Lawmakers to blame for Caterpillar cuts, group argues
Layoffs at Caterpillar are the result of lawmakers dismissing pleas from the manufacturing community, a non-profit think tank charged recently.
“For years, Illinois lawmakers have ignored cries for reform from Illinois manufacturers – an insult to more than half a million manufacturing workers who rely on a healthy industry to forge the state’s middle class,” Austin Berg wrote on the Illinois Policy Institute's website.
The claims come after Caterpillar’s announcement on March 31 that it planned to close its machine plant in Aurora, which the institute claims will put 800 hourly employees out of work.
Berg pointed to a 2012 op-ed by then-CEO Doug Oberhelman that appeared in the State Journal-Register.
“About 10 months ago, I wrote a letter to our political leaders expressing my hope that the state would undertake fundamental reforms so Illinois could compete for jobs and long-term business investment that drives growth," Oberhelman wrote. "To date, we haven’t seen much change."
Oberhelman said part of the problem was Illinois’ inability to balance the state budget. He also noted that major credit agencies downgraded the state’s bond rating.
While Oberhleman approved changes to workers' compensation passed in 2011, he said they weren't enough.
“Illinois will still be among the most expensive states for workers’ compensation insurance,” he wrote. “In fact, our own comparison of workers’ compensation costs showed Illinois was far more costly than Indiana, which is consistent with a study by the state of Oregon that also shows Illinois is much more expensive than Indiana, Iowa and Kansas when it comes to workers’ compensation insurance rates.”
With so much changed since that 2012 op-ed, the closing paragraphs in the op-ed now ring hollow for those set to lose their jobs with the Aurora plant closing.
“Let me be clear,” Oberhelman concluded. “Caterpillar is not threatening to leave Illinois. Rather, we want to grow our presence in the state. For Illinois to really compete for new business investment and growth, the state must address these matters.”
At the time, Oberhelman was in charge of a $60 billion company that reported record earnings. Over the next several years, the situation for Caterpillar changed dramatically. Oberhelman retired at the end of 2016 and was replaced by Jim Umpleby.
The early retirement of Oberhelman wasn’t unheard of for Caterpillar leadership, Brooke Sutherland reported for Bloomberg, but she speculated that his departure meant the longtime CEO saw trouble ahead for the company.
“Leaving now suggests Oberhelman doesn't see a path for things to turn around significantly in the next year or two,” Sutherland wrote.
The situation further deteriorated in March, when federal agents raided Caterpillar facilities. Forbes reported that the corporate headquarters in Peoria were among the buildings raided. The raids were conducted by the U.S. attorney’s office in the Central District of Illinois and involved the Federal Deposit Insurance Corp., the Internal Revenue Service and the Department of Commerce.
Caterpillar stock shares plummeted following the news, and on March 31 the company announced plans to close its machine production plant in Aurora. That news was first reported by the Chicago Tribune.
According to the Tribune, the company plans to relocate the production of large wheel loaders and compactors to Decatur and medium wheel loaders to North Little Rock, Arkansas. Caterpillar is expected to retain 1,200 workers in Aurora.
According to Berg of the Illinois Policy Institute, the move presents an opportunity for lawmakers to look back at Oberhelman’s plea for changes to the business climate while surveying the current situation.
“The results are in,” Berg wrote. “Illinois is the only state in the region to suffer a net loss of manufacturing jobs in the last five years.”