CAT Moves Jobs from Illinois to Michigan

Caterpillar announced plans to close three component production facilities in Illinois, moving the work to a similar facility in Michigan.

The sites are all Anchor Coupling facilities that make or distribute hydraulic hose assemblies for Caterpillar and other equipment manufacturers. The work will be moved to an existing site in Menominee, MI, in an attempt to cut costs and boost efficiency, according to the company’s news release.

“You’ve got three facilities spread out across two (locations) in Illinois that are doing essentially, primarily the same work as one facility is doing in Menominee,” company spokeswoman Rachel Potts told the Journal Star. Combining them in the site about an hour northeast of Green Bay, WI, will allow the company to eliminate some “redundancies in management structures” and internal logistics costs that come from having the work spread out over four locations, she said.

The company eyed “a variety of locations across North America” before settling on the existing Michigan location, Potts said. “In the end, the financial analysis just showed the team that the location in Menominee is a better location for efficiency reasons,” she said. The analysis not only looked at overall business climate, but also at other costs. She said that CAT also reviewed Illinois sites but would not detail what other locations in the U.S. or Mexico it considered.

While the company did not mention it, a Tax Foundation report revealed one reason jobs are fleeing Illinois is that it is getting more and more expensive for businesses to operate in the state.

The Tax Foundation’s 2014 State Business Tax Climate Index confirms the state’s worsening position. Illinois has dropped 15 spots, to 31st from 16th, since 2011, the year the state passed a record income tax hike. This lower ranking means it’s become even more difficult for businesses and entrepreneurs to compete in Illinois’ unfriendly tax environment.

What could be another plus for Michigan is the right-to-work legislation the state passed in 2012, which applies to labor contracts extended or renewed after March 2013.