Illinoisans are known for crossing into Indiana for cheap cigarettes, cheap gas and now cheaper costs of doing business it seems. On Tuesday, Indiana officials rolled out the red carpet in introducing the latest Illinois firm to leave the state.
Modern Drop Forge, a manufacturing firm in south suburban Blue Island, Illinois, will move its operations 30 miles to the east to a now vacant facility to Merrillville, Indiana.
Indiana Republican Gov. Mitch Daniels announced the company’s intentions at a Tuesday morning press conference.
“We operate on the theory that let’s make it as affordable as possible to come and hire Hoosiers,” Daniels said. “Creating a climate that attracts successful, growing companies like Modern Forge to Indiana is our top priority. Since day one, we have worked hard to make Indiana the top jobs state in the country and Modern Forge will benefit from our strong infrastructure, skilled workforce and business friendly environment.”
Modern Drop Forge is a family-owned business with operations in four states, employing some 700 people. It manufactures parts for aerospace, truck and recreational vehicles.
Greg Heim owns the company that’s been in business, getting its start in Blue Island in 1914.
He says officials with the Indiana Economic Development Corporation (IEDC) and the Town of Merrillville, worked with his company to make an attractive offer to lure the company.
IEDC offered Modern Drop Forge $2 million in performance-based tax credits and up to $200,000 in training grants based on the company’s job creation plans.
The city of Merrillville, meanwhile, provided additional property tax abatements.
But in the end, Heim said the cost of doing business in Illinois proved too much, especially with the state increasing its corporate income tax by 67 percent in January. The actual rate increased from 4.7 percent to 7 percent until 2015.
“I haven’t talked to anybody (manufacturers in Illinois) that’s said, ‘Boy, Illinois is wonderful and why would I want to leave,” Heim said.
Heim says he does feel badly about leaving Blue Island, a city that’s done so much for his company.
“We have to do what’s best. When you’re in a family business, you have to think back over time about the people who have made it possible for you to be at where you are at today, and hope to God that they agree with our decisions. It’s tough,” Heim said.
Heim says when the company makes its move to Merrillville, its Blue Island plant will shut down. But Merrillville, largely a bedroom community with little industry, won’t get all the jobs that are now in Blue Island. Heim said of the 260 jobs, about 240 will be moved to Merrillville’s southeast side, just east of the well-known Westfield Shoppingtown “Southlake” Mall on U.S. 30 and east of Interstate 65.
Current Modern Drop Forge employees will be offered a chance at those jobs in Merrillville, but some will be filled by Merrillville area residents, Heim said.
Merrillville Town Council member Shawn Pettit says the move by Modern Drop Forge will help the town to shore up its finances. It’s been running in the red ever since Indiana moved to a property tax cap for homeowners and businesses.
“It’s going to be a shot in the arm for the local economy. The job creation is outstanding. The expansion that they’re talking about is going to mean more tax dollars into the town,” Pettit said.
The announcement by Modern Drop Forge comes on the heels of railroad operator CN decision to move some 250 jobs from the south suburbs to Gary, Indiana, while investing millions to upgrade a rail yard there.
While the news is good for Indiana, it’s angering many in Illinois.
On Tuesday, Illinois Republican Party chairman Pat Brady took aim at Illinois Gov. Pat Quinn.
“Governor Quinn and the Democrats in Springfield continue to fail us. The only way we can bring jobs back to Illinois is by making Illinois an attractive place to do business,” Brady said. “Being the state with the fifth-highest corporate income tax, over 7,000 units of local government to deal with, an overly burdensome regulatory environment and a haven for trial lawyers with a heavy dose of corruption does not attract jobs to Illinois.”
But Quinn administration is firing back.
“The Administration reached out to Modern Drop Forge with a competitive business package,” Quinn said in a written statement. “We remain focused on solutions that will revitalize our economy in the short- and long-term, including getting our fiscal house in order after years of mismanagement, making Illinois more globally competitive and investing in infrastructure and education to create and grow more jobs.”
Quinn said the state of Illinois led the Midwest in job growth last year, and is first in the Midwest for exports and foreign company investment, including more than 1,500 foreign companies with locations in llinois.
“But the reality is that Midwestern states will need to work together more, not less, to market the region to global visitors and business. An approach that focuses solely on picking off a neighboring state’s businesses is short-sighted; it’s a losing strategy for our region.”
But Daniels insists he isn’t trying to start a border war with Illinois and doesn’t take issue with it for raising its corporate income tax.
“It’s not for me to give advice to anybody else. Every state has to make its own decisions and I respect that,” Daniels said. “I never say anything negative about anywhere else. I believe the competition is healthy for us all. But I’m just going to tell them … Indiana is now, along with a couple of Sun Belt states, is everybody’s pick as the best place to do business, the best place to hire people and have a good chance to get your money back. We make no apologies for … building that climate and we’re all for going on and marketing.”
And true to his comment, Daniels planned on visiting other Chicago area firms on Tuesday to make his best pitch as to why they should make a run for the border.