Navistar layoffs add to doubts about incentives
Sears Holdings Corp. and Chicago’s financial exchanges have quit threatening to pull up stakes now that Illinois has enacted tax breaks for them. But it remains unclear whether state incentives to big companies are wise uses of economic-development resources. A personnel shift by Lisle-based Navistar International Corp. will add fresh doubt.
WBEZ has learned that some new jobs Navistar promised under an Illinois incentive agreement are coming to the state at the expense of unionized workers in Indiana.
Illinois Gov. Pat Quinn announced the Navistar incentives last year after the company threatened to pack up its headquarters in west suburban Warrenville and leave the state. The deal committed Illinois to a $64.7 million bundle of tax credits and job-training subsidies for the company. It committed Navistar to moving the headquarters to Lisle, a couple miles east, and to adding 400 full-time Illinois employees.
Navistar’s first report to the state about the jobs isn’t due until next year, so it’s hard to tell how many positions the company has created thus far. Employees confirm that dozens of new engineers and designers are working at the Lisle facility.
Navistar is creating those jobs as it phases out its Truck Development and Technology Center in Fort Wayne, Indiana, just three hours southeast of Chicago. The latest Fort Wayne cuts came December 2, when the company laid off 130 employees, mostly engineers and designers who are United Auto Workers members. Before the layoff, some of the Fort Wayne workers had to help train their Lisle replacements.
Navistar has “rewritten the job descriptions so the people that used to do the work here — the union folks — don’t qualify anymore on paper,” said Craig Randolph, a design engineer the company laid off after 15 years at the Fort Wayne center. “So they’re eliminating the high-seniority, older employees like myself and replacing them with nonunion college kids — guys fresh out of school. And the taxpayers in Illinois are subsidizing the whole thing.”
Asked for a response, Navistar spokeswoman Karen Denning called it unusual for engineers to have union representation in the first place, a claim disputed by auto industry experts. Denning also sent a statement that said the company’s decision to shift the Fort Wayne jobs to Lisle was “based solely on our desire to compete in the global economy.” The statement added that Navistar has allowed many Fort Wayne employees to relocate to the Chicago area and stay with the company.
The Illinois Department of Commerce and Economic Opportunity sent a statement that doesn’t directly address whether the Navistar incentives have anything to do with the Fort Wayne layoffs. The statement says the state’s assistance to companies like Navistar over the last decade has “created and retained tens of thousands of jobs,” including unionized positions.
There’s not much proof to back up such claims. Scholars who study the effects of corporate incentives point out that companies decide where to operate based on proximity to suppliers, markets, transportation and so on. Another factor is whether workers are bargaining collectively. Just this summer, Navistar announced it was closing a unionized plant in Chatham, Ontario. The company has moved that work to nonunion facilities in Texas and Mexico.
“I don’t think that the [Illinois] incentives are causing Navistar to shift around its workforce,” said Rachel Weber, an associate professor of Urban Planning and Policy at the University of Illinois at Chicago. “But they do send a message that the public sector and taxpayers are validating these kinds of activities. And, if you asked a lot of taxpayers in the state of Illinois whether they’d want to support these kinds of activities, I don’t think they’d be so happy about it.”
Weber pointed out that the economies of Illinois and Indiana intertwine closely and said it would help both states to quit poaching jobs from each other. Eliminating state incentives for corporations, she added, would free up resources for everything from workforce readiness to small-business incubation.
The union, for its part, didn’t return calls about the Fort Wayne layoffs and isn’t creating a public fuss about them. That raises questions about the role of UAW Secretary-Treasurer Dennis Williams, who serves on Navistar’s board of directors under a decades-old agreement that reserved the seat for the union. Because Williams draws salaries from both the UAW and Navistar, and because he once directed a UAW region that includes Illinois but not Indiana, some of the union’s Fort Wayne members accuse him of hanging them out to dry.