Caterpillar CEO's letter talks of leaving Illinois

Caterpillar CEO's letter talks of leaving Illinois

www.pantagraph.com

SPRINGFIELD -- The chairman and CEO of Peoria-based Caterpillar Inc. is raising the specter of moving the heavy equipment maker out of Illinois.

"I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest,"

Schuh said the tax hike and the state's worker compensation costs on businesses "make Illinois a hostile environment, prime for the picking."

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These high tax states just don't seem to get it. Major corporations have been voting with their feet for a couple of decades and there is little the state can do to keep Cat in the state. They will definately leave - this is the first salvo so that the state can respond, only to have their deal, which will largely be beat by another state and then the CEO can simply state that they wanted to stay, but in the interests of the firm, they had to move.

Same thing happened with Boeing, at one time the largest employeer in Washington. Boeing announces they will move to Chicago, because their largest client, United Airlines is headquartered there, but that they maintain significant numbers of assembly jobs in WA. Since that time, they have bled the jobs out of Washington and moved them to South Carolina and Kansas. The CEO of Boeing directly attributed the move to the high taxes and unions in Washington.

Any surprise that all three states they are currently looking at are Right to Work states?

This will continue until there are no more jobs left in these states. Its a positive thing - they are either going to go down the drain or reform their economic and labor policies.

www.pantagraph.com
(visit the link for the full news article)

Maybe Caterpillar should take some lessons from GE, which pays no taxes, despite being the largest corporation on Earth.


People talk about different "tiers" of society, but to me it just looks like a total free-for-all, and the only thing that matters is how much money you have and how many lawyers you can afford.

I live in Illinois. I can say that I agree with him totally. This state is one of the worst to do business in. We have few jobs because of the yayhoo's up in Chicago. I cannot blame a businees that explores different options. This is capitolism at it's finest.

Lets keep raising taxes, that will fix it.

This state is screwed. Go getem Cat.

They could just say that their home office is in Delaware and pay only 100 dollars in taxes a year, yet still operate in Illinois. A lot of companies have been doing that for years.

i play a lot of fantasy stock games, and caterpillar was a winner to invest with real money. time to sell short.

reply to post by dolphinfan


Down the drain we go.

Politicians.

What do the politicians in Illinois expect? They punish large corporations so the companies go elsewhere. Our "president" could learn from this. Punitive, confiscatory tax levels push producers away. They go elsewhere to work, to set up their businesses, or invest elsewhere.

The Japanese pay just slightly more corporate tax rate than we do here. Why are their corporations not moving away from having headquarters in Japan sense the tax rate is so high there? Is it because they actually get far more back in social services than the United States does? We pay so much in taxes yet get back very little in social services from what i see. By all means correct me if i'm wrong.

reply to post by dwmjr1985


That's not the only issue. Its the workman's comp that is also a significant part of the problem. They won't keep anything in Illinois when its all said and done. They will gradually move their manuacturing out of the state. Once they look at the tax breaks the other states give them, the reduced workman's comp and the right to work status of those states, there will be no feasible way to keep the company in Illinois.

Lay on top of those items the increased regulations in these high-cost states and its a no brainer. These CEOs set these things up based on their fiduciary responsibility. Once they have a total package that is significantly more attractive, they are essentially compelled to move due to their obligation to the shareholders.

Time to buy Cat stock. They will move to a lower cost environment, write down the cost of relocation and drop the savings to the bottom line. They are already a solid company and will get stronger outside the yoke of Illinois and their anti-business regime.

As a machinist that makes parts for Cat everyday, I worry about the hundreds of smaller companies that actually make Cat parts. I don't know if most are aware, but Cat plants are assembly plants. They take parts made at companies like mine and do final assembly at their plants.

reply to post by dolphinfan


If i had money to put into stocks i would. These other states are also more likely to give Caterpillar money to bring their jobs there. Japan has a pretty extensive workers comp program as well though. But i digress, Japan's entire culture is completely different than ours, including their corporate and manufacturing structure. Quality over Quantity.

reply to post by freedom12


I'd say no matter where CAT relocates, say in the south, if they've already decided to purchase parts from your company and others that shouldn't change. The parts still have to be shipped to them no matter what.

reply to post by dwmjr1985


Japan.. Hmmm..

Tell that to their Pharma and Nuclear industries, along with Toyota and all their recall problems.

reply to post by dwmjr1985

Not a good time to invest in Cat. You missed the boat right when Obama was elected, the stock was around $25/share. Last week it was around $108(I bought in at 26.09). I have a sell order in at $125.

Businesses and manufacturing plants have been closing up shop and leaving the Northeast and Midwest for the past 4 decades now and it is very sad, especially for the people that live in that region and grew up in a family where generations worked in those coal mines, factories, and shops. My family all worked at the Bethlehem Steel for generations until it closed in 1995 after 138 years of operation. When you combine excessive taxation and regulation by the state and local governments, the corporate tax on the federal level of up to 35% (highest in the developed world), an EPA on a witch hunt for any business that 'pollutes' so they can regulate them into oblivion, a populace growing ever more hostile to all businesses, and the insane outsourcing caused by ‘free-trade’ it is no wonder these states are collapsing.

Caterpillar had been located in Illinois for decades and became known for being an Illinois business but when a state keeps running up deficits like it does which leads them to taxing and regulating people and businesses to death the end result will be the departure of business from that state. Unfortunately Wisconsin, Illinois, Michigan, Indiana, Ohio, Kentucky, West Virginia, D.C., Maryland, Delaware, New Jersey, Pennsylvania, New York, Connecticut, Rhode Island, Massachusetts, and California are all states experiencing this problem caused by their own reckless ways.

When I finally see serious changes in all the aforementioned states with their business and fiscal policies then we will finally see the restoration of the ‘rust belt’.

mabey the plan is to crash the economy
if i tried to crash an economy
i would do exactly what has been done to the us
you are being sold out from the inside

and someone will be making money selling you out
is it rich vs poor?
sure looks like it

I dunno if this is straying off topic, but one of the reasons I suspected he was singled out was because he was keeping his promise to not raise taxes on many things. As soon as Quin was handed the governorship, he started getting things ready for tax hikes. Kind of odd, out of all the charges against Blagojevich, the only one he was convicted of was Lying to the feds, if they wouldnt have brought those charges against him in the first place he would not have had to answer questions, anyway, the point is, the one Governor that was keeping his promises gets outed, and the media had a field day tarnishing his image. A lot of states are now trying to coax businesses over to their states out of Illinois.

The Politicians need to get their pay cut down to the state minimum of what the average Illinoisan makes. No pay raises without the consent of the people PERIOD. That pay cut may just be enough to put some sort of dent into the failing budget. Reduce taxes on Businesses that keep people employed, when the companies leave, and the employees are jobless, that naturally means less money for the state. Where is the logic in the politicians' thinking?

reply to post by mydarkpassenger
Maybe yes and maybe no. Cat is building at new plant in Mexico and soon will be building in China. You have to enter shipping costs into the equation. If they move somewhere else, other companies will bid on the work we do and if they're considerably closer, those other companies will have alot lower shipping costs. Corporations don't care where the parts come from, as it's all about the bottom line for them.

Originally posted by bsbray11
Maybe Caterpillar should take some lessons from GE, which pays no taxes, despite being the largest corporation on Earth.

Apples & Oranges. GM paid no federal taxes this year. Why? Do you think that bankruptcy had anything to with it? Now let's do the math. GM Open: 68,000 employees have jobs, most very well-paying. GM Bankrupt: A few jobs for security guards at shuttered plants nationwide.

The taxes caterpillar is talking about are various forms of state taxes, which are considerable. Some of them have to do with inventorym, such as B&O taxes, and some of them arte employee-related, such as high rates for 'worker's compensation.'

If a company is actually considering ditching an entrenched inventory to move out of a high-tax state, hat gives you an idea of how much momey is involved. If Illinois wants to turn Chicago into another Detroit, let 'em!