The announcement that Caterpillar would close its Aurora plant at the end of 2018, laying off 800 union workers, threatens instability throughout the economy of the region in Kane, Kendall and Cook counties.
The international corporation’s decision has left planners and politicians wondering: What can be done to help the plant workers? What will happen to the property? How can we prevent this from happening again?
At the end of March, the multinational mining and farm equipment company announced poor sales were forcing them to close the Aurora plant and shift production of “large and medium wheel loaders” to Decatur and Arkansas. Employees represented by United Auto Workers Local 145 were offered a severance package of 40 hours of pay for every year of service. Aurora workers were excluded from a contract provision granting $10,000 to those who offered to retire before 2019. Employees were offered the option to relocate.
Workers had been on edge since the beginning of the year and voted by 93 percent for the UAW to authorize a strike before the company’s 2011 contract expired Feb. 28. Meanwhile, Caterpillar announced the company would move headquarters from Peoria to Chicago, taking 300 jobs. Then the Peoria offices were raided by the IRS and federal agents in early March as part of an investigation into allegations the company was shipping profits overseas to evade taxation.
“Shuffling money overseas and moving from Peoria when they promised they wouldn’t just makes them a poor business partner for the state of Illinois,” said State Rep. Stephanie Kifowit (D-Oswego). “Some of these companies are willing to decimate the economies of loyal workers and the people who buy their products.”
Union members worked without a contract for a month in a “media blackout” throughout March, and then were told the plant would close.
The whole situation sounded familiar to Gary Kecskes, of the Workforce Solutions Department at Waubonsee Community College.
“When I worked in Detroit, the auto manufacturers were laying off large groups of people,” Kecskes said. “In January [Caterpillar] made an announcement and we had an inkling they would close the Aurora plant.” Kecskes remembered how Detroit companies sponsored worker retraining and job placement centers — a role Waubonsee could fill, Kecskes said.
“We have formulated a rapid response team to support these workers,” he said.
“We got the word out to all the economic development organizations in the [Waubonsee College] district that we have services to support these workers should the layoffs eventually result,” he added.
Along with an online job board and a fall career fair, Waubonsee “Brighter Future” program offers help with resumes and self-branding through social media.
“Let us help you through this transition,” says a flier.
Laid off workers can take a career assessment to find jobs that fit their interests. The community college offers three types of classes to help Caterpillar employees, or anyone looking for a better job. With non-credit short courses, workers can “re-skill or tune up,” in areas like software, manufacturing, or training. Certificate programs can take as few as 16 weeks to be employable in a new career. The college also offers degree completion programs. The phone number for the program is (630) 466-2368. “We have operators trained to route each call to the right department,” Kecskes said. “This is not a one-size fits all.”
What will happen to the plant property?
The 350-acre Cat plant is located on South Route 31 in unincorporated Kendall County, just outside Montgomery. The buildings consist of “office and warehouse and production space,” said Rich Young, director of community development for the Village of Montgomery. Representatives from the village met with Caterpillar staff earlier in the year to ask about annexing the property, which is adjacent to the village boundary, Young said. This would involve the village taking over the maintenance of Caterpillar Drive, which runs through the property, he said.
“Repurposing that [parcel] will be a challenge, but we’d like to get ahead of that,” Young said. The plan would include working with national economic redevelopment firms to develop a “request for proposals” for a development plan the village could live with. The village is not considering purchasing the land, he said.
“It would be nice to find another large industrial manufacturer, but they’re not lining up to take over the property,” he said. “To some degree, it’s a matter of who’s available at the time to make a proposal to redevelop.”
There would be somewhat higher taxes on the land if it was within the village boundaries, Young said, “but the village board could look at rebating taxes to help redevelop the property.”
Using tax rebate incentives to help development is not something she’s opposed to, said Kifowit. But the state of Illinois needs to work with corporate partners who care about the community.
“You need good business partners who work with you in good faith,” Kifowit said. “At the end of the day, if a company takes taxpayer money and then locks up and leaves town, the state should be able to claw back that money.”
An example was Nabisco, she said, who announced in 2015 they would ship 600 jobs to Mexico. “They are just decimating American workers and U.S. jobs and they are not acting in good faith. We need good-faith partners who realize what we have here.”
Caterpillar drastically reduced their state tax bill 20 years ago when taxes were changed from a three-pronged equation based on property, number of employees and sales. The state streamlined the corporate tax to a “single sales factor,” taxing only profit from sales in Illinois, Kifowit said.
“The state lost a lot of money for bridges and roads and police and all of a sudden a lot of [Caterpillar] sales started happening out of state.”
Kifowit said she’s supporting several Democrat bills in the Illinois House that will bring accountability to corporations that receive tax benefits.
“We are targeting this kind of malfeasance if a company receives taxpayer dollars and leaves, we need to claw that back. You need to invest in the state if the state is invested in you. That’s the bottom line.”
— Help for Aurora Caterpillar workers, and a possible land-use plan —