Peoria, region grappling with Caterpillar HQ announcement

By Dave Fidlin For Chronicle Media

Caterpiller headquarters has been a part of downtown Peoria for nearly 100 years. The company announced Jan. 31 it was moving its global headquarters to Chicago. (Photo by Tim Alexander / for Chronicle Media

Through all of the changes to our world in the past nine decades, there has been one notable constant in Peoria: Global heavy equipment manufacturer Caterpillar has called the city its official home by virtue of its headquarters downtown.

This past week, the city learned that nearly century-old arrangement would be coming to an end by the end of 2017 as the company relocates many executive-level functions to Chicago.

While the bulk of Caterpillar’s existing operations will remain in Peoria after the transition is completed, the cachet of referring to Peoria as the company’s global headquarters will be scrubbed.

Peoria Mayor Jim Ardis, who initially was stoic about the announcement, admitted a day later he was shell-shocked when word came down about the move. Coincidentally, Ardis delivered his annual state of the city address Feb. 1 — a day after the announcement was made.

“The elephant in the room is so big it wouldn’t fit into this ballroom,” Ardis said as he gave his opening remarks to 625 business and civic leaders at the Peoria Civic Center. He said he tweaked his initial draft speech to address Caterpillar’s changes.

Although Ardis expressed optimism of Peoria’s future in the broader Central Illinois landscape, despite the announcement, he was quick to point out Caterpillar’s decision brings a certain degree of pain.

“It’s a horrible kick in the gut,” he said. “This will be another tough one, but we’ll get through it.”

While Peoria is frequently linked to Caterpillar’s operations, the company has a long history in Morton as well. A logistics operation has been housed in the Tazewell County community for more than a half century.

Morton Village President Ron Rainson echoed what many leaders have been saying since the announcement: It came out of nowhere.

“Normally, when Caterpillar makes a move that will impact the area, there is some discussion, and even a rumor or two to get some public feedback,” Rainson said.

From his vantage point, Rainson said he sees the concerns stemming from Caterpillar’s move as broader in scale, and he points the finger at officials in Springfield.

“What we need is some help from the legislature to make Illinois a desirable place to do business,” Rainson said. “Then we wouldn’t have to worry about future and even more distant departures.”

A number of civic and governmental organizations throughout Central Illinois have been meeting in the days after Caterpillar’s announcement to discuss short- and long-term strategies.

From his vantage point, Eric Miller, executive director of the Tri-County Regional Planning Commission, said Caterpillar’s decision does not alter the course of his group’s efforts. Tri-County is an umbrella group that represents Peoria, Tazewell and Woodford counties.

If anything, Miller said Caterpillar’s announcement is prompting the agency to double down on the efforts it has in place, which is to broaden the mix of industries perched throughout the region.

“We’ve always had this diversification issue. It’s been the monkey on our back,” Miller said. “This is more or less a wakeup call for us. More than ever, we need to have strategies in place as we take a look at our current assets.”

One specific issue Miller pointed to is air transportation. Caterpillar listed several reasons behind the planned uprooting of its headquarters, including ready access to top-tier airports as the company continues its growth and evolution.

“We’re not going to make ourselves a large international airport hub, obviously, but this does reinforce the fact we have some work to be done,” Miller said. “Improving air access could be something we look at in the future.”

In his recent address, Ardis pointed to Peoria, and the region’s, strong history of hosting manufacturing businesses, such as Caterpillar. But Ardis also was quick to point out other industries are growing in the community.

The healthcare sector, Ardis said, is strong in Peoria. More than 700 health care businesses are located in the city, bolstered by the OSF medical complexes. A combined 32,000 people work in the healthcare industry locally, Ardis said, representing 18 percent of the jobs in the area.

From an architectural standpoint, Caterpillar’s announcement also has city officials looking at the ongoing renaissance of the downtown area. For years, Caterpillar had been discussing building a new headquarters in the heart of Peoria.

A view of the Caterpillar, Inc. headquarters in downtown Peoria from across the Illinois River. Caterpillar and other large manufacturers have been slowing pulling out of the Central Illinois region. (Photo by Holly Eitenmiller / for Chronicle Media)

But Caterpillar executives hit the pause button on the look at building a new headquarters in Peoria in fall 2015 as the company began retrenching in some areas and laid off workers as part of a large-scale evaluation of its operations.

In an interview with the Chronicle, Caterpillar spokeswoman Rachel Potts said few noticeable changes are anticipated once the headquarters are relocated to Chicago.

“Our Central Illinois facilities will remain active,” Potts said. “The Administration Building and the connecting Building AH in downtown Peoria will remain active office buildings.

Caterpillar’s current Peoria area workforce hovers around 12,000 persons. Potts said about 300 persons are expected to work at the new Chicago office. Some of those Chicago-based positions, including CEO Jim Umpleby, will be “relocated from the Peoria area,” Potts said.

“The vast majority of our people will remain in the Peoria area, which is an important region where we have many essential facilities and functions,” Potts said.

Miller sees one silver lining as he and other decision makers across the region continue digesting Caterpillar’s news.

“The good news is many of these 12,000 employees will remain,” Miller said. “If the reverse were happening, we’d be having a very different discussion right now.”

“This hurts, but it’s a pride issue, more than anything,” Miller said.

 

Peoria area’s economy shifting from manufacturing

Though the aftershocks of Caterpillar Inc.’s plans to move its global headquarters out of Peoria may rattle the region for some time, there’s good news; the company will still employ 12,000 in the region, and nearly that many new job opportunities are expected by 2018 in other sectors.

A Greater Peoria Economic Development Council recently survey of 41 regional employers. The study revealed  9,200 new job opportunities in the next two years. The sectors surveyed were manufacturing, healthcare agribusiness, logistics and professional/technical services.

“A great chunk of those is in healthcare,” GPEDC CEO Jennifer Daly said. “Healthcare is Peoria’s largest employment sector. That sector is planning some very exciting things.”

As the number of Caterpillar Inc.’s employees has slowly dropped over the past two decades, the healthcare industry in the Peoria area has grown exponentially. In the meantime, she said, subcontractors to the industrial giant, have worked to diversify.

“We have a very wonderful manufacturing sector that has continued to diversify over the past couple of decades, identifying new clients to help them become more balanced,” Daly explained.

The Greater Peoria Manufacturing Network, a co-marketing collaboration championed by GPEDC, stands poised to land a multimillion dollar contract with a refuse truck manufacturer. “Fifteen companies are part of this, and they just got their first bid on almost $3 million in a different sector,” Daly said.

As these companies, many of which are heavy fabrication and metal machining, distance themselves from the dirt moving industry, a large number of others in a variety of other sectors are experiencing growth.

“We have a lot of phenomenal things happening here and incredible employers,” Daly said. “Maui Jim, 360 Yield Center, Weaver Popcorn, Core Construction, Morton Buildings.”

Morton’s AutonomouStuff, a leader in supplying autonomy system components, employs 50 employees and plans to hire more after the purchase of another building. The company works with such big names as General Motors, Ford and a number of oversees companies.

“The founder is from Morton and it’s grown and grown,” she said. “He is from Morton and he said, ‘I want my company to be in Morton’ so he established it there. It’s a phenomenal company.”

Regarding Caterpillar Inc.’s move, “It’s certainly emotional and it effects the region. It’s been the identity of this region for a very long time, but it is only part of the identity,” Daly said, “The vast majority of their employees are staying and we have so many wonderful things happening here.”

(By Holly Eitenmiller / for Chronicle Media) 

 

CATERPILLAR THROUGH THE YEARS 

1925

While the Caterpillar Tractor Company was formed wth the merger of the Holt Manufacturing Company and C. L. Best Tractor Co. The first product line consists of five tractors.

1931

Caterpillar produces its first diesel tractor model and changes the standard paint color of machines from gray with red trim to “Hi-Way Yellow” with black trim.

1941

Caterpillar products support the Allies during World War II.

1944

Caterpillar machines help start the construction of more than 70,000 miles of highways throughout the United States.

1950

Caterpillar forms its first overseas subsidiary – Caterpillar Tractor Co. Ltd. in England.

1952

Members of Caterpillar’s Peoria Cats championship basketball team play on the U.S. Olympic Basketball Team and win the gold medal.

1962

Caterpillar introduces is first off-highway truck – the 769

1967

Caterpillar opens a new worldwide headquarters building in Peoria.

1969

Caterpillar engines supply power for the Apollo 11 mission to the moon.

1970

Caterpillar sales outside of the U.S. are greater than those inside the U.S. for the first time.

 

1983

More than 120,000 workers go on strike for 205 days against Caterpillar, the longest in UAW history.

1986

Caterpillar officially changed the company name from Caterpillar Tractor Company to Caterpillar, Inc.

1992

UAW conducted a five-month strike against Caterpillar. In response, Caterpillar threatened to replace Caterpillar’s entire unionized work force.

1994-95

Over 10,000 UAW members strike for 17 months, a record at that time.

2012

Caterpillar’s Visitors Center opens in Peoria.

2015

Caterpillar says it will keep its world headquarters in Peoria and expand a downtown corporate campus to include new buildings.

2017

The company announces plans to move its international headquarters to the Chicago area after more than 90 years in Peoria. The planned upgraded downtown Peoria corporate campus is cancelled.

 

 

Caterpillar moving HQ, senior executives from Peoria to Chicago

 

 

 

 

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