Caterpillar CEO Doug Oberhelman: Why we decided to invest and grow jobs in Illinois

Editor's note: This column was published 10 years ago in the Journal Star in 2012. 

Caterpillar has deep roots in Illinois. Over the years we’ve employed tens of thousands of Illinoisans, including the 23,000 working and raising their families here today. My personal roots in Illinois are also deep.

I attended public schools in Illinois, went to college in Decatur and have spent the bulk of my career in the Land of Lincoln. Illinois is Caterpillar’s home, and it is my home.

I’m pleased to be part of the governor’s new export council, which I hope will help Caterpillar and other Illinois companies increase exports, which support so many jobs. In fact, export demand played a huge role in our decisions in the last few months of 2011 when we announced investments totaling $840 million to support two of our large Illinois factories.

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Sometimes exports drive those investment decisions, other times it may be logistics. More often in Illinois, the issues I am outlining below keep us from investing in our home state.

Despite the fact that we have announced plans for dozens of new factories in the last few years and that our work force in the United States has increased by more than 14,500 people in the last 10 years, we haven’t opened a new factory in Illinois in decades.

Our work force in Illinois today is at the same level it was 10 years ago. In short, when Caterpillar and most other companies look to locate a brand new factory in the United States, Illinois is not in the running for such projects. It doesn’t have to be that way.

About 10 months ago I wrote a letter to our political leaders expressing my hope that the state would undertake long-term, fundamental reforms so Illinois could compete for jobs and long-term business investment that drives growth. To date, we haven’t seen much change.

The governor’s recent three-year projection of state revenue and spending proves that, even with the income tax increase, Illinois has not done what is necessary to balance its budget. Major credit agencies have downgraded the state’s bond rating. The state passed some changes to workers’ compensation last spring, but it wasn’t enough.

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Illinois will still be among the most expensive states in the nation for workers’ compensation insurance. In fact, our own comparison of workers’ compensation costs showed Illinois was far more costly than neighboring Indiana, which is consistent with a comparative study by the state of Oregon which also shows Illinois is much more expensive than Indiana, Iowa and Kansas when it comes to workers’ compensation insurance rates.

What’s the solution? For starters, Illinois needs to adopt a long-term, sustainable state budget that relieves pressures on taxpayers. Unlike some, I do not favor an early rollback of the temporary tax increases in Illinois, but they should expire as planned.

Keeping the temporary tax increases in place for now gives the state time to develop a multi-year plan that must balance the state budget. In addition, the state needs to dramatically lower workers’ compensation costs. Some say these changes are not politically possible in Illinois. But if all Illinoisans put pressure on both parties to make these types of improvements, I think Illinois can become a place that can compete for business growth and new jobs.

Let me be clear. Caterpillar is not threatening to leave Illinois. Rather, we want to grow our presence in the state. For Illinois to really compete for new business investment and growth, the state must address these matters.

You might be asking why a $60 billion company that just reported record earnings would care about issues like this. We are pro-active members of our community, and there is no state or even another country where we have as much invested as we have in Illinois.

We could leave it up to others to sort out the challenges that Illinois faces, but that type of attitude wouldn’t reflect the values in which Caterpillar prides itself.

Business leaders are making decisions today on where to invest in the future. Illinois must act now, with a bipartisan sense of urgency, to position itself for future job creation that is being discussed in board rooms all across this country. I want Illinois to be in the hunt for those types of investments, including investments by Caterpillar. Illinois deserves it.

Doug Oberhelman was chairman and CEO of Caterpillar Inc., headquartered in Peoria.