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* Greg Hinz…
In a blow to the local economy, a technology center that was supposed to come to the Chicago area with Archer Daniels Midland’s headquarters instead has gone to suburban Cincinnati, at least in part because the company received economic incentives there it couldn’t get here.
In a statement, ADM said its new information technology and support center will open next year in Erlanger, Ky., just over the Ohio river from Cincinnati, with about 100 newly created jobs, eventually doubling to 200.
A company spokeswoman confirmed that the tech center is the same operation that the company originally intended to open here in conjunction with moving its headquarters from Decatur to downtown Chicago. But company efforts to get a state subsidy of more than $24 million ran into a roadblock in Springfield, and the firm ended up moving only about 65 to 70 headquarters positions here, putting the tech center on hold.
The Kentucky incentives are valued at up to $5.3 million, ADM said.
posted by Rich Miller
Thursday, Dec 11, 14 @ 1:06 pm
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Kentucky for a tech center? They must mean call-center because you’re going to have a hard time getting staff for that… Enjoy ADM.
Comment by PMcP Thursday, Dec 11, 14 @ 1:12 pm
A Springfield road block?
Comment by Keyser Soze Thursday, Dec 11, 14 @ 1:12 pm
So they couldn’t get 24 million, so they took 5.3?
Comment by OneMan Thursday, Dec 11, 14 @ 1:12 pm
The company wanted a state subsidy from Illinois of more than $24 million, but Kentucky gave incentives of up to $5.3 million and got ADM’s tech center. Apparently there’s a huge cost of living adjustment from Illinois to Kentucky.
Comment by Say It Ain't So!! Thursday, Dec 11, 14 @ 1:13 pm
5.3 million for 200 high paying jobs doesn,t seem to bad. Have to admid’t Im not a fan of corporate welfare but this is an example of why states do it.
Comment by fed up Thursday, Dec 11, 14 @ 1:14 pm
They wanted to upgrade from Decatur and chose…the KY parts of Cincy? Swing and a miss.
Comment by Dirty Red Thursday, Dec 11, 14 @ 1:16 pm
More Photogenic and Colorful Location for ” The Informant II ” .
Comment by x ace Thursday, Dec 11, 14 @ 1:22 pm
==ADM said its new information technology and support center will open next year in Erlanger, Ky.==
Doesn’t ADM know what those heathens in Kentucky do with our sacred corn crop?
Comment by Anon. Thursday, Dec 11, 14 @ 1:31 pm
Incentives help, but the costs are also prob a fraction of chip area
Comment by Langhorneduly Thursday, Dec 11, 14 @ 1:31 pm
Erlanger isnt just across the river from
Cincy, it’s about 10 miles down the road near the Northern Kentucky airport.
If you can get what you need for a “tech center” in small town Kentucky, it sure wouldn’t make any sense to locate in Chicago.
Comment by Wordslinger Thursday, Dec 11, 14 @ 1:31 pm
Fraction of CHGO area costs
Comment by Langhorneduly Thursday, Dec 11, 14 @ 1:33 pm
As Rich clearly states, it’s in a suburb of Cincinnati which is just over the river to the north, and has a thriving tech community. Still, they would have been much better off tapping into the highly ranked University of Illinois ECE grads, many from Chicagoland, who would have flocked to the new tech hub…location, location, location.
Chicago > Cincinnati
Comment by PublicServant Thursday, Dec 11, 14 @ 1:33 pm
24 mil is 240,000 per employee for the first 100. We would be giving them years of free employees. We could just hire 100 people at DOC for less and fix staff shortages.
Comment by Ghost Thursday, Dec 11, 14 @ 1:34 pm
This is corporate welfare.
Comment by Ghost Thursday, Dec 11, 14 @ 1:35 pm
How many times does it have to be said. People are LEAVING Illinois. Its that simple. Its not how you feel or how you want it, but what is actually happening. It took threats to keep Walgreens and they will leave when they can just like the rest.
Comment by Anonymous Thursday, Dec 11, 14 @ 1:38 pm
I suppose a lot depends on what they mean by high paying jobs. Knowing the area they are locating in I suspect these are low level support jobs and while substantially above minimum wage these are not engineering jobs. There is no infrastructure to support a large engineering support center. This is essentially a call center that Kentucky is paying 26k per job for. Not sure it’s a big win for Kentucky or a loss for Illinois.
Comment by Dazed but not confused Thursday, Dec 11, 14 @ 1:41 pm
Kentucky paid the bribe. We didn’t. I’m ok with that.
Comment by Demoralized Thursday, Dec 11, 14 @ 1:48 pm
People are LEAVING Illinois. Ahhhh!!!! The sky is falling! Chaos, locusts, frogs are invading our land!
Or wait, maybe not. Maybe the complete opposite of that is true. Maybe the hyperbolists need to quiet down:
“According to the latest study of the four-month period of May through August, not only did considerably more people move to the Chicago area than away, but Chicago was the most popular locale for moves in the nation, trailed by Washington, Atlanta, Boston, Los Angeles, Dallas, Phoenix and New York.”
http://www.chicagobusiness.com/article/20140912/BLOGS02/140919953/chicago-takes-top-spot-on-move-in-list-believe-it-or-not
Comment by chi Thursday, Dec 11, 14 @ 1:52 pm
Let’s do some quick math.
200 jobs x $80,000 (being generous here and assuming true high paying tech jobs) = $16,000,000
Illinois income tax from those jobs at 3.75% = $600,000
Even at 5% it’s only $900,000
We can guess that there will be no increase in the corporate income tax revenues because ADM was asking for a credit against withholding — usually, the only reason to do that is because you don’t pay enough income taxes to use the credit.
So, overall we would pay $5.3 million in incentives for $600,000 in revenue.
I know, I know: there are secondary effects, etc. But we get those same secondary effects if we directly transfer $5.3 mln to unemployed people.
Go for it, Kentucky.
Comment by VM Thursday, Dec 11, 14 @ 1:55 pm
It all depends on what the average pay is for these jobs, the capital investment they will make and a cost benefit analysis to determine if this was a good incentive package for Kentucky or not.
If these are high paying jobs with a significant capital investment, this looks like a good investment.
Also, something to keep in mind, from October 2013 - 2014 Kentucky and Illinois had about the same total job growth. That’s not per capital, that’s total.
Comment by Ahoy! Thursday, Dec 11, 14 @ 1:58 pm
Similar jobs pay much less down there. They would have a hard time filling those jobs here for fast-food wages.
Comment by DuPage Thursday, Dec 11, 14 @ 2:00 pm
I’m glad the state took a pass on this one. Cmon, it’s a call center! Paying that amount of a bribe for jobs that will probably pay 10 bucks per hour is ridiculous. Funny though, they didn’t move the HQ jobs to KY. Wonder why? How about I WANNA LIVE AND WORK IN DTOWN CHICAGO!!!
Comment by Anonymous Thursday, Dec 11, 14 @ 2:01 pm
Good! Hurrah! In a race to the bottom, let Kentucky win!
Comment by Soccermom Thursday, Dec 11, 14 @ 2:04 pm
The Cincinnati airport is in Kentucky. It’s a major hub for Delta. The areas around there are not po-dunk. They are actually rather nice and relatively newly constructed. As an area, it would be competitive. Don’t quite get why the tag was $24M here and $5M there. Must be more to it than that. Their valuation of incentive of $5M sounds more like what it should be.
Comment by A guy... Thursday, Dec 11, 14 @ 2:14 pm
ADM IT jobs are crappy pay for long hours compared to our other major central IL IT employers. When Illinois Power gutted its Decatur IT dept, many of those folks went to ADM but they didn’t stay. Loads are now employees of or externals at the insurance companies here in sunny BloNo. I laughed at the thought of ADM taking those IT jobs to Chicago because there’s no way they could compete for Chicago talent anywhere close to the pay scale they had in Decatur. I’m not surprised one bit they are going somewhere cheaper.
Comment by Rayne of Terror Thursday, Dec 11, 14 @ 2:17 pm
The “free market” at work.
Comment by Precinct Captain Thursday, Dec 11, 14 @ 2:18 pm
Well I am fairly confident that information technology talent is less expensive there than in Chicago. Also ADM would seem to be the type of firm that would look to outsource the whole IT operation. Kind of surprised they haven’t already.
Doesn’t strike me as worth 24 million…
Comment by OneMan Thursday, Dec 11, 14 @ 2:21 pm
Screams outsourced in 5 years to me…. Highly doubt they built an ERP solution from scratch. Likely a third party ERP solution implemented for them..
Again these are logical guesses…
Comment by OneMan Thursday, Dec 11, 14 @ 2:25 pm
@fed up… do the math, it ain’t that good of a deal.
Comment by From the 'Dale to HP Thursday, Dec 11, 14 @ 2:27 pm
RofT
Sorry I missed your comment.
That might have been why they wanted 24 million from Illinois.
Comment by OneMan Thursday, Dec 11, 14 @ 2:32 pm
Public Servant @ 1:33 PM—ADM can still “tap” into the U of Illinois ECE grads. Many of our young people have been leaving Illinois to go to where the jobs are at. And, many of our older retired folks have also been moving from the state to go live in Florida, Nevada, etc. where it costs them less to live.
It will be interesting to see if Rauner can stem the flow of this ebb tide of our best and brightest during his tenure as Governor of Illinois.
Comment by Rowdy Yates Thursday, Dec 11, 14 @ 2:43 pm
- VM - Thursday, Dec 11, 14 @ 1:55 pm:
I have to agree. Your math is spot on. The secondary effects are negligible and barely make a dent in the overall numbers. Did someone in Springfield complete their Finance 101 class?
Comment by northernwatersports Thursday, Dec 11, 14 @ 2:44 pm
Rowdy, I don’t think the best and brightest from anywhere are moving to Kentucky.
You know, the ADM execs, presumably the “best and brightest” at that multi-national corp., moved to Chicago. And as you can read in the link above, Chicago is leading the nation in move-ins of wealthy millenials.
Comment by Wordslinger Thursday, Dec 11, 14 @ 2:54 pm
Have to draw the line somewhere. These are not tax incentives to the companies, they are tax hikes on the rest of us.
Comment by Very Fed Up Thursday, Dec 11, 14 @ 2:59 pm
@very fed up.
I couldnt agree more. Someones free Government Tax Entitlement is another man’s bigger tax bill. I’m assuming Bruce with his business acumen from managing the pizza parlor understands this.
Comment by Del Clinkton Thursday, Dec 11, 14 @ 3:06 pm
Rowdy Yates, please see my comment above. More people moved into Chicago over the last several months than any other city in the country.
Also, you think retirees move to Florida and Nevada and Arizona because it costs them less to live? Why’d they wait until they retired? It costs less to live in South Dakota too, why aren’t retirees flocking there?
Comment by chi Thursday, Dec 11, 14 @ 3:08 pm
Rowdy Yates,
Sorry, A U of I ECE grad wasn’t (and isn’t) going to go take a job doing ERP implementations unless they have to.
You don’t want to start your technology career supporting a specific technology or product like an ERP platform because the risks of lock in are too high, I know guys who did that and if you bet on the wrong technology you are screwed (some did)…
Also generally they don’t want to go work in Decatur, nothing against it but if you are going to work in tech and in your 20s, you are looking for a start-up. It’s fun and you can take the risk and your technology skills are a better match.
I have spoken at a different school (NIU) on career panels and to CS student groups. Large corporate ERP (or large corporate in general) is not what todays CS or ECE grad is looking for.
Also if you look at their press release it mentions contractors. That they picked a place so close to the airport again points me to consultants/outsourcing.
Sorry but no one spends 4 years getting a U of I ECE degree to do corporate backoffice stuff.
Comment by OneMan Thursday, Dec 11, 14 @ 3:11 pm
Whether they knew it or not, it looks like the Illinois state legislature got this one right.
Comment by The Colossus of Roads Thursday, Dec 11, 14 @ 3:12 pm
I guess ADM didn’t get the message from Mr. Rauner. Do nothing important until I’m sworn in!
Comment by John Parnell Thursday, Dec 11, 14 @ 3:18 pm
Another Quinn failure, in my opiniion. We need a Governor who is respected by the business community and can implement tax incentives in break-neck speed if need be.
Comment by Black Ivy Thursday, Dec 11, 14 @ 3:19 pm
Gratitude for IL taxpayers paving the way for millions of bushels of crops trucked into Decatur. And for all the other infrastructure, educational institutions, hidden subsidies, etc. to make all this agricultural industrial production happen. Not that ADM doesn’t give a lot back but still???
Comment by vole Thursday, Dec 11, 14 @ 3:21 pm
Wordslinger- I will stand corrected if you and Chi are correct in your statement that there “now” appears to a reversal (an increase in wealthy millenials). I was not aware of that. I am now enlightened. Thank you. It is a nice fact to be made aware of.
Comment by Rowdy Yates Thursday, Dec 11, 14 @ 3:21 pm
Black Ivy..
Sorry, have to disagree. Might be my bias that Illinois not being the low cost IT solution is a good thing. For what it is worth at times me and a guy might have been the only two defending Bruce and I am no Quinn fan, but letting this one go is smart IMHO.
But not sure why 24 million is a good idea for 200 jobs. If they needed high quality IT staff they would have put it in Chicago, it is kind of obvious they don’t need top tier or near top tier tech talent. No sense the taxpayer of Illinois subsidizing salaries of folks like because my skill set costs more in Chicagoland.
Comment by OneMan Thursday, Dec 11, 14 @ 3:35 pm
==can implement tax incentives in break-neck speed if need be==
He could of. He chose not to and in my opinion it was a good choice. I’m not in favor of paying off every business that asks just to get them to stay here or come here. $24 million is an awful lot of money for what they are.
Comment by Demoralized Thursday, Dec 11, 14 @ 3:42 pm
The big dogs at ADM moved to Chicago without any incentives. Apparently, for them, it held more allure than northern Kentucky.
Comment by Wordslinger Thursday, Dec 11, 14 @ 3:46 pm
We get the HQ, and get to save $50Million instead of 100-200 other jobs.
Both are wins for the State.
Comment by walker Thursday, Dec 11, 14 @ 3:55 pm
should have been “get to save $24Million” above
Comment by walker Thursday, Dec 11, 14 @ 3:56 pm
“Tax incentives”….
Great, so my taxes can go up even higher.
Comment by Del Clinkton Thursday, Dec 11, 14 @ 4:06 pm
Keep in mind the $24 million was for the Corporate HQ and this tech facility. They moved the corporate facility and received a smaller incentive for just the tech center.
Comment by 4 percent Thursday, Dec 11, 14 @ 6:26 pm
Hurray!! A single article that has no factual reference other then a moving company stating more people are moving back during a single one quarter period. Besides, its the wealthy that are leaving and the poor that are coming to the “sanctuary state”. The word BROKE does have meaning.
Comment by Anonymous Thursday, Dec 11, 14 @ 7:31 pm
Yeah, those poor ADM execs that moved to Chicago are struggling. The CEO only pulled down $7 million last year. That doesn’t even get her in the top 20 of publicly traded corp. CEOs in Chicago.
Comment by Wordslinger Thursday, Dec 11, 14 @ 7:53 pm
$53,000 per job subsidy from the taxpayers. Pretty darned expensive welfare for ADM.
Comment by jimbo2600 Thursday, Dec 11, 14 @ 10:46 pm
Wow alot of know nothing comments n this thread. ADM has one of the most complex logistical businesses in the world and pulls down nearly $100 Billion in revenue. By the way they already have 3 data centers in Illinois and they can get just as good talent out of Cincy than Chicago. This was a no brainer for the company. Just look at this state big companies not expanding here. There is a reason State Farm is hiring 12K peope and building 1.0 million plus square foot facilities in AZ, TX and GA.
Comment by fly on the wall Thursday, Dec 11, 14 @ 11:18 pm