74 Comments - Dan Johnson-Weinberger - Thursday, Jan 20, 11 @ 2:10 pm: Great example of how infrastructure, not tax rates, drive economic development. - CircularfiringSquad - Thursday, Jan 20, 11 @ 2:15 pm: Hmm Let’s see if We get this right FL gets min wage sandwich maker with some health code challenges IL gets steel maker WI: Gov Cheesehead gets zip Sen. CommandoMakeItUp gets schooled big time for flapping his lip. He should stick to the war and grooming PetRockSchock - S - Thursday, Jan 20, 11 @ 2:18 pm: Great! 15 more of those and we’ll offset the 1,000 jobs we lost when Winchester announced they’re moving from IL to Miss. in November! Let’s go Pat! - Rich Miller - Thursday, Jan 20, 11 @ 2:21 pm: S, that plant left because of a very nasty labor dispute. They actually credited Quinn with making an impressive offer. - Commonsense in Illinois - Thursday, Jan 20, 11 @ 2:21 pm: All this says is that tax isn’t the only component, but even the owner says he’s not pleased with the tax hike. I also noticed that he’s taking advantage of the EDGE tax credit which will essentially make the new rate a non-factor for at least the next four years, so let’s not forget to include that before intimating that taxes aren’t really all that important to economic development. It’s how all the components work together that convince a perspective business whether to locate in Illinois or not. Today, we won. Let’s see what happens tomorrow. - GetOverIt - Thursday, Jan 20, 11 @ 2:25 pm: This further supports the need to expand the runways at O’Hare for the airline traffic of tomorrow. If the O’Hare bond issuance goes through; the high speed rail projects get started; and a few more companies deem Chicago home - I will take it. - S - Thursday, Jan 20, 11 @ 2:26 pm: Thanks, Rich! Perhaps he should have sent in Alexi to negotiate after his amazing success with HartMarx (no, not seriously…) - Rich Miller - Thursday, Jan 20, 11 @ 2:30 pm: ===which will essentially make the new rate a non-factor=== Not for his personal taxes, it won’t. - Anonymous - Thursday, Jan 20, 11 @ 2:33 pm: Apparently the Russians are coming. Don’t know how to put in a link here but this is from the Portland (OR) Business Journal (feb. 14, 2010): “…At Evraz North America production fell nearly 24 percent to about 3.9 million tons. It has a maximum production capacity of 5 million tons. Its work force has fallen from 4,710 in October 2008 to 3,365 today . Its Portland work force has fallen to 900 from 435 in that same time period. Evraz North America doesn’t break out revenue, but officals have said the company will again generate $5 billion in annual revenue once steel markets recover. At parent company Evraz Group SA revenue fell 58 percent ­— from $17.1 billion to $7.1 billion — through nine months, the most recent financial data available for the publicly held Russian company. At the same time, Evraz Group’s debt reached in excess of $7 billion after years in acquisition mode.” - The Doc - Thursday, Jan 20, 11 @ 2:43 pm: ==Transportation and infrastructure. Those are the watchwords.== Precisely. I hope that this serves as a reminder to our pols that substantial and ongoing investment in both is needed, and not an endorsement of the status quo. - Commonsense in Illinois - Thursday, Jan 20, 11 @ 2:48 pm: @ Rich: From Salary Wizard…The tax table below will show in detail the Oregon state income tax rates by income tax bracket(s). There are 3 income tax brackets for Oregon. If your income range is between $0 and $3,050, your tax rate on every dollar of income earned is 5%. If your income range is between $3,051 and $7,600, your tax rate on every dollar of income earned is 7%. If your income range is $7,601 and over, your tax rate on every dollar of income earned is 9%. So, no…it appears he would pay less than he would in Oregon, assuming he earns over $7,600 annually. - Anon - Thursday, Jan 20, 11 @ 2:48 pm: Funny this isn’t front page news on the SJ-R… I think they had JJ’s move up within minutes yesterday. - bored now - Thursday, Jan 20, 11 @ 2:48 pm: everybody knew the “businesses will leave because of the tax hike” meme was bull. corporations simply have too many variables to consider and are already proficient at reducing their tax liabilities. i seriously doubt anybody really believed the meme. it was just a good talking point. it wasn’t planted in the real world… - Anonymouse - Thursday, Jan 20, 11 @ 2:49 pm: Too bad the working poor in this state don’t get ‘tax packages’. WOW…more progressiveness from Hapless Pat. Tax the poor, give to the $$ rich $$. - Anonymouse - Thursday, Jan 20, 11 @ 2:51 pm: Hmm…400 jobs leaving Mt Morris. Local officials plan to make the closed plant into a museum. Maybe Pat can give ‘em some tax credits? - Rich Miller - Thursday, Jan 20, 11 @ 2:56 pm: Anon, those 400 jobs aren’t “leaving,” they’ve been eliminated because the company lost a very big customer. A quick Google search is all it took… A loss of customers brought on the job reductions, which will also mean eliminating two departments — Bindery and Finishing & Offset Press. “The reason is a loss of client work that was not renewed prior to Quad/Graphics acquisition of the facility,” Ho said. Quad/Graphics, Inc., acquired the Mt. Morris plant in January of 2010 when it purchased World Color Press, Inc., for $1.3 billion. Ho declined to comment on what customers were lost, but sources have indicated that work done for Sears and Scholastic went to R.R. Donnelly, a printing competitor. - Rich Miller - Thursday, Jan 20, 11 @ 2:59 pm: RR Donnelly is an Illinois company, btw. - John Bambenek - Thursday, Jan 20, 11 @ 3:00 pm: Please… it isn’t so simple. Steel is a special case industry. The crap is heavy and expensive to ship so it makes sense to locate your facilities as close as possible to your customer or as centrally located geographically as possible. On the flip side, tech companies don’t have any real transportation costs and you’ll note we don’t have many compared to the costs and we’re losing a few over the Amazon tax. It’s simple math. Does the cost of doing business in IL outweigh the transportation costs involved? In this case, probably not. But I’m not sure anyone on this board is going to salivate over a steel worker job either. The question is on the balance to we gain or lose jobs, not the individual companies involved with a few dozen workers. (That, once again, we have to pay for with our tax dollars to the tune of ~135,000/job). - John Bambenek - Thursday, Jan 20, 11 @ 3:02 pm: “many compared to the costs” should read “many compared to the coasts” - AnonX - Thursday, Jan 20, 11 @ 3:03 pm: @Commonsense Oregon has no sales tax, so… - Robo - Thursday, Jan 20, 11 @ 3:04 pm: Welcome news, but they moved their HQ, not their production facilities. You see it all the time, like Boeing and that outfit out of TN. It’s usually because they can get around the country easier, it’s easier to recruit young professionals to move to major metro areas, the CEO is from Wheaton and wants to go to Wrigley more often or all of the above. The moving of major production facilities to IL is less likely. Production and distribution is where the real economic development is. - Rich Miller - Thursday, Jan 20, 11 @ 3:06 pm: ===but they moved their HQ=== Hence the headline. - Small Town Liberal - Thursday, Jan 20, 11 @ 3:07 pm: - The crap is heavy and expensive to ship so it makes sense to locate your facilities as close as possible to your customer or as centrally located geographically as possible. - Umm, John, I’m not sure they’re actually moving a steel mill into the city. I think the idea is that the executives and other management employees could travel more easily to different locations inside and outside the US. This may be something tech companies would like to do as well. - Robo - Thursday, Jan 20, 11 @ 3:15 pm: ===but they moved their HQ=== ++Hence the headline. Yes. Not a lot of jobs, not a ringing endorsement of Illinois’ business climate. We are paying them around $43K per job created. - Irish - Thursday, Jan 20, 11 @ 3:16 pm: Mississippi is a right to work state and I doubt that there is much anti-gun talk down there. I believe gun ownership is a prerequisite……just sayin,lol - Rich Miller - Thursday, Jan 20, 11 @ 3:16 pm: Bring the HQ, other jobs tend to follow. Boeing is opening a new Metro East facility, for instance. - Davey Boy Smithe - Thursday, Jan 20, 11 @ 3:19 pm: Can’t you people see, this “Steel maker” is working undercover for the Pittsburgh Steelers, and will try to get Bears secrets for the Super Bowl match up of Bears/Steelers. - Commonsense in Illinois - Thursday, Jan 20, 11 @ 3:19 pm: According to the National Association of Manufacturers the average manufacturing job in the US now pays more than $74,000 annually (benefits included). Since steel making is a 24-7-365 venture, these are some of the highest paying manufacturing jobs we have that aren’t bio-tech. - Irish - Thursday, Jan 20, 11 @ 3:22 pm: -S-@2:26 pm. Did they leave the cannoli? (sorry I couldn’t help myself) - Commonsense in Illinois - Thursday, Jan 20, 11 @ 3:22 pm: Forgot to end my thought…manufacturing jobs are the ones we want to bring here and keep here. So, keeping a competitive and balanced business environment should be Job 1. Since 2000, Illinois has lost over 300,000 manufacturing jobs (IDES labor market information). The 70 being created here are indeed welcome, but let’s face it we have a long way to go. - Kyle - Thursday, Jan 20, 11 @ 3:23 pm: How does the so called Amazon tax hurt technology companies moving to Illinois? It does affect companies not in Illinois because they skirt collecting sales tax. But if you are based in Illinois you would already be collecting it. - Rich Miller - Thursday, Jan 20, 11 @ 3:24 pm: CiI, these are not mfg jobs. Read the darned headline at least. - wordslinger - Thursday, Jan 20, 11 @ 3:26 pm: My, my, all the criers for Jimmy John can’t put a smile on their face for some good news — a steelmaker, for crying out loud? I’m starting to question some motivations here. - Rich Miller - Thursday, Jan 20, 11 @ 3:28 pm: word, you wouldn’t believe all the stuff I’ve deleted so far. It’s pretty ridiculous. - Robo - Thursday, Jan 20, 11 @ 3:28 pm: That is good news Still, at $57K per job created next door to their MO facilities, no corporate ownership and during the campaign… - Rich Miller - Thursday, Jan 20, 11 @ 3:31 pm: Robo, do you think other states aren’t offering incentives to Jimmy John’s, etc.? - Robo - Thursday, Jan 20, 11 @ 3:34 pm: No doubt. I’m making the point that the real economic development comes when the business climate in IL improves. That’s regulations, taxation and overall public policy stability. - Liandro - Thursday, Jan 20, 11 @ 3:37 pm: The tax increase is far from the major factor in any movement to or from IL, it’s just one small concern in the midst of countless factors. It’s biggest impact, both psychological and true economic, will be on existing IL businesses that have been dealing with the environment for a long time. I’m glad to have new people coming in, and I hope far more follow. - CircularfiringSquad - Thursday, Jan 20, 11 @ 3:37 pm: Word the “motives” It seems pretty simple the GOPs now have two state offices with free computers and very limited work load so they can pound PQ all day and sell more gloom and doom. - Commonsense in Illinois - Thursday, Jan 20, 11 @ 3:45 pm: Rich, I realize it’s the corporate HQ and its sales folks moving here. I did read the lede. All I’m saying is that manufacturing jobs are well worth the effort to pursue and who knows, down the road, if the tax rate is allowed to roll back, maybe they will move some production lines here. If memory serves me correctly, don’t we have a vacant steel mill around Alton? (National City?) - SIU worker - Thursday, Jan 20, 11 @ 3:57 pm: Despite all the bully talk from the regressives, the number of businesses that leave Illinois over this tax hike will be very, very small. - John Bambenek - Thursday, Jan 20, 11 @ 3:58 pm: The whole “economic incentives” to bring businesses in is a sham. It’s just business leaders deciding on a shortlist of places they want to go and then seeing who will let them shift the most costs off to the taxpayers. But it’s a game that has to be played because the other 49 states do it too. - Adam Smith - Thursday, Jan 20, 11 @ 3:58 pm: Even a broken clock is right twice a day… All the creative rationalizations aside from those eager to prop up Governor Sock Puppet, a large tax hike, on top of high workers comp costs, a famously plaintiff-friendly court system, huge congestion, even an often inhuman climate add up to some big negatives for business executives. Location, good labor force, access to capital and customers and other factors work on the plus side. As a result, some businesses will chose Illinois, others wont. THE POINT my tax-loving friends, is that this Governor, this general assembly (and their predecessors) are making it less and less attractive for employers and harder and harder to make the numbers work for prospective business owners. Not every business will up and move immediately, and not every business in search of new digs will reject Illinois out of hand, but we have dug a deep hole and it has seriously negative effects. Those who say the tax hike is a definitive death knell are wrong, but those of you who are brushing it off as inconsequential or rationalizing its consequences are delusional. - Ghost of John Brown - Thursday, Jan 20, 11 @ 3:59 pm: Oregon just passed Mesaure 66 and Measure 67 which raises the income tax on those making $250,000 and above (Measure 66) and on corporate taxes (Measure 67). It’s not like a company from a low tax state suddenly moved into our high tax state. - dupage dan - Thursday, Jan 20, 11 @ 4:01 pm: This is great news! Maybe we should raise the business tax even more since it is obviously not hurting business. Illinois could use the additional cash. I realize this is snark - however, there is a cost of raising taxes, otherwise people wouldn’t get so upset about it. There is a tipping point involved. The question is, where is it? - Small Town Liberal - Thursday, Jan 20, 11 @ 4:01 pm: - this Governor, this general assembly (and their predecessors) are making it less and less attractive for employers and harder and harder to make the numbers work for prospective business owners. - Yeah, and even if evidence never shows up to support this you’ll still be saying it. - John Bambenek - Thursday, Jan 20, 11 @ 4:04 pm: STL- Jimmy John’s certainly offered a data point. Conclusive proof, no. But to say evidence never shows up is a bit extreme. But hey, I’m sure the %!#$ You! Attitude to business in this state is a winning strategy. - Small Town Liberal - Thursday, Jan 20, 11 @ 4:08 pm: - But to say evidence never shows up is a bit extreme. - That’s why I didn’t say that, maybe read my post again. - wordslinger - Thursday, Jan 20, 11 @ 4:08 pm: –The whole “economic incentives” to bring businesses in is a sham.– Yeah, but guys like JJ like to be “courted” and “feel wanted.” Perhaps if DCEO ponies up enough dough for him to expand his headguarters, he’ll forgo the requirement that the SOI also “admit it made a mistake” and “apologize” to him. - U-Haul Ho! - Thursday, Jan 20, 11 @ 4:14 pm: If the company wants to move here because of our infrastructure and transportation, why do they need the tax subsidy? - Irish - Thursday, Jan 20, 11 @ 4:14 pm: I was trying to keep this light but it seems as though the doom and gloom crew, to be known in the future as the D&GC, only see one side of the coin, so to speak. I believe you can look in any business magazine and find references to good schools, quality of life, adequate infrastructure, and recreation as points that business leaders look for when choosing a place to locate. Anyone that thinks any of those could have been accomplished in the current fiscal situation without the tax increase is an idiot, plain and simple. And no I am not name calling. That assignment will be brought on by your own rhetoric. - Just the Facts - Thursday, Jan 20, 11 @ 4:15 pm: This is a good thing and I’m glad to see it. But let’s keep this in perspective and acknowledge that there are enough pros and cons for all sides to try to make their points. We are talking about 70 jobs, which is not exactly a major employer in the Chicgo area. They are not moving any production jobs to Illinois and, given that the pareent company is a Russian steel manufacturer, how likely is it that any production jobs will ever move to Illinois? Tax hike proponents need to remember that these executives are moving from a state with a “progressive” tax system to one with a flat rate system. Keep that in mind the next time you argue for changing Illinois’ flat rate tax. This is actually a classic examples of why “soaking the rich” doesn’t work — the jobs are mobile and can easily be moved to a more favorable location. As is typical of the Governor’s announcements, the details of exactly what Illinois offered in the way of incentives isn’t clear. And, of course, the larger question of whether or not it is appropriate to use taxpayer dollars to move executives from one state to another isn’t addressed. If a previous post’s figures are correct, it looks like the company may not be too concerned about corporate income taxes (You need to show a profit before you pay income taxes). Yes, any new jobs are a good thing and adding several dozen new executives to the voting rolls in the Chicago area makes my Republican heart happy. But, in the grand scheme of things, this doesn’t “prove” anything on either side of the question. - Pilgrim - Thursday, Jan 20, 11 @ 4:35 pm: Indiana and Wisconsin must have had to turn them away because there were so many businesses fleeing to them from Illinois that they couldn’t handle steel-maker Evraz North America. Jimmy John’s is headed to Florida so another one Indiana and Wisconsin couldn’t handle. They must be plum full already. - Yellow Dog Democrat - Thursday, Jan 20, 11 @ 4:37 pm: Bringing the HQ here is good news for the financial services sector, law firms, p.r. firms, and everyone else who supports core business functions. This seems like a good point to repost my early point from Site Selection Magazine, November, 2010. Top factors businesses are looking at when deciding where to locate: 1. Work force skills 2. State and local tax scheme 3. Transportation infrastructure 4. Flexibility of incentive programs 5. Availability of incentives 5. Utility infrastructure 7. Land/building costs and supply 8. State economic development strategy 9. Permitting and regulatory structure 10. Higher education resources Yes, Illinois may be losing out on #2 for the next four years. But the Republican alternative is to cut funding for 1, 3, 4, 5, 8 and 10. If I were Quinn, I’d be hitting the GOP over the head with their calls to eliminate DCEO. Repeatedly. And then harder. - Yellow Dog Democrat - Thursday, Jan 20, 11 @ 4:39 pm: @Just the Facts: As I just mentioned, asks the banks, law firms, p.r. firms, paper suppliers, etc. in Chicago whether they think having the HQ matters here. Believe me, it does. All things being equal, and even most of the time when they’re not, business contracts tend to flow to the guy you know from the East Bank Club. - Bigtwich - Thursday, Jan 20, 11 @ 4:43 pm: So how does JJ talking about moving prove anything? - Anonymous - Thursday, Jan 20, 11 @ 5:03 pm: “Yes, Illinois may be losing out on #2 for the next four years.” Who actually believes this tax increase will not be made permanent? I do believe the economy will get better and hence more tax dollars but I also know politicians love to spend money. - GetOverIt - Thursday, Jan 20, 11 @ 5:07 pm: The whole anti-business subsidy rhetoric is old. If we want to be a competitor on the world stage tax subsidies will always be part of the equation. - Yellow Dog Democrat - Thursday, Jan 20, 11 @ 5:10 pm: @Anonymous - That’s what elections are for. - wordslinger - Thursday, Jan 20, 11 @ 5:13 pm: –If we want to be a competitor on the world stage tax subsidies will always be part of the equation.== If the competition is for most press releases. The great majority of businesses come and go without any notice or any overt state subsidies. Mini-Mitch in Indy has the system beat. Half the time, he just puts out the press release without the corresponding, promised jobs every materializing. That’s thrifty. - 3 beers to Springfield - Thursday, Jan 20, 11 @ 5:19 pm: I wish good luck to Jimmie J. in finding workers for his Floridian corporate headquarters. I have a friend with a business in Florida, and she’s constantly harping about the difference between the work ethic of midwesterners and Florida transplants who are more interested in getting in their sun time. I also wish him luck in paying his ever-increasing property insurance and property tax bills (someone has to pay for all the public infrastructure damaged in floods and hurricanes). - Laughing_All_The_Way - Thursday, Jan 20, 11 @ 5:29 pm: Some seem to think that Olins move was more garnered to the structural problems faced by companies located in Illionois. Olin stated that an injury in its Mississippi plants cost 6 times more to settle that a similar injury at its Illinois plants. Olin also mentioned the high workman’s compensation and liability insurance rates in Illinois, high minimum wage rates, property tax rates among other things including regulattory issues. One would think that Olin is foreseeing the much larger crisis of the forecasted billions in underfunded pension liabilities that need to be addressed in Illinois that are seemingly ignored. The pension billions are where the action will be in the future. Olin’s offer of staying here with concessions from the unionized work force only carried a guarantee of remaining in Illinois for seven years. The union’s turning of the offer down speaks of the problems of the union attitude of the downstate Illinois workforce as well. It’s a bundle of complicent factors, not just wages thatface Illinois employers these days and the new taxes just add to the problems. Like it or not, that’s the way it is. - Michelle Flaherty - Thursday, Jan 20, 11 @ 5:41 pm: Laughing, The pension billions are not knew. Hence the 1995 law the Republicans passed to get it under control over the course of 50 years. Yes, it would have been nice if they’d have paid a little more toward them during the first 15 years of the plan, but hey, we are where we are. The tax increase, at least for the next four years, means the state will pay them rather than skip or borrow to make them. Think of the billions in unfunded liability as a mortgage on house. We’ve got a 50 year mortgage that had an artificially low rate for 15 years and now that’s over. But this whole, “we’ve got to do somethign about this unfunded liability” debate played out 15 years ago and resulted in the payment schedule law. Peter Fitzgerald was one of the big sponsors of it. Pretty sure the debates can be found online if you care to read them. Steve Rauschenberger was another key proponent. I’m sure he’s available to talk about it. - Chicago Cynic - Thursday, Jan 20, 11 @ 5:46 pm: I said this with Jimmie Johns and I’ll say it here, these are one-offs that don’t necessarily evince a trend. As the saying goes, you win some, you lose some. The question is whether we’ll lose more than we win exclusively because of the tax increase and I would say the jury is still way out on that one. Contrary to what many on the right post on this board, I’m a business owner. I sign (electronically usually) the front of the checks. I get it. I don’t like this. It’s painful. But I’m also a realist who is waiting for someone, anyone, to tell me how they propose to fill the gap with no revenue. I have this annoying quality of insisting on facts and context. The tax increase sucked but what were the alternatives. No new revenue? Gutting of public education? The reality is that for all but the top 2% of earners in Illinois, we won’t feel this because it will be largely offset by the social security tax cut (which we can not afford). Suck it up and stop whining. And come up with a better poster child next time than Jimmie “I can afford to donate 6 figures to Republican candidates but can’t pay the 2% tax increase” John. - steve schnorf - Thursday, Jan 20, 11 @ 5:54 pm: Rich, the level of incivility on here makes me think about reading newspaper blogs as a relief - Rich Miller - Thursday, Jan 20, 11 @ 6:03 pm: I figure it’ll calm down in a week or so, Steve. You should see the stuff I’m deleting, though. Whew. - Gregor - Thursday, Jan 20, 11 @ 6:03 pm: I’ll worry when McDonald’s decides to leave Oak Brook for South Beach. And I just wanted to point out that the EDGE tax credit was signed into law by George Ryan, as a way to make the counties on the borders of the state a little more competitive with the folks across the border. He’s a jailbird now, but this was one good thing he did. - steve schnorf - Thursday, Jan 20, 11 @ 6:06 pm: One of many good things he did. - Yellow Dog Democrat - Thursday, Jan 20, 11 @ 6:06 pm: @Gregor And the EDGE Tax Credit was sponsored by State Rep. Tom Holbrook. Isn’t great what Democrats and Republicans can accomplish together when they try? - Bond_player - Thursday, Jan 20, 11 @ 7:12 pm: I am confused. The state mentioned its 3 million of tax incentives, but when asked the officials at Evraz said there was an incentive package offered and it was private and would not comment. Does this mean there are incentives above and beyond what the state is offering? - Living In Oklahoma - Thursday, Jan 20, 11 @ 7:25 pm: It goes without saying that business will still locate to Illinois if the circumstances are right. However I hope we can all agree that the tax increase has probably made the chances of the circumstances being right less likely. I tend to agree with Chicago Cynic, one business move does not beget a trend, hopefully Illinois wins more than it loses. Cheers to a good news headline for once. - Michelle Flaherty - Thursday, Jan 20, 11 @ 8:30 pm: I wish the Quinn admin was as honest and realistic in explaining this as Chicago Cynic. That was about the best assessment of the situation and solution I’ve seen. Thanks. - Returning Dog - Friday, Jan 21, 11 @ 12:16 am: “Hence the 1995 law the Republicans passed to get it under control over the course of 50 years.” Speaking of this - since we haven’t met this schedule at all - what’s wrong with a new 50 year plan? - Yellow Dog Democrat - Friday, Jan 21, 11 @ 6:13 am: @ Returning Dog - I’ve argued for a new ramp-up that recognizes the political and budgetary reality that when revenues are flat or declining, pension payments must remain flat so that we can continue to fund life-saving programs. But when revenues are growing, we should overpay into the pension system. The irony of the GOP demand for a defined contribution program is that it not only costs more (because we’d have to pay into social security), but when state revenues are flat or declining it would force either a massive tax hike or massive cuts in education and Medicaid, sacred cows for both parties. Sorry, comments for this post are now closed.