Manufacturer cites workers comp in moving plans
Thursday, Aug 13, 2015 - Posted by Rich Miller
By Barton Lorimor Email | @bartonlorimor
* An expanding Illinois-based manufacturer is heading to East Chicago. From Crains…
In East Chicago, he said, Hoist will save $1 million annually on workers compensation-related costs, a significant sum for the firm. Workers compensation lawyers in Cook County right now are bringing three to four illegitimate claims against the firm a month, costing it money, according to Flaska.
Indiana also offers lower taxes for the company and less-expensive housing for his employees, he said. Hoist employs welders, assemblers, material handlers and other production workers. Hoist’s lifts are used by big manufacturers, like automakers.
Incentives played a critical role in the company’s decision to leave Illinois. Hoist will be able to lay claim on a big package of tax credits as it ramps up operations in East Chicago. By 2022, the company plans to employ around 500 people there.
* On a related note…
More than two weeks after Mitsubishi announced it was pulling up stakes on its taxpayer-subsidized auto plant in Normal, officials still aren’t saying whether the company will have to repay any of the financial incentives it received from the state.
Rather than focus on the estimated $9 million that has been paid out to the company as part of a decade-long economic development agreement inked in 2011, the Illinois Department of Commerce and Economic Opportunity says it is trying to ensure some other manufacturer fills the space left behind.
“DCEO’s primary focus is working with all parties to find a buyer for the plant and preserve the workforce,” agency spokeswoman Lyndsey Walters said in an email.
Mitsubishi received an EDGE grant not too long ago. Go read the whole thing before commenting.
- anon - Thursday, Aug 13, 15 @ 7:15 am:
Wonder what spin the left leaners will make about this story????
- Last Bull Moose - Thursday, Aug 13, 15 @ 7:38 am:
Mitsubishi should repay if the contract calls for that.
Not a huge fan of subsidies. If used, at least a plant like Mitsubishi has a lot of related activities that it generates.
- sideline watcher - Thursday, Aug 13, 15 @ 7:55 am:
Left spin makers….haaa! I was thinking the same thing about waiting for the conservatives to start yelling SEE???? Lol! I love the line about the big bad workers comp lawyers from Chicago filing illegitimate claims. That’s a little inflammatory. I’d love to hear what they think is a illegitimate claim.
- Anonymous - Thursday, Aug 13, 15 @ 8:02 am:
Well left always think all claims are legit but employees lose the claim, they walk away without any consequences but the employer has to pay lawyer cost , workmen comp cost increases and all other costs with litigation
- Northsider - Thursday, Aug 13, 15 @ 8:04 am:
Hmmm. According to the OSHA violations database, Hoist has had 11 serious violations in the past 6 years.
Welcome to Indiana!
- Demoralized - Thursday, Aug 13, 15 @ 8:06 am:
Maybe they should look at why they have so many claims. Could it be because they have safety issues?
As for the move, I get it. You go where you can save money. But I suspect the incentives had a great deal to do with the move. I’d move if somebody gave me money to do so.
- sideline watcher - Thursday, Aug 13, 15 @ 8:11 am:
Anonymous. ..and the Right always believes that every claim is fraudulent, unless of course it happens to you. Because we know that when Republicans get hurt at work, they sue too. But I know, when Republicans do it, it’s totally legit.
- NewWestSuburbanGOP'er - Thursday, Aug 13, 15 @ 8:12 am:
Aren’t the claims investigated?
- A Jack - Thursday, Aug 13, 15 @ 8:17 am:
East Chicago is just over the border. So Illinois likely gets the bulk of those wages flowing back into the Illinois economy without having to pay incentives.
- Wordslinger - Thursday, Aug 13, 15 @ 8:21 am:
What’s the handout big tax credits Indiana is giving?
I doubt if people who were working in Bedford Park are going to move to Easf Chicago for the “less expensive housing.” It’s cheaper for a reason, I’m guessing fhey’ll drive.
- Steve - Thursday, Aug 13, 15 @ 8:24 am:
It looks like its cheaper to kill your employees in Indiana.
- Jack Stephens - Thursday, Aug 13, 15 @ 8:24 am:
Yup, in Indiana they handout Pence-Fare Entitlements without any revenue offsets or mandatory drug testing!
- Nickname#2 - Thursday, Aug 13, 15 @ 8:30 am:
Time to jack up the tolls again.
- Joe M - Thursday, Aug 13, 15 @ 8:37 am:
Compensation from Workers Comp for loss of arm while on the job:
Illinois: $439,858
Indiana: $202,050
- Skeptic - Thursday, Aug 13, 15 @ 8:42 am:
“Incentives played a critical role in the company’s decision to leave Illinois.” Yup, it was all about worker’s comp. Who’s got your spin now?
- Apocalypse Now - Thursday, Aug 13, 15 @ 8:44 am:
AJack is on to something. =East Chicago is just over the border. So Illinois likely gets the bulk of those wages flowing back into the Illinois economy without having to pay incentives. =
Let’s encourage more business to locate right across state lines. Just think how much incentive money can be cut from the budget! Maybe, some of those workers may actually move there once they start working there.
- Wordslinger - Thursday, Aug 13, 15 @ 8:46 am:
If you google “hoist Marty flasks Dan lipinski” there are all sorts of stories from 2013 about Flaska bragging about he’s going to add hundreds of jobs to the Bedford Park factory after Lipinski got him a no-bid DOD contract.
I guess not.
- walker - Thursday, Aug 13, 15 @ 8:58 am:
The local NW Indiana manufacturers are beside themselves with anger at the special deals for newcomers that cause their own property taxes to go up. Kinda like TIF districts.
- Demoralized - Thursday, Aug 13, 15 @ 9:02 am:
@Joe M
I’m not sure what your point is. Does Illinois over value an arm or does Indiana under value an arm? How much should an arm be worth?
- Joe M - Thursday, Aug 13, 15 @ 9:11 am:
Average Worker’s Comp Premium Cost to Employer per $100 of Workers Wages:
Illinois:
1988: $3.58
2014: $2.35
Indiana:
1988: $3.42
2014: $1.85
Wages are much lower in Indiana too, so that will make Indiana’s rates look even less costly, son one needs to compare such things as rates per $100 of worker’s wages.
But besides things like Indiana paying half as much for the loss of an arm as Illinois — Indiana also passed legislation in 2013 that:
- adopted a medical fee schedule that caps payments to doctors and hospitals
- increased maximum compensation checks for temporarily disabled workers and raised the cap on lifetime benefits for the most severely disabled workers to $400,000 by 2018
Those caps like Indiana has, eventually send injured workers to the emergency rooms after their medical caps have been reached — and put injured workers and their families on welfare after their compensation maxes out.
Indiana is obviously pro-business, but anti worker.
- Joe M - Thursday, Aug 13, 15 @ 9:15 am:
==Joe, I’m not sure what your point is. Does Illinois over value an arm or does Indiana under value an arm? How much should an arm be worth?==
If Indiana only pays half as much for lost body parts, that could be one contributing factor to why their rates are lower than those in Illinois.
- Joe M - Thursday, Aug 13, 15 @ 9:38 am:
OSHA inspection and violation/fine information on Hoist Liftruck MFG, Bedford Park, IL
2013:
https://www.osha.gov/pls/imis/establishment.inspection_detail?id=897178.015
https://www.osha.gov/pls/imis/establishment.inspection_detail?id=897181.015
2012:
https://www.osha.gov/pls/imis/establishment.inspection_detail?id=897181.015
https://www.osha.gov/pls/imis/establishment.inspection_detail?id=400064.015
- Jorge - Thursday, Aug 13, 15 @ 9:43 am:
Say it ain’t so Joe.
- Louis G. Atsaves - Thursday, Aug 13, 15 @ 9:47 am:
Although I am not a fan of cherry picking numbers, the Crain article cites a $1 million annual premium savings with this move. Heavy manufacturing and welding salaries result in the employer paying higher premiums for these jobs as compared to office workers. The employees are more likely to be seriously hurt and are considered high rate cases. I doubt this employer has 3-4 “illegitimate” claims each month, but I understand his frustration.
In my old firm we did some labor law and represented a few unions. One day a lock manufacturing company left their factory on the north side of Chicago and moved to Kenosha. The first year 80% of the employees commuted from Illinois. By the 5th year that number dropped to 15% , nearly being older workers squeezing out a year or two until retirement. All were replaced by Wisconsin residents.
These examples have been continuing for years in Illinois. I am not advocating an Indiana model which tends to be harsh as compared to Illinois.
In Illinois in 2005 we were ranked the 23rd most expensive comp system out of all the states. Then benefits were jacked up tremendously, some were needed, most were not. Within two years we jumped to 2nd most expensive in rankings. After a mild haircut in 2011, Illinois has drifted down to 7th most expensive. I don’t see us dropping more than one or two positions in the near future.
We need to get down to roughly a 20 rank in most expenses to lessen the impact that comp costs result in losses of high paying manufacturing jobs.
Time for a real turn around.
- anon - Thursday, Aug 13, 15 @ 9:52 am:
Demo—-So you would move if someone gave you money? Makes sense. It also makes sense when a state takes more of your money that a person would consider moving. Hello Florida!!! Or, that a company would relocate.
- Joe M - Thursday, Aug 13, 15 @ 9:55 am:
Woops, I put one OSHA inspection link twice. I meant to include this one from 2012:
https://www.osha.gov/pls/imis/establishment.inspection_detail?id=424535.015
- Anonymous - Thursday, Aug 13, 15 @ 9:57 am:
$1 million annually? But the Dems just told us not to worry about that. They had charts and everything!
- Wordslinger - Thursday, Aug 13, 15 @ 10:00 am:
Louis, that’s strange, as Hoist claims its Bedford Park plant has “full automation of its manufacturing and welding departments.”
Flaska throws out a “million” here, and “millions” there without any backup.
The only thing he doesn’t put a number to is the handout Indiana is giving him.
Remember, this is the guy who in 2013 said he was bringing “hundreds” of jobs to Bedford Park after Lipinski clouted him a DOD contract. That didnt happen. We’ll see what really happens here.
- Anonymous - Thursday, Aug 13, 15 @ 10:00 am:
We would be paying them incentives to stay. If we could still afford to do so. That ship sailed…
- Anonymous - Thursday, Aug 13, 15 @ 10:03 am:
Manufacturing companies continue relocating to Indiana, and it has to do with more than handouts. Modern Drop Forge, Hoist, the list is lengthy.
- Mama - Thursday, Aug 13, 15 @ 10:11 am:
Perhaps he is trying to help Rauner by stating Workman’s Comp is the reason for moving the company across the IL boarder.
- Mokenavince - Thursday, Aug 13, 15 @ 10:15 am:
Our tort laws must be changed in our workers comp
and causation must be addressed . These are both non starters for Cullerton and Madigan. As Louis G. Astaves states if we ranked 7th highest in workers comp we have a long way to go to get to 20. I don’t think we have a chance to do that.
The lawyers and unions are to entrenched. We are losing people and jobs and Springfield could care less.
- Wordslinger - Thursday, Aug 13, 15 @ 10:15 am:
According to the National Association of Manufacturers, the value of both Illinois and Indiana’s manufacturing outputs in 2008 was $80 billion.
In 2014, Illinois was at $101 billion, Indiana at $95 billion.
Manufacturing accounts for 30 percent of Indiana GSP, but less than ten percent of Illinois’ much larger and diverse economy.
Sorry to ruin a good whine with facts from an independent third party source.
- Louis G. Atsaves - Thursday, Aug 13, 15 @ 10:20 am:
@Wordslinger;===Louis, that’s strange, as Hoist claims its Bedford Park plant has “full automation of its manufacturing and welding departments.”===
Good point, but someone there is running those machines, maintaining them, and handling the product to feed into those machines. The article did say he employed welders and other employees, so they are doing something with their backs, hands, shoulders and other body parts. “Full automation” does not yet exist in this country.
- Union Man - Thursday, Aug 13, 15 @ 10:26 am:
Hope they have fun in the state with a higher child-poverty rate, higher taxes, fewer college graduates…
- Demoralized - Thursday, Aug 13, 15 @ 10:35 am:
==Hello Florida!!! ==
Don’t let the door hit you. For all the whining and moaning people do about moving to another state, just do it already. Life’s too short to be miserable. If taxes make you miserable then move. But I’ll tell you, I was offered a job in Florida once and it would have cost me more to live there than here. You can look at income taxes if you want. I looked at the overall cost of living (taxes, price of housing, etc). Cheaper for me here. But, as I said, if you want to move, go. Doesn’t matter to me. Just stop whining about it.
- Wordslinger - Thursday, Aug 13, 15 @ 10:36 am:
The Jan. 3, 2015, Crains has a deep-dive into the claims of the “moving to Indiana” cult and concludes they’re wrong.
They cite real facts to back it up, not just the whiny talking points in evidence here.
It’s online. Google “Crains jan. 3 2015 Indiana Illinois.”
- Anon221 - Thursday, Aug 13, 15 @ 10:42 am:
Recent ProPublica/NPR report, and the corresponding OSHA report from this year on workers comp costs:
https://www.propublica.org/article/osha-report-echoes-propublica-and-nprs-workers-comp-findings
http://www.dol.gov/osha/report/20150304-inequality.pdf
- anon - Thursday, Aug 13, 15 @ 10:57 am:
Who is whining Demo, just stating facts. And if you think taxes are higher in Florida, well post the comparison. And if you think real estate is higher there, hmmm, maybe if you are living in a small town mobile home park in IL.
You gotta lighten up Frances.
- Joe M - Thursday, Aug 13, 15 @ 10:58 am:
Also, Link to the actual NPR report:
http://www.npr.org/2015/03/06/391149235/as-workers-comp-varies-from-state-to-state-workers-pay-the-price
That main story also has links to NPR sub-stories of:
How Much Is Your Arm Worth? Depends On Where You Work
Interactive: State By State Body Part Values
Injured Workers Suffer As ‘Reforms’ Limit Workers’ Compensation Benefits
Look up workers’ compensation reforms in your state.
See each state’s average premium costs to employers.
- walker - Thursday, Aug 13, 15 @ 10:58 am:
We might not like what the owner previously said, and says now. But the fact remains he’s moving to Indiana, and that has all kinds of costs and hassles. Do we want to compete for this kind of company or not?
Maybe the biggest drivers on this one are tax reductions and credits, which are highly questionable, but it does appear we are out of bounds on comparable workers’ comp costs.
However, too broad a switch to a “causation” standard would cost our businesses more in legal costs. Solutions are tricky, but further movement appears necessary.
- Demoralized - Thursday, Aug 13, 15 @ 11:09 am:
==And if you think real estate is higher there==
It is in West Palm Beach where I was offered the job. Central Illinois to West Palm Beach is quite the step up.
==And if you think taxes are higher in Florida==
I didn’t say that. I said cost of living. Big difference.
==You gotta lighten up Frances.==
This is my rifle, this is my gun . . . I better stop there
- Nobody important - Thursday, Aug 13, 15 @ 11:09 am:
The Illinois status quo:
1) Businesses leaving (or not locating/expanding here) because of the hostile business enviornment;
2) democrats in deep denial; and
3) The huge loss in revenue deepens the debt hole that the state is in.
- Wordslinger - Thursday, Aug 13, 15 @ 11:13 am:
Walker, I won’t to compete for the business through better roads and other infrastructure, better schools, things that the state can actually do.
I want to get it of true business of corporate welfare, It hasnt proven to produce anything but press releases.
If we are going to continue these handouts, I want a piece of tne action, If we’re going to continue as h-a socialists with direct investments in private corporations, I want an ownership stake.
- Anonymous - Thursday, Aug 13, 15 @ 11:17 am:
From that Crain’s story, interesting-But all that glitters is not necessarily gold. Jobs data show Indiana has a higher rate of growth in lower-end manufacturing compared with Illinois. This, experts say, means Indiana’s strategy may be appealing to companies that are footloose—but also low-wage and low-innovation.
New Jersey-based research firm Dun & Bradstreet, show 70 companies in Illinois relocated their entire business or branches of their business to Indiana in 2013, up from 40 in 2012. During the same period, 48 companies in Indiana moved all or portions of their businesses to Illinois, up from 39 in 2012.
About 5.8 million people worked in Illinois in 2013, compared with 2.9 million in Indiana, according to the Federal Bureau of Labor Statistics. Census data show in 2012 roughly 29,300 new businesses formed in Illinois, compared with about 12,700 in Indiana. And Chicago pulled in more corporate investment projects than any metro area in the U.S. in 2013, according to Site Selection Magazine.
Related info
That with a personal state income tax of 3.3% for 2015 and a county income tax e.g. Lake County is 1.5% for 4.8% and as high as 3.13% in Pulaski County for a total of 6.43%.
- Sir Reel - Thursday, Aug 13, 15 @ 11:28 am:
DCEO ’s response is like saying, we can only do one thing at a time.
Gives one confidence in future corporate welfare.
- Jack Stephens - Thursday, Aug 13, 15 @ 11:31 am:
@word:
Couldn’t agree more. Scott up north just gave the Milwaukee Bicks…$250 Million Dollars in ScottFare….and nobody has to be drug tested.
Meanwhile if you get $200 in food stamps…Scott wants a drug test.
Freedom and liberty (along with Socialist Corporate Welfare) hard at work.
- Jack Stephens - Thursday, Aug 13, 15 @ 11:35 am:
@nobody:
There are many reasons why people go into business, stay in business, or go out of business.
Workmans comp or taxes may be one of those reasons. Maybe not.
Republics are in deep denial about all of the reasons.
- walker - Thursday, Aug 13, 15 @ 11:37 am:
Word: Generally agree with you. We should not compete with the various forms of corporate welfare. Still, if WC costs are seen as out of whack, we need to face up to that issue.
- anon - Thursday, Aug 13, 15 @ 11:55 am:
Demo, your comparison lacks validity. Of course West Palm Beach is more expensive than say, Riverton IL. So is Glencoe and Wilmette. But, you could find very affordable housing in the WPB AREA just as you can find very affordable housing or very expensive housing in the Springfield area. Well, just post real estate taxes in Florida, sales taxes in FL and state income taxes in FL compared to here. You are an analytical kind of guy!
- Demoralized - Thursday, Aug 13, 15 @ 12:57 pm:
==Demo, your comparison lacks validity.==
Whatever. I did the math for my particular situation. It didn’t work. Believe me or not, I don’t care. You seem to already know everything anyway.
- VanillaMan - Thursday, Aug 13, 15 @ 1:02 pm:
What he likes is how he can afford to injure two Hoosiers for the price of one Illinoisan. Simon Legree liked that about his business too.
- anon - Thursday, Aug 13, 15 @ 2:07 pm:
So in other words Demo, you have no info to back up your argument. That’s ok, because that is your MO every day. One would think, in order to save face a little, that you would have researched the info, you know, using that Google thingy. Now, get back to work, you are wasting taxpayer money!!!!
- Chicagonk - Thursday, Aug 13, 15 @ 2:16 pm:
I work in insurance and took a look at the WCRI cost trends just now. Medical cost per claim and per visit are very much in-line with other states. And while the indemnity benefits are high, at least this money is going to workers. The issue that Illinois could improve upon is the tendency in this state for employees to get lawyers involved. Work comp is supposed to be an exclusive remedy and this has historically been a mutually beneficial agreement. When workers get injured on the job, employers agree to pay for medical expenses, lost wages, and any temporary or permanent disability. It’s designed to be a very mechanical and unambiguous process. The goal is to get the employee healthy and back to work as quickly as possible. States like Indiana encourage this through laws designed to make it easier for employees to return to work early (even if in a light-duty capacity). I have seen first hand how beneficial these programs are for both employers and employees. It would be nice to see Illinois follow Indiana’s lead on this.
- Demoralized - Thursday, Aug 13, 15 @ 2:19 pm:
anon:
What “info” do you want? This was 10 years ago. Sorry I didn’t keep my work from then. I’m talking about an individual situation that involved looking at pay, benefits, cost of housing and other living expenses, taxes, and whatever else I could think of at the time. You are turning my one anecdotal comment into some sort of analysis on state taxes. It had nothing to do with who’s taxes were higher or lower. That was one factor in the overall formula for me. There were about 50 other factors. Apparently I should have consulted you before making my decision 10 years ago since I apparently don’t know what I’m talking about. I’m sure it works out better for some people. It didn’t for me. Sorry if that doesn’t fit into your narrative. Sheesh.
- Nick Danger - Thursday, Aug 13, 15 @ 2:52 pm:
There is room for compromise on WC. Raising the “causation standard” from
- Anonymous - Thursday, Aug 13, 15 @ 3:06 pm:
Comparing West Palm Beach to Central Illinois is going to be a very different cost of living. Moving to Chicago would also be more expensive than Central Illinois.
- Demoralized - Thursday, Aug 13, 15 @ 3:13 pm:
Anonymous:
I understand that. He was trying to turn this into some sort of argument about tax rates. I was only making an anecdotal comment about moving to Florida and how it didn’t work out in my case. Apparently, according to him, because they don’t have a state income tax I don’t know what I’m talking about. I suppose my point was/is that a lot more than tax rates go into an equation on moving.
- Enviro - Thursday, Aug 13, 15 @ 4:46 pm:
Did Hoist, the factory in Bedford Park, acknowledge that an Illinois Congressman helped them get a DOD contract that saved his company?
- 39th Ward - Thursday, Aug 13, 15 @ 4:58 pm:
Chicagonk is exactly right. Workers compensation insurance operates quite different from other disability systems. WC companies are ready to pay for intensive medical and rehab costs since that will get the injured employee back on the job and end the weekly wage replacement payments. States that do that well are those that are designed to eliminate lawyers (both plaintiff and defendant) from the WC process.
- Tom K. - Thursday, Aug 13, 15 @ 9:23 pm:
Demoralized at 3:13, the thrust of the argument is that people and businesses are leaving the state at much higher rates than people are moving in, and as a result, Illinois becomes poorer and poorer as time goes by. It may feel good to reply, “Don’t let the door hit you where the Good Lord split you”, but that is an awfully flip answer to what I believe is Illinois’ largest problem, which is only likely to become worse over time. If this trend had not occurred, we wouldn’t HAVE a budget crisis now, there would be enough revenue to do everything everyone wants without breaking the bank. Or do you not believe this is happening? How to stop it, is our largest problem.
- Wordslinger - Thursday, Aug 13, 15 @ 10:02 pm:
Tom K, can you guide us to the empirical evidence that shows the “trend” of a net loss of population and businesses?
- Tom K. - Friday, Aug 14, 15 @ 4:15 am:
“Tom K, can you guide us to the empirical evidence that shows the “trend” of a net loss of population and businesses?”
I am not involved in data collection/analysis, but have read many, many credible articles regarding this in the past two years or so, it would be an easy thing to Google them up - I’m sure you’ve read the same things I have. I try to be fair, but all I can find for rebuttals to these arguments are “more” superficial and anecdotal than the articles themselves - simply look at the state’s population over the past decade. The cause/effect of the out-migration may be inferred, but from speaking to people at work, etc., I can guarantee you there is a huge underlying dissatisfaction with Illinois tax rates (primarily real estate tax), the poll done a year or so ago saying that over 50% of Illinoisians would leave the state (if they were able) is very telling. Are you saying that the articles I’ve read are wrong? Because if you are correct in that assertion, it would be such a large campaign of disinformation as to be almost “conspiracy theorist” in nature. Again, simply Google “Net migration out of Illinois” or similar. Am I being misled? My opinion has been formed by what I have read overall - I have no political ax to grind outside of my own personal well-being (and I feel I am being “squeezed” financially due to the ineptitude of our politicians and their poor choices over the years, from high tax rates, low real estate appreciation, and lack of raises at work. The Republicans that helped cause this mess are long gone, but Madigan’s crew remains, and that is who I hold responsible today.
- Just Me - Friday, Aug 14, 15 @ 7:53 am:
Please stop citing the inaccurate and misleading figure that implies that every worker in Illinois who loses his or her arm on the job gets $439,858. That is simply not the case. In only very rare cases would a worker ever get that much. First of all, in order to get to that figure, the arm amputation would have to be so close to the shoulder that no prosthetic could be used. Second, only a worker who earns more than $106,000 per year could get that much. Not many workers in Illinois make more than $106,000 per year. The average Illinois worker earns a little more than $53,000 or about half that much(State Average Weekly Wage is $1,021.34). Therefore the average worker in Illinois would get only $197,936 for this kind of severe arm amputation. For a less severe arm amputation, an Illinois worker would get only $155,039. This means that the average Illinois worker gets less than what every Indiana worker gets for an arm amputation. I wonder if the resident experts agree with these calculations?
- Wordslinger - Friday, Aug 14, 15 @ 9:13 am:
Tom K, that’s a very windy way to say “no.”
I referenced the Jan. 3, 2015 Crains article comparing Illinois and Indiana. That’s a good start for some facts, if you’re interested.