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Illinois Losing More Jobs Amid Caterpillar Inc.'s Concerns

BLUE ISLAND, Ill. (CBS) -- An Illinois manufacturer anticipates moving part of its operation -- and hundreds of jobs -- out of state as corporate giant Caterpillar Inc. is warning Gov. Pat Quinn about the business climate here.

Modern Drop Forge Co. of southwest suburban Blue Island said Monday it expects to ship one of its two Illinois plants to Indiana, taking 250 Chicago area jobs with it. The 97-year-old company makes automotive, truck and recreational equipment parts.

"Illinois is becoming very, very unfriendly to manufacturers," company CEO Pat Thompson told CBS 2.

Thompson cites not only the corporate income tax hike approved last year, but other state tax laws, workmen's comp rules and prevailing wages.

"We now have just about the highest state income tax in the United States, and the overall income taxes for corporations in Illinois are amongst the highest in the free world," he said.

LISTEN: Newsradio 780's John Cody reports

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Thompson's comments come as Gov. Pat Quinn is facing increased backlash for the state's business environment. Quinn supported the hike in corporate and personal income tax rates as a way to shore up the state's historic budget deficits.

But Caterpillar CEO and Chairman Doug Oberhelman warned Quinn in a letter sent last week that Illinois could drive away businesses, even the Peoria-based Fortune 500 company. He said four states have been courting Big Yellow but indicated the company does not want to move.

Quinn says Illinois ranks fourth in the nation for job creation and has seen exports jump. He told reporters over the weekend that Caterpillar won't leave the state, citing its existing labor contracts, among other factors.

In acknowledging the Caterpillar letter, Quinn's press spokesman Monday said the governor "welcomes frank and open exchanges with the business community."

Quinn and Oberhelman are scheduled to attend an event at Bradley University in Peoria next week. Both are keynote speakers. But it will undoubtedly be what they say to each other off-camera that could be more significant.

New Jersey and Wisconsin are among the states that have made overtures to Illinois businesses, effectively taking pot shots at Quinn's administration.

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