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CEO: Caterpillar Is Staying In Illinois

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Doug Oberhelman

Chief executive officer Doug Oberhelman says Caterpillar will be staying in Illinois. (Credit: CBS)

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UPDATED 04/05/11 5:27 p.m.

EAST PEORIA, Ill. (CBS) – When a letter from Caterpillar arrived on Gov. Pat Quinn’s death last month, it sounded as if one of the state’s biggest employers was ready to leave Illinois over a tax hike.

But now, as CBS 2’s Dana Kozlov reports, the situation seems to be resolved following a meeting in Peoria between Quinn and Caterpillar chief executive officer Doug Oberhelman.

“I think Caterpillar is here to stay,” Oberhelman said after the meeting. “We have 23,000 employees. We’re the largest manufacturer in Illinois. But we want a climate here that the governor shares, in terms of being very business-friendly so we can increase; who doesn’t want more jobs in Illinois? And because we’re here, we want to have that.”

LISTEN: Newsradio 780’s Dave Dahl reports

The meeting between Quinn and Oberhelman wrapped up sometime before 11 a.m. It took on added significance after the letter that hinted the company might leave Illinois.

In the letter, Oberhelman said four other states were trying to lure the heavy-equipment manufacturer out of Illinois, after Gov. Pat Quinn and state lawmakers approved a hike on income and business taxes.

In the letter, Oberhelman told Quinn: “I want to stay here. But as the leader of this business, I have to do what’s right for Caterpillar when making decisions about where to invest.”

Quinn immediately went on the defensive, insisting Caterpillar was not leaving.

But the meeting Tuesday was a way to set the issue straight, so everyone would know Caterpillar is not only saying, but is investing about $1 billion in the state.

“No deals. We talked specifically about improving Illinois in general, and we are both committed to that, and the governor is absolutely all over that, and I’m pleased with that,” Oberlehman said. “So we’re looking forward – how do we do this better? How do we make Illinois a place where people want to come here as badly as other states and for that matter, countries, are doing as well, so we will share that vision.”

Although Oberlehman said there were no deals cut to keep Caterpillar in Illinois, he likely got some face-to-face assurances from Quinn that the governor’s office would take steps to address the company’s concerns about the state’s business climate.

On Tuesday, Quinn said that Oberhelman’s letter was “water under the dam.”

But while both he and Oberhelman were smiling after their meeting in Peoria, Oberhelman was candid when talking about the business challenges he’d like the governor to address, including worker’s compensation reform.

“We talked a lot about an infrastructure bill, capital (construction) expense around the state as well,” Oberhelman said. We have got to be competitive in Illinois, competitive in the United States to take on emerging competitors we see every day around the world.”

Oberhelman said there were some key issues that were critical to Caterpillar and other businesses’ success. The first is getting the state’s budget under control, the second is addressing the issue of workers’ compensation, and the third, Oberhelman wants the tax hike that was instated in January to be temporary, as promised now.

If that does not turn out to be the case two years from now, the issue of Caterpillar staying or going could be readdressed.

Oberhelman said the governor is on board. And Quinn stayed on message, touting Illinois’ recent economic growth, shrinking unemployment and infrastructure improvements.

But for now, both leaders, one of industry the other of government, seem to see eye-to-eye.

“We have with us today an honest man as governor of Illinois for the first time in a long time,” Oberhelman said. “And I think that’s the beginning of an image change.”

Oberhelman later said he never intended the letter as a real threat to leave the state, but rather as an attempt to shed light on Illinois policies.

In the meantime, Caterpillar plans to invest another $1 billion over the next few years to update its Illinois plants, a good sign those facilities will be around for the long haul.

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