UPDATED 08/23/11 4:30 p.m.

MERRILLVILLE, Ind. (CBS) — The Chicago area will soon have a few hundred fewer jobs, while Northwest Indiana will have a few hundred more.

As CBS 2’s Susanna Song reports, sources say Modern Forge is moving from Blue Island across the state line to Merrillville, Ind., and the new town is rolling out the its welcome mat for the plant.

Indiana Gov. Mitch Daniels was present for the official announcement of the move Tuesday morning.

The 97-year-old company makes parts for cars, trucks and recreational equipment.

The announcement came on the same day Gov. Pat Quinn was announcing a construction project to bring 1,200 new jobs to Illinois.

CBS 2’s Dana Kozlov reports on what it means in the fight for jobs in Illinois.

Quinn insisted Tuesday that Illinois has created more jobs in the past year than any other state. But those other states are working hard to change that.

On Tuesday, Indiana succeeded as Blue Island-based manufacturer Modern Forge announced it was moving across the state line. CEO Greg Heim said Illinois made it impossible to stay.

“The environment in Illinois, I would say there was no — we did not see any change coming in Illinois,” Heim said. “Illinois continues to stay on a path of not being – for us – a (pro-business) environment and the excitement and energy here in Indiana, that’s very important to us.”

That’s why, after 97 years in Blue Island, Modern Forge is picking up and moving its building and 240 jobs to Indiana.

“It’s a huge thrill for us,” Indiana Gov. Mitch Daniels said.

Daniels didn’t mince words when he said luring business is the Hoosier State’s #1 priority. And there’s no question that Illinois – and companies like Modern Forge – are main targets.

He claimed that “well over a dozen” businesses have moved from Illinois to Indiana in the past few months. “And it’s not like this just started recently,” he added.

In fact, it really ramped up last year when Illinois lawmakers hiked the state’s income tax. Since then, some businesses have bailed and others threatened to do so, citing high taxes, worker’s compensation issues, lack of incentives and an overall lack of encouragement from the Quinn administration.

It’s the elephant in the room that Quinn doesn’t like to address.

“Sometimes companies will make a decision of their own choice to go to one state or another, but I don’t think you should exaggerate that,” Quinn said.

Heim said that he heard directly from Daniels while Indiana was working to lure Modern Forge to Merrillville.

“Well, I heard from the governor of Indiana. I never heard from the governor of Illinois,” Heim said.

According to U.S. Labor Bureau statistics, Quinn needs to do something. Statistics show a steady jobs decline beginning in January, shortly after the tax hike passed.

Daniels said he sees tax concerns in Illinois as a potential Indiana win.

“We’ve had a big upsurge in contacts from businesses who want to explore an Indiana location because the arithmetic tells them it’s less expensive to hire people here,” Daniels said.

The new Modern Forge plant in Merrillville is expected to open just off U.S. 30. Business leaders say the company will keep some current employees from the plant in Blue Island, but that it could offer hundreds of jobs to local workers.

“Jobs in northwest Indiana are hard to come by. With the economic times, I think it would be a good thing for the town of Merrillville,” town council member Tom Goralczyk said.

He said new business is bringing 240 jobs to Merrillville and to Northwest Indiana, which are hard to come by given the economic struggle. Goralczyk added that Modern Drop Forge has discussed opening up summer jobs for high school students.

Residents of Merrillville also say the new plant will provide hope for the community.

“It’s great. Anytime you can get new business to come in and create jobs for people, that’s what we need, because people are struggling,” said William Bane, a 17-year resident.