Cat to move HQ to Chicagoland, but keep Peoria its 'hometown'
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- Published on Tuesday, 31 January 2017 13:59
- Written by Paul Gordon
News that Peorians and much of central Illinois have feared for years came to be Tuesday morning when Caterpillar Inc. announced it will relocate its headquarters and its top executives to the Chicago area, likely by the end of this year.
Caterpillar said when the move is complete about 300 of its executives and support staff will be in the new headquarters and the rest will remain in Peoria.
While a location in Chicago has not yet been chosen, the company said it believes this move, putting the executive team closer to the travel hub that is Chicago, will do more to help Caterpillar regrow than building a new headquarters building in downtown Peoria. Plans for that new headquarters complex that was announced two years ago have been scrapped.
But company officials, namely new CEO Jim Umpleby, said Caterpillar will maintain a large presence in Peoria and that central Illinois will remain its largest job location going forward. He went so far as to say Peoria, where Caterpillar had been based since 1925, will continue to be the company’s “hometown.”
"Caterpillar's Board of Directors has been discussing the benefits of a more accessible, strategic location for some time," said Jim Umpleby, who became CEO on Jan. 1, replacing Doug Oberhelman, who remains chairman of the board through March.
"Since 2012, about two-thirds of Caterpillar's sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently,” Umpleby said.
"We value our deep roots in Central Illinois, and Peoria will continue to be our hometown. The vast majority of our people will remain in this important region where we have many essential facilities and functions," added Umpleby. "The new location is also an opportunity to add to our talented team while improving the productivity of our senior leaders."
Caterpillar will lease space in the Chicago area rather than build.
The company said its current headquarters at 100 NE Adams St. will continue to be home to many of its offices. Market conditions as well as “the need to prioritize resources to focus on growth” were cited as reasons to scrap the plans for the new complex that was going to envelope several city blocks in downtown Peoria. The new HQ was going to be built where the company parking deck is now.
Caterpillar said it will work with the city to find new uses for the block that housed Chase Bank and a CEFCU member center, bordered by Adams, Main, Washington and Fulton streets. Caterpillar bought up the block anticipating building its new parking deck there and it now is vacant.
Caterpillar said that over the last five years, even while facing challenging conditions that saw its revenues drop from its record $66 billion to $37 billion, it and its employees and retirees contributed more than $60 million to support thousands of families, organizations and programs across central Illinois. The company will continue its philanthropic support and deep civic involvement in the Peoria area.
Reaction to Caterpillar’s news, broken first in the Peoria Journal Star, was swift and for the most part, upbeat. That’s largely because of Caterpillar’s assurances Peoria will remain its hometown and because of the diversity the area has experienced the past couple of decades or so, mainly in health care.
"As mayor, I never want jobs moving out of the city. However, the overwhelming majority of Caterpillar employees and their families based in the Peoria area won't be impacted by this decision. I'm pleased Caterpillar continues to call Peoria its hometown," said Peoria Mayor Jim Ardis.
The mayor said the city continues to have confidence in the community and the leadership we have throughout greater Peoria. “Our community will continue to look for ways to expand our economy. Peoria began as an agricultural town, then the nation’s distillery, and into a manufacturing giant. Some people do not realize that healthcare is now the largest employment sector in greater Peoria. We are very thankful for this growth and stability. There are over 700 healthcare related businesses that employ over 32,000 people-18 percent of jobs in the greater Peoria area,” he said.
Peoria County Board Chairman Andrew Rand considered the company’s global presence. “If Caterpillar succeeds globally, we win in Central Illinois. I'm disappointed we can't keep every job here, but if moving some of its team near Chicago helps Caterpillar thrive, it will benefit Peoria, our county and the surrounding communities," he said.
While Caterpillar said a chief reason for the move was to be closer to Chicago’s travel hub, Gene Olsen, director of the Wayne Downing Peoria International Airport said that it’s “important to note that we have daily nonstop flights to four of the top five most connected airports in the world.” That’s important for the 12,000 or more Caterpillar employees who will remain in the Peoria region.
Olsen also noted the community’s diversity when he said, “In addition, during a period of historic downturn for Caterpillar, we have managed to grow our passenger count and increase the number of direct flight destinations, which shows there is a lot more going on in Peoria and Central Illinois than just Caterpillar.”
U.S. Cheri Bustos, D-Moline, said there is no question Tuesday’s announcement “is a real blow. Our local economy is tied to the success of Caterpillar. My hope is that Caterpillar will keep the promise it made today for Peoria to remain its largest manufacturing site. I stand will all Peorians in expressing my deep disappointment with this decision.”
State Sen. Chuck Weaver, R-Peoria, suggested that blame should not be assessed but rather, the future should be discussed. “Today we must again realize that we can take nothing for granted. Our decisions as a community must begin with an understanding that any corporation’s first loyalty is to the health of their enterprise. That is not a criticism. That is a reality. As a community, we will get the jobs and businesses we earn. It is not a time for blame. It is a time for clarity of thought, increased expectations of our leaders and increased expectations of ourselves. All of us have ownership for our collective future,” he said.
State Rep. Ryan Spain, R-Peoria, said he was surprised Caterpillar would do this after all the city has done for the company. “Out of respect for our 90 year collaboration with Caterpillar, I urge the Board of Directors to meet with community leaders and reconsider this devastating move. In the mean-time, our community and business leaders will rally together under the clarion call for further economic diversification of Central Illinois' economy,” he said.
Ardis said there are reasons to believe Peoria will continue to grow and diversity. “We have an active start up presence, creating jobs in new sectors every day. As a community, we have a resiliency that is second to none. Our focus is on the whole region and ways we can grow this economy. We hold our current and future employers, and all of our citizens with the same weight as Caterpillar Inc.,” he said.
“While we cannot control what happens on the global stage, we can work together to strengthen Peoria. Caterpillar is moving 300 executive positions to Chicago, but we are going to hold them to their word that 12,000 jobs will remain in the greater Peoria region and that Caterpillar will remain a huge presence – as an employer and as a civic and philanthropic leader,” Ardis said.
In an exclusive interview with the Journal Star, Umpleby said the board’s decision to make the move was recent but that it has been under consideration for some time.
“We are not abandoning Peoria, we are not going to be moving everyone in Peoria to Chicago. The great, great majority of employees in Peoria will still be here,” he said in that interview.
