State’s business climate contributes to closures

Published April 22, 2015

Ever read a news story that gives you a sinking feeling, because it just hits too close to home?

That’s how I was feeling the other day when I read about the steel plant closing in Granite City, Illinois.

About 2,100 people are out of work.

And lots of folks are asking: Is this really just a temporary closing?

I hope it is.

Just over a decade ago, in my hometown of Galesburg, a town about the same size as Granite City, we lost 2,000 jobs when Maytag closed its refrigerator plant.

I remember hearing the pain in people’s voices as they talked about their jobs disappearing. It was a time of navel gazing and reevaluation.

Folks wanted things to get better, but they just wouldn’t. Even today, Galesburg has yet to fully recover.

Illinois factory jobs are vanishing faster than emails on Hillary Clinton’s computer.

But that’s not the case everywhere.

Just look at Indiana.

Since March 2012, Indiana has added 39,000 manufacturing jobs, while Illinois has lost 2,500, according to the U.S. Bureau of Labor Statistics.

That’s a pathetic performance on Illinois’ part.

The Land of Lincoln is experiencing an exodus of jobs and people. States with lower taxes or regulations like Indiana, Texas and Florida have been the beneficiaries of this diaspora.

Yet another Illinois steel-industry company announced this month it is moving operations elsewhere.

It is jumping the border to Indiana.

And it’s taking 100 new jobs with it.

South Holland-based T&B Steel Tubing will invest $5.6 million to build a brand-new facility in Gary, Indiana.

Also Romeoville-based American Stair Corp. Inc., a manufacturer of steel stairs and railings, announced in February it will be relocating to a new plant in Hammond, Ind., by the end of the year.

This will yield nearly 200 new manufacturing jobs in the border town over the next three years.

So why are businesses moving elsewhere?

Many companies prefer to operate in right-to-work states.

Recently, I had a chat with someone who promotes economic development in Iowa and Illinois for the Quad-City Chamber of Commerce.

He said it’s not uncommon for businesses seeking a site to want to build in right-to-work states. This means only Iowa sites in that bi-state region are considered for those businesses.

But Illinois functions at a disadvantage in other areas as well.

One of the big areas companies executives consider are the costs of workers compensation.

Workers comp is the insurance employers have to buy in case an employee gets hurt on the job.

Workers comp rates in Illinois are among the highest in the nation.

According to Springfield-based Selvaggio Steel. Steel workers falling under one particular class cost Illinois manufacturers more than $14 in workers’ compensation costs per $100 of payroll. In Indiana, that number stands at just below $5.

That’s a big cost savings that makes it difficult for the Land of Lincoln to compete.

And until we see fundamental reform in the areas of taxes, labor law and workers compensation, Illinois won’t compete.

Scott Reeder ([email protected]) is the Executive Editor of the Illinois News Network, a project of the Illinois Policy Institute. An earlier version of this article first appeared at Reprinted with permission.