Caterpillar Inc. is moving its headquarters to the Chicago area and won’t build a new complex in downstate Peoria, where it has been headquartered for decades.
The move comes as the company faces a weak equipment market that has been cutting into its bottom line. Last week, the farming and construction equipment maker reported a wider fourth-quarter loss on charges and higher restructuring costs. It has been cutting jobs and facilities over the last several years.
“As a result of continuing challenging market conditions and the need to prioritize resources to focus on growth, Caterpillar will not build the previously announced headquarters complex in Peoria,” the company said.
The company said it will locate a limited group of senior executives and support functions in the Chicago area later this year, saying it is a more strategic location. It expects about 300 people to be based at the new location, but the exact spot, Chicago or a suburb, is unknown.
“We haven’t made a decision. What many companies do is make a site selection and then release this information,” Caterpillar CEO Jim Umpleby told the Peoria Journal-Star. “We decided to be very transparent to both our employees and the community. We decided to go public with that information, tell our employees, tell the community, and then start a site selection process.
“We’re not going to build a new building. . . . So what we’ll do is lease space in an existing building and we honestly have not made a decision where that will be,” he said.
Mayor Rahm Emanuel, without knowing the final site, seized the opportunity to brag about the parade of corporate relocations to Chicago, and the city’s many strengths.
The mayor noted that Caterpillar already has employees at the Merchandise Mart. The workforce is “going to grow to 40, just in the technology, IT, data-mining, internet of things,” Emanuel said.
“Three years in a row, the city of Chicago was the No. 1 city for corporate relocations. Our strategy of focusing on talent, transportation, training, technology and transparency are key to our economic growth,” the mayor said. “The ability in our city to get anywhere in the world for a company like Caterpillar [or] anywhere in the United States is a tremendous economic advantage for us. And we’re gonna continue to invest in that area. We’re gonna talk to them about what their plans are.”
Theresa Mintle, the former Emanuel chief of staff now serving as president of the Chicagoland Chamber of Commerce, said Caterpillar’s move will benefit Chicago, even if it’s located in the suburbs.
“We’re happy they’re staying in Illinois because they could go elsewhere. And whether it’s Chicago or the suburbs, just moving a little bit closer to all of the assets of our region, we think that’s a really good move for them,” she said.
“Corporate headquarters are bragging rights. They bring a lot of synergy. They bring . . . another draw for talent. Another reason why our airports should be modernized,” Mintle said.
Reading between the lines, she predicted that Caterpillar would choose an existing building “somewhere in the O’Hare area,” but “perhaps not” in the city.
“But they’ve made it clear that O’Hare is a draw as are the other resources in the area, like talent. And we’ve seen from other headquarters that have chosen Chicago, it’s entirely possible that they might choose us. We look forward to engaging in that conversation,” she said.
In a news release, Umpleby said, “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.”
The bulk of Caterpillar workers are to remain in Central Illinois.
“We value our deep roots in Central Illinois, and Peoria will continue to be our hometown,” Umpleby said. “The vast majority of our people will remain in this important region where we have many essential facilities and functions.”
Peoria Mayor Jim Ardis was quoted by the company as being pleased that “the overwhelming majority of Caterpillar employees and their families based in the Peoria area won’t be impacted by this decision.”
Emanuel’s office noted that Chicago has been on the winning end of a parade of corporate relocations in the last two years.
They include Conagra, McDonald’s, Motorola Solutions, Kraft-Heinz, Duracell and Mars-Wrigley. In several of those cases, including McDonald’s, Motorola Solutions and Kraft Heinz, Chicago’s win came at the expense of the surrounding suburbs.
According to Site Selection Magazine, Chicago leads the nation in corporate relocations over the last three years.
Contributing: Fran Spielman, Associated Press
