As Springfield stalls reform, another Illinois manufacturer heads across state lines
Illinois’ broken workers’ compensation system makes it an easy decision to leave.
Michigan-based manufacturer DE-STA-CO announced on Tuesday that it will close its Wheeling, Illinois, manufacturing facility and relocate to the Volunteer State, taking 100 Illinois manufacturing jobs from Wheeling to Mt. Juliet, Tennessee, just outside of Nashville. DE-STA-CO produces a range of automation equipment.
DE-STA-CO joins a long list of recent manufacturing exits from Illinois, including Kenall Manufacturing, T&B Tube, AM Manufacturing, Modern Drop Forge, Edsal Manufacturing, American Stair and Granite City Steel; along with an as-yet-unnamed manufacturer that the Northwest Indiana Times reported will take 500 jobs paying $55,000 per year from a western Chicago suburb to East Chicago, Indiana.
DE-STA-CO’s exit follows the pattern of the other Illinois manufacturing exits. DE-STA-CO will leave for a Right-to-Work state with much more reasonable workers’ compensation costs. Tennessee workers’ compensation premiums, measured as a percentage of payroll, are between a third and a half of the equivalent premiums in Illinois across a wide variety of manufacturing classifications.
That means hundreds of thousands of dollars in annual savings for a manufacturer like DE-STA-CO, which can go toward more hiring and investment. Similarly, the Illinois manufacturer that was announced to be leaving for Indiana last week will likely save between $1.7 million to $2.8 million per year in workers’ compensation costs alone. Illinois’ broken workers’ compensation system makes it an easy decision to leave Illinois.
Tennessee has one more policy sweetener to add to the pot. In November, voters in the Volunteer State passed a constitutional amendment to prohibit income taxation permanently, making it impossible for lawmakers to impose a tax on personal earnings and business income. This provides businesses and investors with iron-clad certainty that they will be able to direct their profits toward more investment and expansion over time.
Manufacturers are being forced to ignore Illinois’ central location, strategic advantages and talented workforce because of policy pain points that make doing business in Illinois a risky proposition. Meanwhile, neighboring states like Indiana and Michigan are vastly outperforming Illinois for creating factory job opportunities. That’s why Gov. Bruce Rauner’s Turnaround Agenda addresses many of the areas of reform that are necessary to get Illinois back on its feet again.
The Illinois General Assembly should get past political theatre and get on with the real business of reforming the state’s business climate for manufacturers. During this overtime legislative session alone, two manufacturing companies have already announced they are leaving Illinois. Opportunity isn’t waiting for Springfield politicians to get their acts together, making it only a matter of time before another Illinois manufacturer shuts down and ships out.