Another Illinois manufacturer set to cross state lines

Another Illinois manufacturer set to cross state lines

Alliance Steel Corp could bring 100 new jobs to Gary, Indiana.

Another Illinois manufacturer is preparing to leave the state.

Alliance Steel Corp submitted a $925,000 bid to the Redevelopment Commission in Gary, Indiana, for 25 acres of land. The Northwest Indiana Times reports the bid was approved Aug. 2 by the commission, but the company is waiting for the state to provide incentives and for the city to work out logistics for neighboring land before the move is official.

Alliance Steel CEO Andrew Gross said that the $35 million relocation could bring 100 new jobs to Gary, according to the NWI Times. The company, currently based in Bedford Park, Illinois, plans on building a new 250,000 square-foot production facility and offices.

Additionally, sister companies Alliance Steel LLC and Affinity Metals LLC may take part in the move. A separately owned trucking company associated with Alliance Steel, unnamed by the NWI Times, will also relocate with Alliance to Gary.

Hoist Liftruck, an industrial forklift manufacturer that operated close to Alliance in Bedford Park, preceded the steel fabricator in its move to East Chicago, Indiana, last year. Hoist CEO Marty Flaska said the company would not have even considered moving hundreds of jobs to Indiana if not for Illinois’ high workers’ compensation costs and property taxes.

Alliance Steel is the latest company to move to resettle in a location near enough to the Prairie State and Chicago to capitalize on its workforce, but across state borders where there’s a smaller tax burden. In the past year alone, Colbert Packaging, Vonco Products LLC, Prestige Metals, and Haribo all decided to move to or expand operations in Wisconsin, and Enjoy Life Foods moved to Indiana.

Businesses aren’t the only ones to leave Illinois; its residents are fleeing too. In 2015, Illinois lost nearly 20,000 residents, on net, to Indiana alone.

Policy reforms in neighboring states have put Illinois at a serious disadvantage when competing for good manufacturing jobs.

In 2012, Indiana passed statewide Right-to-Work legislation. From March 2012 – March 2017, Indiana has added 55,700 manufacturing jobs while Illinois lost 11,800 manufacturing jobs.

Illinois has the most costly workers’ compensation system in the region and the seventh-most expensive system in the nation. Employers that leave Illinois or chose to expand elsewhere regularly cite workers’ compensation as a reason for relocation.

For example, manufacturers in Illinois pay significantly higher workers’ compensation costs for equipment- and machine-repair workers than manufacturers pay in neighboring states. A move from Illinois to Indiana could save a machine- and equipment-repair manufacturer nearly 6 percent of total payroll costs. Additionally, workers’ compensation premiums for long-distance truck drivers are nearly 50 percent higher than the average of surrounding states.

Businesses in Illinois also face an excessive amount of regulations and pay a high price in complying with them. Illinois’ 2017 Administrative Code is a massive document that would take a person nearly 21 weeks to read – if he or she were reading 40 hours a week at 300 words per minute, according to a study by the Mercatus Center.

The Mercatus study notes the Illinois code contains more than 250,000 restrictions, double that of neighboring states such as Missouri and Kentucky. Industry-specific regulations target chemical manufacturing (22,128 regulations), food manufacturing (12,001 regulations) and animal production and aquaculture (5,971 regulations).

Illinois’ high taxes are another disadvantage.

Illinois’ combined state and local tax burden is among the highest in the nation. A median Illinois household pays $8,162 in annual state and local taxes, including sales, property and income taxes.

Despite this, the General Assembly passed Illinois’ largest permanent income tax hike in July, increasing the personal income tax rate to 4.95 percent from 3.75 percent and the corporate rate to 7 percent from 5.25 percent. These higher taxes will not only be burdensome to companies, but also workers.

On top of that, Illinois has higher property taxes than any state with no income tax.

Moreover, the property tax on a median Illinois home is nearly three times higher than the property taxes on a house of the same value in Indiana. Illinois’ high property taxes are unattractive to large manufacturers planning to build large facilities.

The high cost of doing business in Illinois, excessive regulations, and the ever-present threat of more tax hikes as the state struggles with more than $14 billion in unpaid bills and more than $250 billion in pension debt will keep new businesses from settling in Illinois until reforms are made.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!