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Quinn: Caterpillar decision about port access

By David Mercer

Associated Pres

Published: Thursday, Feb. 9 2012 4:06 p.m. MST

Illinois Gov. Pat Quinn talks about his 'Hiring Veterans Tax Credit' initiative at Huff Hall in Champaign, Ill. on Thursday Feb. 9, 2012. Quinn believes Caterpillar Inc.'s decision to bypass Illinois as it looks to build a new plant and relocate some of its Japanese operations was based almost entirely on Illinois' lack of ocean access and had little to do with the state's business climate. The Peoria-based manufacturer said this week that it decided against the almost one-dozen Illinois locations vying for the plant because of both logistical concerns and the concerns about doing business in the state.

News-Gazette, John Dixon, Associated Press

CHAMPAIGN, Ill. — Gov. Pat Quinn said Thursday that he believes Caterpillar Inc.'s decision to bypass Illinois as it looks to build a new plant and relocate some of its Japanese operations was based almost entirely on Illinois' lack of ocean access and had little to do with the state's business climate.

The Peoria-based manufacturer said this week that it decided against the almost one-dozen Illinois locations vying for the plant and its 1,400 jobs because of logistical shortcomings and its longstanding, widely publicizes concerns about doing business in the state.

Quinn, during a stop at the University of Illinois in Champaign, said he spoke with Caterpillar CEO Doug Oberhelman before this week's decision and was told the plant needed easy access to a deep-sea port.

"I personally spoke with Doug Olberhelman about that," Quinn told reporters. "He told me at the time that logistics would drive that (decision). ... He also pointed out that they needed a deep-sea port."

Caterpillar spokesman Jim Dugan on Thursday declined comment on the company's decision, only saying that Oberhelman had "recently communicated with the administration" about the decision.

But in an email to leaders in cities and counties in Illinois that hoped to lure the plant, Caterpillar said its concerns were both logistical and governmental.

"Please understand that even if your community had the right logistics for this project, Caterpillar's previously documented concerns about the business climate and overall fiscal health of the state of Illinois still would have made it unpractical for us to select your community for this project," said the email, a copy of which was obtained by The Associated Press.

The mayor of Galesburg, one of the Illinois communities that sent Caterpillar a proposal, said the company's logistical requirements weren't specified as the town put together its bid. Mayor Salvador Garza said that, based on other projects, Galesburg looked at its bid as, if nothing else, a chance to put the town on the radar for future development by Caterpillar and other companies.

"We clearly understood that the bid form Galesburg and west-central Illinois was a longshot, but we took it," he said.

The existing plant in Sagami, Japan, makes excavators and small tractors. The company plans to move those operations to a new site, then convert the Japanese plant to make components for other Caterpillar machines.

Caterpillar plans to announce the location by April 1 and be at full capacity in four to five years.

The company hasn't named likely locations, but the email said the plant would be built in "tight" proximity to the division headquarters in Cary, N.C., that it would report to.

Oberhelman last year wrote to Quinn to complain about Illinois' economic situation after Quinn signed off on an income tax increase to try to ease the state government's multibillion-dollar budget shortfall. In the letter, the CEO noted that other states often try to lure away Caterpillar's headquarters, though he later said the company has no plans to leave.

When asked Thursday about the company's concerns — which have been echoed by a number of other companies that have talked about leaving the state — Quinn pointed out that since Oberhelman's letter, Illinois last has enacted worker's compensation reform and passed a Caterpillar-backed tax credit for research and development costs. And he said he plans to push further business-friendly legislation this year, such as changes intended to lower pension and Medicaid expenses.

"We need to do all of those and we're going to do them this year," the governor said.

Quinn also noted that, while Caterpillar has voiced complaints about Illinois' economic climate, Chrysler last week announced it was adding 1,800 workers at its plant in Belvidere.

And Caterpillar itself, he said, recently announced plans to invest more than $800 million at existing plants in Eats Peoria and Decatur.

Those plans, though, don't compare to the investment in or potential of new facilities, Dugan said. Oberhelman has said the company will likely announce new projects in the next few years, and the email to Illinois communities this week urged them to help push the state toward changes that would help them compete for future projects.

"We have a lot of existing facilities and we continue to invest in those," Dugan said. "But it's kind of investing to maintain a facility, which is not insignificant, but not growing a new facility and adding bricks and mortar."

Follow David Mercer on Twitter at http://twitter.com/DavidMercerAP.

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