Less than six weeks after defense contractor and aircraft manufacturer Boeing announced it would move its global headquarters out of downtown Chicago, executives of another major company are set to leave the region.
Longtime Illinois-based Caterpillar Inc. will move its headquarters from Deerfield to an existing office in Irving, Texas, outside of Dallas, the company announced Tuesday.
“We believe it is in the company’s strategic interest to make this decision, which supports Caterpillar’s profitable growth strategy as we help our customers build a better, more sustainable world,” said Jim Umpleby. , chairman and CEO of Caterpillar, in a statement.
The move means the majority of the roughly 230 employees based at the mining and construction equipment maker’s Deerfield office are expected to move to Texas over time, Caterpillar spokeswoman Kate Kenny said.
The transition will begin this year. Kenny did not provide a specific timeline for the move, but said the company has a lease for its Deerfield office that “will allow for an orderly and flexible transition for our employees”, and business leaders will work with the individually employed.
Caterpillar has offices and manufacturing sites throughout Illinois, including an office in Chicago, and Kenny said the move will not affect any other Chicago-area sites. Illinois is expected to remain the largest concentration of Caterpillar employees in the world, with more than 17,000 employees in the state, most near Peoria.
“The global competitive and business environments we face as a business are constantly changing, and we are constantly evaluating and updating our global footprint, including office locations, to better meet our business needs. and talent,” Kenny said in an email.
The company is the latest to shrink its footprint in the Chicago area amid corporate relocations and an office market reeling from two years of the COVID-19 pandemic.
Boeing is moving its headquarters to Arlington, Va., and said it would reduce office space but continue to employ hundreds of people in Chicago. Earlier, in 2018, Takeda Pharmaceutical Co. announced that it would close its headquarters in Deerfield.
More recently, other companies have sold office space as many employees have worked remotely during the pandemic. Insurance giant Allstate reached a deal in late 2021 to sell its longtime headquarters near Northbrook, and recently healthcare company Baxter said it was selling its longtime headquarters in Deerfield for s adapt to the hybrid working model, although it would “stay in the general area” and remain accessible to Deerfield-based employees.
“That’s kind of how things are now,” Deerfield Mayor Daniel Shapiro said. “As we emerge from the coronavirus pandemic, the demand for office space is not what it was three years ago. People don’t come to offices as often, so that’s kind of what the market is doing. »
He pointed to greater economic strengths for Caterpillar’s move, as well as other recent departures like the one announced by Baxter.
However, some recent Deerfield losses have benefited Chicago. In 2019, Mondelez announced that it would move its headquarters from Deerfield to Chicago, and Walgreens Boots Alliance continues to be headquartered in Deerfield, but the company announced plans in 2018 to move many employees to the city.
Caterpillar’s departure will be staggered over two years, allowing time to find new tenants for the 100,000 square foot space, Shapiro said.
The company has long been based in Illinois and in 2017 announced the move of its headquarters to Deerfield from Peoria. The company took over the former main office of liquor producer Beam Suntory, which moved to downtown Chicago. Beam Suntory announced plans in 2021 to establish global headquarters in New York, but will retain certain business units and corporate positions in Chicago.
At the time, Umpleby cited Deerfield’s proximity to O’Hare International Airport and accessibility to Chicago.
“After a thorough site selection process, we chose this location because it is approximately a 20-minute drive from O’Hare Airport and convenient to the city of Chicago via commuter rail, meeting our goal of be more accessible to our global customers, dealers and employees,” he said at the time. “This site gives our employees many options for living in an urban or suburban environment.
“We know we need to compete for top talent to grow our business, and this location will appeal to our diverse, global team now and in the future. »
Caterpillar received no inducement from the village of Deerfield or the state in its move, the Tribune reported at the time.
Caterpillar’s move to Irving, Texas comes as no surprise to John Boyd, director of The Boyd Co., a nationwide site selection company.
“The metropolis of Dallas has really become a premier corporate headquarters, and Caterpillar has had a strong presence in Texas for many years, both manufacturing and office,” he said.
The lack of personal and corporate income taxes in the Lone Star State is the big draw, especially for top corporate executives, Boyd added.
Caterpillar showed greater interest in the Dallas area last year when it announced the creation of an Electric Power division in the Las Colinas neighborhood of suburban Irving, bringing in executives and other staff members from several offices across the country.
The lifestyle offered by these upscale areas also attracts Fortune 500 companies like Caterpillar.
“Las Colinas is now a very high-profile address, a place where many celebrities live, and there are also many gated communities that C-level executives find appealing,” Boyd said.
Some 12,000 of Caterpillar’s more than 17,000 employees in Illinois are based around Peoria, according to the company. But Greater Peoria Economic Development Council CEO Chris Setti said he wasn’t worried about Caterpillar’s move to Sun Belt.
The manufacturer has remained an economic powerhouse in the region, where it began building tractors in 1910, after several hundred head office workers headed north to Deerfield, and it expects the latest decision does not stop local growth either.
“Caterpillar’s commitment to our region continues to be strong,” he said. “They have over 12,000 employees here, which makes Peoria the largest employment center for Caterpillar in the world.”
The company has a research and development campus near Peoria, as well as a foundry and logistics center, among many other facilities. This spring, she often advertised on the radio, looking for workers to fill vacancies.
“They call it ‘walk-in Wednesdays,’ they just ask people to come in with their resume on Wednesdays, and if you qualify, you’re hired on the spot,” Setti said.
Still, Gov. JB Pritzker called Caterpillar’s decision “disappointing” and said the state was adding new small businesses and large and medium-sized businesses.
“It is disappointing to see Caterpillar moving its 240 head office employees out of Deerfield over the next few years when so many businesses arrive,” he said in a statement.
The Illinois Republican Party has lambasted Pritzker, who faces re-election later this year, over Caterpillar’s impending move.
“Another week, another iconic American company is moving its headquarters out of Illinois under the leadership of Governor JB Pritzker,” Chairman Don Tracy said in a statement. “Like the hundreds of thousands of individuals and families who fled Illinois in recent years, Caterpillar joins Boeing in leaving us for other states with lower taxes, more opportunities for growth, and fewer of crime.”
Mark Denzler, president and CEO of the Illinois Manufacturers Association, said while the move is a loss, the company continues to employ thousands of people in the state.
“The decision to move its headquarters out of state is a loss for Illinois, which has proudly been home to the iconic construction equipment manufacturer for nearly a century,” it said in a statement. “As 240 employees based at the company’s headquarters in Deerfield leave the state, the company will continue to represent a significant portion of our state’s manufacturing sector.”
Even as politicians and the state’s Manufacturers Association lamented the relocation of Caterpillar’s headquarters, Boyd of the National Site Selection Company expects corporate relocations to become more common. The recent transformation of office work has eased the way, he said.
In the past, companies knew that out-of-state moves meant the loss of some valuable employees held back by family or community ties. But the rise of remote technology and the ability to work almost anywhere means key employees may choose to stay, perhaps establishing home offices.
“In general, companies were reluctant to move their headquarters,” he said. “But today we are witnessing a wave of relocations.”
Dan Petrella contributed to this report.
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