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Quinn Confident Caterpillar Will Stay In Illinois

Updated 03/28/11 - 11:14 a.m.

SPRINGFIELD, Ill. (CBS) -- The chief executive of Caterpillar has written Gov. Pat Quinn, saying that other states are trying to lure its operations out of Illinois. But Quinn said Saturday that he remains confident about keeping the Peoria-based heavy equipment manufacturer, despite tax increases.

"Caterpillar's not leaving Illinois," Quinn said at an unrelated event in Chicago.

Quinn said the Caterpillar work force is well educated, "knows how to get the job done and does it." He said the United Auto Workers recently concluded negotiations on a multi-year contract at facilities ranging from Aurora to Peoria.

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He has not actually seen the letter, written by Caterpillar President and Chief Executive Officer Doug Oberhelman, in which he said at least four states have approached company officials since Illinois raised its income tax. But he said he expects to meet with Oberhelman to discuss a variety of issues April 5 in Peoria.

U.S. Sen. Mark Kirk (R-Ill.) was among the Illinois Republicans who criticized Quinn, a Democrat, for his hand in raising the state's income tax last year.

"I think Caterpillar's departure from Illinois would be a disaster for the Illinois economy," Kirk said during an appearance in Caterpillar's hometown. "I think the governor should not have raised taxes by 66 percent.  We should not have the highest corporate tax rates of the industrialized world."

In his letter to Quinn's office, Oberhelman wrote that the direction the state is heading is not favorable to business, and says he wants to work with Quinn to change that.

Oberhelman indicated that he has never considered living anywhere else or relocating Cat's operations, but he wrote Quinn that "policymakers in Springfield" make it "harder by the day." Caterpillar employs 23,000 people in Illinois.

Quinn chided those states that have made overtures.

"I don't really believe in kicking other states in the shins. I'm never gong to do that," the governor said. "I don't think that's a successful way to help our state or any state."

Quinn said Illinois is investing in infrastructure and education despite hard times and said he expects the state to grow jobs, not lose them.

Still, the threat to leave by Caterpillar has residents of Joliet worried.

As CBS 2's Dana Kozlov reports, Caterpillar is one of the biggest employers of Joliet. Its plant looms large on the edge of the city.

"We have Joliet families; state of Illinois families affected by this. We should not be playing games. We should be having honest conversations to resolve the issue," said Andy Mihelich, a candidate for Joliet mayor.

Keith Godsey's father spent 35 years at the company.

"The possibility of losing Caterpillar, then that would mean all the people that make parts and every other little thing for Caterpillar – the plastic parts and everything else – would be closing up," he said, agreeing that it would devastate Joliet.

If Caterpillar left, it wouldn't be first company to bail over the income tax increase. Tim Roberts, the chief executive officer of Crystal Lake-based Catalyst Exhibits announced earlier this month that he is moving the company and its more than 85 jobs to Pleasant Prairie, Wis. The head of Jimmy John's has threatened to move too.

Also, Blue Island-based Modern Drop Forge plans to move to Indiana over the tax hike, although the firm has a plant in Rockford that will stay open. The 250 employees of the company may apply for positions in Indiana, but they are not guaranteed jobs, the company reported.

Mihelich believes if companies continue to leave the state, something will have to give.

"Eliminating the tax increase – it's that we spend too much. We tax too much. We have to resolve this issue," Mihelich said.

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