Tuesday, December 27, 2011

Illinois Subsidizes Navistar's Indiana Layoffs With Tax Incentives

We're used to sports team owners holding cities and states hostages by threatening to move to a different city in order to get new taxpayer-funded stadiums. But less well known is that other corporations often extort those same governments to get taxpayer incentives and subsidies as well.

It's one thing when it happens to prevent an employer from moving out of state. But what if an employer uses the incentives in order to open a new facility so it can the fire higher paid, unionized employees in another state? Think that can't happen? Well it just did in Illinois, according to this report:
WBEZ has learned that some new jobs Navistar promised under an Illinois incentive agreement are coming to the state at the expense of unionized workers in Indiana.

Illinois Gov. Pat Quinn announced the Navistar incentives last year after the company threatened to pack up its headquarters in west suburban Warrenville and leave the state. The deal committed Illinois to a $64.7 million bundle of tax credits and job-training subsidies for the company. It committed Navistar to moving the headquarters to Lisle, just a couple miles east, and to adding 400 full-time Illinois employees.

Navistar’s first report to the state about the jobs isn’t due until next year, so it’s hard to tell how many positions the company has created thus far. Employees confirm that dozens of new engineers and designers are working at the Lisle facility.

Navistar is creating those jobs as it phases out its Truck Development and Technology Center in Fort Wayne, Indiana, just three hours southeast of Chicago. The latest Fort Wayne cuts came December 2, when the company laid off 130 employees, mostly engineers and designers who are United Auto Workers members. Before the layoff, some of the Fort Wayne workers had to help train their Lisle replacements.

“They’ve rewritten the job descriptions so the people that used to do the work here — the union folks — don’t qualify anymore on paper,” said Craig Randolph, a Navistar design engineer laid off after 15 years at the Fort Wayne center. “So they’re eliminating the high-seniority, older employees like myself and replacing them with nonunion college kids — guys fresh out of school. And the taxpayers in Illinois are subsidizing the whole thing.”
Okay, that's bad enough, but the Corporate FlackQuote is just priceless:
Asked for a response, Navistar spokeswoman Karen Denning called it unusual for engineers to have union representation in the first place, a claim disputed by auto industry experts. Denning also sent a statement that said the company’s decision to shift the Fort Wayne jobs to Lisle was “based solely on our desire to compete in the global economy.” The statement added that Navistar has allowed many Fort Wayne employees to relocate to the Chicago area and stay with the company.
Because Illinois is just full of sophisticated, well refined workers, don't you know, while those troglodytes over in Indiana have not yet even evolved opposable thumbs.

In summary, lower paid Illinois workers are benefiting from higher paying jobs being transferred from Indiana, while the nearly bankrupt Land of Lincoln loses even more tax revenue it can ill afford to lose. Meanwhile, the top management at Navistar pat themselves on the back for being such shrewd businesspeople while laughing all the way to the bank. And yet people still want to blame the unions for making "unreasonable" demands as being the reason why so many companies are having trouble being competitive.

Bonus: I wonder if R. Dean Taylor used to work for Navistar


  1. Bill, thanks for bringing this out. I read quite a bit and this is the first I've seen of this. Absolutely disgusting.

  2. Its not just Indiana...