If you were sick of the political back and forth and totally divested yourself from TV and the Internet last week, you might have missed the news that Caterpillar, the Peoria, Ill. behemoth, is moving its headquarters to Chicago, a few hours by car (and a good bit longer by construction truck, I assume) up the highway.
Caterpillar is what many people think of first when they hear “mobile hydraulics,” and with good reason. The company, with reported revenues of $38 billion last year and nearly 100,000 employees across the world, is an icon, with its machinery easily visible on construction projects, in mines, and along highways—not to mention a leader in hydraulic development and research.
But Caterpillar, too, has been synonymous with Peoria, a Midwestern town known for … well, its typical-ness. Groucho Marx popularly asked “Will it play in Peoria?” and rock stars, politicians and corporations have long used the city as a testing ground of sorts before expanding their reach to both coasts.
So why leave? Executives have expressed a desire to be closer to a world-class airport, which Chicago certainly has in O’Hare. And like Boeing’s move from Seattle to Chicago, there’s probably more than a little bit of a panache that a Chicago or New York or San Francisco address has—that an Omaha or Cincinnati or Rochester doesn’t. Chicago, too, surely has a lot more to offer potential new executive recruits, for when Caterpillar is looking to hire in its upper ranks. And that’s primarily what Chicago will be to the company. Headquarters will merely be the topmost executives and their direct support staff. The company says as many as 300 employees will eventually end up in the Windy City. Luckily for Peoria, the vast number of the company’s jobs currently located there are expected to remain put.
Years ago, a very large company I was covering hired a new CEO from a distant state. Not long afterward, the company announced that it was moving the entirety of its headquarter operations to that same state. What an odd coincidence! While this Caterpillar announcement doesn’t leave that sort of taste in my mouth, I do wonder what it means for so many other mid-sized and large manufacturers headquartered in the Toledos of the world. Will they all eventually forced to relocate to the biggest of the big cities in order to remain competitive? Or is this nothing more than the latest business fad?
I’d love to hear your comments.
The company’s original announcement is below.
Caterpillar to Establish Global Headquarters in Chicago Area
Caterpillar Inc. announced January 31st it will locate a limited group of senior executives and support functions in the Chicago area later this year and reaffirmed the ongoing importance of its presence in Peoria and Central Illinois.
“Caterpillar’s Board of Directors has been discussing the benefits of a more accessible, strategic location for some time,” said Caterpillar CEO Jim Umpleby. “Since 2012, about two-thirds of Caterpillar’s sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently.”
“We value our deep roots in Central Illinois, and Peoria will continue to be our hometown. The vast majority of our people will remain in this important region where we have many essential facilities and functions,” added Umpleby. “The new location is also an opportunity to add to our talented team while improving the productivity of our senior leaders.”
As a result of continuing challenging market conditions and the need to prioritize resources to focus on growth, Caterpillar will not build the previously announced headquarters complex in Peoria. The current headquarters building will continue to be used for Caterpillar offices.
Over the last five years, even while facing these challenging conditions, Caterpillar, along with its employees and retirees, has contributed more than $60 million to support thousands of families, organizations and programs across Central Illinois. The company will continue its philanthropic support and deep civic involvement in the Peoria area.
“As mayor, I never want jobs moving out of the city. However, the overwhelming majority of Caterpillar employees and their families based in the Peoria area won’t be impacted by this decision. I’m pleased Caterpillar continues to call Peoria its hometown,” said Peoria Mayor Jim Ardis.
“If Caterpillar succeeds globally, we win in Central Illinois. I’m disappointed we can’t keep every job here, but if moving some of its team near Chicago helps Caterpillar thrive, it will benefit Peoria, our county and the surrounding communities,” said Peoria County Board Chairman Andrew Rand.
A limited number of senior executives will move into leased office space beginning in 2017. Once the new location is fully operational, Caterpillar expects about 300 employees to be based there, which includes some positions relocated from the Peoria area.
Filed Under: Mobile Hydraulic Tips
