state’s taxes and onerous regulatory environment. “Some businesses
have called out Illinois’ tax and regulatory policies for increasing the
cost of doing business compared
with nearby states,” says Murphy.
For companies engaged in e-commerce, one big drawback to locating
in Illinois is its sales tax. Companies
with a physical presence in Illinois
must charge their customers in
that state a sales tax on the goods
and services they buy online, while
those without a physical presence
in Illinois are exempt from that
requirement. “Companies that
don’t have a physical brick-and-mortar presence in Illinois try to
stay out of the state to avoid those
taxes,” says Eric Stavriotis, senior
vice president with CBRE. For
example, Amazon.com built two
distribution centers to serve the
Chicago market in nearby Kenosha,
Wis.
Not surprisingly, neighboring
states like Indiana, Wisconsin, and
Missouri have capitalized on those
liabilities, offering incentives and
real estate tax rebates to lure business away from Illinois.
“We do lose deals and compa-
nies to places like Indianapolis that
have fairly aggressive real estate tax
rebate programs,” says Stavriotis.
“But on a gross basis, companies
have to determine whether it’s
better and more cost efficient to
be there, rather than being closer
to their service area, where their
transportation costs are going to be
different.”
Roth agrees, saying that while
incentives can be an important fac-
tor in site selection decisions, they
are often a secondary consideration.
“They’re typically not as much of
a factor as transportation costs
because transportation is forever,”
he says.
ing that retail giants Wal-Mart Stores Inc.
and Home Depot Inc. have located 5 million square feet of DC space there.
Growth in and around the intermodal
center looks to continue apace as trucking costs rise, capacity tightens, and more
companies turn to rail, according to Roth.
“I’m seeing a migration more toward boxcar and spur service, and I’m seeing more
of a gravitational pull toward intermodal
centers,” he says.
ADVANTAGE 3: SKILLED WORKERS
Another factor working in Illinois’ favor
is its strong labor pool, according to Chris
Lydon of the industrial real estate firm
Cushman & Wakefield. Overall, Illinois
has a labor force of more than 6. 5 million
workers and ranks third in the nation for
transportation and material moving occupations. Looking to the future, the state
expects to add nearly 20,000 jobs across the
transportation, distribution, and logistics
industries by 2020, according to Murphy.
Not only is the labor base large, it is also
highly skilled. According to Seals, Illinois’
population is among the most educated in
the country. And if the skills aren’t there,
the state has several workforce develop-
ment programs to help fill the gaps. “States
across the country are grappling with the
skills gap concern within the manufac-
turing and distribution sector, especially
as older generations retire,” says Murphy.
“In response, a number of public- and
private-sector organizations in Illinois
have introduced various workforce devel-
opment programs and grant initiatives to
ensure the strength and volume of local
skilled workers in the future.”
The one drawback to the labor force in
Illinois, at least in some companies’ eyes,
is the strong union presence in the state.
“Unlike in Indiana and parts of Wisconsin
where you can get away with nonunion
labor, here in the Chicagoland area, you
have to go union for the most part,” says
Lydon. “Obviously, those costs can have an
impact and are sometimes a [liability] for
us when competing against neighboring
states.”
STRIKE 1: TAXES AND INCENTIVES
If there is a disincentive that keeps companies from situating a DC in Illinois, it’s the
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