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State

Illinois bicentennial: Peoria still home to 12,000 Caterpillar workers

Despite HQ shift, Peoria remains home to about 12,000 Caterpillar workers

Peoria wasn’t always a company town. It was a distillery town, a farm implement town and a river town before the Caterpillar Tractor Co. set up shop.

A bond developed between company and town that became a mutually beneficial relationship.

Caterpillar rose to international prominence on the strength of rugged, reliable earthmoving machines while the Peoria area gained jobs – not only in bustling factories, but at the headquarters of a Fortune 100 company, a rare distinction for a city with a population of 100,000.

However, in 2017, that symbiotic relationship underwent a dramatic change. Caterpillar announced two things that reverberated across central Illinois: One, the company ditched plans for an expansive office project in downtown Peoria that Caterpillar had promised with great fanfare only two years earlier, and, two, the corporate headquarters would move to the Chicago area.

Peoria would remain Caterpillar’s “home,” the company stated, emphasizing that 12,000 employees would remain in central Illinois while about 300 executives and staff would work out of corporate offices in Deerfield.

Peoria Mayor Jim Ardis expressed appreciation for the employees who stayed behind, but called the news “a punch in the gut.” State Sen. Dave Koehler said, “It’s something that everyone feared but had hoped would never happen.”

The city now has fears of future announcements from Caterpillar management – headed by new CEO Jim Umpleby and board chairman Dave Calhoun, who leads the Blackstone Investment Group – that more jobs might be sent out of town.

While Peoria was jolted by Caterpillar’s actions last year, it’s no secret that the U.S. manufacturing scene has changed mightily since 30,000 people were employed at central Illinois Caterpillar plants in the early 1970s. That was a time when most of Caterpillar’s machines were assembled in Illinois – at plants in Joliet, Aurora and Decatur, as well as across the Peoria area.

Now, Caterpillar has more factories overseas – 76 – than it does in the U.S., where 62 plants operate. Caterpillar maintains 25 plants in China alone. When it comes to opening plants in this country, Caterpillar follows the trend of big manufacturers that set up shop in the Sun Belt.

U.S. plants opened by Caterpillar in recent years have been in Georgia and Texas, while the company recently moved its mining division from Milwaukee to Tucson, Arizona.

Caterpillar Inc., the name the company adopted in 1986, has expanded beyond bulldozers. Along with making a major commitment to mining, Caterpillar now is heavily involved with equipment used for oil and gas exploration, electric power generation and marine engines.

But it wasn’t always that way.

By the time the Caterpillar name was a registered trademark in 1910, the Holt Caterpillar Co. had established a plant in East Peoria in a building that previously housed the Colean Manufacturing Co., a firm that made steam-powered tractors before the company went bankrupt.

Benjamin Holt’s family business started in the mid-1880s in California. Holt Caterpillar started a division in the Midwest, moving to central Illinois with only 12 employees. Fifteen years later, the Holt firm merged with rival C.L. Best Gas Tractor Co., another California-based company, to form the Caterpillar Tractor Co. in central Illinois.

After the 1925 merger, C.L. Best became Caterpillar’s first CEO, a position he held until his death in 1951.

“Clarence Leo Best – no one called him Clarence. His friends called him Leo. At work, he was C.L.,” said Lee Fosburgh, Caterpillar’s archives director.

Fosburgh pointed out that it was Best who got Caterpillar off on the right foot.

“The Best Tracklayer Sixty became the Caterpillar Sixty,” Fosburgh said, referring to the workhorse tractor that helped establish Caterpillar in the earthmoving marketplace. “Best helped lead the push toward the company’s adoption of the diesel engine. He came up with concepts and ideas right up until his death, at age 71.”

Former CEO and Chairman Doug Oberhelman, in remarks made at the
2016 opening of an exhibit on Best at the Caterpillar Visitors Center in Peoria, said Best’s business acumen was one of the big reasons for the company’s success. Oberhelman noted that Best went to Wall Street for Caterpillar’s initial public stock offering Dec. 2, 1929 – only weeks after the devastating stock market crash that precipitated the Great Depression.

After presiding over the company’s all-time greatest sales year in 2012, when Caterpillar topped $65 billion in sales (an occasion celebrated in Fortune magazine with the headline “Caterpillar crushes it”), Oberhelman went all-in on mining. In 2010, Caterpillar made the largest acquisition in its history, buying Bucyrus International, a Milwaukee-based maker of large mining equipment, for $8.8 billion. No sooner was the deal completed when mining around the globe went into a tailspin.

As a result, Oberhelman presided over something else: the closing and consolidation of 20 plants worldwide and a dramatic reduction in the company’s workforce. Between 2012 and 2015, Caterpillar laid off 31,000 people.

But like the heavy-duty equipment it produces, Caterpillar has shown an ability to weather storms, whether inflicted by markets or strong winds. Caterpillar already was bouncing back from the malaise in the mining industry in 2017, and this past April, Caterpillar posted the highest first-quarter profit in the company’s 93-year history with a 31 percent increase in company revenues.

Today, property that had been set aside for Caterpillar’s new headquarters
is slated to be home to OSF Healthcare. OSF plans to place between 700 and
750 employees at the site at a cost between $80 million and $100 million.

• Journal Star reporter Steve Tarter can be reached atstarter@pjstar.com.

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