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Illinois: Traditional and Green Manufacturing Help Prepare for the Turnaround

Susan Avery (Apr/May 09)
Throughout Illinois, amidst the seemingly endless negative economic news of mass layoffs and closures are many glimmers of hope.

At the former Republic Windows and Doors plant in Chicago - which made national headlines in December when laid-off workers staged a sit-in to protest its sudden closure - the new owner, California-based Serious Materials, is hiring those workers back. The facility will produce environmentally friendly windows that qualify for green building tax credits, and the company also hopes to benefit from stimulus funding for low-income housing weatherization projects in the area. "We're super optimistic," said Sandra Vaughan, Serious Materials' chief marketing officer. She cites the "highly skilled work force requiring very little retraining" as the primary reason for the company's purchase of the facility.

Another recent green development in the state is Wanxiang America Corp.'s announcement that it will build a solar panel manufacturing facility in Rockford, where it also proposes to create one of the largest solar farms in the country, leasing up to 200 acres in a public-private partnership. The state provided a $2 million incentive package to support the project.

Peoria, home to the world headquarters of Caterpillar Inc., has definitely felt the effects of the worldwide recession. Layoffs by the heavy equipment manufacturer totaling around 2,000 workers in the area, plus layoffs by affected Caterpillar suppliers, added about 2 percent to the Peoria MSA unemployment rate. It reached 9.1 percent in February, its highest level since 1987. But even here there is cause for optimism.

Local Caterpillar suppliers who went through the 1980s downturn "became very smart or they didn't survive," says Jim McConoughey, president and CEO of The Heartland Partnership, an umbrella organization for economic development efforts in the Peoria area. "They learned to shift gears quickly, from producing new parts to making replacement parts for used equipment." The economy of the area has also diversified greatly since then, he added, and the technical skills of the work force have become "quite extraordinary" due not only to manufacturing experience but also to community college and technical training programs, which are currently seeing double-digit growth in enrollment rates.

R&D commercialization is another growing trend. Firefly Energy, for example, a Peoria-based Caterpillar spinoff company, in March announced that local bus operator CityLink was the first transit customer for its new eco-friendly batteries. The company is awaiting approval of federal stimulus money that would allow it to open a full production facility as early as next spring.

Back in Chicago, office space vacancy rates have risen drastically since the downturn began. Cushman & Wakefield's fourth quarter 2008 Chicago Central Business District Office Report predicted that vacancies will not reach their peak until sometime in 2012, due in part to new space coming on the market. According to the report, nearly 75 percent of the new space is already pre-leased, and "sizable amounts of vacancies will hit the market as firms relocate to these new developments." One notable relocation: London-based insurance broker Willis Group Holdings is consolidating its area offices and about 500 employees to the Sears Tower, which will be renamed the Willis Tower as part of the deal.

The state has already begun allocating its share of federal funding from the American Recovery and Reinvestment Act, with transportation infrastructure projects a major component of the plan. New Illinois Governor Pat Quinn signed legislation on April 3 authorizing $3 billion in state bonds for additional transportation improvement projects, the first part of a proposed $26 billion jobs plan that if approved by the state legislature would add billions more in infrastructure funding and support 340,000 jobs.

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