Less than six weeks after defense and aircraft manufacturer Boeing announced it would move its global headquarters out of downtown Chicago, executives at another major company are set to leave the region.
Longtime Illinois company Caterpillar Inc. will move its headquarters from Deerfield to an existing office in Irving, Texas, outside of Dallas, the company said Tuesday.
“We believe it is in the company’s best strategic interest to take this step, which supports Caterpillar’s strategy for profitable growth as we help our customers build a better, more sustainable world,” said Jim Umpleby, Chairman and CEO from Caterpillar, in a statement.
The move means the majority of the roughly 230 employees at the mining and construction equipment manufacturer’s Deerfield office are expected to relocate to Texas over time, Caterpillar spokeswoman Kate Kenny said.
The changeover will begin later this year. Kenny didn’t give a specific timeframe for the move, but said the company has a lease on its Deerfield office that “allows for an orderly and flexible transition for our employees” and company managers will work with employees on an individual basis.
Caterpillar has offices and manufacturing locations throughout Illinois, including an office in Chicago, and Kenny said the move will not affect other Chicago-area locations. Illinois is expected to remain the largest concentration of Caterpillar employees worldwide, with more than 17,000 employees in the state, most of them located near Peoria.
“The global competitive and market environment we face as a company is constantly changing, and we continually evaluate and update our global footprint, including office locations, to best serve our business and talent needs,” Kenny said in one E-mail.
The company is the latest company to downsize its footprint in the Chicago area amid corporate relocations and an office market reeling from two years of the COVID-19 pandemic.
Boeing is moving its headquarters to Arlington, Virginia and has said it will cut office space but will continue to employ hundreds of workers in Chicago. Earlier, in 2018, Takeda Pharmaceutical Co. announced it would close its Deerfield headquarters.
More recently, other companies have sold office space as many employees have been working remotely during the pandemic. Insurance giant Allstate reached an agreement in late 2021 to sell its longtime headquarters near Northbrook, and recently healthcare company Baxter said it was selling its longtime headquarters in Deerfield to adapt to the hybrid working model, although it’s “in the general area stay” would remain accessible to employees in Deerfield.
“That’s the way things are now,” said Deerfield Mayor Daniel Shapiro. “After the coronavirus pandemic, office demand is not as high as it was three years ago. People don’t go to the office that often, so the market does that.”
He pointed to greater economic drivers for Caterpillar’s move, along with other recent exits like that announced by Baxter.
However, some recent losses for Deerfield have been Chicago’s wins. In 2019, Mondelez announced it would be moving its headquarters from Deerfield to Chicago, and Walgreens Boots Alliance remains headquartered in Deerfield, but the company announced plans for 2018 to move many employees to the city.
Caterpillar’s move out will be phased out over two years to allow time to find new tenants for the 100,000-square-foot space, Shapiro said.
The company has long been based in Illinois and in 2017 announced the relocation of its headquarters from Peoria to Deerfield. The company took over the former headquarters of liquor maker Beam Suntory, which relocated to downtown Chicago. Beam Suntory announced plans in 2021 to establish global headquarters in New York City but will retain some business units and corporate positions in Chicago.
At the time, Umpleby cited Deerfield’s proximity to O’Hare International Airport and accessibility to Chicago.
“After a thorough site selection process, we chose this location because it is approximately 20 minutes’ drive from O’Hare Airport and convenient to the commuter train into the city of Chicago to serve our goal of better serving our global customers and dealers to be available and employees,” he said at the time. “This location offers our employees many opportunities to live in either an urban or suburban setting.
“We know we must compete for the best talent to grow our business, and this location will appeal to our diverse, global team today and in the future.”
Caterpillar received no incentives from the village of Deerfield or the state in its move, the Tribune reported at the time.
Caterpillar’s move to Irving, Texas, now comes as no surprise to John Boyd, director of The Boyd Co., a national site selection firm.
“The Dallas Metroplex has truly evolved into a premier corporate headquarters location, and Caterpillar has had a strong presence in both manufacturing and office operations in Texas for many years,” he said.
The lack of income and corporate taxes in the Lone Star State is the big draw, particularly for top corporate executives, Boyd added.
Caterpillar signaled greater interest in the Dallas area last year when the company announced the creation of an Electric Power division in the Las Colinas suburb of Irving, bringing on board executives and other employees from multiple offices across the country.
The lifestyle such upscale areas offer also attracts Fortune 500 companies like Caterpillar.
“Las Colinas is now a very prestigious address, a place where a lot of celebrities live, and also has a lot of gated communities that executives at the C-suite level find attractive,” Boyd said.
About 12,000 of the more than 17,000 Caterpillar employees in Illinois are based in Peoria, according to the company. However, Chris Setti, CEO of the Greater Peoria Economic Development Council, said he’s not concerned about Caterpillar’s shift to the sunbelt.
The manufacturer has remained an economic powerhouse in the area, where it began building tractors in 1910 after several hundred headquarters employees moved north to Deerfield, and it expects the recent move will not halt local growth.
“Caterpillar’s commitment to our region remains strong,” he said. “They have over 12,000 employees here, making Peoria the largest employment center for Caterpillar in the world.”
The company operates a research and development campus near Peoria, as well as a foundry and logistics center, among many other facilities. That spring, it often advertised on the radio, seeking labor to fill vacancies.
“They call it ‘Walk-in-Wednesdays,’ they just ask people to come by on Wednesdays with their resumes, and if you qualify, they hire you right away,” Setti said.
Still, Gov. JB Pritzker called Caterpillar’s move “disappointing” and said the state is adding new small, large and medium-sized businesses.
“It’s disappointing to see that Caterpillar will move its 240 headquarters employees out of Deerfield in the next few years when so many companies are joining,” he said in a statement.
The Illinois Republican Party has blasted Pritzker, who is due for re-election later this year, over Caterpillar’s impending move.
“Another week, another legendary American company is moving its headquarters from Illinois, led by Governor JB Pritzker,” Chairman Don Tracy said in a statement. “Just like hundreds of thousands of individuals and families who have fled Illinois in recent years, Caterpillar is joining Boeing in leaving us for other states with lower taxes, more growth opportunities and less crime.”
Illinois Manufacturers Association president and CEO Mark Denzler said while the move is a loss, the company continues to employ thousands of people in the state.
“The decision to move its corporate headquarters out of state is a loss for Illinois, which has proudly served as the home of the legendary construction equipment manufacturer for nearly a century,” he said in a statement. “Although 240 employees at the company’s Deerfield headquarters will relocate out of state, the company will continue to be a large part of our state’s manufacturing sector.”
While politicians and the state’s manufacturers’ association lamented the move of Caterpillar’s headquarters, Boyd of the national site selection firm expects corporate relocations to become more common. The recent transformation of office work has eased the way, he said.
In the past, companies knew that moving abroad meant losing some valuable employees who were being held back by family or community ties. But the rise of remote technology and the ability to work almost anywhere means key workers may choose to stay behind and perhaps set up home offices.
“Typically, companies have been reluctant to relocate their headquarters,” he said. “But today we’re seeing a wave of moves.”
Dan Petrella contributed to this report.