Note: The weekly Illinois Bicentennial series is sponsored by the Illinois Associated Press Media Editors and Illinois Press Association. More than 20 newspapers are creating stories about the state’s history, places and key moments in advance of the Bicentennial on Dec. 3, 2018. Stories published up to this date can be found at 200Illinois.com.
Peoria was not 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 earth-moving 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.
But in 2017, that symbiotic relationship underwent a dramatic change. Caterpillar announced two things that reverberated across Central Illinois: the company ditched plans for an expansive office project in downtown Peoria that Caterpillar had promised with great fanfare just two years earlier, and the corporate headquarters was moving to the Chicago area.
Peoria would remain Caterpillar's “home,” the company stated, emphasizing that 12,000 employees would remain in Central Illinois while some 300 executives and staff would work out of corporate offices in Deerfield.
Peoria Mayor Jim Ardis expressed appreciation for the employees that 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 Chief Executive Officer (CEO0 Jim Umpleby and board chair Dave Calhoun, who heads the Blackstone Investment Group, that more jobs might be sent away.
While Peoria was jolted by Caterpillar's actions last year, it's no secret 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 — in plants at Joliet, Aurora and Decatur and 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, Wis., to Tucson, Ariz.
Caterpillar Inc., the name the company adopted in 1986, has expanded beyond bulldozers. Along with making a major commitment to mining, Caterpillar is now heavily involved with equipment used for oil and gas exploration, electric power generation and marine engines.
But, it was not 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 up a division in the Midwest and moved to Central Illinois with just 12 employees. Fifteen years later, the Holt firm merged with rival C.L. Best Gas Tractor Co., another California-based company, to form Caterpillar Tractor Co.
After the 1925 merger, C.L. Best became Caterpillar's first CEO, a position he held until his death in 1951.
“Best helped lead the push towards the company's adoption of the diesel engine. He came up with concepts and ideas right up until his death — at age 71,” said Lee Fosburgh, Caterpillar's archives director.
After presiding over the company's greatest sales year ever in 2012 when Caterpillar topped $65 billion in sales (an occasion celebrated in Fortune magazine with the headline, “Caterpillar crushes it”), former CEO and Chair Doug Oberhelman went all-in on mining.
In 2010, Caterpillar made the largest acquisition in its history, as it bought 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 while 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.
Caterpillar equipment did not just build American highways but were in use around the world. As the global economy got bigger, Caterpillar grew with it. New markets provided Caterpillar with opportunity.
Not only did Caterpillar start building factories overseas, it opened new plants across the country — usually in right-to-work states like Texas or Georgia. While a hub for Caterpillar operations, Central Illinois became a battleground between Cat labor and management in the 1990s marked by two lengthy strikes.
The United Auto Workers (UAW), which waged such a spirited campaign against Cat in the 1990s, has seen its influence — and numbers — decline in recent years. There were 9,500 UAW members who voted on a six-year contract at 11 Caterpillar facilities in Illinois and Pennsylvania in 2011. By the time of the next contract, approved in April 2017, only 5,000 UAW members voted.
Today, things are changing in downtown Peoria. Property that had been set aside for Caterpillar’s new headquarters is slated to be home to OSF HealthCare, who plans to place between 700 and 750 employees at the site at a cost between $80 million and $100 million.