News Column

Archer Daniels Midland Moving HQ to Chicago

December 18, 2013

Phil Rosenthal and Ray Long, Chicago Tribune

Dec. 18--Archer Daniels Midland, unable to secure the special tax incentives it sought from Illinois legislators, nonetheless announced Wednesday that it will go forward with its plan to move its world headquarters to Chicago from Decatur, Ill.

The agriculture giant said it plans to locate 50 to 75 executives in Chicago to a site that has not yet been selected. That's down from the 100 jobs the company originally cited in its bid to win Springfield approval for special payroll tax incentives worth up to $30 million over 20 years.

"While we considered other global hubs, Chicago emerged as the best location to provide efficient access to global markets while maintaining our close connections with U.S. farmers, customers and operations," said ADM Chairman and CEO Patricia Woertz said in a statement Wednesday morning. "Chicago also provides an environment where we can attract and retain employees with diverse skills, and where their family members can find ample career opportunities."

Additionally, a technology center staffed by 100 new employees that was part of ADM's public bid no longer is tied to the headquarters change, a source said. The company said it will continue to consider potential locations for the IT center in several states and expects to make a decision by mid-year 2014

The politicians who opposed a cash-strapped state giving a $1.5 million annual tax break to a company with a market cap of more than $27 billion can claim they held their ground. But absent the incentives package, ADM would not have to make assurances about ongoing staffing levels.

Chicago Mayor Rahm Emanuel, who was directly involved in recruiting ADM on a number of occassions, said Wednesday he was pleased with the decision.

"I wanted to personally make sure that all of this was on display for ADM and that we took nothing for granted. We were successful in keeping the company in Illinois and I think they'll thrive in Chicago," Emanuel said in a statement.

Woertz said ADM will continue to have a significant presence in Decatur, which will be designated the company's North American headquarters, and that the company does not plan any layoffs in connection with the move to a new global center.

Decatur Mayor Michael McElroy said earlier that t would be disappointing for his city to lose the company's global headquarters.

"But I'm very happy that they're staying in the state of Illinois," McElroy said. "There are still 4,000 jobs in Decatur, Ill., that depend on ADM. And the many philanthropic and educational things they're involved in in our community are also very, very important to us. They're still a very, very large company."

Sen. Andy Manar, the Bunker Hill Democrat who had pushed for ADM to refrain from lowering job numbers in Decatur, responded in a text late Tuesday that he would not comment until the company makes its announcement and he could review the full details.

Proposed incentives for ADM became part of a public debate because ADM wanted what's known as special EDGE credits, which, unlike regular state tax credit incentives awarded under EDGE, or Economic Development for a Growing Economy, require a case-by-case legislative approval.

The goal of EDGE is to encourage companies to create jobs in Illinois that otherwise would go elsewhere.

A regular EDGE credit counts against corporate tax. ADM sought to be among the handful of companies, including Motorola Mobility, Sears Holdings and Navistar International, allowed to retain employee payroll taxes due the state.

It became clear the company was running into political head winds in October.

That's when ADM Chief Financial Officer Ray Young said at an informational hearing in Chicago held by the state House Revenue and Finance Committee that the company got where it is by "minding its pennies and nickels and dimes over the years" to remain competitive.

"When we think about relocation of our global headquarters and we think about locating a new, second technology center, we have to be mindful of our nickels and dimes, and that's the reason why we're talking to the state regarding and looking at the EDGE program in order to continue to participate in the growth within the state," Young said.

Illinois House Majority Leader Barbara Flynn Currie characterized the ask as anything but benign.

"It is essentially blackmailing the state," Currie told Young. "It essentially is saying if you don't jump to, if you don't go do this for us, we might think about going somewhere else."

Even if the legislature had rubber-stamped the deal, Gov. Pat Quinn said he wouldn't approve such a measure until the House and Senate dealt with public pension reform.

But after the Democratic-controlled legislature voted this month for sweeping changes to public employee pensions, legislators seemed to squirm in the politically awkward position of squeezing labor at the same time they were considering tax incentives for big corporations.

Incentives for ADM, chemical company Univar and the newly merged combo of Naperville-based OfficeMax and Office Depot of Boca Raton, Fla., got through the Senate but weren't acted upon by the House before adjournment for the year Dec. 3.

OfficeMax/Office Depot last week announced its plan to make its home in Florida, a move affecting 1,600.

Democratic House Speaker Michael Madigan, the next day, suggested that a pattern of business executives threatening to leave Illinois unless they get tax incentives and politicians quickly responding has created an appearance of "corporate pay-to-play."

Madigan has called for overhauling a system that prompts companies to line up hat in hand at the Capitol.

"I find it very difficult to support tax giveaways for corporate CEOs and millionaire shareholders whose companies pay little in state taxes," Madigan, who is state Democratic chairman, said in a statement.

"I question our priorities when corporate handouts are demanded by companies that don't pay their fair share while middle-class families and taxpayers face an increasing number of burdens."

Madigan said the state "must resist the temptation to cave to corporate officials' demands every time they impose a deadline for payment in exchange for remaining in Illinois, and end the case-by-case system of introducing and debating legislation whenever a corporation is looking for free money from Illinois taxpayers."

From a logistical standpoint, Chicago was seen by many as ADM's logical choice for a headquarters all along, given its central location, educated workforce, transportation network and standing as an international hub.

But when Springfield balked at its incentives request, it toured other cities in the Midwest and beyond.

Asked several weeks ago what it would mean if ADM chose one of them instead, Emanuel rejected the question, instead focusing on what he thought would keep ADM in Illinois.

"ADM and their leadership will see what GE Transportation saw when they left western Pennsylvania and came to the city of Chicago," Emanuel said. "They thought it was an incredible business climate here in the city of Chicago. That's what I said to ADM and what I'd say to anybody."

Tribune reporters John Byrne, Hal Dardick and Gregory Karp contributed.

philrosenthal@tribune.com

rlong@tribune.com

Twitter @phil_rosenthal

Twitter @RayLong

___

(c)2013 the Chicago Tribune

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Original headline: ADM announces it is moving headquarters to Chicago


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Source: (c)2013 the Chicago Tribune


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