Drop Forge Drops Illinois: Fact-Checking Kinzinger on Jobs

"You may have heard last week about a business, who after nearly a century of doing business in Illinois, is moving their company across the border to Indiana, taking hundreds of jobs with them. The reason? The recent hike in the corporate income tax here in Illinois. The family-owned Modern Drop Forge Company marks the 13th business from Illinois to relocate to Indiana over the past few years.

"Raising taxes on job creators produces an economic catastrophe, hampering investments and placing far greater difficulty on nearly one in 10 of our neighbors throughout Illinois who are struggling to find a job. Last month, Illinois lost more jobs than any other state in the nation and the unemployment rate rose to 9.5 percent in the state."

– From "Focusing Squarely on Job Creation," an Aug. 28 press release by U.S. Rep. Adam Kinzinger (R-11th)

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Welcome to , an intermittent column where we take statements like Kinzinger's and break them down to answer one simple question: Are they true?

Since Adam Kinzinger was in New Lenox Tuesday for a roundtable with local business owners, let's look at a press release Kinzinger based on similar roundtables he's held elsewhere in the district.

For some fun with misused numbers, read our companion piece,

You may have heard last week about a business, who after nearly a century of doing business in Illinois, is moving their company across the border to Indiana, taking hundreds of jobs with them.

Verdict: True

He's talking about Modern Drop Forge Company, which started in Blue Island in 1914 and recently announced a move to Merrillville, Ind., about 30 miles away.

This will result in 260 jobs leaving Illinois and about 240 jobs coming to Indiana by 2014. Current employees will be offered a chance at the jobs, but some will be filled by Merrillville residents, group owner Greg Heim told WBEZ.

The reason? The recent hike in the corporate income tax here in Illinois.

Verdict: Tell the whole story

was part of Modern Drop Forge's reason, as Heim said in the WBEZ story. But Heim also mentioned Illinois' worker compensation laws as a reason in this story in a trade publication and Indiana's general "common sense approach to business" in the press release announcing the move.

Republican Blue Island Mayor Don Peloquin, who was heavily involved in the negotiations to keep Modern Drop Forge, said the company turned down tax breaks Illinois offered.

"The county and state offered tax incentives to reduce the tax bill, and (offered) jobs training money. But one of the biggest things is worker's comp insurance. It's high in Illinois, and by going to Indiana they can save $300,000 to $400,000 a year in insurance," Peloquin said in this Sun-Times Media article on the Modern Drop Forge move.

In fact, you might say it's not just about state income taxes. Or, in the exact words of Modern Drop Forge general manager Patrick Thompson in an Associated Press article about the move, "It’s not just about state income taxes."

For example, Kinzinger omits the $2 million in tax credits and $200,000 in training grants Indiana promised Modern Drop Forge if it moved and the 10-year tax abatement Merillville recently approved for the company. Northern Indiana Public Service Co. is also giving the company power rate considerations, according to the Sun-Times Media article.

But to Kinzinger, the move was just about the tax hike. Too bad the company disagrees.

The family-owned Modern Drop Forge Company marks the 13th business from Illinois to relocate to Indiana over the past few years.

Verdict: An Illinoying omission

Modern Drop Forge isn't going until 2014 and three of the other companies haven't even officially announced their move yet, but the point is the same: 13 companies have pledged to expand or move into Indiana. They account for about 1,000 jobs, according to the Indiana Economic Development Corporation.

One minor and horrifying correction to Kinzinger's statement is that these pledges weren't "over the past few years." All these announcements came this year.

Courtesy of Katelyn Hancock at the IEDC, the 10 companies that have announced moves or expansions in Indiana (the unannounced three are still an IEDC secret) are:

• NetShape Technologies
• Franciscan Alliance
• North American Lighting, Inc.
• Berry Plastics Group, Inc.
• Canadian National Railway Company
• American College of Education, Inc.
• Modern Drop Forge
• Special Metals Corporation
• State Farm
• Coupon Cabin

Those links on each company name aren't to the corporate websites. Each is a link to an article or press release explaining the individual nature of each move. Check them out when you get a chance.

Only State Farm (which is closing field offices through Illinois, Michigan and Indiana, consolidating them in one of two bigger offices per state, a move that requires some downstate Illinois workers transfer to Indianapolis) and Coupon Cabin (which, after the above release, reportedly moved its 15 jobs from Chicago to Whiting, Ind.) made their shifts without a deal brokered by the IEDC.

Indiana paid dearly for the rest. To get Berry Plastics' 60 new jobs, the IEDC put together an incentive package of up to $1.1 million, plus more money from the new home of Evansville. 

Canadian National's 251 jobs? $2.95 million in performance-based tax credits and up to $250,000 in training grants, plus tax increment financing bond money from Gary.

Illinois Gov. Pat Quinn is quoted in the WBEZ story saying Illinois offered Modern Drop Forge "a competitive business package" as a counter-offer, so it's a game Illinois is playing too. The state of Illinois pledged $272.7 million in incentives to 67 companies last year, according to the Associated Press. That dollar amount is double the 2009 offers and more than quadruple the 2006 incentives.

Meanwhile, Indiana (like Wisconsin and South Dakota) is trying to poach Illinois jobs using the tax hike as the PR hook, plus they're paying top dollar, as this Rockford Register Star analysis details. You might have seen the billboard campaign trying to lure business owners to Indiana a few months back.

Kinzinger makes it sound like all these companies' executives saw the tax hike, said "No sir, I don't like it" like the horse from Ren and Stimpy and waltzed across the border the next day. That's just not what happened.

Raising taxes on job creators produces an economic catastrophe, hampering investments and placing far greater difficulty on nearly one in ten of our neighbors throughout Illinois who are struggling to find a job.

Verdict: Control-V

That's a belief based on the correct fact that unemployment is nearly one in 10 right now. So that section of the Aug. 28 release is fine.

It was also fine on Aug. 1 to explain why Kinzinger voted to raise the debt ceiling and Aug. 12, also explaining the debt ceiling decision.

Ultimately, failure to increase the debt ceiling or raising taxes on job creators would create an economic catastrophe, hampering investments and placing far greater difficulty on nearly one in 10 of our neighbors throughout Illinois who are struggling to find a job.

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It's perfectly fine, but I would suggest not going to the same well over and over again. That's like FDR saying every bad day will live in infamy.

Last month, Illinois lost more jobs than any other state in the nation ...

Verdict: Apples and Percentages

Yes, Illinois lost more jobs than any other state in the nation in July, but Illinois is a big state. Although it lost fewer total jobs, the much-less-populous Minnesota had the biggest percentage drop in employment, going down 0.7 percent, according to the most recent Bureau of Labor Statistics report.

Illinois and self-proclaimed economic Shangri-La Indiana were tied for second place, both states seeing a 0.4 percent drop in employment in July.

It makes no sense to compare raw numbers across states. For example, there are more than twice as many unemployed people in California as there are people in Rhode Island.

If you're looking at whether it would be easier to get a job in Rhode Island or California, the raw numbers tell you nothing. But if you see that 12 percent of Californians are out of work compared to 10.8 percent of Rhode Islanders, you say, "Aha, I'm heading to Brown."

... and the unemployment rate rose to 9.5 percent in the state.

Verdict: "You keep using that word."

"Rose" is not the word. "Returned" is the word.

Illinois' unemployment rate was 4.4 percent as recently as November 2006. It skyrocketed, peaking at 11.2 percent in January 2010 before dropping to 8.7 percent in April.

Then it started going up again, returning to 9.5 percent in July. July 2011 is still better than July 2010 (10.1 percent) or July 2009 (10.4 percent).

Play around with this Google Public Data Explorer to see the numbers in more context.

Elsewhere in the release, Kinzinger, who will be seeking a second term in Congress in 2012, said many of the concerns about taxes and regulations hurting jobs came from roundtables with business owners.

Read our coverage of Tuesday's roundtable in New Lenox.

The job situation in Illinois is terrible. I wouldn't doubt it if people who own businesses believe business taxes are the problem, just like I wouldn't doubt it if labor leaders believe weak unions are the problem and beef farmers believe beef prices are the problem. As a reporter, I can't take any of their beliefs at face value. I need facts.

Most of what Kinzinger cites can be corroborated elsewhere, but I feel he's telling a fraction of the story, leaving us only the parts that agree with him. I don't trust this press release.

Bonus Feature:

It's hard to prove things 100 percent. For example, even though they're phrased similarly, I can't prove Kinzinger got his Aug. 28 jobs stats from this Aug. 19 press release from the conservative think tank Illinois Policy Institute.

But it didn't stop me from writing a whole supplimentary Fact Check on their monkeying with data.