Caterpillar said Tuesday that it is scrapping plans to build a new office complex in central Illinois and will move its corporate headquarters to Chicago — but said it plans to keep a presence in Peoria, Ill.
The company said it wants to position itself in a hub to more easily access international customers, which account for about two-thirds of Caterpillar’s business.
“Caterpillar’s board of directors has been discussing the benefits of a more accessible, strategic location for some time,” Caterpillar CEO Jim Umpleby said in a statement.
“Since 2012, about two-thirds of Caterpillar’s sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently.”
The upper echelon of executives, including the newly installed Umpleby, will begin relocating later this year, with as many as 100 employees moving by the end of the year. About 300 people will work in the new office at an as yet undecided location once the transition is complete, according to the Peoria Journal Star.
As a result of “continuing challenging market conditions” and the need to prioritize resources to focus on growth, Caterpillar said it will not build a previously announced headquarters complex in Peoria. The current headquarters building will continue to be used for Caterpillar offices.
The company unveiled plans in 2015 to build a large campus in Peoria across the street from its current headquarters, the Journal Star reported. Caterpillar indefinitely suspended planning for that building in the fall of 2015 after announcing a restructuring that resulted from a lingering global downturn in mining and energy equipment.
Since then, 30 facilities have been affected and 16,000 Caterpillar employees have lost jobs, the newspaper said.
The changes contributed to $2.3 billion in savings in 2016, but sales and revenue for last year still were more than 40 percent below the peak levels of 2012. Umpleby said that decline is a fundamental reason the company's board opted to move the global headquarters to an area where the global marketplace is within easier reach.
“We value our deep roots in central Illinois, and Peoria will continue to be our hometown. The vast majority of our people will remain in this important region, where we have many essential facilities and functions,” Umpleby said. “The new location is also an opportunity to add to our talented team while improving the productivity of our senior leaders.”
Umpleby stressed that the company will continue its philanthropic efforts in central Illinois, which have contributed more than $60 million during the past five years.
Peoria County Board chairman Andrew Rand said he was disappointed that he could not keep every job in the city, “but if moving some of its team near Chicago helps Caterpillar thrive, it will benefit Peoria, our county and the surrounding communities.”
A limited number of senior executives will move into leased office space, beginning this year. Once the new location is fully operational, Caterpillar expects about 300 employees to be based there, which includes some positions relocated from the Peoria area.