Blue Island business to move to Indiana

August 22, 2011 (BLUE ISLAND, Ill.)

After 96 years in Blue Island, the Modern Drop Forge Co. is reportedly moving 30 miles east to Merrillville, Ind.

"The taxes are very high and Illinois is not friendly to business anymore," said one employee with the company.

Sources say Indiana Gov. Mitch Daniels will announce Modern Drop Forge Co., which makes precision tools and metal components, including for Harley Davidson motorcycles, is the latest Illinois company to be lured away by lower taxes and business costs.

Blue Island Mayor Don Peloquin says in this company's case, workman's comp differences alone will save several hundred thousand dollars a year.

"They're looking at dollars. If it costs this much here under the workers comp law, when they go to Indiana, they drop it by 30 or 40 percent. They save that much money," Peloquin said. "There's very little a local mayor can do."

The corporate quest to save money doesn't only involve crossing state lines. In some case, some companies have been setting up small, almost storefront operations in rural communities that have lower tax rates.

Chicago Mayor Rahm Emanuel says his administration is looking at suing "city" businesses that re-route sales tax through smaller communities.

"There's companies doing work here in the City of Chicago who are literally designing, with high priced lawyers and accountants, a system to circumvent the sales tax. That's not right," Emanuel said.

The Chicago Tribune reports the lost revenue for transit and other government agencies reaches into tens of millions of dollars.

"They're in Chicago, there's a sales tax. It should be there," Emanuel said.

As for Modern Drop Forge Co., sources say it'll actually shed jobs when it reopens in Indiana as a smaller operation, and its owners hope, a more profitable company.

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