Setting aside metro-New York and its unique concrete, aggregate and cement supplier profile, Chicago was the last major U.S. market to draw significant investment from integrated, multinational producers. Three now have sizable stakes, as a fourth eyes a corporate beachhead a stone’s throw from Lake Michigan.
Hanson Plc landed trophy aggregate operator Material Service Corp. a year before its 2007 merger with Heidelberg Cement. Also in 2006, Holcim (US) Inc. acquired Meyer Material Co., a key suburban Chicago ready mixed producer with additional presence in southern Wisconsin and Milwaukee. In 2008, Votorantim Cement North America absorbed Prairie Material Sales, then the industry’s largest independent ready mixed producer, with major Chicago and suburban operations, plus Milwaukee, Detroit and Indiana satellites.
Material Service, Meyer Material and Prairie Material hold strong strategic value for their buyers. Now extending its Illinois market presence beyond a NewCem slag mill in Chicago and the Joppa cement plant is Lafarge North America, albeit in a different capacity than Hanson, Holcim and VCNA. One of the industry’s best-managed operators, Lafarge NA is curiously relocating corporate headquarters from northern Virginia, near Dulles International Airport, to an undisclosed site northwest of Chicago, near O’Hare International Airport.
A state incentive package valued at $6.3 million over 10 years, coupled with skilled-workforce availability and the prospect of closer proximity to a larger portion of its customers, drove the decision. Joining Illinois Gov. Pat Quinn to announce the move, Lafarge NA’s John Stull, CEO for U.S. Cement and Aggregate & Concrete operations, noted, “As a leader in the building materials industry, it is important to us to be close to our operations and customers to help provide them with sustainable construction solutions. The location around O’Hare and along the Interstate 294 corridor is ideal because it is central to our U.S. footprint.”
Gov. Quinn recruited company officials and met with senior leadership of Paris-based Lafarge Group during a March economic trade mission to Europe. Lafarge NA will invest about $10 million in the fall 2012 move, its new headquarters staff of about 90 projected to climb above 100 over the next few years.
As a longtime Chicago-area resident and observer of heavy building materials production, I welcome Lafarge NA’s arrival, but am glad its Illinois headquarters investment is very modest against overall revenues. The state can deliver the quality workforce, and a home base close to O’Hare International behooves a company with visitors from across the U.S., Canada and Europe. Those factors are apparently sufficient for Lafarge Group and Lafarge NA management to overlook negative ones that have transformed the Land of Lincoln to a den of thieves.
Illinois is a high-tax state whose businesses and residents are increasingly exposed to financial burdens rooted in pension obligations for the state’s retired public “servants,” according to figures from Chicago area-based Better Government Association and pension system observer Bill Zettler. Where else could a former governor draw a $135,000-plus annual pension concurrent with a $177,000 University of Illinois salary? How many states boast 4,000-plus retired public employees bagging $100,000 or more annually, and have another 20,000 peers in line to join the six-figure pensioners club over the next decade?
The ability of Gov. Quinn to temper state retirees’ pension largesse weighs heavily on Illinois regaining a diminished business base. Many entities that see the same location and workforce advantages as Lafarge NA probably don’t share the company’s apparent tolerance for uncertain state tax liabilities and public “servants” positioned to retire in their early sixties on $10,000 a month.