Navistar to cut production, 170 jobs from Melrose Park facility
Illinois’ manufacturing middle class continues to face somber news.
Vehicle and engine manufacturer Navistar Inc. announced it is ending engine production at its Melrose Park, Ill., facility by the second quarter of 2018, according to a company spokesperson’s statement reported by Crain’s Chicago Business.
Navistar will lay off 140 manufacturing workers and about 30 managerial workers, Crain’s reported.
Engine production at the Melrose Park location specialized in 9/10 liter engines, which are designed for particular kinds of medium duty trucks. According to a company spokesperson, the market for such engines had become increasingly niche, and the company could no longer justify their production.
Markets Insider reported that Navistar will continue producing engines at its Indiana, North Carolina and Alabama facilities.
Cutting 9/10 liter engine production will save Navistar $12 million in annual operating costs, but the move will cost the company $32 million in employee separation, pension and post-retirement contractual termination benefits, and $11 million toward inventory reserves, according to Crain’s.
Manufacturing struggles
Navistar’s decision adds to Illinois’ jobs plight. Illinois has half the jobs growth of its neighboring states, and unemployment has risen despite the decline in the state’s labor force.
Illinois’ manufacturing jobs climate is the worst in the region. And state policy mistakes share a great deal of the blame.
Illinois’ excessive business regulations contribute to the state’s moribund manufacturing sector. Illinois’ 2017 Administrative Code is a massive document that would take a person nearly 21 weeks to read – if he or she were reading 40 hours a week at 300 words per minute, according to a study by the Mercatus Center. Excessive and complicated regulations make Illinois’ corporate environment a minefield to navigate.
Additionally, Illinois’ current workers’ compensation system puts it at a disadvantage when competing for jobs with neighboring states, especially riskier jobs such as manufacturing, construction and transportation. For example, manufacturers in Illinois pay significantly higher workers’ compensation costs for equipment- and machine-repair workers than manufacturers pay in neighboring states. Workers’ compensation costs $9.22 per $100 of payroll for equipment- and machine-repair workers in Illinois – 45 percent higher than the average of surrounding states and 164 percent higher than in Indiana.
State policymakers can help stop the bleeding by making the state more hospitable to Illinois businesses.