How TIFs and China Work Together To Boost Chicago Steel and Manufacturing

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[youtube]http://www.youtube.com/watch?v=1BDsC53j2_o[/youtube]

Mayor Richard M. Daley of Chicago touts local steelmaker A. Finkl & Sons Co. for staying in the city and retaining manufacturing jobs at a luncheon held by the Alliance for Illinois Manufacturing. Video: Taras Berezowsky/MetalMiner

Big news last week for the Chicago steel industry when US steel producer A. Finkl & Sons Co. received a hefty chunk of change — $20.5 million from the city’s Community Development Commission in TIF money to move operations to the former South Side site of Verson Steel (instead of picking up and moving to Canada). Tax Increment Financing (TIF) is a hot-button issue in Chicago, as many city officials, including outgoing Mayor Richard M. Daley, favor it as a way to incent local business development to spruce up blighted neighborhoods, while detractors say the property tax freeze that the government offers on these properties diverts money from local schools (yet somehow manages to get funneled into the pockets of Daley officials and their favorite developers).

Crain’s Chicago Business reported that the latest approval brings Finkl’s total government assistance to $31 million from the state and the city, which represents about 20 percent of their total spend on the new facility — $150 million. These new operations will boost Finkl’s capacity from a current 100,000 tons to nearly 500,000 tons when all is said and done a sizable boost to the local steel industry. Crain’s says the company will eventually employ up to 500 people at the new plant, and for now, the 350 jobs that the city of Chicago will keep make its TIF offer worthwhile. A Chicago Community Development Commission report mentioned in the article noted that Finkl also requested funds for job training funds, reflecting the conundrum of available industry positions with not enough qualified people to fill them.

But keeping steel mills like Finkl’s and other manufacturing businesses in Chicago and Illinois has been a top priority after Gov. Quinn’s tax hikes forced many companies to think twice about staying in-state. After all, according to the Alliance for Illinois Manufacturing (AIM), Illinois ranks second in number of manufacturers, representing $72 billion in gross regional manufacturing products. A big component of keeping companies in Chicago can be traced to Mayor Daley’s main mantra: let’s make business and government work together and not at cross-purposes, as evidenced by his penchant for privatization.

When the Baron From Bridgeport himself attended a luncheon held by AIM last week, honoring him with a Lifetime Achievement Award, he mentioned Finkl’s new project (among others) — check out the video above — making it clear that manufacturing is near and dear to his heart and so is China.

“It’s amazing how much they’ve adjusted [to become a leading global economy] in the last 20 years, Daley said.

He professed his love for the “inquisitiveness of the Chinese people and how dedicated to foreign investment they are. Daley mentioned that Chinese metal companies are also setting up shop in Chicago, thanks in no small part to his personal initiatives to make Chicago the most China-friendly city in the country.

Whether national partnership with the Chinese is bottom-line beneficial on a trade deficit basis, one thing is clear: getting Chinese companies to employ American workers and retaining the American (steel, etc.) companies paying domestic workers to compete globally is a winning situation, especially for a city with a rich industrial history like Chicago. Daley’s a big reason, through privatization and TIFs, that businesses have been able to at least consider working with or staying in the city over the past two and a half decades.

If you work in, buy from, or distribute to the metal industry in Illinois, leave a comment below tell us what you think!

–Taras Berezowsky

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