Illinois Outbids Oregon for Hyster Plant

PORTLAND, OR - The Hyster Company, the second largest American producer of forklift trucks, is packing its bags and leaving Portland. The firm, which began its business life here back in the 1930s, plans to phase out its production facilities and most functions of its corporate headquarters over the next three years and move to Illinois.

Why Illinois? Because the townships of Danville and Kewanee, where Hyster also has manufacturing plants, enticed the company to relocate with an offer it couldn't refuse - free money. Oregon couldn't, or wouldn't, ante up.

This latest outcome of the growing competition between states and cities for industry does not spring from acute monetary distress. Hyster is not limiting its international expansion in these grim economic times; on the contrary, it opened a $5O million forklift truck plant in Craigavon, Ireland, in 1981 (where it can write off up to 90% of initial investment costs), and despite some planned consolidation, continues sole or joint operation of facilities in Brazil, Scotland, The Netherlands, South Africa, Belgium, Canada and Australia. Hyster has plants in other U.S. states as well, including Alabama, Kentucky and Tennessee.

According to a Forbes Magazine article of June 7, 1982, Hyster logged $583 million in sales in 1981. It could add "$100 million to the company's sales figures" from the Craigavon plant operating at full capacity.

So when this multinational firm bought a two-page spread February 6 in Portland's only daily newspaper, The Oregonian, to complain about foreign competition and request public assistance, it startled some and seemed an abrupt switch for a company known historically in Oregon as a champion of "free enterprise."

When the dust settled, City of Portland and State of Oregon officials showed a conspicuous lack of sympathy in the face of Hyster's plea for help. As Steve Peterson, an officer with the Portland Development Commission, puts it, "There was not a great deal of support on the City Council for this (aiding Hyster)."

The state and city's final offer to the company was in the form of $200,000 worth of job training, and a preferred stock purchase scheme using Hyster employee pension funds.

But Hyster was not satisfied. "Such a purchase of stock is a liability on their books," Peterson explains. "They would have had to pay it back eventually." Did they just want free money? "That's about it," Peterson says. "We went as far as we could, taking into account the political realities, but we couldn't come up with free money."

Where Oregon failed, Illinois succeeded. Its magnanimity took the form of $10.2 million in funneled-through HUD community development block grants, low-interest loans and state industrial training funds. According to Penny Strong, spokesperson with the Illinois Commerce and Community Affairs Department, Hyster must guarantee up to 2,000 jobs and invest significantly in the Illinois facilities. The Department, along with the Danville Economic Development Corporation, helped construct the aid package.

"The feds must come through with the same level of funding on a year-by-year agreement," Strong says. "You can't guarantee the money will be there, but if everything goes right, it's clear until 1987."

Like other companies in the lift-truck industry, Hyster's U.S. operations are operating at a very low capacity, and face stiff competition from Japanese imports. Hyster is attempting to compete by producing newer, smaller and less expensive models. The Ireland plant will manufacture a $20,000 "no-frills" lift truck aimed at trimming back Japan's current share of the U.S. and European markets.

Union officials at the Oregon plant were angered at Hyster's methods in dealing with the shutdown. Meetings to work out a final contract covering the phase-out period, ended February 18 with a "heated discussion" over severance pay, union president Roger Rimer recalls. "They (Hyster) said `no' to severance pay unless the contract gives them everything they want." ("Everything they want" includes, according to a local reporter who has covered the issue, a splitting up of company unions into individual components for contract negotiations.)

Rimer says he doesn't know whether the company wants to come to any agreement with the union. "I thought they did, but now I'm not sure. If they do, they sure have a funny way of doing it." He added that employees "have a very poor attitude toward Hyster now."

As far as the company is concerned, the official point of view is particularly elusive. Repeated calls to the plant manager and company negotiators yielded no results. Even their public relations officer was "not available," according to the receptionist.

"Hyster is not used to being socked around by the press," comments Douglas Carter, Economic Development Director for the State of Oregon, who has a most sympathetic view toward the company's plight. "If I were misquoted and misquoted the way they've been just to sell a sensational headline, I wouldn't return phone calls either."

"It's not Portland's fault they (Hyster) built a new facility in Danville. It was a prudent business decision. Their market, predominately, is east of the Mississippi River. If I would have been an official of that company, I would have made the same decision (to leave)," he added. "There's no way anybody can be critical of what they've done."

But a larger question remains of how states and cities will adjust public policy as more and more corporations seek buffers from the shifts of fortune in the international marketplace.

"I think Oregon's going to have to take a hard look and make a policy decision - will we play the game of incentives and giveaways? What kind of business climate and economy do we want in this state?" asks Steve Peterson of Portland's Development Commission. "We can't be halfway in the game."

In that "game," the public subsidizes the costs of doing business while profits remain in private, often multinational, hands.

In this particular round, Portland, and Oregon, refused to play.

Catherine Siegner is a free-lance writer based in Portland, Oregon. She writes regularly for the Portland Observer.