By John Ruberry

Last Monday I had a errand to run for work–which brought me to Milwaukee’s suburbs. And for the first time in five years I drove on Interstate 94 north of the Illinois-Wisconsin state line–on what is known as the Milwaukee to Kenosha I-94 Corridor.

A lot has changed since 2012. As I left a toll road south of the border and entered a true freeway–okay, to be fair, the toll road has been there for decades–I noticed a lot.

Businesses–with huge facilities–that weren’t there five years ago leap out at you. Most obvious is the massive Uline warehouse in Pleasant Prairie. The headquarters office of the industrial supplier moved a few miles north from Waukegan, Illinois into Pleasant Prairie in Kenosha County in 2010. Its “Chicago warehouse” followed four years later.

In the 1980s Wisconsin’s tourism slogan was “Escape to Wisconsin.” Illinois businesses are now heeding the call.

Yes, the Chicago area has a couple of Amazon fulfilment centers, but farther north on my drive I saw a massive one in Kenosha–it opened in 2015. The Milwaukee Business Journal calls it “the largest in the recent Kenosha County industrial boom.” There is a “Hiring Now” sign out front.

Sears Holdings, an Illinois loser

South of Kenosha County is Lake County in ILL-inois. There is no Lake County industrial boom. There is no Illinois industrial boom.

Why is that? Sure, tax incentives from Wisconsin’s Republican governor, Scott Walker have helped greatly. Illinois, when inept Democrat Pat Quinn was governor, offered tax breaks to Sears Holdings, which operates the Sears and Kmart brands, and Mitsubishi Motors, to encourage them to stay. This was a few months after a huge income tax hike was enacted. What about attracting new business? By all accounts Sears and Kmart are on life-support and Mitsubishi closed its Bloomington plant in 2015.

Corporate taxes might be slightly higher in Wisconsin–no place is perfect. But Illinois has the nation’s highest median property tax rate. And Illinois’ expensive workers compensation laws frighten business owners.

In 2015 Wisconsin became a right-to-work state. All the states that border Illinois except for Missouri are right-to-work states and Show Me State voters will be asked next year if they want to join the trend. Nearby Michigan has been right-to-work since 2012. Job creators don’t like unions and based on recent workplace votes, neither do workers.

Illinois has its 800-pound odious gorilla in its basement, a woefully underfunded public-worker pension system. Wisconsin’s state pensions are by most accounts fully funded. Businesses don’t like uncertainty and Illinois’ pension bomb, despite a massive personal and corporate tax hike put in place this summer, has not been defused. Not even close. Ka-boom is coming.

Blogger in Pleasant Prairie

This summer Wisconsin and the Milwaukee to Kenosha I-94 Corridor snagged its biggest prize, the Foxconn factory. The Taiwanese manufacturer will hire anywhere from 3,000 to 13,000 employees for its facility in Mount Pleasant in Racine County. Yes, Illinois had also bid on the Foxconn plant.

Indiana is also enjoying great success poaching Illinois firms for the similar reasons.

And when the jobs leave the people leave. And Illinois is one of only three states with negative population growth.

John Ruberry regularly blogs from Illinois at Marathon Pundit.

SearsBy John Ruberry

“‘Vanity of vanities,” saith the Preacher, “vanity of vanities; all is vanity.'”
Ecclesiastes 1-2.

There are many great American business success stories–and the rise of Sears, Roebuck and Company is one of the more compelling tales.

The last few pages of the book on Sears are blank–and the ending is not going to be a happy one.

Richard Sears, like many entrepreneurs, started small. The Minnesota railroad station agent first sold watches to other rail agents in 1886. After moving his business to Chicago and partnering with watch repairer Alvah Curtis Roebuck in the 1890s, the company created the legendary Sears catalog, where one could buy the 19th century version of everything. Because Richard grew up on a farm, he picked items for the catalog that he knew would appeal to farmers and small-town Americans.

In 1908, Sears created the build-it-yourself house kit–over 70,000 Sears homes were constructed. In 1925, Sears opened department stores and after World War II it successfully rode the wave of suburbanization that crosstown rival Montgomery Ward missed.

Willis Tower, center, onetime HQ of Sears
Willis Tower, center, former HQ of Sears, Roebuck and Company

But rural America, which was once Sear’s base market,  didn’t vanish–and it was in the countryside where Walmart founded in 1962. By 1990, Walmart surpassed Sears as America’s largest retailer, and the onetime behemoth has been struggling ever since. Kmart, another troubled retailer, merged with Sears ten years ago–creating Sears Holdings. The union was similar to a marriage between members of two cash-poor aristocratic families whose chief asset was their names.

Last week Fitch downgraded Sears bond-rating to Double-C, which according to Michael Aneiro of Barron’s, is “essentially the sub-basement of the speculative-grade ratings scale.”

Crain’s Chicago Business’ Joe Cahill speculates that the debt load could put the “closed” sign forever on Sears and its family of stores by 2016.

Three years ago, after threatening to move its headquarters out of Illinois, the state legislature gave $150 million in tax breaks to Sears Holdings so it would stay in the Prairie State.

What a waste of money that was.

John Ruberry, a fifth-generation Chicago-area resident, regularly blogs at Marathon Pundit.