Twin Cities give ADM leverage in Illinois

Even if Archer Daniels Midland Co. executives have their hearts set on moving to Chicago, they are best served by keeping Minneapolis-St. Paul in the mix as the firm looks for a new headquarters site.

That's because any deal for ADM to keep its headquarters in Illinois in exchange for state tax breaks hinges on other states trying to lure away the agribusiness giant.

ADM announced last month it plans to move its headquarters from Decatur, Ill., to a larger metro area, bringing about 200 jobs to its new home. The Illinois tax incentives sought by ADM require the company to show that it has a competitive offer from another state.

"The fact that they are considering an option like Minneapolis-St. Paul gives them leverage," said Timothy Bartik, an economic development expert at the W.E. Upjohn Institute for Employment Research in Michigan.

By all accounts, the clear favorite appears to be Chicago, which is just 180 miles northeast of Decatur. The Twin Cities and a few other cities remain candidates.

ADM representatives met Monday in St. Paul with officials from Greater MSP, a regional economic development organization, and the Minnesota Department of Economic Development. No formal financial incentive plan was offered, although ADM was told about the type of programs that were available.

"We made a strong case for Minnesota," Blake Chaffee, a department spokesman, said Tuesday. "We'll see where it goes."

In Illinois, ADM is seeking tax credits of $1.2 million annually for 15 to 20 years. The program ADM wants to tap requires a company "to provide documentation that attests to the fact of competition among a competing state," according to the website of the Illinois Department of Commerce & Economic Opportunity.

In other words, if not for the Illinois tax incentive, ADM would be better off economically by relocating elsewhere. Such stipulations are common among states, Bartik said.

Though tax breaks can be a strong enticement, most companies are more influenced by fundamental factors, such as labor costs, labor productivity and transportation access. In the case of ADM, high-quality air service is critical.

While it's hard to beat Chicago on airline connections, Minnesota still has a good case to make, economic development officials say.

Industry "clusters" are important in attracting businesses, and the Twin Cities is a national food and agriculture hub, said Lee Munnich, a senior fellow who studies economic development at the University of Minnesota's Humphrey School of Public Affairs. Also, the metro area is home to many major corporations already.