by Dan Rafter
Chris Gary is rarely surprised when industrial users choose to open their manufacturing or distribution businesses in Northwest Indiana instead of the Chicago market.
Operating in this slice of Indiana — which includes such traditionally manufacturing-friendly cities as Hammond, East Chicago and Gary — comes with a host of benefits, the most important of which is the lower cost of doing business here.
“In general, your costs of operation will be down in Northwest Indiana,” said Gary, a vice president and industrial specialist with Oakbrook Terrace, Ill.-based NAI Hiffman. “The soft costs — the workers’ compensation costs and unemployment insurance rates — are terrific in Northwest Indiana. The utility rates can be less. The state government and municipalities have been very aggressive in attracting Illinois businesses, so there are often incentives. It’s a good place to run an industrial business.”
End users know this. For proof, just look at the major industrial projects going on here. ITR America at the end of 2013 completed a 100,000-square-foot build-to-suit facility in Hobart, Ind. Munster Steel is now building a 123,000-square-foot center in Hammond, Ind., for its operations.
Urschel Laboratories is building a 350,000-square-foot manufacturing plant in Chesterton, Ind., in the Coffee Creek Center. This project, which also includes a new headquarters building for the company, will cost $104 million.
Then there’s chemical company MonoSol, which recently bought a 23-acre site in the Portage, Ind., business park AmeriPlex at the Port. The company plans to build a 300,000-square-foot manufacturing plant.
“Those are four substantial projects. What’s interesting is that each is a manufacturing project, not a distribution project,” Gary said. “That’s a little counter to the market overall. To put a rough number on it, roughly 75 percent to 80 percent of new industrial deals tend to be distribution deals. But here, these four big projects are all manufacturing deals. I would chalk that up to the fact that historically, Northwest Indiana has a bit of a labor advantage to Illinois.”
Those lower labor costs, of course, is one reason why industrial users might choose to locate in Northwest Indiana instead of the Chicago-area market. Labor costs are lower on the Indiana side of the border. Indiana is also a right-to-work state, which is also attractive to industrial users.
Then there’s the way workers’ compensation and unemployment insurance are calculated in Northwest Indiana. Gary estimates that end users can save up to $1,500 a year for every worker in soft costs if they do business in Northwest Indiana instead of Illinois.
“If you have a lot of employees, if you have 100 or 200 employees, that can come out to $150,000 to $300,000 of soft-cost savings,” Gary said. “That is real money. That is one of the reasons why manufacturing projects have come to the forefront in Northwest Indiana at the moment.”