Illinois’ manufacturers are defaulting on their loans at a much greater rate than the national average.
According to loan default information from credit rating company PayNet, almost 3 1/2 percent of Illinois’ small manufacturing companies are in a form of default on a loan as of February. The industry hasn’t seen this level of defaults in Illinois since November 2010. Compared to other states, only Texas and Louisiana are experiencing higher rates of loan default in their respective manufacturing industries. Illinois had a significantly higher percentage than its neighbors, who were all less than half of Illinois.
Zach Mottl of Atlas Tool Works wasn’t surprised to see those numbers. He said much of what would be profits used to pay overhead is often sucked up by Illinois’ expensive workers’ compensation insurance premiums and high property taxes.
“If I could have gotten both of those things cut in half, and I could’ve by moving over the border to Indiana, I would’ve been profitable for the last 10 years,” he said. “When you have these high burdens, you’re dragging an anchor that other people don’t have to drag.”
PayNet President Bill Phelan says the numbers show Illinois manufacturers are dealing with higher financial stress.
“There’s about three-and-a-half out of every 100 of those companies in the Illinois market [who] are having to close their doors because they can’t meet their loan payments,” Phelan said. “The amount of financial stress is higher for those manufacturing companies in Illinois than the average for all of Illinois as well.”
The Illinois Manufacturers Association estimates that there are more than 18,000 manufacturing businesses in the state, the majority being small businesses.
Source: Alton Daily News