Peoria, Ill.: Caterpillar’s Exports Buoy City

Median household income: $47,266
Unemployment rate: 5.1 percent
Median home price: $125,200

Nestled inside his downtown coffee shop, Ron Clementz is finishing up a 3-D foam puzzle of a fairy-tale castle while barista Terry McWilliams steams milk. Both the owner of the Daily Buzz and his dreadlock-sporting employee talk like true independents—sharing a distaste for conventional politics and an angst over the encroachment of corporate coffee giant Starbucks. But Clementz and McWilliams are quite warm toward another corporate giant—Caterpillar. "As Caterpillar goes, Peoria goes," Clementz says. "If it wasn't for the Caterpillar people, I probably wouldn't be here."

Coffee shop owner Ron Clementz is upbeat.

(Carlos J. Ortiz/Polaris)

It's good news, then, that sales are bustling at the 83-year-old manufacturer of heavy equipment. Caterpillar has been plying its goods overseas with great success. Machinery sales were up 24 percent in Latin America and 31 percent in Asia for the year, offsetting an 11 percent dip in North America. Foreign governments and companies from China to Brazil have ready cash to spend, and with the weak dollar making American goods a bargain, Caterpillar is exporting nearly half of the products made at its three largest facilities in Illinois.

Although polls of Americans show growing skepticism about the benefits of free trade, globalization has been good to Peoria at a time when the rust belt is pockmarked with embittered communities that have lost big chunks of manufacturing jobs to cheaper workers in Mexico and China. The United States lost over 3 million manufacturing jobs from 1995 through 2005— more than a third in the Great Lakes states, according to the Brookings Institution.

But in Peoria, Caterpillar has added roughly 3,000 local jobs in the past five years and today employs about 17,500 workers in the area. Bernard Goitein, director of the Center for Business and Economic Research at Bradley University in Peoria, says Caterpillar's global sales are considered a key local economic indicator. The center's fall 2007 survey of local consumer confidence found nearly half of families said they were better off financially than a year ago. And Peoria isn't as reliant on Caterpillar's success as it once was, because of rising employment in healthcare and technology.

Don Faber, a dental ceramicist who likes to talk politics, was struck by the tone of a recent Democratic presidential debate: "All they talked about was how bad things are," Faber says. Yet from his perch in Peoria, the economy looks strong.

Since the 1920s, when vaudeville acts were tested on Peoria audiences and when producers asked, "Will it play in Peoria?" the city has borne the responsibility of representing Middle America to the nation. Yet the optimism here seems anomalous in this anxious economic climate. Last winter, President Bush made a trip to Caterpillar's East Peoria plant, hopped aboard a tractor, and announced he was "about to crank this sucker up." No need, really. While the national economy may be sputtering, things are cranked up here.