A railcar manufacturing facility that received millions of dollars in incentives from the state just a few years ago is shutting its doors.
Nippon Sharyo announced it would be closing its facility in Rochelle at the end of August. This follows a years-long reduction in its workforce there due to decreased demand.
"The closure of this facility comes after years of dedicated work by company leaders and employees to deliver the 130 Bi-Level Passenger Rail Car," the statement read. "Ultimately, the complexity of the project prevented Nippon Sharyo from successful completion of this project. This result brought significant losses, which severely impaired our financial conditions to the extent that we can no longer build rail cars at the Rochelle factory."
The plant opened in 2012 after Illinois officials offered Nippon Sharyo an incentive package worth more than $4.7 million, including training funds, grants, and corporate tax credits. Additionally, the Illinois Department of Transportation spent $5.5 million to build a rail spur to the new factory.
State Rep. Tom Demmer, R-Dixon, says it's not the ending anyone wanted.
"It's really unfortunate to see," Demmer said. "Both the local and state government did a lot to try to bring in Nippon Sharyo in the beginning. I don't think we can look at this and say it was a very ideal outcome. Certainly not happy with the fact they lasted only six years there."
Demmer says there is no mechanism in place for the state to attempt to recover any of the tax credits or grants awarded to the company.
Jason Anderson, economic development director for the city of Rochelle, argues that despite the closure, the community retains some benefits.
"As a result of Nippon Sharyo, we built about $11-million of rail on the city of Rochelle railroad system. And today, our rail system is at its capacity with all the industry built around it," Anderson said. "Nippon Sharyo spent hundreds of thousands of dollars training people from the ground up in machining and welding and parts manufacturing. All these companies in northern Illinois looking to hire trained workers have hired these people."
At its peak, Nippon Sharyo employed about 600 workers at the location, but layoffs began in 2015 after failed safety tests on certain cars. The company also was fined $19,550 that year by the Occupational Safety and Health Administration for exposing workers to dangerous conditions.
"When you're in business, not every enterprise works out the way you hope it would," Demmer said. "This is an unfortunate ending to what was an extremely promising project at the beginning."
Nippon Sharyo is preparing to sell the factory and its assets. Anderson expects the space to be filled in the near future. He said he's fielded about a half-dozen inquiries about the building in the last year or so. Meanwhile, state officials are standing by to assist, if needed.
"I think the state will be involved in helping to recruit businesses to come in there, but you're not going to see the same kind of financial involvement because a lot of that work has already been done," Demmer said.
In spite of the setback, Anderson argues the long-term trajectory of Rochelle's economic base remains solid.
"We are so positioned to add a lot more industry," Anderson said. "The fact that we have those buildings available actually is a big, big plus for the city of Rochelle because we have filled every building in Rochelle in the last 10 years. We had nothing to sell."
Among the projects now under way in Rochelle is a 14-story frozen food warehouse. The facility is expected to open in December, and will employ about 70 people in various positions.
"Nobody is going to bat 1.000," Demmer said. "You're not going to have every project be successful. But Rochelle has done a really good job of attracting new projects and a diverse range of projects."