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Du Quoin cable maker says sales tax hike could be harmful

  • Erik Perks, general manager of the Prysmian Group (formerly General Cable) in Du Quoin, speaks to the Du Quoin city council last week.

    Erik Perks, general manager of the Prysmian Group (formerly General Cable) in Du Quoin, speaks to the Du Quoin city council last week.
    Renee Trappe photo

  • The manufacturer sells $180 million in cable each year from its Du Quoin facility.

    The manufacturer sells $180 million in cable each year from its Du Quoin facility.
    Devan Vaughn photo

By Renee Trappe
updated: 2/19/2020 11:58 AM

A half-cent addition to the Perry County sales tax could potentially jeopardize the future of one of Du Quoin's biggest employers and sales tax producers, the general manager of the Prysmian Group told the Du Quoin city council.

Erik Perks, general manager of the Prysmian Group (formerly General Cable) plant on Route 51, did not say that a half-cent increase in the county sales tax -- which is a question on the March 20 primary ballot -- would necessarily doom the company.

He said, however, that his job is to keep the Du Quoin plant competitive with other cable manufacturers within the Prysmian Group, so that if cuts ever have to be made the company will look elsewhere to make them.

Right now, Perks said, the $9.75 sales tax in Perry County has Du Quoin at about a 2% disadvantage against its North American competitors. Raising the sales tax to $10.25 would only widen that gap, he said.

The Du Quoin plant has been making power distribution cable for more than 50 years. In 2018, General Cable -- at the time the fourth largest maker of power distribution cable in the world -- was acquired by the #1 maker, the Prysmian Group, based in Italy.

Since then, the Du Quoin plant has gone to a seven day a week operation and increased its workforce to 203 people, 99% of whom earn at least $20 an hour, Perks said. He said he and the Teamsters just recently negotiated a new four-year labor contract for 180 unionized employees.

Prysmian also invested a million dollars in upgrading the plant. It asked Perks for -- and got -- a 16% increase in the volume of cable the plant made since going 7 days a week.

The Du Quoin plant alone sells and ships $180 million worth of cable every year, Perks said, all subject to state and local sales tax.

"Business is great right now," Perks said, "and we are a very large contributor to the county and to the city. We're investing, we're growing ... we have visitors (from around the globe) every day of the week.

"But business is cyclical. If and when business gets tight they (Prysmian) will look to see which plant can produce cable at the lowest competitive rate. That'll be wages, fringes, utility bills -- every aspect that costs money and generates money.

"If they need to take a plant from seven days to five days, or to furlough a facility, it'll be the one that has the highest cost."

Du Quoin is Prysmian's only plant in Illinois. Other plants in Marshall, Texas, Abbeville, South Carolina, Williamsport, Pennsylvania and two in Canada all make power distribution cable. Prysmian has 21 manufacturing sites in North America, each one focused on one of three products: power distribution cable; communications equipment like fiber and telecom; and specialty cable, like that for the military or for specific building codes.

Perry County's half-cent sales tax initiative on the March ballot would raise an estimated $689,000 annually, most of which would go to beef up sheriff's patrols. Sheriff Steve Bareis said he frequently has only one officer on duty to patrol the rural parts of the county, which he considers dangerous for residents living in those rural areas, and dangerous for his officers, because backup officers aren't necessarily nearby.

This is the second try for this referendum, which failed by more than 2 to 1 at the 2019 election, losing primarily among voters in the incorporated areas of Du Quoin and Pinckneyville, which have municipal police departments.

Du Quoin Mayor Guy Alongi has opposed both attempts, saying Du Quoin businesses -- especially Prysmian and Walmart -- would bear the brunt of the increased sales tax and that the town would get little in return for it.

By his numbers, Du Quoin businesses would generate about $503,000 of the $689,000, or about 73%. Prysmian and Walmart alone make up 63% to 65% of the city's total sales tax receipts, Alongi said.

He doesn't want anything to discourage Prysmian about the viability of the Du Quoin plant.

"If we were to lose Walmart or General Cable because of a half-cent sales tax it would take a long time for Du Quoin to recover," Alongi said.

"It would be tough to replace 203 jobs making $20 an hour, in a town of 6,000 people that's 18 miles off the interstate," he added.

He said with most of Prysmian's employees living within 30 miles of the plant, "the impact of General Cable is huge throughout the region."

Perks, meanwhile, said a half-cent sales tax would be roughly the equivalent of 17 employees.

"Right now, I have to be strategic," said the southern Illinois native, who has two engineering degrees and his MBA, all from Southern Illinois University.

Good times, he said, are when a company should work to get itself in the best position it can.

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