Manufacturing plants all over the nation have been shutting down and their jobs have been shifted overseas for decades. But one plant shuts down overseas and the jobs get moved back to the US, and all hell breaks loose.
The plant in question is the new $200 million Caterpillar Inc. (NYSE: CAT) plant for small track-type tractor and mini hydraulic excavators.
The 1,400 jobs for this facility are being moved from Sagami, Japan to the “Orkin Site” near Athens in Clarke and Oconee counties in Georgia. Caterpillar estimates that another 2,800 full-time jobs will be created among suppliers and other companies that will support the new facility.
The new facility will provide completed machines for customers in North and South America. In addition, the company also plans to export partially assembled mini excavator base units to a facility in Europe, where final assembly will take place, improving delivery times for European customers.
The site selection process had raised feverish activity in Peoria County, Illinois where the largest construction equipment maker in the US has its headquarters, and in Cary, NC where it has its divisional headquarters.
Caterpillar first signaled back in November that it would be moving the Sagami plant back to North America. Mary Bell, the head of Building Construction Products (BCP) Division based in Cary, NC, said at that time that, “The decision to shift production from Japan to the United States is driven by the proximity to a large base of customers in North America and Europe.”
At that time, sites in Mexico and Canada were also in consideration. The Caterpillar site selection team also studied 100+ communities in three dozen states in the US.
But then, Peoria County was informed on Feb 7, 2012 back that Illinois had been eliminated from the process. Caterpillar’s North American Facility Site Selection team sent a letter to county officials informing them why Illinois lost out. An excerpt from the letter is published below.
“As you know, we have a site selection and business modeling team in place that has been reviewing a comprehensive set of criteria to determine the optimal location for this facility. These factors include logistics, port access, labor markets, supplier base, and governmental partnership opportunities. We have defined a very tight search area that is primarily being driven by logistics, port access, and proximity to our division headquarters in Cary, North Carolina…
Please understand that even if your community had the right logistics for this project, Caterpillar’s previously documented concerns about the business climate and overall fiscal health of the state of Illinois still would have made it unpractical for us to select your community for this project.”
So that left North Carolina as the pin waiting to be knocked out. What did them in was the port. Brunswick County, NC had a site in the running, located in the International Logistics Park. They were also eliminated on Feb 7, 2012 because the NC Ports Authority could not guarantee a 50 ft deep channel leading to the current or future port.
Ultimately, what it came down to was that the Athens site had ports nearby like the one in Savannah, GA and in Charleston, SC with the capacity to handle large roll-on/roll-off cargo. Georgia wasted no time in touting their success and explaining why they were successful at recruiting the 1 million sq ft plant.
“This is an extraordinary day for our entire state, and a game-changer for Clarke, Oconee and surrounding counties throughout northeast Georgia,” said Georgia Governor Nathan Deal. “Caterpillar will find a happy home here, and our state’s logistics, workforce, speed and efficiency will give the company an edge in the global marketplace.”
The statement put out by the Governor’s office cited the Georgia Quick Start program as a major factor in Caterpillar’s decision. Working through Athens Technical College, Quick Start will train Georgia workers in the full spectrum of Caterpillar’s needs – including those working in the office and production employees.
The third factor is the $75 million plus incentives package put together by Georgia and the Clarke and Oconee counties. Caterpillar will break ground for the plant in March 2012 and begin operations in late 2013. Most employees will be hired locally.