Ports help Georgia land new Caterpillar plant

   Access to the ports of Savannah, Ga., and Charleston, S.C., played a key role in Caterpillar Inc.’s decision to build a new plant in Athens, Ga., the company said Friday.
   The 1 million-square-foot facility will manufacture small track-type tractors and mini-hydraulic excavators and employ 1,400 people when fully operational. 
   The announcement also underscores the recent phenomenon of near-shoring, the slowly growing trend of some U.S. manufacturers relocating overseas factories to the United States or nearby regions such as Mexico or Central America. Caterpillar said it is shifting production from Japan to Georgia to place the two product lines closer to its primary customers in North America and Europe.
   Caterpillar said it will invest about $200 million in the facility and an adjacent distribution center. The plant will deliver completed machines to buyers in North and South America, and export partially assembled mini-excavator units to a facility in Europe for final assembly. 
   The Peoria, Ill.-based company estimates that the new production facility will create 2,800 indirect jobs in the United States among suppliers and other vendors, with a total economic benefit of $2.4 billion per year.
   Caterpillar officials said they were also attracted to the Athens site, from dozens of potential locations, by the strong regional base of suppliers, a pro-business climate and a good pool of potential employees with manufacturing experience, in addition to the availability of major ports. Georgia’s Quick Start program that customizes workforce training to a company’s needs and the 250-acre site’s proximity to two highways were also factors in Caterpillar’s decision, according to state officials. 
   Athens Technical College will conduct the training. 
   Clark and Oconee counties provided $30 million in incentives covering taxes, land acquisition, utility hook ups, roads, traffic signals and other services over 20 years.
   “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,” Georgia Gov. Nathan Deal said in a statement.  
   Athens is about four hours by truck from the Port of Savannah, which will be used to import materials and export 40 percent of the earth-moving equipment made at the new plant, according to a report by the Morris News Service carried in the Savannah Morning News. The Port of Charleston is about 4.5 hours from Athens. From a national perspective, Savannah is already a significant outbound port for Caterpillar.
   At a news conference, Caterpillar Chief Executive Officer Doug Oberhelman also cited the state’s pending referendum on a sales tax for transportation projects as a consideration about where to build the plant, to the consternation of Tea Party activists, Walter Jones, the Morris capital bureau chief, wrote in an analysis piece.
   “We need infrastructure badly in this country. I know. I sell infrastructure products, full disclosure, no problem,” Oberhelman was quoted as saying. “That Transportation Investment Act is critical in making Georgia competitive” and Caterpillar will work to help get it passed, he said.
   The small tractors and excavators are currently made at Caterpillar’s facility in Sagami, Japan. Once the transition to the new plant in Athens is complete, the Sagami plant will serve as a high-tech component facility, Caterpillar said.
   The manufacturer plans to break ground on the factory in the first quarter and projects initial production to begin in late 2013. It will take five years to reach full-production, it added.
   Caterpillar had record sales of $60.1 billion last year, an increase of 41 percent. Its profit increased 83 percent to $4.9 billion.
   The huge gain in revenue was largely due to exports, which reached an all-time high of $20 billion, according to the company’s Jan. 26 earnings release. Much of Caterpillar’s new business is in emerging markets as construction activity in the United States and Europe remains weak. The company said it will continue to invest in plants and equipment because production capacity for many of its products is tight. The company’s capital budget this year is $4 billion.
   One of the primary themes of President Obama’s State of the Union speech last month was the importance of restoring the U.S. manufacturing base. He outlined a series of steps designed to develop “an economy that’s built to last,” based on manufacturing, exploiting domestic energy resources and investment in infrastructure.
   He took credit for helping save the U.S. auto industry with huge loans and said other industries can be reinvigorated as well.
   “We can’t bring every job back that’s left our shore. But right now, it’s getting more expensive to do business in places like China. Meanwhile, America is more productive,” Obama said. “So we have a huge opportunity, at this moment, to bring manufacturing back.”
   The president proposed that businesses that outsource overseas shouldn’t get tax breaks for doing so, with the money instead used to cover the relocation expenses of companies that opt to bring production back to the United States. He also said multinational corporations should have to pay a basic minimum tax that would go to lower taxes for companies that invest at home, and that American manufacturers should get double the normal tax deductions.
   “So my message is simple. It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me those tax reforms, and I will sign them right away,” he told members of Congress in the audience.
   In the past year, Caterpillar has added 33,000 jobs, 14,000 of them in the United States.
   For more details about Caterpillar’s supply chain improvements and plans, read the December 2011 American Shipper cover story. — Eric Kulisch