Landing Caterpillar plant a major economic victory for Georgia

ATHENS -- Facing a stubbornly high unemployment rate and twin economic albatrosses in the housing and banking crises, Georgia needed a win.

Friday, it got one in the form of a $200 million Caterpillar heavy equipment plant and distribution center to be built near Athens that will eventually employ 1,400.

Caterpillar also expects its suppliers to ultimately relocate 2,800 jobs to Georgia and surrounding states. Plus there'll be temporary jobs created during construction of the plant.

The manufacturing facility for mini-hydraulic excavators and small track-type tractors will have an economic impact of $1.4 billion, with $33 million in annual state and local tax revenue, said Jeffrey Humphreys, director of the Selig Center for Economic Growth at the University of Georgia.

For each job at the new plant, Humphreys estimates another 2.4 will be created across the state, with Caterpillar ultimately generating more than 4,800 jobs, including those at its facility.

Caterpillar will build on a 265-acre slice of the Orkin tract, a 900-plus acre “mega site” that straddles the border of Athens-Clarke and Oconee counties. The site was once envisioned for and purchased by IBM, and later was bought by the Orkin family. The tract lies between two major highways, U.S. 78 and Ga. 316, about 60 miles east of downtown Atlanta.

Humphreys said the new plant will be a plus for metro Atlanta, as well. Parts of the region, such as Gwinnett and Barrow counties, are within an easy commute of the plant and suppliers, and those workers will spend money in the metro area.

When complete the plant will represent the largest growth of new jobs since the sprawling Kia Motors plant came to West Point in 2006, Gov. Nathan Deal said.

“This is an exceptional investment in the state of Georgia,” he said. “A $200 million investment in northeast Georgia will make a huge difference for this state.”

The Caterpillar plant is expected to have an annual payroll of $57 million at full employment, with average salaries competitive with or above Athens-Clarke's current average of $37,596 and Oconee's average of $33,748, officials said.

Many of the jobs will require a college degree or at least two years of technical training, the company said.

Manufacturing is a key sector that is powering Georgia’s recovery, Humphreys said. But Georgia needs a string of successes such as Caterpillar to put its employment back on par with the nation, he said.

The win didn’t come cheaply. State and local incentives will total $75 million over a number of years.

Caterpillar is eligible for job tax credits and a project development grant totaling $45 million, according to the Georgia Department of Economic Development. That does not include jobs training provided by the state under Georgia’s Quick Start program.

Athens-Clarke and Oconee incentives of more than $30 million over 20 years include tax abatements and infrastructure construction such as expanded transportation access.  Industrial development authorities in Athens and Oconee will acquire 265 acres in a deal approved Friday, with ownership transferring to the company over 20 years.

The commissions of Athens-Clarke and Oconee counties voted on the deal after closed meetings early Friday morning.

Athens Mayor Nancy Denson and Oconee County Commission Chairman Melvin Davis were rushed by police escort to make the governor’s 10 a.m. announcement at the state Capitol, where Caterpillar construction equipment was parked outside.

In November, Caterpillar announced plans to open a new U.S. manufacturing facility. Caterpillar decided to shift production from Japan to a site closer to its large base of customers in North America and Europe, the company said in a statement last fall.

Illinois-based Caterpillar picked Georgia over a host of other states, including North Carolina, which seemingly has eaten Georgia’s economic development lunch in recent years, including a victory in landing Chiquita.

Athens was desirable because of its proximity to the Savannah port, said Mary Bell, vice president of Caterpillar’s building construction products division. About 40 percent of everything made at the plant will be shipped overseas.

Production at the plant is expected to start late next year, with 800 employees in five years, ramping up to 1,400 by 2020.

Options for additional land are available for Caterpillar to exercise for its own expansion or for its suppliers.

Jim Stephenson, president of Yancey Brothers, the main dealer for Caterpillar equipment in Georgia, said a main product at the plant will be excavators for smaller construction jobs.

"The market for them has really been growing much faster than pretty much any other machine," he said.

The Caterpillar deal also adds momentum in a new year that has already seen Georgia nab two auto parts suppliers.

In early December, Georgia appeared to have fallen far behind rival states, said Chris Cummiskey, commissioner of Georgia Department of Economic Development.

Prior sites Georgia offered weren’t the right fit, he said, but with swift action by the local governments in Athens-Clarke and Oconee, the state threw a Hail Mary with the Orkin tract.

Athens-Clarke and Oconee officials weren’t engaged in negotiations until mid-December. “We had to play catch up,” Denson said.

A meeting with Caterpillar officials at Fulton County Airport-Brown Field about two weeks ago convinced Cummiskey Georgia was back in the game.

Georgia’s history of luring Kia suppliers along with the giant auto plant, and a proposed sales tax exemption for energy used in manufacturing, were among the factors that helped tip the scale in the state’s favor, he said.

Another factor: Georgia’s upcoming transportation referendum, said Caterpillar Chairman and Chief Executive Doug Oberhelman. Citizens around the state will vote this summer whether to raise their sales taxes to fund regional transportation improvements.

Oberhelman said improved infrastructure is badly needed in the country and is “critical” to make Georgia competitive. He promised that the company will “work hard to help it get passed.”

Company officials and Deal also highlighted the state’s Quick Start program, which provides customized training at state technical schools.

“You’re our secret weapon,” Deal said about the program.

Athens Technical College will provide workforce training if needed, Technical College System of Georgia Commissioner Ron Jackson said. The training will cover almost every job from office workers to welders, he said.

Athens has been insulated from the broader economic collapse by being the home of the University of Georgia and its health care system, said Doc Eldridge, a former Athens mayor and the president and chief executive of the Athens Area Chamber of Commerce. The unemployment rate in Athens was 7.3 percent in December, far better than the state rate of 9.7 percent or the U.S. jobless rate of 8.3 percent in January.

Still, Eldridge said, “we’ve been through the dance so many times” wooing major industry to the Orkin tract. “We’ve always been the bridesmaid, but never the bride.”

Athens had developed a reputation as not being friendly to big business, Eldridge said. Landing Caterpillar, he said, suggests otherwise.

The Caterpillar announcement will provide a lift to businesses that took a “bunker mentality” in the depths of the recession, said Amrey Harden, president and CEO of Oconee State Bank in Watkinsville, the Oconee County seat.

“They’ve been looking for something to be that catalyst, to say ‘OK, now’s the time to start investing in the future,'” Harden said.

Staff writer Ariel Hart contributed to this article.

Many of the jobs will require at least a college degree, or at least two years of technical training.

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