A $200 million Caterpillar manufacturing plant set to open near Athens next year is the latest in a flurry of economic development coups for Georgia as it positions itself to compete amid a resurgence in U.S. manufacturing.
The Illinois-based heavy equipment maker announced Friday plans to break ground next month on the 1 million-square-foot facility for mini-hydraulic excavators and small track-type tractors. It’s expected to create about 1,400 jobs by 2020.
Georgia has ramped up its efforts to attract advanced manufacturing projects since KIA Motors opened its plant in West Point two years ago, employing 3,000 workers, said Chris Cummiskey, commissioner of the state Department of Economic Development.
“Our pipelines are as full as they’ve ever been,” Cummiskey said, adding that advanced manufacturing will continue to be a heavy focus throughout the next decade or more.
The state’s expansive railway system, favorable corporate income tax rules, expanding Port of Savannah and jobs training program, known as Quick Start, have been critical in attracting major manufacturers such as Caterpillar, he said.
Among Georgia’s most recent wins: Toyota Industries Corp. recently announced plans to open a $350 million automotive compressor parts plant in Pendergrass, 60 miles northeast of Atlanta. The project, slated to be completed in late 2013, will create an estimated 320 jobs.
Industry observers say Georgia and the Southeast are poised to be big winners in the revival of manufacturing across the country.
Companies are looking to minimize their costs as much as possible, said Mitch Free, CEO of Atlanta-based MFG.com, an online marketplace for manufacturers.
Shipping cars and equipment half way across the world is a time intensive and expensive process, Free said.
Manufacturing in the U.S. means not only being closer to a company’s base of customers; it has also become cheaper as the dollar has weakened, he said. The cost of doing business in Europe and Japan has become extremely expensive — spurring companies such as BMW to look here, Free said.
The Southeast, with its lack of unions, cheap land costs, low wages and access to large ports, has become a significant player in attracting those companies, he said.
Snagging major companies such as Caterpillar is key to getting Georgia’s sagging economy back on track, said Jeffrey Humphreys, director of the Selig Center for Economic Growth at the University of Georgia.
Georgia’s manufacturing industry, which once largely focused on tile, wood and other construction materials, got hammered by the recession but is starting to recover, Humphreys said.
But while often on the short list for major projects, Georgia has struggled to close deals, in part, because it hasn’t offered as many incentives as other states, he said.
Incentives are critical to Georgia being able to compete with the Carolinas, Mississippi, Alabama and other Southern competitors, said Jonathan Sangster, senior managing director with CBRE Consulting in Atlanta.
Georgia has historically focused on automatic incentives based on measures such as the number of jobs a company creates rather than discretionary incentives that are tailored to the needs of specific projects, such as offsetting the cost of extending sewer lines and other infrastructure needs, he said.
“[Incentives] can either level the playing field or can tip the scales,” Sangster said.
Under the deal announced Friday, Caterpillar is eligible for more than $75 million in state and local incentives — including $45 million from the state in the form of job tax credits and a project development grant.
A bill introduced in the state House earlier this year aims to attract new jobs to the state by upping incentives for jobs created by existing firms or jobs moved to Georgia.
The legislation proposes lowering the number of new workers needed to qualify for incentives and increasing the amount of credits in more developed counties.
Sangster said he expects to see more growth in advanced manufacturing as companies that have been hesitant to make decisions get back in the game.
“There are still a lot of dollars on the sidelines,” he said. “Over the next year, as we get through the election and stabilization of the market ... we’re going to see activity continue to pick up.”
Georgia’s economic winning streak
● Retailer Bed Bath & Beyond plans to open an e-commerce fulfillment center in Pendergrass in Jackson County, creating as many as 900 jobs over four years.
● Home Depot plans to open a new customer support call center this year in Cobb County, bringing with it 700 jobs.
● Tenneco, a global vehicle supplier, is expanding its production lines at its existing facilities in Hartwell, adding 350 jobs.
● Toyo Tires is investing $910 million into expanding its Bartow County facility, adding up to 470 jobs over the next few years.
● Hailo USA, the American division of a German manufacturing firm, will move its headquarters, opening a wind turbine component facility in Elberton and create 500 jobs over five years.
Source: Staff research
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