Caterpillar to Build N.C. Plant

RALEIGH, N.C. -- 

The nation's economic recovery remains crippled by weak business spending and hiring, but Caterpillar is bucking the trend in North Carolina.

The company said Friday it will build a $426 million manufacturing plant in Winston-Salem, N.C., and create more than 500 jobs over the next five years. The announcement came on the day the federal government reported that economic growth had slowed to 2.4 percent in the spring - down from 3.7 percent during the first three months of the year.

Many companies, even those flush with cash, remain reluctant to hire or expand because of fears that the recovery is losing momentum.

Caterpillar, the world's largest maker of earth-moving equipment, was lured to Winston-Salem with state incentives worth up to $16.8 million if it meets its hiring goals. Local incentives could push the total payout to more than $40 million.

The investment comes after several years in which Caterpillar was forced to shed thousands of jobs worldwide, including hundreds in the Raleigh area.

Caterpillar employs 1,026 people in the state, mostly at operations in Clayton, Cary and Sanford. The state tax breaks and other incentives tied to the Winston-Salem expansion don't require the Peoria, Ill.-based company to retain employees at its other sites in North Carolina.

Caterpillar also is considering a major expansion of its Sanford plant that could bring hundreds of additional jobs. Last month, Lee County commissioners approved a $900,000 grant for the proposed project.

"That's just to let them know that we're very interested in anything they would do out there," said Bob Heuts, the county's director of economic development. "We wanted to make sure they knew and understood that we'd be ready to step up."

The company is also considering a site in South Carolina for the project, Heuts said.

Efforts to reach Caterpillar officials for comment on Friday were unsuccessful.

Caterpillar has seen demand for its construction and mining equipment, engines and turbines increase recently, and the company has responded by adding about 1,250 employees in the United States this year.

The Winston-Salem plant will be part of Caterpillar's mining operations and will perform work not done at any of its other North Carolina locations. The 850,000-square-foot facility will assemble, test and paint axles for large mining machines.

The plant will be next to the Dell computer-assembly plant, a facility that also was lured by the promise of millions in incentives. That factory became a symbol for critics of incentives when Dell announced last fall that it would close the 750,000 square-foot plant five years after it opened.

Pros, cons of incentives

Opponents of the state's economic incentives policy said the Caterpillar deal represents another handout for a company that doesn't need it.

"We're continuing to be taken advantage of," said Bob Orr, the executive director of the N.C. Institute for Constitutional Law in Raleigh. "If you look at the budget holes state and local governments are facing, it simply makes no sense to be giving this kind of money away."

Keith Crisco, the state's commerce secretary, said incentives are a necessary tool in today's economic development world.

"We have no choice but to participate or we will lose jobs and not be successful at economic development," he said.

After originally considering sites in nine states for its new plant, Caterpillar said earlier this month that it had narrowed its list to three: Winston-Salem, Spartanburg and Montgomery, Ala.

The state's job-creation grant requires Caterpillar to add 392 jobs over the next five years. Another 118 jobs will be contract positions.

The permanent jobs will pay average annual salaries of $40,482, slightly above the Forsyth County average of $40,352.