The construction equipment maker, which has hired 600 new workers in Sanford this year, says a new facility will help increase production of compact track loaders and telehandlers. The company had considered expanding in other states.
Construction equipment maker Caterpillar Inc. plans to invest $1 billion in North Carolina to expand manufacturing in Sanford, the company said Wednesday. The decision comes less than two weeks after local officials approved tens of millions of dollars in tax breaks to keep the company — and 2,000 jobs — in Lee County.
Caterpillar, which is one of the county’s biggest employers, says it plans to build a new manufacturing facility to increase production of compact track loaders and telehandlers — machines used in construction, landscaping, agriculture and material handling.
The company is evaluating the purchase of the Regional Crossroads Park, which sits on 500 acres off U.S. 1, north of U.S. 421, a company spokesperson said. It’s expected to be one of the biggest corporate investments in Lee County history.
“As demand for compact equipment continues to increase, we're investing to better serve this growing segment of customers,” Rod Shurman, president of Caterpillar’s construction industries group.
Caterpillar currently employs about 2,000 at its existing Sanford facility, which is a few miles southwest of Regional Crossroads. The company, which has hired at least 600 new workers this year, doesn’t plan to increase its workforce at the new facility, according to Caterpillar spokeswoman Lisa Miller.
“Our existing workforce will be upskilled to be ready to operate in a more technology-enabled manufacturing environment,” she said in a statement. The company said it expects the project to create opportunities for advanced manufacturing careers and help employees develop skills in automation, robotics, digital manufacturing and advanced production systems.
'We dodged a bullet'
Caterpillar had considered expanding in other states, including South Carolina, local officials said. In an effort to keep the jobs in the area, the Lee County Board of Commissioners and Sanford City Council approved incentives worth up to $85.5 million.
County commissioners last week authorized tax rebates worth up to $46 million for the company. Sanford officials approved a similar $39.5 million incentives plan earlier this month.
“In my professional opinion, we dodged a bullet,” Lee County Commissioner Kirk Smith told WRAL in a telephone interview.
Companies need to meet investment and job commitments to receive economic incentives, which are often paid out in annual installments. Caterpillar would need to invest $1 billion and keep at least 1,950 full-time jobs that pay an average annual wage of about $65,500 to receive the full amount. The county expects to make 12 annual payments totaling about 80% of the property taxes paid by the company, provided the company meets the targets. Sanford officials also expect to pay out incentives over a 12-year period.
The state is also committing $2.6 million from the Industrial Development Fund's Utility Account and $500,000 from the state Department of Transportation’s Rail Division for Caterpillar’s expansion, according to a Commerce Department spokesperson. The project is also receiving support from the North Carolina Railroad Company, the department said.
Caterpillar said Wednesday that it chose to build the new plant in North Carolina because of Caterpillar's longstanding presence in the state, the strength of the local workforce, and the opportunity to build on existing manufacturing expertise and operations in Sanford.
"We've been operating here for a long time and we've developed a a highly skilled workforce that has satisfied our customers to this point and will continue to do so in the future," said Rob Janssen, Caterpillar's senior vice president of building construction products. "So, we felt like it was really important to reinvest in them."
'Dramatic economic impact'
Officials didn’t publicly name the company when considering the incentives in public meetings this month, which is common with ongoing economic development projects. State law allows such deals to remain secret, and officials often refer to projects only by code names to enable companies to explore opportunities before making a major public commitment. Officials on Wednesday confirmed that the incentives were for Caterpillar, a project previously referred to publicly only as Project Paragon.
“A project of this magnitude and dramatic economic impact is highly competitive, with strong competition from other communities around the country,” Jimmy Randolph, the chief executive of the Sanford Area Growth Alliance, told commissioners at a meeting last week.
Economic incentives can be a strong deciding factor for companies considering expansion or relocation plans.
Without the approved incentives, officials feared the company would have left the state, according to Smith, the county commissioner. “It would have been devastating to Lee County because Caterpillar is one of our largest employers,” he said.
North Carolina Commerce Secretary Lee Lilley said the investment “is a powerful reflection of the manufacturing excellence, innovation, and opportunity that have become synonymous with North Carolina.”
“Caterpillar understands that lasting success is built through strong communities and meaningful partnerships,” Lilley said in a statement. “Their leadership in creating pathways for the next generation through apprenticeship opportunities is helping prepare our workforce for the future.”