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Expert: Caterpillar playing role in economic remaking of city
[November 16, 2012]

Expert: Caterpillar playing role in economic remaking of city

Nov 16, 2012 (Winston-Salem Journal - McClatchy-Tribune Information Services via COMTEX) -- The first year of Caterpillar Inc. in Winston-Salem was filled mostly with sunshine even as clouds from a companywide production slowdown recently began to crowd the sky.

The $426 million plant officially began a year ago today axle-assembly production for the massive Caterpillar trucks used in the mining industry. It shouldered more than a year's worth of backlog when the plant opened.

Caterpillar is an important part of the economic remaking of Winston-Salem and the Triad, said Michael Walden, an economics professor at N.C. State University.

"There is optimism that we may have seen the bottom of the manufacturing cycle and growth in the future," Walden said. "As the world continues to develop -- long term -- there will be a need for the products Caterpillar makes." The company committed to have 510 total jobs -- 392 full-time and 118 contract workers -- when the 850,000-square-foot plant is at full capacity.

Spokeswoman Rachel Potts said the company is "on target" to meet the year-one incentive criteria of at least 180 full-time jobs by the Dec. 31 deadline. Caterpillar must achieve that workforce level to fully qualify for the first year's worth of state incentives, which could reach $28.5 million over the life of the contract.

The state and the city/county have different employment requirements to fully qualify for the incentive packages, such as the state counts full-time and contract workers, whereas the city/county only factors in full-time workers.

Rusty Davis, the plant manager, said the company has about 300 employees - at this point nearly equally split between full time and contract. He said the company expects to convert more contract workers to full time in 2013.

"We will be really close to the 510 by the end of 2013 (not including) another machine shop line coming online in 2014," Davis said.

A main reason why Caterpillar committed to having so many local contract workers was to build in workforce flexibility in case an economic downturn required a production slowdown. .

To fully meet the requirements for up to $23.5 million in city/county incentives, Caterpillar must hire 392 full-time workers. The 118 contract workers are not included.

"Locally, there is no annual requirement for job creation," said Derwick Paige, deputy city manager. "All qualifying jobs have to be in place by Dec. 31, 2015." Mayor Allen Joines said city officials are pleased that Caterpillar "made the investment that they agreed to, including giving about 70 percent of the construction work to local subcontractors. They are well on their way to the job totals they have agreed to as well." Despite the orders backlog, Caterpillar warned Oct. 26 that its plants, including those in North Carolina, are feeling the pinch from the company's projection of a profit squeeze that it expect to linger through at least the first quarter.

That means the company will continue to idle plants, including those that make or assemble products for the construction and mining sectors, for up to two weeks a quarter, Mike DeWalt, its corporate director of investor relations, said Nov. 6. Some plants are operating on four-day workweeks.

Davis said the slowdown has had "minimal" impact from the production slowdown.

"We are meeting our production targets," Davis said. "The mining industry is still fairly strong overall. With all the new lines and models coming out in 2013, we believe production will stay pretty strong even though they may be some hiccups at times." The plant is handling axle production for three new truck models, with another three models expected to come online in 2013, Davis said. "The company didn't want to bring all of the new models out at once," he said.

Caterpillar has begun production in two of seven planned machinist lines, with all but one of the other lines slated to come online next year. The company has pledged to have at least 120 machinists.

The company is working with Forsyth Technical and Guilford Technical community colleges on machinist training. Forsyth Tech is also helping with welding, painting and quality-control training. "We're finding the people we need," Davis said.

Walden cautioned factories "continue to move away from people as workers, and to machinery and technology." "The new buzzwords in manufacturing are robotics and 3D manufacturing," Walden said. "So even if manufacturing - as represented by Caterpillar - prospers, don't necessarily translate that into an abundance of jobs." Davis said he's pleased he hasn't lost one employee who transferred to Winston-Salem to help establish the plant.

He credits that statistic to the quality of life Winston-Salem and the Triad offer, including how quickly the community embraced the plant and its workforce.

"The warmth of the welcome has been pleasing to say the least," Davis said.

The same, of course, could have been said by Dell Inc. officials when it opened its $110 million plant in October 2005. There were several local events welcoming Dell amid the considerable promise it held as an advanced-manufacturing anchor for the Triad.

Dale Carroll, the state's deputy Commerce secretary, said Caterpillar has proven to be "an important partner with North Carolina" that also includes facilities in Clayton and Sanford. Altogether Caterpillar has more than 1,400 employees in the state.

"Caterpillar is a respected global company, and we believe others in the business community paid attention to their decision about making significant investments in our state," Carroll said. "Their decision to locate in North Carolina can only help our economic recruitment efforts in the future." Caterpillar has made a concerted effort to get out of the plant to community events.

For example, Caterpillar was a sponsor of the county Invitational Robot Run tournament involving nearly 300 students from 17 county middle schools and Brunson Elementary School. The event tests students' skills in science, technology and teamwork.

Gayle Anderson, president and chief executive of the Winston-Salem Chamber of Commerce, said Caterpillar has become "an integral part of our community." "It is hiring talented workers, supporting economic development, and providing volunteers and financial support for our critical non-profit organizations." ___ (c)2012 Winston-Salem Journal (Winston Salem, N.C.) Visit Winston-Salem Journal (Winston Salem, N.C.) at Distributed by MCT Information Services

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