Caterpillar to add 325 jobs in Sanford

Staff WriterAugust 6, 2010 

For the second time in less than a week, Caterpillar has chosen North Carolina as the site of a major corporate expansion.

The company said Thursday that it will enlarge its Sanford plant and create 325 jobs over the next four years. A Caterpillar supplier will also come to Sanford and create 160 jobs.

The decision has broader implications for the Triangle, as Caterpillar is receiving millions in state incentives that require the company to retain hundreds of existing jobs in Sanford and at another factory in Clayton.

The Sanford announcement comes just six days after Caterpillar received an even larger incentives package to build a factory in Winston-Salem where it plans to employ 392 people.

Peoria, Ill.-based Caterpillar is ramping up production around the globe as it sees signs that an economic recovery is taking hold. Sales of Caterpillar's earth-moving equipment in North America increased 43 percent in the second quarter compared to the same period last year.

That has caused the company to dust off plans that were shelved when the economic downturn took hold and demand slumped, said David Wells, a senior research analyst with Thompson Research Group in Nashville.

"A lot simply got deferred when things slowed down," he said. "They're making a lot of investments all across the world."

Caterpillar officials did not return calls seeking comment Thursday.

After cutting hundreds of local jobs during the recession, the company now employs 1,026 people in the state, mostly at operations in Clayton, Cary and Sanford.

The decision to expand in Winston-Salem and Sanford makes sense for a number of reasons, said Michael Walden, an economist with N.C. State.

Both offer an abundance of skilled labor, as many manufacturers in those areas have cut back or gone out of business in recent years, he said. And both sites are connected to good transportation networks that allow the factories to supply businesses up and down the East Coast.

North Carolina was chosen over several other southern states with business-friendly reputations.

Caterpillar picked Winston-Salem over sites in Montgomery, Ala., and Spartanburg, S.C. Sanford was selected over Florence, S.C.

Caterpillar was lured to the state by plenty of economic incentives.

The company is receiving state and local incentives worth as much as $8 million if it meets its hiring goals in Sanford. Those incentives require Caterpillar to retain at least 739 existing jobs at its factories in Clayton and Sanford.

The company must also keep 86 administrative jobs in Cary. Those jobs can be moved elsewhere as long as they remain in North Carolina.

The Sanford incentives package is in addition to the more than $40 million in state and local incentives Caterpillar will receive to build the Winston-Salem facility.

Mighty big axles

That plant will be part of Caterpillar's mining operations and will be used to assemble, test and paint axles for large mining machines.

The Sanford plant is part of the company's construction products division. The $28 million expansion will increase production of earth-moving vehicles used at construction sites.

The Sanford expansion is expected to be complete by July. The new jobs will pay an average annual wage of $35,602, below the Lee County average of $36,504.

That fact didn't reduce the excitement felt by Sanford and Lee County officials on Thursday. Lee County has been among the state's hardest hit counties during the economic downturn.

Unemployment was 12.3 percent in June, well above the state rate of 10.1 percent.

"I can not tell you how thrilled I am," said Cornelia Olive, Sanford's mayor. "We've had a couple of really rough years."

david.bracken@newsobserver.com or 919-829-4548

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