North Carolina lost out on one of the most heavily contested economic development projects in recent memory Friday when heavy equipment-maker Caterpillar announced it would build a new plant in Georgia.
The selection came after Caterpillar had chosen sites in North Carolina for three major expansions over the past 18 months. Still, the loss stings, as it would have brought 1,400 jobs to an area just west of Wilmington that has been pining for just such a project.
"We hate that it's not coming because North Carolina has a darn good relationship with that corporation," said state Sen. Bill Rabon, a Republican who represents Brunswick County. "They gave us a good hard lick."
Caterpillar had considered an industrial park along the border between Brunswick and Columbus counties.
Although state officials discussed offering Caterpillar an economic incentives package valued at $70 million to $90 million, the talks remained informal. The company never filed paperwork with the state showing where else it was looking and what other states were offering.
"It never got to the point where we were negotiating incentives," said Tim Crowley, a spokesman for the state Department of Commerce. "There would have had to have been some action by the General Assembly for the level of funding this one would have required."
He added that he believes that had it reached that stage, North Carolina's package would have been competitive. Georgia and Caterpillar officials didn't disclose the incentives package the company ultimately received.
In a statement released Friday, the company explained that it chose a site near Athens, Ga., for a number of reasons.
"The Athens site was selected from among dozens of locations considered due to its proximity to the major ports of Savannah and Charleston, a strong regional base of potential suppliers, a positive and pro-active business climate and a good pool of potential employees with manufacturing experience," said Mary Bell, a vice president with Caterpillar's Building Construction Products Division, which is based in Cary.
Port issues
The company's decision cast a cloud over the state's Maritime Advisory Council meeting Friday morning, where an outside consultant presented a draft report outlining the steps needed to make Wilmington a premier port and help the state attract more economic development.
Rabon said the state's ports are limiting North Carolina's ability to attract new industry, such as the Caterpillar project and a Continental Tire facility that also recently considered locating in the same area.
Continental chose a site in South Carolina, where it is now building a $500 million facility that is expected to employ 1,500 people.
In a meeting with a top Caterpillar official, Rabon said, they "discussed nothing but port issues."
"This port's problem has cost southeastern North Carolina two major industries - 2,800 jobs in the last 90 days," he said. "We're missing the boat."
Rep. Dewey Hill, who earlier in the week said he didn't think port issues would be a problem for Caterpillar, revised his view Friday.
"I think maybe infrastructure had right much to do with it," said Hill, a Democrat who represents Brunswick and Columbus counties. "The Savannah port was a real selling point there."
What, if any, improvements should be made to North Carolina's coastal infrastructure has been unclear since late 2010, when state officials put on hold a controversial proposal to build a $3 billion international shipping terminal near Southport.
Critics say the proposal is a boondoggle and question the economic projections it's based on. They also say its proposed location, next to a nuclear plant, makes it a security risk that could hurt the area's tourism.
An ambitious outline
The N.C. Maritime Strategy draft report, at 254 pages, came at the behest of a governor's task force. The draft version refrains from making recommendations but outlines an ambitious strategy to expand the capacity of the Port of Wilmington and develop terminals on Radio Island, a spit across the Newport River from the Port of Morehead City.
The expansion doesn't carry an exact price tag, but estimates for particular upgrades, such as those needed to handle more container cargo, are in the billions of dollars. Advisory committee members called the undertaking "gigantic" but urged the N.C. Department of Transportation to push ahead with a final plan.
Such an undertaking would put North Carolina in competition against established Southeastern ports with developed infrastructure. Several of those ports are now making costly upgrades so that they can accommodate a new generation of superships that are expected to dominate shipping after the widened Panama Canal opens in 2014.
Work from Japan
Caterpillar's plant near Athens will make miniexcavators and small tractors - manufacturing currently done in Japan. When the facility opens in late 2013, it will provide machines to customers in North and South America as well as export partially built machines to Europe.
Being in close proximity to a deep-water port is increasingly important to global manufacturers such as Caterpillar, said Steve Yost, director of North Carolina's Southeast , an economic development agency that serves that region of the state.
"They need and want to be located closer to ports because they source parts or raw materials from all over the world," he said.
Yost worries that the state will continue to lose major economic development deals if it doesn't make upgrades.
"It's going to be a critical requirement of infrastructure that we (need to) have," he said. "Certainly it's an expensive piece of infrastructure, ... and we have to figure out the planning and how to do that."
