Lower-than-expected job numbers will end up costing Caterpillar tens of thousands of dollars in Johnston County tax incentives.
After a public hearing last week, the Johnston County Board of Commissioners approved a reworked incentives package related to Caterpillar’s 2012 expansion in Clayton. The revised package lowers the percentage of tax reimbursement the company is eligible for based on its $33 million investment.
Caterpillar has three more years on its reimbursement package and stood to get 60 percent forgiveness on this year’s tax bill, or about $154,000. Commissioners lowered the reimbursement rate to 50 percent this year, for a rebate of $128,000, based on the $33 million figure.
The reimbursement rate will fall against in 2018, to 40 percent, and in 2019, to 30 percent. In all, the difference in the three years adds up to around $77,220 more tax revenue paid to Johnston County.
When the heavy-equipment maker expanded its Clayton plant in 2012, it projected 169 jobs, said Chris Johnson, Johnston County’s director of economic development. Caterpillar was able to create only 108 jobs, Johnson said, triggering the county to review its incentives package with the company. Johnson said automation largely led to the employment shortfall.
“We are so fortunate to have Caterpillar in Johnston County,” Johnson said. “Due to changes in the market and automation production advancements, Caterpillar was unable to meet the original state job creation goal of 169. As a result, we worked cooperatively with Caterpillar to amend the county grant agreement and adjusted the grant percentage for the remaining years on the grant. We appreciate Caterpillar’s continued commitment to Johnston County.”
Johnson said Caterpillar met the financial obligations of the grant, meaning it still invested the $33 million, but demand and changes in manufacturing eliminated some of the jobs before they were ever created.
“They just didn’t need as many people, but if you ask the 106 people who have jobs, I’d expect they’re very thankful (Caterpillar) made that commitment,” Johnson said. “We’re still celebrating the $33 million investment they made.”
Caterpillar did not respond to an email requesting comment on the jobs shortfall and reworked incentives package.