By Rob Moritz
Arkansas News Bureau
LITTLE ROCK – Caterpillar Inc. announced plans today to invest $140 million in a state-of-the-art road grader plant in North Little Rock that will employ 600 people.
The plant, to be located in a 700,000 square-foot building that formerly housed a video assembly operation, will be the “jewel in Caterpillar’s crown,” producing a full line of motor graders beginning early next year, plant general manager Jon Harrison said during a news conference with Gov. Mike Beebe at the state Capitol.
The new facility will allow Peoria, Ill.-based Caterpillar to move it’s production of road graders, also known as motor graders, from a plant in Decatur, Ill., so that facility can expand its mining equipment production, Harrison said.
Road graders like those to be built in Arkansas cost $250,000 to $500,000 each, he said.
Beebe said $3 million from the governor’s quick action closing fund was part of a package of state and local incentives used to entice Caterpillar to locate in Arkansas, along with income tax credits based on payroll, a cash rebate equal to 5 percent of payroll for 10 years and training assistance through Pulaski Technical Institute in Little Rock.
North Little Rock’s incentives package includes tax credits for energy conservation and is expected to be $10 million to $13 million over 10 years.
Negotiations to bring the plant to Arkansas took nearly a year, North Little Rock Mayor Patrick Hays said.
“Moving motor grader production to North Little Rock is part of Caterpillar’s long-term, strategic plan to increase its large mining truck capacity in Decatur, Ill., and drive greater focus on improving motor grader production,” Harrison said.
The value of the old Deluxe Media Services property, which was purchased by Caterpillar Dec. 26, is about $21.9 million. The actual purchase price of the property was not disclosed.
“This decision is an announcement to the world that we are a major factor in the vehicle manufacturing industry,” Hays said.
Beebe and Harrison said the majority of the 600 new jobs will be filled by Arkansas workers. Harrison said salaries would be competitive, though he declined to discuss the salary range for workers.
Caterpillar is the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. It reported nearly $45 billion in revenue in 2007.
Today’s announcement came two weeks after Caterpillar announced sweeping cost-cutting measures in response to adverse market conditions.
The company said it would reduce salaries by up to 50 percent for executives, 5 percent to 35 percent for senior managers and up to 15 percent for other management and support staff. Other measures included offering employees an incentive-based voluntary separation program; suspending merit pay increases; and instituting a hiring freeze.
After the news conference, Beebe said the entire $50 million in his quick action closing fund has either been spent or obligated, and that he will ask the Legislature to replenish the fund during the upcoming legislative session.
Former state Sen. John Riggs, who owns the Caterpillar dealership in Little Rock, said not only would the new plant bring jobs and revenue, but so will other businesses that move into the area to provide materials for the facility.
Also, because the road graders will need to be transported out of Arkansas to other states and nations, the port in Little Rock, area trucking companies and train transportation companies will benefit, Riggs said.
“To have them choose to build this core product in Arkansas is just phenomenal,” Riggs said. “It’s going to be a great, great new business to open in Arkansas.”
