The State of Georgia is near and dear to me. I was born and raised in the Peach State, make it back to visit at least a few times a year, and – with the help of family, friends, and the Internet – I try to keep up with news and developments there. So, I was pleased to recently learn via the online edition of my old “hometown” newspaper, the Atlanta Journal-Constitution, that Caterpillar has decided to build a factory near Athens, GA that will initially create 800 jobs and employ 1400 by 2020. The $200 million facility will produce small bulldozer and excavators, and according to a related piece in the Wall Street Journal, about 40% of equipment made there is expected to be produced for export. The factory is also expected to create additional jobs in the surrounding region thanks to the “multiplier effect” of manufacturing, as the WSJ reports that “Caterpillar estimated that the project will create another 2,800 jobs among suppliers and other firms providing support services.”
Caterpillar seems to be one of a growing number of manufacturers that are choosing to “reshore,” or move production back to the U.S. In fact, the company has most recently been producing this equipment at a plant in Sagimi, Japan. However, the AJC notes that Caterpillar framed their search for a new plant site by “a strategic decision to shift production from Japan to a site closer to its large base of customers in North America and Europe.” The article quotes the company’s vice president, Mary Bell, who said that “Producing these machines at a North American location will put us in the best possible position to serve our customers in the building construction industry,” and that the need to minimize customer logistics costs factored into the decision as well.
A recent article in Bloomberg Businessweek notes that companies often fail to consider the total cost of doing business offshore when making decisions on where to manufacture their products, and that they should consider factors such as intellectual-property risk, the cost and time of travel to visit distant suppliers, and the negative impact of separating manufacturing from engineering staff back at headquarters. It’s also worth noting that companies manufacturing abroad sometimes find themselves embroiled in human rights controversies that they may not have bargained for.
So, let me take this opportunity to say, “Welcome to Georgia, Caterpillar!”
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