Relocating to Georgia is Best Move for Caterpillar

What happens when you manufacture products that the locals can’t afford to buy?  You move to Georgia. 

The announcement last Friday by Caterpillar to move to Georgia will create 1,400 jobs according to Caterpillar representatives and invest $200 million to build small tractors and excavators. Another 2,800 jobs will be created around the country as a result of the new plant.

Officials with Caterpillar say the area's close proximity to the Port of Savannah was a key element in the decision to build the plant in Georgia.

"Forty percent of everything made here will be exported. So there are great American products built by Georgia workers and exported around the world," said Caterpillar CEO Doug Oberhelman and reported by Fox News.

Georgia's Governor Nathan Deal called the plans to build the plant in the state a "great day for Georgia."  You bet it is, and the story is bigger than just jobs in Georgia.  We can learn much from a case study in business from a company like Caterpillar who faces the typical struggles of jobs creation, product life cycle management, demand fluctuations and the pressure of competing in the “right” economic environment.  After all, a lot has changed since this company was founded in 1883. 

Fast forward to 2012 and blink and you will miss the 129 years of growth, subsistence, struggle and creative compromise that a true entrepreneurial organization will shoulder to stay in business.  As did many manufacturing companies, Caterpillar found survival in the downturn of the 1980’s by two methods.  First they moved facilities overseas to take advantage of the stronger US dollar in foreign countries, and second it increased automation efficiencies which mean that it needed fewer workers to do the job.

 In the early 1990s Caterpillar looked to the east and south for its future growth. The company strongly supported both the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), concluding that the elimination of trade barriers could add sales.  Sales growth in Mexico and outside North America led to ventures in Japan, Russia, China and Vietnam.  Ongoing UAW contract battles led Caterpillar to shift manufacturing to right to work states and foreign countries. 

The cycle of purchase power is now coming full circle it seems.  With the continuing economic downturn, companies are realizing that if they manufacture overseas, then the people here at home who are unemployed because they lost their job to an overseas initiative, can’t afford to buy the product.

Several government initiatives may be needed to make the “purchase power” part of this picture whole though.  Yes we need tax reform.  Yes we need a pro-business environment.  But what we really need is an educated worker to do the job. 

As we have written here before, the manufacturing worker today is very different than that of 50 years ago.  Often in a white coat and not just a hard hat, these workers need strong high school educations where graduation is expected.  Caterpillar is not new to this dance and the company expects an educated worker.

In 1968, Caterpillar was early to enlist in a government-sponsored program to hire and train people considered to be unemployable. This program was directed to persons who had been out of work for extended periods. The hirees would work half of the day at entry-level positions and spend the other half of the day learning job skills for better-paying jobs.  According to Fox News, Georgia was among a number of states competing for the new plant. Ground breaking is expected to take place in 2012. Production is slated to begin late in 2013. Officials say the state granted about $45 million in incentives to close the deal. 

Companies like Caterpillar are looking for logistics, workforce, speed and efficiency.  North Carolina was a hot contender for the Caterpillar deal according to Jim Bradshaw, the Executive Director of the Brunswick County Economic Development Commission, but they lost due to logistics.  A 50 foot channel is needed for their shipping needs, and the current 42 feet channel at the Port of Wilmington is not adequate.  Our own Mobile Bay can have a depth of 75 feet, but on average is 12 feet, according to the World Atlas. 

Alabama was a contender for Caterpillar in 2010 as reported by Al.com, but we still had some work to do at that time to attract business.  Work continues, and as late as last Thursday, the House of Representatives passed a key job-growth bill known as House Bill 159.  House members passed a constitutional amendment that allows voters to give the Governor and the Alabama Development Office the authority to offer incentives like those used on the Mercedes project to recruit new industry to Alabama and prevent existing industry from leaving the state.  According to Representative Barry Mask and reported by Stephen Crews in DothanFirst, “We're trying to give our state and local economic developers more tools to help grow existing businesses and land new industry, both of which result in more jobs for Alabamians." Mask continued, "I was pleased to work with colleagues from both parties to make this bill better so that voters can be confident in the plan we put before them."  Opposition came from the Alabama Education Association and the Alabama Democratic Party. 

Crews also reported that Speaker Hubbard said, "It's hard to believe anyone would be against bi-partisan efforts to boost job growth".  "When the economy grows, our education budget grows, and we have more funds to put toward schools. More jobs and more money for education means everybody wins. Most importantly, the people win over the special interests."

This constitutional amendment and enabling legislation will now move to the Senate.  A list of Alabama State Incentives for Business may be found at businessfacilities.com.  Let’s just get it done. 

Governor Bentley, the North Jefferson area and Your Chamber of Commerce

“Communicate, Collaborate, Connect” said Charlotte Reach, incoming President of the Gardendale Chamber of Commerce and Vice President of First Commercial Bank in Gardendale.  It is important to begin with the end in mind and those words of challenge bring in to focus the requirement for success for our North Jefferson community as we begin 2012.  Adding strength to her words and those of her team, our Fultondale Chamber was pleased to have a presence of support at the noted visit by Governor Robert Bentley to our North Jefferson area where Reach accepted her new role as Gardendale Chamber President and contributed her comments. 

            The important role of a Chamber of Commerce took stage with the visit of Governor Bentley.  Bentley began by reminding the audience that he too, like a Chamber of Commerce, is a servant leader.  As a servant leader, Bentley thanked the support of small business and the critical role that business owners have played in jobs creation.  Bentley said, “After one year in office, I need to applaud YOU.  We now have 40,000 more people working here in Alabama.”  We have come through difficult times certainly, but, “with a continued Pro-Business Legislation and efforts with the Immigration Bill, …as well as addressing the education bureaucracy which has held us back, we will continue to create jobs,” said Bentley.

            Bentley shared that we should expect changes to our State budget in 2012 with respect to education, transportation and health.    He committed that money would not be taken from the classroom, and attention would be given to the 50% of funds that “doesn’t make it to the classroom now.”  Charter School efforts will move forward, because in his words, “the child is most important.”  Adding to the list will be efforts with road and bridge repair.  “We need to repair and preserve what we have now.  Toll roads may be an option to generate funds to accomplish this,” Bentley said.  And on health, he stated simply, “We are a fat State.”  Now don’t get offended Dear Reader, he is a doctor after all.  He challenged the group to make their dollars count.  “If you are going to spend money on healthcare, then make it count,” he said.  There is a need for Alabama to have measured results and a return on investment assessed for health outcomes.  He added, “It just costs less to be healthy.”

            Speaking of cost and funding, the General Fund is down 463 million from 2011.  The education budget looks good, but the General Fund, not so much.  As the economy grows, the tax collected will grow that General Fund, so it is critical to keep the embers of growth burning.  But in 2012, Bentley promised a real budget, and there are no Federal dollars to prop it up this year.  Governor Bentley told the audience that he is not a “caretaker” Governor.  “I want change,” he said, and added “I want us to get better.”  Governor Bentley called on the Chamber of Commerce and Small Business, as leaders in the community, to participate and be involved. 

            Getting involved with your business community through our Chamber of Commerce organizations is easy.  Not a member or involved just yet?  Then please mark your calendar for Thursday, February 9^th, 2012 for the next joint meeting of the Gardendale and Fultondale Chambers of Commerce as they co-host Mr. Moore Hallmark from the US Chamber of Commerce.  Hallmark is the Executive Director of the Southeastern Region and oversees the congressional and public affairs for eight southeastern states: Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia.  We will meet at the Gardendale Civic Center and all business owners, civic and community leaders from the entire North Jefferson area are encouraged to attend.  Moore will be presenting on the important role of the Chamber of Commerce at a local level, and what the Regional and Federal initiatives include. 

As we have asked in this column before, “Do you really know what good looks like?”  Initiatives such as the Alabama Community of Excellence as well as understanding accreditation requirements of the US Chamber of Commerce give credence, credibility and yes clout, to what your Chamber of Commerce can do for you and your business.  

Governor Elect Dr. Bentley, BBA, and the North Jefferson Area

Governor-Elect Robert Bentley is already working for the North Jefferson area.  If you lodged your vote for a pro-business agenda, you would have been encouraged if you attended the Birmingham Business Alliance Annual luncheon this week at the Sheraton to hear Dr. Bentley, I mean Governor-Elect Dr. Robert Bentley, discuss his commitment to our area.  An intricately woven quote by Lynard Skynard that “Birmingham Loves the Governor,” was an bright attempt to win hearts and minds.  Bentley’s follow up that “You may not always love me, but we will have a good four years full of opportunity,” set the stage for anticipation of good ideas to come.  Even this conservative skeptic is willing to give him a chance. 

 “I commit to you to make Birmingham a better place,” said Bentley.  Well, so goes the North, so goes Birmingham.  Bentley expressed support for the Northern Beltline and promised to make its construction a priority.    In allegiance with our Senators Shelby and Sessions, he remains committed to work quickly and diligently to make our road access a reality.  A quick turn down I65 South and you can see the fruits of all of our labors, that of our Legislators and that of our hard earned tax dollars.  Sharing the luncheon table with me were Mayors McCondichie and Phillips from Brookside and Gardendale respectively, and we were all ears.

Not fading from the issues, Bentley stated that “the role of government is to create a fertile field for jobs to grow, not to create the actual jobs.”  I like the sound of that.  Bentley was humble to recognize that the strength of a leader will be measured by history by the minds that he surrounds himself with in the leadership challenge.  To that end, University of Alabama at Birmingham President, Dr. Carol Garrison, was selected to introduce Bentley.  Per Dr. Garrison, UAB has a lot to gain by a pro business minded leader at the helm.  UAB alone has a half million dollar economic impact on Alabama, and lest you be stymied by that number, please realize that this occurred just in the time that the one hour luncheon was served at this event.  That is a half million dollar impact EVERY HOUR.  Garrison shared that for every $1 invested in UAB, a full $16 impact is realized for the Alabama.  UAB is the Economic Engine for Alabama.  Yes, we need efforts in Huntsville, Mobile and beyond, but UAB is alive and well and doing the job needed to keep Alabama competitive.

Bentley stands out front as one of the first to ask the question, “Did you create a job?”  This is simple, poignant, and clearly significant thinking here.  In an environment with 20% underemployed, and 9% real unemployment, we look to strong leadership on several fronts to include right to work legislation, improvements in our 2 year and 4 year colleges, decisions on tax requirements for business, and please oh please let us not overlook infrastructure improvements to attract business and industry to our area.  Bentley will be well supported if he is a leader that makes strategic decisions, and does not “study the problem to death.” 

Well, how do you do that, and can he?  Echoing his training as a physician, his message was true in its simplicity.  Dr. Tinsley Harrison was his professor in medical school, and a storied and respected physician indeed was Dr. Harrison.  Dr. Harrison, ever the servant leader, would encourage his student to “listen to the patient.”  The patient will tell you what is wrong if you are keen to listening.  Your job then will be to not just examine, but to diagnose and MAKE A DECISION.  When you make your decision, then your treatment will lead the way to strength and improvement. 

It has been my experience that everyone has an opinion after someone makes a decision.  I assess that we are mercifully entering into a time of great decisions and change here in our fair state.  Now is the time to educate yourself, leverage your opinions and become involved in the diagnosis and ultimate treatment choice for healthy growth.