Caterpillar Picks NC for Second Plant in Two Weeks

WRAL

SANFORD, N.C. — Heavy equipment manufacturer Caterpillar Inc. announced an expansion at its Sanford plant on Thursday afternoon, bringing more than 300 jobs back to a facility that has seen cutbacks in recent years.

Gov. Beverly Perdue and other state and local officials were at the plant to herald the $28.3 million expansion, which is expected to add 325 jobs over the next four years. An unidentified Caterpillar supplier is also expected to bring 160 jobs to North Carolina to work with the plant, officials said.

“For the second time in less than a week, Caterpillar is making a major investment in North Carolina and strengthening its ties as a corporate citizen of our state,” Perdue said in a statement. “By expanding its stake in North Carolina, Caterpillar has demonstrated that our own investments in education, worker training, transportation and infrastructure have paid off.”

Last Friday, the company said it would build a $426 million factory in Winston-Salem to produce axle units for large mining equipment. It could employ about 500 full-time and contract workers in five years.

Caterpillar will build a 270,000-square-foot addition to the Sanford plant that will house logistics and robotic welding lines to produce skid steer loaders and other equipment, officials said. About half of the new production is slated for export, they said.

Construction is expected to start in September, with production beginning by next July, officials said. The average annual wage for the new jobs will be $35,602, plus benefits, they said.

The Sanford plant and another Caterpillar facility in Clayton have experienced several rounds of layoffs since late 2008, as the company adjusted to the global economic slowdown.

Lee County's unemployment rate is more than 12 percent, and Sanford Mayor Cornelia Olive said it was difficult for her to stop smiling on Thursday with hundreds of new jobs on the horizon.

"This has been a hard couple years for Lee County," Olive said.

Charles Childress, who lost his job as a machinist five months ago, already lined up an interview for Monday for a job at Caterpillar.

"It's hard to find a job. It really is," Childress said. "I know a lot of people out there need work, and there's a lot of people out there qualified (for the Caterpillar jobs)."

Caterpillar employs 1,026 full-time workers in seven North Carolina counties, and with the economy stabilizing, the Peoria, Ill.-based company appears to be gearing up for growth again.

Lee County commissioners in June offered Caterpillar up to $900,000 in incentives to land the plant expansion.

Caterpillar also was awarded a $600,000 grant from the One North Carolina Fund, which provides cash grants to attract business projects to the state. No money is paid up front, and companies must meet job creation and investment targets to obtain the funding.

Also, the state Economic Investment Committee voted Thursday to award a Job Development Investment Grant to Caterpillar. Under the terms of the JDIG, the company is eligible to receive a grant equal to 75 percent of the state withholding taxes on the new jobs for each year in which it meets annual performance targets.

If Caterpillar meets the all of the targets during an 11-year period, it could garner $3.46 million from the JDIG.

IBM To Hire 600 Workers In RTP For Service Center

Raleigh Telegram

North Carolina Governor Beverly Perdue announced this week that a subsidiary of IBM (International Business Machines) will hire around 600 workers during the next two years in Research Triangle Park.

The governor’s office says that the company will invest $3.7 million to open a managed business process service center in Research Triangle Park.  The jobs are being located here thanks in part to tax incentives being offered by state and local governments that could total as high as $7.79 million if IBM hires all of the 600 workers.

“IBM has been a major employer in North Carolina providing thousands of skilled jobs for more than 30 years. We value this company’s ongoing commitment to North Carolina and Research Triangle Park,” said Perdue.

With thousands of workers, IBM is one of the largest employers in Research Triangle Park and one of its first tenants in the facility that was created by the government decades ago to draw high-tech firms to the area.

According to the governor’s office, the salaries for the 600 new jobs will be around $50,000 a year, while the Durham County real estate average is $57,772.

“The new services operation furthers our commitment to the state of North Carolina and our ongoing presence in Research Triangle Park,” said Bob Greenberg, senior state executive, IBM North Carolina in a released statement.

“These are exactly the sort of highly skilled jobs that North Carolina needs to be recruiting in the 21st century economy, and we’re especially pleased that IBM is expanding its presence in Research Triangle Park,” said Rep. Mickey Michaux, (D-Durham) in a released statement.

Northeast Foods to Open New Plant in N.C.

Baltimore Sun

CLAYTON, N.C. - Northeast Foods, a Maryland company that bakes hamburger buns for McDonald's restaurants and other commercial customers, plans to open a new plant in North Carolina, creating about 80 jobs.

Gov. Beverly Perdue's office said Monday that taxpayers will contribute $350,000 to lure the company into spending $25 million on a new plant in Clayton.

The company says on its Web site that it's supplied burger buns to McDonald's fast food restaurants since 1965. The privately owned company has five plants along the East Coast from Connecticut to Virginia, including one on Commercial Avenue.

Perdue's office says wages at the Northeast Foods bakery south of Raleigh will top an average of $41,000 a year plus benefits, compared with the Johnston County's average of $31,000.

Study: Raleigh-Cary Ranked No. 3 in Five-Year Jobs Growth

Triangle Business Journal

The number of jobs in the Raleigh-Cary area grew 10.3 percent during the five-year period that ended in December – the third best performance among the 67 U.S. metros with a population of at least 750,000.

A study of U.S. Bureau of Labor Statistics data conducted by G. Scott Thomas of Buffalo Business First, a sister paper of Triangle Business Journal, found that Wake, Johnston and Franklin counties added 47,600 jobs between December 2004 and December 2009, bringing the area’s total number of jobs to 508,300.

Raleigh-Cary ended up on the positive side of the jobs ledge despite losing nearly 20,000 jobs over the past two years. The area had 527,700 jobs in December 2007. (Go to the bottom of this page to see how Raleigh-Cary fared in each of the five years studied.)

Still, Raleigh-Cary trailed only two Texas metros in percentage job growth over the five-year stretch, which bodes well for the Raleigh real estate market. Austin led the way with 14.2 percent growth, to 781,000 jobs. San Antonio was second at 10.6 percent, to 847,700.

The only other North Carolina metro with at least 750,000 residents, Charlotte, also gained jobs during the five years studies. The Queen City added 24,200 jobs, or 3.1 percent – to 811,600 – despite taking a major hit on the jobs front with the financial crisis and the shedding of thousands of banking jobs.

The Durham metropolitan area was not big enough to be included in the study.

Texas posted the strongest performance, with four of the top six metros in terms of percentage gain. Houston, No. 4 in percentage gain at 8.9 percent, was No. 1 in raw gain at 206,600 jobs added over the five-year stretch.

Texas and North Carolina fared better than most areas of the country during the five years ended in December 2009. Nearly two-thirds of the 67 major markets have fewer jobs now than they did in 2004.

Detroit has suffered the worst – no surprise, given the woes besetting domestic automakers. The Detroit area has lost 343,700 jobs during the past five years.

Los Angeles and Chicago have also suffered six-figure declines. A total of 200,700 jobs have slipped away from L.A. since 2004, and 173,300 have vanished from the Chicago area.

Detroit also ranks the worst in terms of percentages. One-sixth of Detroit’s jobs -- 16.5 percent -- have disappeared in the past half-decade. New Orleans, which was battered by Hurricanes Katrina and Rita early in the study period, has suffered a five-year loss of 14.9 percent.

Job Growth Erodes as Housing Bust Pushes Mobility to Record Low

Bloomberg

Raul Lopez, laid off from three construction jobs since October 2007, is focusing his search for work near Antioch, California, because his $392,000 mortgage is almost triple the price his home there would sell for today.

“If it wasn’t for the house, I’d probably move closer to Oakland, Hayward, San Leandro, places where there are jobs,” said Lopez, 36, who is married with four daughters.

The ability to relocate for employment, which helped the U.S. recover quickly after previous deep recessions, is the latest victim of the housing bust. About 12.5 percent of Americans moved in the year ended March 2009, the second-lowest ever, estimates Brookings Institution demographer William Frey, after a 60-year record low of 11.9 percent the previous year.

Local moves may rise “a little bit” in the 12 months that end this March, with long-distance migration “staying flat,” Frey said. “Both will be below normal levels from earlier in the decade.”

Some households are staying put because they owe more on their mortgages than their properties are worth; others have trouble selling houses in depressed areas, economists say. The S&P/Case-Shiller composite index of home prices in 20 U.S. metropolitan areas was down 29 percent in October from its July 2006 peak.

“One of the hallmarks of America’s labor market is a high level of mobility,” said Joseph Stiglitz, a Nobel Prize-winning economist, in a Jan. 3 interview in Atlanta, where he was speaking to an economics conference. “We are about to lose that.”

Stagnant Workforce

The stagnant workforce may raise the long-term trend rate for unemployment by 1 percentage point and lower economic growth 0.3 percent a year through 2012, said Michael Feroli, an economist in New York for JPMorgan Chase & Co. It has already contributed to keeping the jobless rate as much as 1.5 percentage points higher than would have been suggested by the depth of the recession, Peter Orszag, director of the U.S. Office of Management and Budget, estimated in July.

The U.S. economy shrank 3.8 percent in the 12 months that ended in June, the worst performance since the 1930s. Unemployment reached a 26-year high of 10.2 percent in October before sliding to 10 percent in November. The rate stayed at 10 percent in December, according to the median estimate of 72 economists in a Bloomberg News survey. The Labor Department will release the data on Jan 8.

Pharmaceutical and biotechnology companies have lost potential employees in the past two years as candidates are stuck with houses worth less than their mortgages, said Deborah Coogan Seltzer, a vice president in Atlanta for the Dallas-based executive search firm Pearson Partners International. Some prospects also worry it may take a year or more to sell their homes, even if they have equity in the properties, she added.

Candidates Withdraw

“It’s a constant factor,” Seltzer said. “Conservatively, in at least 70 percent of the searches I’ve worked on in the last 12-to-18 months at least one or two candidates have withdrawn from the process after they’ve investigated their real-estate situation.”

Some companies are allowing recent hires to stay where they are and use a combination of telecommuting and traveling, said Kevin Kelleher, president and chief executive officer of Danbury, Connecticut-based Cartus Corp., which specializes in relocation.

Employers and their prospects are “thinking about assignments or commuting policies rather than picking up the family and moving on,” he said.

Seltzer and Kelleher declined to provide names of specific companies.

Labor-Market Recoveries

The ability and willingness of workers to relocate has contributed to labor-market recoveries following recessions that ended in March 1975 and November 1982, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody’s Economy.com. The unemployment rate fell 1.6 percentage points to 7.4 percent in May 1976 from a year earlier and dropped 2.5 percentage points to 8.3 percent in December 1983 from the previous December.

While some economists say the recession that began in December 2007 may have ended last summer, unemployment will fall only 0.8 percentage point to an average of 9.2 percent in 2011, according to a December Bloomberg News survey of 46 economists.

“You don’t have to be a rocket scientist” to know that unemployment will be higher and “the noninflationary speed limit, or what economists call the potential growth rate of the economy, is going to be lower as a result of the housing-related decline in labor mobility,” David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto, said in a Jan. 4 telephone interview.

‘Negative Equity’

Almost 10.7 million homes, or 23 percent of all mortgaged properties, were worth less than the debt owed on them at the end of the third quarter, according to a Nov. 24 report from First American CoreLogic. An additional 2.3 million mortgages are approaching “negative equity” as loan defaults mount nationwide, the Santa Ana, California-based real-estate research company said.

Sixty-five percent of Nevada homeowners owed more than their houses were worth, the highest rate in the nation, according to the report. Arizona ranked second, at 48 percent, followed by Florida, Michigan and California.

States that grew the fastest during the 2002-2006 housing bubble, including Florida and Nevada, are now experiencing reversals in population trends. The number of people in Florida, where unemployment is 11.5 percent, fell 58,294 in the 12 months ended April 2009, the first decline since 1946, the University of Florida Bureau of Economic and Business Research estimated in August.

Can’t Sell

More people might have left if they had been able to sell their homes, said Jack McCabe, president of McCabe Research & Consulting in Deerfield Beach, Florida, which specializes in real estate.

“Loan modifications have been of insignificant help,” he said.

Through November, U.S. lenders had permanently renegotiated about 31,000 of the 4 million mortgages targeted for relief by the Obama administration’s foreclosure-prevention plan.

Housing woes have exacerbated a decline in worker mobility that began in 1951, when 21 percent of Americans moved, according to the Census Bureau. More families now depend on two incomes, which makes moving more complicated, said Peter Francese, a demographic-trends analyst in Exter, New Hampshire, for New York-based advertising agency Ogilvy & Mather Worldwide.

Aging Population

The aging U.S. population also reduces mobility, he said. The largest age group is 45- to 55-year-olds and the fastest- growing segment is 55- to 65-year-olds, both of which have established family and social networks that complicate relocation, Francese said.

Out-of-state moves, usually associated with job changes, remained at a record low 1.6 percent of the population for a second year in the 12 months ended March 2009, Brookings’ Frey estimates.

Anecdotal evidence suggests an even lower rate for the full year. Shipments handled by movers and paid for by individuals in the first half dropped 18 percent from January-June 2008, while employer-paid moves fell 27 percent, according to the American Moving & Storage Association, an industry trade group based in Alexandria, Virginia.

“This is our first national slump caused by a housing bubble and that ties down workers,” said Nobel Prize-winning economist Paul Krugman in a Jan. 4 interview. “It is a transitory thing, but transitory can mean several years.”