New Caterpillar US plant location and state level competition

Posted on November 30, 2011 by aviyer2010

A Wall Street Journal article (Nov 25, 2011) describes a decision by Caterpillar to move its small excavator production fom Japan to the US, to be closer to customers. The $150 million plant, expected to generate 1000 jobs, has set of competition across states eager to win location in their state. Access to ports, state infrastructure commitments, trained labor, tax breaks etc., will all impact the final decision. Should Caterpillar focus on locations recently abandoned, such as the Whirlpool plant in Arkansas ? Should being close to its supply base be a key consideration, or should suppliers be expected to relocate closer to the new plant ? At what point is the state ending up with a winner’s curse i.e., spending more to attract the plant than the benefit to the state’s residents ? How should states position themselves go succeed ?

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This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged Capacity, competition, Cost, Global, manufacturing, Suppliers, Supply Chain. Bookmark the permalink.

2 Responses to New Caterpillar US plant location and state level competition

Kyle Harshbarger says:

December 1, 2011 at 1:25 pm

I think that’s the “Winner’s curse” ;-), but I don’t think that will happen. States are so much more desperate for their citizens to have jobs that they will pull out all the stops to get 1000 Cat jobs. Beyond just states, individual communities will be vying for them, too, with property tax breaks and such. Cat will get a great deal somewhere, but the secondary industries which are needed to support those 1000 jobs is where the state/city will benefit. I don’t think a state will regret adding 1000 direct jobs and 2340 supporting jobs (http://macny.org/manufacturinginformation.aspx).

Reply
- aviyer2010 says:
  
  December 1, 2011 at 1:47 pm
  
  Kyle:
  
  Thanks for catching the error – I did mean “winner’s curse” and have corrected the posting
  
  Best regards
  
  Ananth Iyer
  
  Reply