The Wisconsin Economic Development Corp. did not have a chance to offer incentives to Caterpillar before the company decided to move engineering jobs from its South Milwaukee facility to Arizona, according to WEDC spokesman Steve Michels.
Bucyrus International, which was acquired by Caterpillar in 2011, was offered $20 million in tax credits in 2010 to expand operations and create 515 jobs in Oak Creek by then Gov. Jim Doyle, just weeks before the acquisition was announced.
The company has claimed almost $9.25 million worth of those credits, according to Michels.
Caterpillar announced last year it was closing its Oak Creek mining headquarters and moving the jobs to South Milwaukee.
Now the Peoria, Ill.-based company says it is adding more than 600 employees to its Arizona workforce as part of a centralization of engineering services for its mining and technology division. Those jobs include relocating positions currently in South Milwaukee and Illinois.
The company has declined to give specific job figures for individual locations, but South Milwaukee mayor Erik Brooks said he was told 200 jobs could leave in the next five to seven years with the bulk of the moving in 2018. He also said some of the positions moving from Oak Creek could now be headed for Arizona.
Caterpillar is working out a final agreement for a $4 million grant from the Arizona Commerce Authority and is eligible to apply for tax credits potentially worth more than $10 million, according to Susan Marie, the authority’s marketing communications manger. The exact value depends on the wages and benefits of the positions created in Arizona and total investment in a new facility.
Caterpillar spokeswoman Lisa Miller said Wisconsin was part of the company’s review in determining where to locate the division. In addition to its South Milwaukee operations, the company’s surface mining headquarters were located in Oak Creek until the closure was announced last year.
Michels said in an email the company did not discuss the mining and technology division project with state officials, but added, “WEDC has had ongoing conversations with Caterpillar and the company has indicated that Wisconsin remains a key location for the future of their operations.”
“Any time we are made aware of a competitive project we work with our local and regional economic development partners to understand the needs of the business, incentivize their growth, and ultimately explain why Wisconsin is a great place to do business,” Michels said, adding the state would continue to work with the company, “to ensure they have opportunities to grow in Wisconsin.”
Miller said the company’s consideration of a Wisconsin location for the mining and technology division did not reach a point where the company would seek incentives.
Caterpillar currently has 900 employees in South Milwaukee performing both management and production functions, according to Miller. She said the job shift to Arizona will not impact manufacturing operations at the South Milwaukee facility and the company will continue to produce rope shovels, draglines and aftermarket parts for both at the facility.
The ability for the company to collaborate with its existing mining resources in Arizona was important, said Tom Bluth, Caterpillar vice president with responsibility for Surface Mining and Technology.
“The ability to get closer to our customers and tightly collaborate across all aspects of the business is at the center of our strategy. This decision positions us to build on the tremendous capabilities present at our Tucson Proving Grounds and Tinaja Demonstration Center and deliver the next generation of mining technology and leadership,” he said.
Caterpillar is in the midst of a cost restructuring that calls for a total workforce reduction of more than 10,000 people through 2018. The company has closed 20 facilities and eliminated 5,300 positions since September 2015.
