Beebe In Hot Pursuit Of Major Caterpillar Factory

Gov. Mike Beebe (D) said Wednesday there “absolutely” is a chance Caterpillar could locate a manufacturing operation in Fort Smith — possibly in the large manufacturing plant Whirlpool is expected to vacate after mid-2012.

Beebe, speaking in the latest installment of “Talk Politics” with Roby Brock, said in the Ustream online interview that Whirlpool’s location could be a fit for Caterpillar. You can view the full video of Beebe’s interview at the bottom of this post.

Peoria, Ill.-based Caterpillar is making news with its plan to bring a large hydraulic excavator factory back to the U.S. from Japan. The plant could employ up to 1,400, and Beebe said access to a “quality workforce” is a key component in Caterpillar’s decision making process. Company officials said last week a decision could come as early as April 1.

A workforce with manufacturing experience is certainly available in Fort Smith.

Whirlpool Corp. plans to close its Fort Smith refrigeration manufacturing plant by mid-2012, with about 1,000 jobs to be lost in that move. Trane recently announced it will cut an estimated 59 jobs later this year as it moves some production from its Fort Smith plant to a Columbia, S.C., plant.

Whirlpool vendors Fortis Plastics has closed, and Huntington Foam is set to close in May. Fortis employed 100 when it closed. Huntington will employ about 14 when it closes, but at one time employed just short of 70 people.

Employment in the Fort Smith regional manufacturing sector during December was 20,700, down more than 32% from more than a decade ago when January 2001 manufacturing employment in the area was 30,700.

“Yes, yes. Absolutely there is a chance,” Beebe said when asked if Caterpillar might select Fort Smith for the excavator plant.

He said in the Fort Smith region there is “tremendous potential” with a “qualified workforce,” and the region also has “a lot of capacity with regard to facilities.” Beebe said the state is not promoting any one city, but will work to present options in Arkansas that best meet Caterpillar’s requirements.

Beebe also said local economic development officials and the Arkansas Economic Development Commission are working to market and sell the around 2 million square feet of structures Whirlpool operates in Fort Smith. Sometimes that effort is complicated by the wishes of the owner.

“They don’t want to sell to competitors,” Beebe said, as an example of how the property marketing is limited.

WIND ENERGY, MITSUBISHI
Beebe also said he hopes Congress will extend wind energy tax credits for more than just one year. He said wind energy companies “need some degree of certainty” in what is a “new and fledgling industry.”

The Production Tax Credit (PTC) establishes an income tax credit of 2.2 cents per kilowatt hour of energy produced by utility-scale wind turbines. The credit was first established in 1992, and is set to expire at the end of 2012.

Arkansas is home to hundreds of jobs — located primarily in central Arkansas and Jonesboro — tied to the growth of the wind-energy production industry.

Mitsubishi has built a large wind-turbine assembly manufacturing facility at Chaffee Crossing. The plant, expected to employ as many as 400, is completed but remains idle because of a legal dispute between Mitsubishi and General Electric.

“Of course,” Beebe said when asked if he was concerned about the future of the Mitsubishi operation in Fort Smith.

However, the company built the plant and has it ready to open.

“I expect there is a lot of optimism that it will come to fruition,” Beebe said.

OTHER INTERVIEW TOPICS
• Health care exchanges – On the issue of exchanges, Beebe noted that objection from some Republican legislators killed a plan that would allow Arkansas to design its own exchange system. Under the new federal health care law, states are required to design an exchange or have the federal government create a system for the state.

“Now, I don’t like the federal government doing hardly anything for us,” Beebe said.

He was quick to note that many Republican governors around the nation have moved to create their own health exchanges, but Republican legislators in Arkansas fought it.

Arkansas’ Republican legislators have said there is no reason to pursue the exchanges because they believe the courts will overturn the federal health care law.

• Medicaid reform – Medicaid costs could possibly be a huge budget problem for Arkansas in 2013 or 2014 without system reform. Beebe says the current fee-for-service model is “unsustainable,” with a deficit of more than $200 million possible by 2014.

Beebe told Brock that a working group of people representing doctors, hospitals, patient advocates and the Medicaid system are working on the “difficult and real complicated task” of possibly moving to a “bundled payment model.” He said there is some resistance to change, but he is hopeful that a test with nine medical procedures could create a financially feasible model.

“We do know if we do nothing we will be way in the hole in terms of money,” Beebe said.

• Trial court funding – A decline in the foreclosure adjudication process and other court cases have created a shortfall in Arkansas trial court funding. Beebe has had to push at least $40,000 to keep the system moving, but said legislators and state officials need to find an “ongoing solution” rather than “just throwing money” at the problem.

• Non-budget items – With the fiscal session starting next week, Beebe said he only foresaw one potential non-budget item that could be considered. The Governor said repealing a tax break for truckers tied to an increase in the diesel fuel tax that never materialized could be an option.

Allowing non-budget items into the session’s agenda requires a two-thirds vote from both legislative chambers.

Beebe said that a loophole in the law that has allowed sex offenders early parole could be remedied by state Parole Board actions. A long-term solution could be developed in the 2013 session, he added.

Michael Tilley with our content partner, The City Wire, is the author of this report. He can be reached by email at [email protected].