Caterpillar officials announced Thursday (July 5) plans to invest $40 million in the company’s North Little Rock plant and add more than 250 jobs as part of an expansion to make paving equipment. An estimated 525 people now work at the plant.
Thursday’s announcement at the plant that first opened in 2010 included Gov. Asa Hutchinson.
“The expansion of Caterpillar’s North Little Rock facility illustrates the growing economy we have experienced throughout the state,” Gov. Hutchinson said in a statement provided by Caterpillar. “We’ve seen great things from Caterpillar’s facility in recent years, and the new jobs mean more opportunity for Arkansas families. This announcement shows the faith that Caterpillar has in our workforce, in the state and in our communities.”
Peoria, Ill.-based Caterpillar opened the plant to build motor graders, and in late 2017 added the production of medium wheel loaders to the manufacturing line. The $40 million investment includes work between 2017 and 2020, when the lines to produce paving equipment – a large six-wheeled rotary mixer, for example – is expected to be complete.
Company officials at the non-union plant said within the next year they will begin hiring assemblers, welders, mechanics, machinists, fork truck drivers, and order pickers on first, second and third shifts. The company is hosting at job fair from 8 a.m. to Noon, July 21, at the North Little Rock plant.
“Adding new products into the facility gives us a lot of opportunity, and I’m most excited about expanding our team to make the machines that will help our customers build a better world,” said Paul Rivera, Caterpillar North Little Rock operations manager. “To support additional production, we’re looking to hire an additional 250 new employees.”
New manufacturing jobs could help boost a segment of the central Arkansas economy that has struggled in recent years. As of May, the region had an estimated 20,200 manufacturing jobs, down 0.5% compared to May 2017, according to the U.S. Bureau of Labor Statistics. Manufacturing jobs are about 6% of the total number of jobs in the state’s largest metro area.
Statewide, manufacturing jobs are growing, and reached an estimated 160,100 in May, up 2.2% compared to May 2017. Manufacturing jobs in May were 12.8% of the state’s total nonfarm employed.
CATERPILLAR STOCK DECLINE
News of the North Little Rock expansion comes amidst concerns that Caterpillar and other large construction equipment makers will be hurt by tariff-induced trade wars, or that growth in the construction equipment cycle is near an end.
The company announced earlier this year plant closings in Aurora, Ill., and Waco, Texas. The company also closed a demonstration center in Panama. The actions were expected to result in 880 combined job losses at the three locations.
Company shares (NYSE: CAT) closed Thursday at $135.81, up $1.98. During the past 52 weeks the share price has ranged between $173.24 and $105.11. Not only is the stock well off its 52 week high, the share price is down almost 16% from its 2018 opening day close of $157.04. The share price decline comes even as the company on April 24 raised its full year 2018 earnings per share guidance from a range of $7.75-$8.75 to $9.75-$10.75.
However, some market watchers remain bullish on the sector. UBS equity analyst Steven Fisher recently issued a “Buy” rating on Caterpillar and raised his target price from $178 to $185. Fisher believes growth in the global mining sector will benefit Caterpillar.
The company posted first quarter net income of $1.665 billion, well ahead of the $192 million in the first quarter of 2017. The company in 2017 posted net income of $754 million, a wide swing from the $67 million loss in 2016.