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Caterpillar on the Move

13 Sep 2016 by BizDESIGN in FALL 2016, FEATURES

By Rhonda Bodfield –

Selects Downtown Tucson for Growth-Focused Central Hub

 

Caterpillar is one of the world’s most valuable brands. After careful consideration and a yearlong process, this Fortune 100 company chose Tucson as the place to substantially expand its Surface Mining & Technology Division.

That’s a decision that translates into a direct infusion of $1.9 billion in economic benefits to this community and brings 600 new jobs paying an average of $90,000.That’s good for us.

Yet to Caterpillar, this move is the foundation for the company’s long-term growth strategy. “We view this as a long-term decision,” said Tom Bluth, Caterpillar’s VP in charge of the Surface Mining & Technology Division. “We’re really planting the future of our business in Tucson.”

Bluth recently took time out of his hectic schedule to have a conversation with BizTucson and share insights about Caterpillar’s decision to expand in Tucson and its vision for the next half century and beyond.

Q. When did the process begin in seeking a new site and what were your goals?

Let’s talk a little bit about this. The Division of Surface Mining & Technology for Caterpillar really is an end-to-end business unit focusing on surface mining. It is a combination of three elements – all of our manufacturing plants across the world that support the surface mining product; a collection of different product groups, including engineers who are designing the products; and what we call our go-to-market group, which is our sales and marketing organization that supports the customers in the field.

When we looked at our business, we had big parts in North America that were splintered. We had parts of our team in Milwaukee, in Peoria, in Decatur, as well as key parts of the team overseas in Germany.

Step one was strategic. As we look to the future, we thought it would make sense to bring parts of this team together to get better synergy. These different product groups would be able to share resources more and be able to work as a systems team. We also wanted to get them closer to mining. They are not necessarily as close to the customers as we’d like.

Long story short, back in early 2015, we went through the process of asking ‘Should we bring this group together?’ and the answer was yes. Then it moved into the next phase, which was, ‘OK, where do we do this?’ I would say from the spring of 2015 through the fall, we had a dedicated project team working everything, and we looked at a number of sites.

Q.  What did Tucson do particularly well through this process?

I think the single biggest thing Tucson did was demonstrate a tremendous partnership across all levels of the different organizations involved – from the state, to the city, to the county, to Sun Corridor Inc. to the Rio Nuevo team. It was really well-handled. They were very flexible and very welcoming in terms of how they engaged.

Earlier in my career at Cat, about 15-18 years ago, I was very involved in a new manufacturing site selection – so I had fair amount of experience in visiting sites when we were considering new manufacturing plants and engaging with different governmental agencies. I’ll tell you, this group in Arizona really showed best-in-class teamwork in terms of how they cooperated at all levels of government. Sometimes you don’t see that type of coordination.

Q. What were the top three attributes that attracted you to Tucson?

One of the strongest things Tucson had going for it was that we had a degree of presence in Tucson already. We have our Tucson Proving Grounds, which is where we test and develop not only our equipment but our technology solutions, and a customer center.

We also wanted to be in mining country. Tucson is right in the heart of it.

The third is probably somewhat under-appreciated. When we started the process, I think folks were not sure we’d have the diversity in workforce that we would need or whether we could attract and retain the talent we need. We view this as a long-term decision. We’re really planting the future of our business there. I would say that what really started to come out, as we spent time there, was a better appreciation for the workforce capabilities.

Q.  What first came to mind when you heard Tucson as a possible future site?

For me personally, when Tucson first bubbled up and we had our initial group of three to five potential areas on the list, I liked the idea that we had a presence there.

But I have to say, one of the strongest things that helped Tucson more than anything was our employees based there. I spent a lot of time asking them about their experience in Tucson as a place to live and what they thought about the overall environment. Probably Tucson’s biggest ambassadors are some of these Caterpillar people who are working there right now. I would say to a person, they were very favorable to Tucson as a place to live. When I heard them say they prefer not to leave Tucson – that really helped me feel better about it.

Then there was the other equation. The concern was as you start to bring in a broader cross-section of employees there, and a bigger piece of Caterpillar, are you doing the right thing? That means doing the right thing for the people who are working there now – in terms of the right school systems, the right type of housing options, the right type of environment – but then your future employees. Are you going to be able to compete to attract the best of the best? That was the piece as we investigated that we got more comfortable with – but I had to learn a bit more and get a little closer as part of that process.

Q.  What was the biggest surprise you experienced as this process unfolded?

The biggest surprise was how supportive the existing business community has been. Sometimes when you explore a new community, the other businesses think of you as a competitor for talent. Then you don’t necessarily see that same type of outreach. So the biggest surprise was how much in partnership the business community was with the local government – and then just to see the diversity of the businesses there and the depth of the technology businesses there.

Q.  So how important was that private sector piece in driving your decision to move here?

I would say it was important. It really helped as we were in the decision-making process to hear directly from business leaders, to have them share their experiences and to be able to connect our HR managers with their counterparts at some of these other companies. That was an important part of the formula and it also spoke well of Tucson – that you not only saw cooperation on the different government levels, but also saw private industry hand in hand. It is a conducive environment in which to work.

Q.  Why did Caterpillar choose Tucson for its next evolution?

It goes back to what I said in the beginning. It starts with our vision to bring pieces of our organization together to drive a more synergistic approach to both our product and solutions development.

Tucson’s location within mining country is important, because you have that mindset.

It was also important to have a strong linkage to educational resources such as the University of Arizona, which we’re tying into a greater degree for some of our development programs.

Then you tie in the proximity to customers in the southwest region of the United States, which will help drive a more customer-centric organization, which we’re always looking to evolve to.

And finally, the ability to take the footprint of Caterpillar that’s already there and leverage it to an even greater degree. We believe that will help create a real culture of design – with our engineering and sales staff being as comfortable behind the computer as they are walking on the mine site and operating the equipment.

Tucson becomes a very opportune place to try to pull those together.

Q.  What kind of work will be done at the site?

For our surface mining group, we will have individual product teams based in Tucson, so you’ll have the engineers who are designing and developing the actual product.

We’re moving our technology-enabled-solutions team to Tucson, so they’re developing elements of our solutions via autonomy, for example. Automation is a growing trend to help miners lower their cost and improve their efficiency. That’s a worldwide team but large pieces will be based in Tucson.

In fact, we already do our initial autonomy testing at the Tucson Proving Grounds. People maybe underestimate the pieces we actually have there. We develop mine operating systems there, which are combinations of the suite-management systems that miners use to manage their mine site. We do the testing in Tucson and now we’ll be bringing the engineers and programmers to create more of a mine-site focus as we do the development. We’ll also be bringing elements of our sales and support team – again the ones who are in contact with our customers.

Think of it as pieces of product development, sales and technology, then support functions for the team on everything from supply chain to purchasing, HR and business resources.

Surface mining and technology really is a worldwide business with a worldwide footprint, but we’re taking a lot of those pieces scattered throughout North America and bringing them together to be an end-to-end group closer to the mining environment.

Q.  Even though you’ve just come off a strong earnings report, is this a challenging time for the  industry? 

We pointed out there are still challenges as we go through the second half, particularly with mining. We are very, very optimistic long term in mining. It’s a cyclical business and our customers are going through the same pain we are as we keep that balance of managing for the current cycle you’re in while making sure you are investing in the future and positioning yourself so you can continue to serve customers as you come out of this cycle. A large part of this story is thinking of the future and how we want to continue serving our customers.

That’s why we’ve been so appreciative of our partnership in Arizona. We’re in a unique time because we’re painting our view of the future. And it’s actually the right time to do this work that we’re establishing in Tucson because we’re probably at the lowest employee cycle we’ve ever been in or will be in the future. Now is actually the opportune time to plant and then regrow.

The unique partnership and approach taken by the state of Arizona, the county, the city, Rio Nuevo and Sun Corridor Inc. made it feasible in this unique timeframe. We’re very appreciative of that partnership.

As we grow significantly from our current footprint, we really want to do the right thing to be partners in the community. I can guarantee you that you’ll see us come in and be valued members of the community.

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