Monday, May 4, 2015

Digitas Health, Cintas land state backing for expansion

The Governor's Action Team awards $75,000 to Cintas and $617,000 to Digitas Health so they can expand in Philadelphia.

Digitas Health, Cintas land state backing for expansion

The Governor's Action Team has been in high gear of late, charging around Pennsylvania and awarding money for economic development projects.

Gov. Rendell was in Center City this morning announcing two projects here in Philadelphia. One sounds like economic development to me, while the other seems more like corporate welfare.

Cintas Corp., the big corporate uniform supplier, will build a 58,000-square-foot building to process laundry at 4700 Jefferson St. in West Parkside. The state will provide a $75,000 "opportunity grant" for the project will cost Cintas $14.8 million to buy he land and build. For its part, Cintas says the new plant will enable it to retain 1,564 existing positions.

OK, a new laundry facility. Probably more efficient. Brings jobs to an area of the city that definitely could use them. Sounds like a good deal.

But then Rendell said the state also is providing a $200,000 opportunity grant and $417,000 in job creation tax credits to help Digitas Health move into 61,000-square-foot offices in Center City.

Digitas Health , which used to be known as Medical Broadcasting Corp., bills itself as "the largest advertising agency in Philadelphia." The agency employs 240 people and has been located on Rittenhouse Square for years. But it has outgrown its space and needed to expand. So it signed a 10-year lease to launch a $4 million expansion project.

Digitas Health, a unit of Publicis Groupe S.A., says it will create 139 "highly-compensated positions within three years."

But here's the thing: Little more than a year ago, Medical Broadcasting was proud that it was attracting so many talented people to Philadelphia and told us so. Here's vice president Larry Mickelberg's quote in a January 2007 story written by staff writer Thomas Ginsberg:

We're starting to woo people to Philadelphia. It's alluring to people in media and entertainment to work in an altruistic calling like health care, and we're at the epicenter.

Now, Digitas Health does have offices in New York, Boston and Chicago besides its Center City headquarters. I supposed the agency could have chosen to expand those offices rather than do so here.

Both Cintas and Digitas Health have access to all sorts of capital and credit. Cintas is a New York Stock Exchange listed company based in Cincinnati with $3.7 billion in 2007 sales. Digitas Health's parent, Publicis Groupe, reported revenue of 4.7 billion euros for 2007.

And for perspective, let's remember that the Governor's Action Team provided a total of $400,000 in financial incentives for the expansion of the AgustaWestland helicopter factory in Northeast Philadelphia about a week ago. That was a $32 million project to create 200 jobs and retain 185 others.

Does anyone understand why the state would throw good money after Digitas Health that has enjoyed rapid growth in the city and is simply moving to larger offices as so many other companies do?

This seems more like a "thank you for not leaving" grant, and I'm not sure Digitas Health was ever serious considering doing so.

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