Saturday, May 30, 2015

New Jersey reaches for Bayer to quell job ache

The German drug maker will consolidate its three North Jersey operations plus one in New York into a new complex in New Jersey after the state agrees to $35 million in subsidies.

New Jersey reaches for Bayer to quell job ache

Once, New Jersey’s Gov. Christie said that Pennsylvania was “eating our lunch” when it came to providing incentives to attract and keep companies.

It would appear that lunch is being served in the Garden State now.

Bayer HealthCare on Monday said it planned to consolidate its North Jersey locations in Wayne, Morristown, and Montville into one new complex in New Jersey and move its Tarrytown, N.Y., operation there as well.

Best-known for its Bayer aspirin, Bayer HealthCare said it employed a total of about 2,500 people at those four locations.

Just don’t ask Bayer where the new operation will wind up, because the company says it has not picked a specific location - only that several sites near its existing facilities are being considered.

Helping Bayer executives to choose New Jersey was the offer of public subsidies totaling about $35 million. In February, the pharmaceutical company was awarded a $14.1 million grant from the New Jersey Economic Development Authority’s Business Retention and Relocation Assistance Grant. In January, the state approved a grant of up to $21 million through its Business Employment Incentive Program.

Will it be taxpayer money well-spent? After all, the pharmaceutical industry has been restructuring for years now, cutting sales forces and eliminating overhead. When Merck & Co. Inc. bought Schering-Plough Corp. and Pfizer Inc. bought Wyeth, both in 2009, the resulting cuts fell hard on the New Jersey operations.

According to the Quarterly Census of Employment and Wages collected by the federal Bureau of Labor Statistics, employment in New Jersey’s pharmaceutical and medicine manufacturing sector peaked at 42,256 in 2007. It dropped to 37,957 in 2008 and 33,993 in 2009.

Just last November, Bayer AG said it planned to cut its global workforce by about 2,000, to 108,700 by 2012. About 4,500 positions, including 1,700 in Germany, were to be eliminated, while about 2,500 jobs would be created, specifically in emerging markets.

Last time I checked, neither New Jersey nor the United States was an emerging market. Bayer Corp., based in Pittsburgh, said annual sales in the United States “remained steady” at $9.4 billion in 2010. In all, Bayer Corp. had 15,100 employees at year’s end.

In a statement, Bayer HealthCare Pharmaceuticals Inc. president and CEO Mark Trudeau said the company was “very excited” about the prospect for a new facility that would house employees from various divisions “under one roof.”

As soon as late 2011, some of those Bayer HealthCare employees are expected to begin moving into a new complex, presumably in North Jersey. Plans call for the relocation to be completed by the end of 2013.

The Christie administration said Bayer’s decision to stay in New Jersey “will help keep us the premier state in the nation for the pharmaceutical industry.”

Still, pharmaceuticals remain such a terrifically profitable business, it’s hard to swallow that New Jersey needed to offer so much to retain Bayer.

Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist