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Wednesday, September 15, 2010

PhillyInc: In this digital age, a cycle begins when businesses relocate

   Business-attraction efforts can work for only so long.

   Last week, we learned the Philadelphia region would gain the corporate headquarters of a manufacturer called Gardner Denver Inc., which plans to relocate from Illinois and create about 50 jobs here.

   Way back in 1986, local economic-development officials landed a whale, attracting the pharmaceutical operations of a brand-name firm, Eastman Kodak Co. It was considered a major coup, and plans called for the creation of 2,000 jobs.

   The fact that you probably don't even remember that the iconic photography company was once in the pharmaceutical business offers a clue where this tale is headed.

   Attracted by a state incentive package totaling $14.7 million, Kodak moved about 300 people into what was to be temporary headquarters in the Great Valley Corporate Center in Chester County in September 1987.

   After Kodak agreed to buy Sterling Drug Inc. in 1988, its growth plans seemed assured, as Sterling's operations and 1,200 jobs were relocated from Rensselaer, N.Y., to a $300 million research complex that was built in Upper Providence Township, Montgomery County, and opened in 1993.

   However, the last two decades for the pharmaceutical industry have been like an extended all-you-can-eat buffet of mergers and acquisitions. By 1994, Kodak had soured on the drug business and sold its pharmaceutical operations to Sanofi S.A.

   Sanofi didn't want the Upper Providence complex, but moved the Sterling research operations and its 420 employees to Great Valley in 1995. Sanofi wound up buying its larger French rival, Aventis S.A., in August 2004. By then, Sanofi-Aventis S.A. had about 750 employees and its U.S. R&D headquarters in East Whiteland Township, Chester County. (Its U.S. headquarters are in Bridgewater, N.J.)

   Earlier this summer, Sanofi-Aventis announced that it was "realigning" its R&D organization and that it planned to shift operations from Chester County to other sites.

   According to a plant-closing notice dated Aug. 31 and filed with the Pennsylvania Department of Labor & Industry, Sanofi-Aventis will

begin winding down its Great Valley R&D operations on

Oct. 31.

   Sanofi-Aventis spokeswoman Elizabeth Baxter said that 303 employees had been offered the chance to relocate to other company R&D sites, while 105 would be "separated" from the company.

   When the relocation is complete by June 30, Sanofi-Aventis anticipates employing 57 people in Great Valley as part of a unit that supports clinical trials, she said.

   So, the cycle of business attraction, job creation, opportunistic acquisition, organizational realignment, and job destruction once again runs its course.

   I'd call it another Kodak moment, if that still meant something in the digital age.

Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com.

See his blog at www.phillyinc.biz.

 
Posted by Mike Armstrong @ 2:00 PM  Permalink | 1 comment
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  • 0 like this / 0 don't   •   Posted 5:50 PM, 09/15/2010
    It is what it is.
    — The Baron


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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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