Montgomery Twp. >> New Jersey Governor Phil Murphy dropped a bombshell on Montgomery County on July 5 with his announcement that his state has lured away a major pharmaceutical company.
Teva Pharmaceuticals USA has accepted an incentive package from N.J. that totals nearly $40 million over 10 years to move its headquarters from Montgomery Township. The move will include the transfer of more than 800 jobs to Parsippany, N.J., according to the governor’s office.
Teva’s current headquarters at 1090 Horsham Road, is one of three area facilities the company operates. The other two are near West Chester and in Frazer.
The Israel-based Teva Pharmaceutical Industries Ltd. is the world’s largest generic drugmaker. The company is in the midst of a restructuring that was announced in Dec. 2017. A key element of the plan, according to a statement released by the company on July 6, was the decision to close or divest a significant number of facilities, headquarters and office locations.
“Reducing the number of sites supports Teva’s drive to unify and simplify the organization, ensure better integration, improve productivity and efficiencies, and reduce its cost base. This includes consolidating Teva’s office sites,” the statement reads. The restructuring will also result in the layoffs of an estimated 14,000 employees globally.
Teva does plan to retain a “significant” presence in Pennsylvania, according to the statement. While many positions will be moving to New Jersey, Teva’s plan during the next two years “maintains employment for approximately 600 life science employees” at Teva’s R&D facility in West Chester. An additional 100 employees will continue to support Teva’s operations and distribution services in northeast Pennsylvania.
“As the restructuring process, market dynamics and natural attrition are ongoing; we cannot confirm final and definitive numbers,” the statement reads.
The package offered to Teva and approved by the New Jersey Economic Development Authority, includes a Grow New Jersey Assistance Program Grant estimated at just under $4 million per year for 10 years.
Pennsylvania’s Department of Community and Economic Development did not make an offer to Teva for this project, according to a statement released July 6 by the office, citing the company’s ongoing restructuring.
“Teva’s consolidation plan is focused on shedding jobs and divesting from several facilities in an effort to alleviate financial struggles. Funding this project does not align with the basic economic development principles of responsibly using taxpayer dollars with strong accountability measures built in to foster true job growth in Pennsylvania,” the statement reads.
Montgomery Township Manager Lawrence Gregan said in an interview on July 6, that the township was aware of the company’s restructuring but was unaware of the “extent of the move out of the area.” However, he added that the company will continue to use the township location for a portion of its business.
“They are maintaining the facility, and have submitted a permit request to convert it to warehouse space. So we expect them to continue to have a presence on site,” Gregan said, adding that the permit was submitted just last week and is being reviewed by the township codes department. Gregan did not know the full details of the request.
“We don’t want to lose businesses in the community but the fact they will retain some presence is somewhat heartening. They will have some group of employees here,” he said.
While some of the specifics about Teva employee impact are not yet known, Montgomery County’s Director of Commerce David Zellers said the county has services to assist affected workers.
“We understand the vulnerability workers face when companies choose to relocate, which is why we have invested with the state government in workforce development services like our PA Careerlink of Montgomery County, which provides services such as job search assistance and career coaching to Montgomery County residents at all stages of their career and professional development every day,” he said.
Zellers added that the county remains, “number one in Pennsylvania for manufacturing jobs and our region is the focal point for the pharmaceutical and life sciences industry in the Commonwealth.”
In announcing the restructuring in December, Chief Executive Kare Schultz said it was crucial to restoring the company’s financial security and stabilizing the business.
“We have no time to waste,” he said at the time.
The company said the planned 14,000 global layoffs represent more than 25 percent of its global workforce. The restructuring is expected to cut costs by $3 billion by the end of 2019.
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