Pfizer Job Cuts May Mean Loss Of Tax Breaks

Pfizer’s decision to close the Brooklyn facility where the company was founded in 1849 could cost the pharmaceuticals giant the remainder of the $46 million in tax breaks it received from the Bloomberg administration in 2003.As part of cuts announced yesterday that would reduce Pfizer’s global workforce by about 10,000 employees, or 10%, the drugmaker said it would shut its packaging facility in South Williamsburg and eliminate about 600 manufacturing jobs there.The cuts are part of a plan that Pfizer says will lower costs by up to $1 billion a year.In May 2003, the Bloomberg administration awarded Pfizer with $46 million in tax breaks and subsidies for the company’s decision to expand in New York City and its promises to add net jobs to the city’s economy.At a press event announcing the deal, Pfizer’s then chairman and CEO, Hank McKinnell, evoked the company’s history in New York City.“We considered many options, but there is one option we did not consider — leaving New York City,” Mr. McKinnell said. “This is the city of our founding, in Brooklyn by immigrants 154 years ago. We still have a large manufacturing plant in Brooklyn, and Manhattan has been our headquarters for nearly 50 years.”The tax breaks and subsidies were worth about $2 million a year, according to documents filed with the City Council for the fiscal year 2005–06. Yesterday, a spokesman for Mayor Bloomberg said the city would look at Pfizer’s tax breaks and other incentives in light of the company’s recent decision.The cuts follow a 43% drop in fourth-quarter profits and a dim forecast for future revenue. Analysts expect Pfizer’s new medicines that are under development to generate half the revenue that will be lost in the next five years as patents expire on older drugs, according to Bloomberg News.In a statement, the company said the decision to close the Brooklyn plant is based on “declining product volumes resulting from the loss of patent exclusivity of some of the company’s larger products, increasing production costs, and a changing product mix that will require new manufacturing technology.” Pfizer has closed 45 plants since 2003, according to a statement. Pfizer maintains its world headquarters on East 42nd Street near Grand Central Station, and employs about 6,500 people in New York.Yesterday, a spokesman for Pfizer, Bryant Haskins, said the tax breaks the company has received so far were based on “previous benchmarks.”“Going forward, that is something that will have to be discussed with the appropriate people in government,” Mr. Haskins said.The scene at Pfizer’s Brooklyn plant was quiet on Monday afternoon. All but a few cars remained in the main parking lot, as workers were sent home early after being told of the closure, according to an employee.News of Pfizer’s decision immediately raised speculation on the future of the imposing factory, visible on Brooklyn’s skyline from miles away, and intense negotiations over the future of the site are likely until the plant closes at the end of 2008.Close to an area of the borough that is rapidly transforming, Pfizer could stand to make a lot of money from selling the real estate. The site could be prime for residential real estate development, particularly attractive to the expanding chasidic community nearby, although it would require a rezoning. A spokesman for Mayor Bloomberg said in a statement he would seek to turn the Pfizer site and other sites nearby into affordable housing.The Pfizer spokesman, Mr. Haskins, said the company would discuss the future of the site with local leaders. “We will look for a solution in keeping with the surrounding neighborhoods,” he said. Over the last few years, local officials said they feared the Pfizer facility was vulnerable to closing. There was a hope that because of Pfizer’s history in the borough, the company might go out of its way to keep the facility open. Yesterday, the Brooklyn officials said they were disappointed that did not happen.The president of Brooklyn, Marty Markowitz, said he was “profoundly disappointed” by Pfizer’s decision.“Apparently market forces have trumped history and local roots, and another piece of our city’s industrial heart and soul will be lost,” Mr. Markowitz said in a statement.The local City Council member, David Yassky, said the borough would be losing “jobs that have helped people live a good middle class life.”“My immediate focus is on making sure the employees, the people that work at that plant, have as many options as they possibly can. The future of the real estate we will figure out later,” Mr. Yassky said in a telephone interview.The president of the Partnership for New York City, Kathryn Wylde, said for many years Pfizer’s decision to keep open its Brooklyn facility represented “a civic commitment rather than business commitment.” She said costs, competition from cheaper cities, and expensive regulation make manufacturing in New York City prohibitively expensive for companies that have to compete internationally.“The days when New York City could maintain major international manufacturing operations that are serving international markets are over,” Ms. Wylde said.Despite the Brooklyn cuts, keeping Pfizer alive and well and in New York, Ms. Wylde said, “is critical to our future in terms of being able to attract life sciences in New York and establishing New York as a center for the biotech industry.”“To think somehow that big pharma has an infinite ability to absorb these punishments, particularly from the generic drug industry, is proving to be wrong,” Ms. Wylde said.

Pfizer Job Cuts May Mean Loss Of Tax Breaks

More from the New York Sun

Iran Adds 7 Years to Prison Sentence for Nobel Laureate Narges Mohammadi

Democrats Notch Another Unexpected Win in Special Election, Swinging Louisiana Legislative Seat 30 Points to the Left

Lawyers Prepare To Release New Evidence in Case of Chicago Woman Shot by Customs and Border Patrol

More from the New York Sun

Iran Adds 7 Years to Prison Sentence for Nobel Laureate Narges Mohammadi

Democrats Notch Another Unexpected Win in Special Election, Swinging Louisiana Legislative Seat 30 Points to the Left

Lawyers Prepare To Release New Evidence in Case of Chicago Woman Shot by Customs and Border Patrol

FCC Launches Investigation into ‘The View’ Over Equal Airtime Rules

The Honda Prelude Is a Prius Pretending To Be a Sports Coupe

A Ma Maniére Is No Longer Special

Samsung’s $2,899 Trifold Phone Arrives in America

Pagani Shows Why Hypercar Makers Need Better Standards