In 2010 Pfizer announced it paid New York City $24.7 million in recaptured funds and penalties, after it relocated corporate offices and transferred hundreds of jobs to New Jersey and Pennsylvania. As of fiscal year 2008 Pfizer received over $10 million in incentives from the Industrial Development Agency, as part of a $33 million (total allocation) incentive package.
The closing of its Brooklyn plant and reduction of Manhattan office space triggered clawback provisions in the project agreement with the NYC Industrial Development Agency. The original subsidy, announced in 2003, included a proposed $1.4 million in subsidies from the Empire State Development Corporation. These subsidies from the state, a $400,000 capital grant and a $1 million grant through the JOBS Now program, were recaptured. For more details on the recapture, read our blog. For more information on Pfizer, view its profile in GJNY's Database of Deals, or Pfizer's Corporate Rap Sheet by the Dirt Diggers Digest.
2007 - Pfizer announced it would be closing its Brooklyn plant and laying off 600 workers, but it will not have to pay any penalties. See the article from the Daily News.
April 2005 -- Pfizer announces restructuring that may result in up to 10,000 layoffs company-wide. It is unclear how many of these will affect New York City.
August 2003 -- According to Bloomberg News, Pfizer cut over 5,000 jobs following its April 2003 acquisition of Pharmacia. Up to 6,050 Pharmacia jobs are slated to be eliminated. Pfizer also reportedly fired 463 of its own workers.
June 10, 2003 -- The city's Industrial Development Agency (IDA) board voted to approve Pfizer's $46.1 million subsidy, despite concerns raised by two board members based on testimony from groups including GJNY. The deal is reported by IDA officials to contain strong clawback provisions if jobs are not created as promised.
June 9, 2003 -- Nine people testified against Pfizer's proposed $46.1 million subsidy at today's Industrial Development Agency public hearing, citing the drug giant's inflated prices, high profits, and efforts to defeat state laws that would reduce drug costs in Medicare and Medicaid programs.
May 2003 -- The City has offered Pfizer $46.1 million if it creates 2,000 new jobs over the course of the 15 year deal. Pfizer can also apply for a grant of $1.4 million from New York State through the Empire State Development Corporation. Pfizer will transfer 1,000 jobs from New Jersey, Michigan, Missouri and Illinois, and promises to create an additional 1,000 jobs over the next five years.
Pfizer and its subsidiaries had previously received subsidies for locating jobs in New Jersey, Michigan, and Missouri. Read a subsidy litigation report from Good Jobs First on Pfizer's attempt to eliminate a Maine program that reduces prescription drug prices for state residents.
The same day the move was announced, the AP reported a meeting between Pfizer CEO Hank McKinnell and New Jersey's governor Jim McGreevy in which Mr. McKinnell declared: "Pfizer remains firmly committed to New Jersey, and for that reason, we are planning to stay and make a major investment in the state."
Breakdown of benefits:
$14.3 million in retention benefits ($10 mil in sales tax and $4.3 million in real estate tax breaks) IF they RETAIN 5,537 jobs and bring the expected 1,000 to NYC by end of 2004
$13.0 million in sales tax growth credits and $ 6.2 million in real estate tax benefits IF they GROW an additional 1,000 jobs for a total of 7,537 by the end of the fifteen year deal.
$6.5 million in Con Ed BIR energy benefits and $6.1 million in NYCPUS energy benefits
$46.1 million total package
Plus possible $1.4 million from the Empire State Development Corporation for total of $47.5 million in possible benefits
Penalties for layoffs in Pfizer's commercial retention agreement with NYC Industrial Development Agency dated December 1, 2003
Pfizer agreed to retain 5,537 employees in New York City and to grow 1,000 additional jobs by June 30, 2005 in exchange for up to $47.5 million in sales tax, real estate tax, and energy cost breaks from the city and state. As of September 30, 2003, Pfizer had 5,582 employees in NYC.
According to Pfizer’s commercial retention agreement, the company must retain:
5,537 employees until 6/30/05
6,537 employees after 6/30/05
Employees above these base numbers count as "growth credit" employees. Once "growth credit" employees have been with the company for five years, they become part of the "base number" and are included in calculations to determine penalties for any layoffs or transfers.
If the “Base Employment Number” is reduced through layoffs, the following penalties apply:
Percent reduction below Base Employment Number
(Minimum number of employees laid off before and after 6/30/05)
0% and 7%
(0 – 388 and 0 – 458)
Between 7% and 15%
(389 – 831 and 459 – 981)
Permanent reduction in future benefits (not including growth credits). If reduction calculations exceed remaining benefits, company must pay IDA the difference.
More than 15%
(more than 830 and more than 981)
The IDA may, at its discretion, terminate all future benefits, cancel PILOT and Lease Agreements, cancel sales tax letter, and divest from any interest in company property.
*GJNY summary based on Pfizer’s Project Agreement with the NYC IDA
NOTE: No recapture penalty is applicable for layoffs. Recapture penalties would only apply to employment reductions resulting from company decision to move employees out of NYC to another location.
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