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Drug Giant Merck Chooses North Carolina for New Plant

Wed February 04, 2004 - Southeast Edition

RALEIGH, NC (AP) Pharmaceutical giant Merck & Co. will build a $300-million vaccine plant in North Carolina if state and local incentives come through as promised, a company spokeswoman said recently.

“Merck has selected a site in Durham County, North Carolina, as the location for its new vaccine manufacturing facility,” spokeswoman Anita Larsen said. “This decision is contingent upon final approval of state and local economic incentive packages. We expect to be able to make a final announcement in the near future.”

In December, North Carolina’s legislature was called into a special session by Gov. Mike Easley and approved incentives worth $36 million to lure the Merck plant.

“The governor has been in negotiations with the company for several months and does anticipate they will make a final decision to locate here,” Easley spokeswoman Cari Boyce said.

The Merck plant will produce a combination vaccine for measles, mumps and rubella and a second medication for chickenpox, Larsen said.

Merck Chief Executive Raymond Gilmartin told The Atlanta Journal-Constitution, that the company was drawn by the concentration of scientists and other biotech workers already living in the Research Triangle Park area.

Financial incentives were involved, but the final decision swung on the skill base available,” Gilmartin told the newspaper. He said Merck also considered Georgia and a third state, which he didn’t identify. Gilmartin was traveling and unavailable for an interview, Larsen said.

The first phase of the project — expected to be built on a site at the northern edge of the city of Durham — is expected to cost between $200 million and $300 million and bring at least 200 high-skilled jobs to the state.

North Carolina officials submitted potential sites to Merck in February, 2003, and company representatives visited the site in March or April, a Commerce Department spokeswoman said.

North Carolina lawmakers approved creating a new fund to award grants to buy and develop industrial sites for businesses. Merck is expected to receive $24 million through the fund.

Merck will negotiate with property owner Terry Sanford Jr. — the son of former U.S. Sen. Terry Sanford — to acquire the site, then the state will make a grant or a forgivable loan for the company to purchase it, Commerce Secretary Jim Fain said.

North Carolina’s incentives also would give Merck a rebate on sales taxes paid for construction materials, worth approximately $4.7 million, and a $3.7-million cash grant over a 10-year period.

Glenn Cornell, commissioner of the Georgia Department of Industry, Trade and Tourism, said he believes North Carolina’s tax structure and incentives factored into Merck’s choice.

“We put a very aggressive proposal on the table,” Cornell said. “It was so aggressive that the North Carolina Legislature had to call a special session to better our proposal. We have to reach a threshold of what is the right amount of return on investment.”

The head of North Carolina’s largest business lobby said the incentives merely augmented the state’s commitment to training biotech workers.

“Biotech jobs go where there’s a good educational infrastructure,” said Phil Kirk, president North Carolina Citizens for Business and Industry. “I think it’s the first of many announcements that we might see in the future because of our state’s continuing focus on biotech.”

Kirk said North Carolina would concentrate on biotechnology businesses to replace thousands of jobs lost in manufacturing.

“Biotech pays well and will be around for a long time,” he said.