Express Scripts moving to Florence Township

Express Scripts' move to Florence, Willingboro Mayor Eddie Cambell Jr. said, is going to leave his town with a "big, empty building."
Express Scripts' move to Florence, Willingboro Mayor Eddie Cambell Jr. said, is going to leave his town with a "big, empty building."
Posted: March 03, 2014

WILLINGBORO A dozen years after local officials persuaded Merck Medco to build the nation's largest pharmaceutical mail-order facility in the township and create more than 1,000 jobs, the company's latest owners are relocating to a neighboring community, a few miles away, where sweeter tax breaks and other incentives beckon.

Florence Township officials wooed Express Scripts, the new owner, with an offer that will slash the property taxes on the site by more than 75 percent - from $417,000 to $108,000 in its first year. There would be a fixed yearly payment, instead of taxes tied to assessed value, that would gradually rise over 20 years to only $232,000, considerably less than the 30-year tax break Willingboro had provided when economic times were different.

Florence also added an expedited approval process and special permission to expand in the future without further oversight, said Florence Administrator Richard Brook.

"You always have to ask, 'Would they have come without an incentive?' And the answer is no," he said. These deals, he said, are required "to land a company of this size and magnitude." The company will pay $3.8 million in taxes over the 20 years.

The New Jersey Economic Development Authority went further. When the company threatened to move its operation out of state, it was awarded a $40 million tax credit against state taxes, over a 10-year period.

The situation with Express Scripts is typical of businesses that seek incentives to locate or remain in a community. States and towns aggressively compete to bring in and retain businesses and industries, sometimes offering lucrative tax breaks and special treatment with little regard for a company's employment track record.

Two years ago the St. Louis-based Express Scripts laid off 900 employees throughout New Jersey when it acquired Medco Health Solutions - Merck Medco's successor - for $29.1 billion.

When Merck Medco first came to Willingboro - a struggling township that had targeted a desolate shopping center for a rebirth - the company had promised 1,200 jobs, township officials said. Merck Medco built a 280,000-square-foot facility - the size of several football fields - and set up conveyor belts that stretch two miles.

Medco Health started out with 800 employees and heavily relied upon automation and robots to fill millions of pill bottles, label them, and package them for home delivery, according to a spokesperson. It took seven years for the company to reach 1,200 jobs. But then, in recent years, layoffs caused the number to plummet to half that workforce.

Willingboro Mayor Eddie Cambell Jr. said Express Scripts is going to leave the town with a "big, empty building." The company has been the town's biggest employer and did not notify township officials about whether the move will "put the workers on the street," he said, adding that many are town residents.

"I'm very distressed," said former Mayor Lavonne Bebler Johnson, who had helped entice Merck Medco to come to the town. She said officials offered a 30-year fixed-payment plan that cut their tax obligation by 50 to 60 percent and that called for them to gradually pay more until they reached their full share. "They're bailing out when we bent over backwards and granted them this great deal to come here," she said. "I'm disappointed there's no corporate loyalty to the towns that gave them a hand up," she said, adding this is a problem "that plagues every town in the country."

Under Express Scripts' agreement with the state EDA, the company will retain the 585 jobs it now has at the Willingboro facility and will create 128 new jobs when it moves to Florence.

Brian Henry, a company spokesman, said in an e-mail that "almost all of the employees" in Willingboro will "have jobs in the new site without having to apply" for them. He also said the new 239,000-square-foot facility - which is being built in a sprawling industrial park off Route 130 - is expected to be completed this summer. The Willingboro facility is on the same highway.

Express Scripts said in its application to EDA that it plans to invest $61.5 million in the plant, which will be leased from National Freight Inc. The company representatives told the agency the current center in Willingboro has "become obsolete." Henry said the company, which has 30,000 employees nationwide and which had reported its revenue in 2012 as about $93 million, wants to build "a state-of-the-art facility" in Florence that will best serve its customers. Nationwide, the company processes 1.4 billion prescriptions annually.

"Incentives were certainly a factor in addition to a combination of other considerations," Henry said, explaining the move. Express Scripts has five other similar facilities across the country.

To qualify, Express Scripts had to certify that it seriously considered moving out of state - possibly to Virginia - had it not received the incentive.

Express Scripts also had to repay the EDA the $6.6 million that Medco Health had received under an earlier tax-incentive program. Under that program, Medco Health had committed to creating and retaining at least 815 jobs in the state for 15 years, a period that is ongoing.

The $6.6 million, Henry said, "was an outstanding obligation we inherited."

856-779-3224 @JanHefler

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