Hunterdon County loses a top employer and taxpayer with Merck's announcement it will move its global headquarters and 2,000 jobs out of Readington Township.
View full sizeMerck & Co. announced Tuesday it was moving its world headquarters from Readington Township, Hunterdon County, to Union County by 2015.BY DOUGLAS B. BRILL AND TOM ZANKI
Max's 22 restaurant opened its doors Aug. 12, offered Merck employees a 10 percent discount then watched workers from the world’s second-largest drugmaker immediately account for a quarter of business.
Less than two months later, the Route 22 restaurant and its Hunterdon County community find they have to try to replace a top moneymaker.
Merck said Tuesday it will move its global headquarters and 2,000 jobs out of Readington Township and into Union County before the end of 2015.
The move would leave the township and county without a top employer and taxpayer, and Readington Township’s business community will have to look for new patrons.
Keith Gilstein, a part owner and manager of Max's, said he and his partners liked the Whitehouse Station section of Readington because it came with built-in customers from Merck.
“It could put me out of business,” Gilstein said of Merck’s plans to move to Summit, N.J., the latest cost cut by Merck since it merged in 2009 with fellow pharmaceutical maker Schering-Plough Corp.
“Would we have necessarily purchased this place if we knew Merck was moving its corporate headquarters?” he said. “Maybe yes, maybe no. But I have to be honest, it would have to be more on the no side.”
Merck said its plan is to close and sell its 1 million-square-foot headquarters, retaining an administrative office that’s about a quarter of the size and employs a few hundred at the same campus.
Move creates a void
The best-case scenario for Hunterdon County is that an employer with as many or more workers buys the larger building and is ready to operate by the time Merck leaves.
“That’s going to be hard,” Hunterdon County Freeholder Director Robert Walton said. “Businesses aren’t expanding in this economy right now. We have to prepare for the worst-case scenario — that we’ll have an empty building there for years to come.
“Our job,” he said, “is to prepare for the worst-case scenario, be optimistic for the best-case scenario and try to recruit a business to be active in that property.”
Merck says the move is part of a plan to reduce real estate and operations costs in 70 countries following its merger with Schering-Plough.
Merck spokesman Ron Rogers said the new Summit headquarters, gained in the merger, has undergone $400 million in upgrades since 2003 and is closer to major transportation and cities. It’s 20 minutes from Newark Liberty International Airport and half an hour from New York City.
It also already employs 1,800 people and houses research, manufacturing, animal health and consumer-care operations for Merck. Employees at the current headquarters will be offered jobs there and at facilities in Branchburg, N.J., and the Cokesbury section of Lebanon Borough.
“The relocation of our headquarters will help us achieve our future vision, reduce the size of our operating footprint and increase agility as we adapt to our changing business environment,” Kenneth C. Frazier, chairman and chief executive officer of Merck, said in a statement.
'A blow for Hunterdon'
Falling drug prices, costly regulatory requirements for new drugs and other competitive pressures likely made downsizing necessary, said Catherine McVicker, of Califon, former director of the defunct economic development group Hunterdon Economic Partnership.
Meanwhile, she said, Merck’s existing headquarters, by size and architecture, is “the kind of thing you build when times are good.”
“It’s a blow for Hunterdon County,” she said. “If you look at it from the standpoint of the company, there were probably a lot of factors benefiting the company that were beyond the control of Hunterdon County.”
Hunterdon County Chamber of Commerce President Chris Phelan said the two-year window provided by Merck will allow the county time to recover.
He said he spoke with representatives of Merck, a chamber member, and was assured the company is committed to a smooth transition. He is confident the property will find suitors.
“There is an opportunity for the next chapter on that site," he said. “I can’t say what that will be right now, but I-78 is a critical thoroughfare with access to the Lehigh Valley. … It’s a very attractive site. It has national and international appeal.”
N.J. strength unchanged
Readington Mayor Thomas Auriemma said he spoke to a Merck property manager Tuesday and that Merck is “committed to selling it to the right firm so that it would minimize impact to Readington residents.”
U.S. Rep. Leonard Lance, D-Hunterdon, said he’s sorry to see the Merck headquarters leave Hunterdon County but is pleased it’s staying in New Jersey.
“Merck will continue to be an integral part of what makes New Jersey the ‘Medicine Chest of the World,’” Lance said in a statement.
That wasn’t much consolation to Gilstein, the restaurant owner.
“That doesn’t help us at all,” he said. “… It’s going to hurt us. There’s no doubt.”
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MERCK'S FINANCIAL LANDSCAPE
Merck & Co. announced Tuesday it will move its headquarters out of Hunterdon County. Since early in the last decade, it has steadily slashed jobs, announcing a new restructuring program every two or three years.
- After buying Schering-Plough Corp. in November 2009, the combined company had a total of about 100,000 jobs. Merck has pared that to 84,000 and continues to trim its workforce.
- The company is being squeezed by the weak global economy, private and government health programs pushing for lower medicine prices, and generic competition slashing revenue from former blockbuster drugs.
- In early August, Merck’s top seller, asthma and allergy treatment Singulair, got U.S. generic competition, and sales have already plunged.
- Merck shares rose 6 cents to $46.40 in afternoon trading Tuesday after rising as high as $46.54 earlier in the session, their highest level since early 2008.
Associated Press