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The End of AstraZeneca in Westborough

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The AstraZeneca plant in Westborough has announced it will shut its doors permanently by the end of 2015. This is the final step the company has taken to shut down the plant, having already decreased employee levels there from 800 to just 180.  More employees will be relieved by March, but others will remain employed until the company closes at the end of 2015.

The closing of the facility means the city of Westborough will lose its biggest taxpayer. The AstraZeneca plant pays the city an estimated $2 million in total; $360,000 in property taxes and $1,548,547 for equipment taxes. Residents and businesses in Westborough will begin to feel the pinch of the revenue loss in fiscal year 2017.

City officials hope to fill the vacancy quickly.   The building is 420,000 square feet and could be a great site for a wide spectrum of businesses.

The AstraZeneca plant processed the asthma treatment Pulmicort Respules, which will now be produced at the company’s locations in Sweden and Australia. A company representative stated the move is to attain “increased efficiencies in our global supply chain.”

AstraZeneca will continue to house its research-and-development operations in Massachusetts, with facilities in both Waltham and Cambridge.

Snow Throws Wet Blanket on Economy

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Starting in late January, Massachusetts has been battered by major snowstorms that have blocked roads, buried parking spaces, and caused widespread power outages. MBTA service has been limited, and even shut down in places. Snow and ice continues to block roads, keeping people away from shops and restaurants and impeding industrial and agricultural operations.

According to Christopher Geehern of the Associated Industries of Massachusetts, employees are having trouble getting to work, and companies are having difficulties distributing their products. Industrial businesses are also spending a lot of time on snow removal.

Here are some other ways the snow is impacting the economy.

The Mystic Generating Station, an eight unit oil and natural gas power facility on the Mystic River across from Charlestown, lowered output to keep snow and ice in the river from making the plant malfunction. Workers also shoveled the flat roofs on the facility constantly. Kevin Thornton, a spokesman for the plant’s owner Exelon, said that the plant put workers in a hotel and provided food to make sure that they could get to work despite the snow. The plant has about 100 workers and the ability to power roughly two million homes. “The biggest costs have been snow removal,” Thornton said.

Insurance broker Marsh & McLennan in Worcester is seeing more claims for ice dams on roofs that have caused leaking and collapses. Jerry Alderman, president of property and casualty in New England, expects an increase in auto claims from snow and ice as well. Snow removal services are stretched very thin.

Economist Michael Goodman said that all the bad weather in January and February could cost the state billions of dollars while, according to a study by IHS Global Insight, a one day shutdown due to snow in Massachusetts would cost the state’s economy about $265 million.

Beaton Plans to Lower Energy Costs By Implementing Solar

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With his focus on “energy justice,” the new state Energy Environmental Affairs secretary, Matthew Beaton’s main objective is reducing energy bills with a plan for installing solar power on city apartment buildings.

At a roundtable meeting, Beaton said, “We need to look at the fiscal realities. A lot of folks are being really pinched right now by the cost of electricity, and we need to look at identifying any and every opportunity to address that price element, but at the same time make sure we’re staying on our path to a cleaner and greener energy source along the way.”

In response to Gov. Baker’s identification of a midyear budget gap of $765 million, Beaton noted that his budget team is working toward reducing that deficit as environmentalists applauded his team’s efforts “to restore environmental programs to 1 percent of the state budget through his [Baker’s] term.”

Beaton describes himself as both an avid fly fisherman and a rower. As a man who has hiked Mount Greylock and “read ‘Walden‘ on the shores of Walden” Pond, he hopes to build on the urban parks program. Save the Harbor/Save the Bay’s Bruce Berman praised Beaton’s approach toward the advocates, saying Beaton set “a really great tone.”

In response to several environmental advocates recommending that the state adopt efforts to adapt to the issue of climate change as well as efficient green energy, Beaton stated that he and Baker understand that “climate change preparedness” needs to be implemented in “coastal and inland areas.”

Although Baker stated that he would not raise fees or taxes, he did not restrict new fees recently implemented by the Patrick administration that raised the cost of visiting a state beach or park.

Elizabeth Saunders, the State Director of Clean Water Action Massachusetts, said that the fees associated with the state’s toxic chemical program would be worth “looking at” as they have remained unchanged since 1991, even though the law requires the fees for the program to “be kept in line with inflation.”

Medical Device Manufacturer Moves to Worcester

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Cogmedix, a wholly owned subsidiary of Westborough-based Coghlin Companies Inc., recently announced the relocation of its world headquarters to 17 Briden Street in Worcester.  The medical device engineering and manufacturing services provider has become quite a success story in an increasingly important sector of the Commonwealth’s economy.

Chris Coghlin, President and CEO of the Coghlin Companies, stated “We are very excited about the trajectory of Cogmedix and the recent relocation, renovation and expansion of this world-class facility. For more than 100 years, our family has shared a deep-rooted passion for the economic success of Worcester and its surrounding communities, and we look forward to adding many new jobs in the greater Worcester area for years to come. The proximity of this facility lends itself well to attract highly skilled technicians as well as engineering and supply chain personnel as our growth continues into 2015 and beyond.”

Matt Giza, Vice President and General Manager of Cogmedix, said, “This move was made necessary by our steady pattern of growth. We really needed the additional space and these newly outfitted facilities are more than twice the size of our former location. This expansion will allow us to increase capacity to accommodate the needs of our customers, both existing and new, as well as provide improved inventory and supply chain management operations.”

Addressing Cogmedix’ growing niche in manufacturing finished laser and optically-based medical devices, Giza noted that upgrades included the installation of five purpose-built, independently climate-controlled, laser-safe test labs. Amenities include new cafeteria spaces, modern conference rooms, and a new Customer Convenience Center featuring fully equipped workspaces exclusively for visiting clients to enable a more intimate and efficient product launch experience with total transparency.

In addition to expanded production capacity and other benefits made possible by the much larger facility, the address itself has significant advantages. “Our new location,” Giza explained, “is at the junction of Interstate I-190 and I-290, providing quick and easy access to the entire region’s transportation infrastructure, including major airports in Boston, Worcester, Providence, and Hartford. We are also only about a mile from Worcester’s Union Station. All of this makes it possible for our visiting clients to arrive by air or rail and be hard at work in their own dedicated spaces in about an hour or less.

“We also couldn’t help but take notice of the rapidly growing biotech and biomed industry presence in the neighborhood,” said Giza. “Both regionally and nationally, Worcester has become well-known as a home for these cutting-edge industries, and Cogmedix is now located right in the heart of it all. We are immediately adjacent to WPI’s Gateway Park, Massachusetts Biomedical Initiatives (MBI), as well as multiple life science companies in the immediate vicinity, something that will surely add to the atmosphere of innovation and create real opportunities for meaningful collaboration.”

 

Baker Resists Tax Hike for “T”

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Charlie Baker thinks the issue of the how to fix the lingering issues related to the financially-troubled MBTA transit system in Boston is still up in the air.  During a February 19 appearance on WGBH Public Radio in Boston, Governor Baker said that, while all options are being evaluated, the issue of raising taxes to solve the issue is one he’s reluctant to consider. Campaigning for his recent election, Baker said he would not raise fees or taxes and that he was in favor of repealing a law that linked the gas tax to the inflation rate.

Conservatives groups have pushed for the MBTA to be placed into receivership. Baker noted that the city of Chelsea, a fiscal control board in Springfield, and the Lawrence Public Schools all successfully emerged from receivership. However, he said he was not yet ready to consider that option for the transit system.One suggestion that has periodically come up as a potential solution was for the MBTA to transfer some of its debt to the state. That debt was related to the agreement made a quarter-century ago that committed the state to expanding the transit system at a cost of an estimated $3 billion.

According to Baker, the operating budget for the MBTA has risen by 50 percent over the past seven to eight years, and that commuter rail operations were significantly increased despite a drop in passenger trips.  Baker also noted that since 2000, the MBTA has grown faster than any other mass transit system in the country, despite the population remaining at virtually the same level.The situation has become much more pronounced in the past few months due to the mountains of snow covering the region. Full service has been forced to shut down during successive major storms.

Baker stated that much of his senior staff has been working on transit issues and expects the service levels to be much improved.

Staples Acquiring Office Depot for $6.3 Billion

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Options for stationery and computer accessories are set to change after Framingham-based Staples, Inc. officially merges with Office Depot next year. Staples is acquiring its major rival in a $6.3 billion deal that should be completed by the end of this year. CEO Ron Sargent aims to reinvent the brand and move into areas beyond office supplies.

Office Depot acquired Office Max in 2013. The combined annual profits of all three companies reaches nearly $40 billion and the merger is expected to save Staples at least $1 billion. The deal came about in an effort to address the issue of Staples’ declining stock as well as the company’s increased focus on online sales instead of retail space.

In January, activist investor Starboard Value, who has a financial stake in both Staples and Office Depot, urged Sargent to pursue a merger. The idea was unanimously approved by the boards of directors of both companies, though the deal is still subject to the approval of regulators and Office Depot shareholders.

Office Depot, based in Boca Raton, Florida, will give shareholders $7.25 in cash and 0.2188 of a share in Staples when the merger is complete. In a statement, Staples responded to Starboard Value’s letter by saying they were open to “constructive dialogue” with shareholders as the merger moves forward.

Based on results from the last trading day prior to media reports of a merger, the deal values Office Depot shares at $11. That result indicates a 44-percent premium over the day’s closing price and a 65-percent premium over the previous 90-day closing price average for Office Depot shares, indications that the merger could be lucrative business for all involved.

Technology Skills for Manufacturing are Lacking in Region

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With recent trends toward onshoring and reshoring, manufacturing jobs are gradually returning to the USA from overseas. Most do not, however, seem to be finding their way into Central Massachusetts. While manufacturing – and the technology propelling it forward – is projected to continue to grow, albeit slowly, during 2015, the focus here remains on locating workers qualified to help the local manufacturing sector expand.

Workforce Sharpening

A suitable workforce is still not available to help grow the manufacturing industry back into the social fiber of the region. Key manufacturers in Worcester County point to the lacking workforce as a major factor in re-establishing manufacturing in the Bay State. Some companies have actually reached the point of having to sell off capital equipment because they simply can’t find anyone to operate it.

“The trend is going to be virtual training and online training,” says Torbjorn Bergstrom, the director of the Haas Technical Education Center at Worcester Polytechnic Institute. These are both rather inexpensive and could provide some workers in a short amount of time. They have proven helpful in other fields and should be just as helpful in restoring industry to its rightful place in Central Massachusetts.

Economic Innovation

Before a product can launch in the public marketplace, someone needs to manufacture it. Massachusetts has become world-renowned as an incubator for technologies useful in many industries, and it continues to rely on local small and medium-sized businesses (SMBs) to nurture that reputation. “Almost all of the manufacturing companies here in Massachusetts are SMB companies,” Bergstrom commented.

The City of Worcester has many multi-story brick buildings sitting vacant since the day a toy, shoe, textile, or furniture manufacturer left – often several decades ago. Worcester is also the center of finance and education in the county. It would seem as though all the pieces were in place. However, unlike some other sections of the country, the management staff required for operations is already here, but the workers are not.

All this must somehow change if the manufacturing sector is to ever have a chance of resurgence here.

Home Sales End Year on Upswing

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December 2014 marked the end of a better year for home and condominium sales. The market came back with both more sales and higher prices. December marked a long uphill climb of nearly two years of returning sales, with a continuing upswing over the past twenty-two months.

Due to a lack of available inventory, there has been a decline in the confidence of the home market by realtors. On a 100-point scale, realtors’ confidence was marked at only fifty percent for December, and that number has been dropping steadily for just over a year. Confidence in inventory dropped 13 percent between December 2013 and 2014. Confidence in pricing fell over the same period to 73.42 percent, a drop of 2 percent.

While the confidence scale of realtors may be down, the buyers seem to be more willing to purchase. Mortgage interest rates have been going down and buyers are taking advantage of these lower prices to purchase now rather than later.

Pending sales for single family homes rose 28.7 percent in December 2014 over December 2013. With a median price of $333,000, the average price of these homes increased by 4.1 percent. The median price of condominiums rose by 3.9 percent to $318,500. There was, also, a rise of 9.9 percent in sales of condominiums for the same time period as single family homes.

As median prices continue to rise, more owners may be motivated to sell and an upswing in market inventory may follow suit. Those who have kept homes may decide now is the time to sell and purchase another home.

While limited inventory is still hampering the market and making it more of a challenge to find the home or condominium of the buyers’ dreams, there are still buyers out there. Prices are rising higher with competition for the inventory, but it does not appear to be stopping those who can borrow at the lower interest rates offered by today’s mortgages.

Mass Revenue Gains Are Good – Not Great

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With the month of January coming to a close, the Commonwealth of Massachusetts received a mixed bag of news as legislators poured over projected revenue surpluses and the instability of state, national, and world economies.

Economic experts forecast an increase in state tax revenues around 4.5 percent for the 2016 fiscal year, slightly up from the previous year’s growth of 4 percent.

Despite this good news, Massachusetts House incumbent budget chief, Rep. Brian Dempsey, cautioned that the revenue gains might not be as good as the numbers suggest.

Instability in foreign oil markets, continued turmoil in the Middle East, and a slowing European economy have led to tender markets across the board. Low oil prices have helped spur an increase in American consumer spending.

Similar economic recovery occurred during the 1990s when the state began recovering from the effects of the previous decade’s high oil prices that slammed the brakes on economic growth. However, during the dwindling years of the twentieth century, Massachusetts was able to surpass 6 percent growth in tax revenues while implementing tax cuts, increasing spending on education, and increasing the amount the state had in its treasury.

State representatives still have a looming $765 million dollar deficit to handle as 2015 begins its crawl toward the warmer months and the end of the fiscal year. Discrepancy between revenue estimates have also forced legislators to discuss which budgetary actions would best serve Massachusetts heading into the 2016 fiscal year.

Even with uncertainty regarding the actions needed to keep the state’s tax revenues climbing, there is good news for the state’s residents. The amount of people unemployed or underemployed has dropped 5 percent since reaching 16 percent in 2009 during the recession. Meanwhile, the unemployment rate is sitting at 5.5 percent, with hopes it will drop even lower as the year unfolds.

Worcester Groups Pitch Transportation Solutions – Seek Backers

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In an effort to provide much-needed transportation solutions in Worcester, seven groups provided ideas for a National Science Foundation program. This program, which was also shared with the cities of San Diego and Chicago, seeks to provide solutions to the cities’ transportation issues that arose out of growing populations. Some of the innovative ideas included skyline transportation and environment scanning apps.

The groups present labored over their proposals for ten months. Though there was a grant program, the groups involved share the creative credit. Participants in the program suggested that the groups might benefit from partnering with businesses.

The Art of Science Learning as well as Worcester’s Incubator for Innovation sponsored the event. Worcester’s focus was on transportation while San Diego handled water resources and Chicago handled urban nutrition. Professionals, students and a healthy cross-section of people from around Worcester were represented.

One of the interesting things about the program is that each of the represented groups presented a unique approach. One idea was to make the bus system more demand-driven than it is presently. One of the groups crafted a middle school curriculum about transportation. Another came up with the idea of converting volunteer service hours into usable bus passes. One proposed program uses predictions about walking patterns to determine which sidewalks and walkways to repair. Another proposes helping patients coordinate bus trips according to their appointments.

One of the things that participants took away from the experience was that, if the desire actually existed, the community could adopt these options immediately, with experts predicting better momentum for the work will make a difference.