KENILWORTH – Borough officials are putting up the welcome banner for Merck, who announced last week they will be moving out of Summit and planting the flag of their global headquarters at exit 138 on the Parkway.
When Merck took over the 100-acre Schering Plough facility several years ago, eventually deciding to phase out the Kenilworth campus and move all but limited research operations to Summit, it was a financial loss for the borough, particularly in taxes. But the pharmaceutical company also had practiced very good corporate citizenship.
“We had a very good relationship with Schering Plough. They were very generous to the borough,” said Council President Brian Joho last week, adding the company helped donate money to the schools and helped finance an ambulance and new fire truck, which was greatly appreciated by the community.
“They even held our health fair in their cafeteria,” the council president said, adding that they expect to have the same working relationship with Merck.
The fact this pharmaceutical company would be paying a significant chunk of the tax base was also more than helpful, even though Merck ended up appealing the 2011 taxes. Although the borough was worried about the hit they could take following the appeal, everything worked out in the end.
The council president gives all credit to borough tax assessor Paul Parsons who he said negotiated “a very fair deal” with Merck, one that might have contributed to swaying them to moving their global headquarters to Kenilworth.
“We were business friendly with Merck,” he explained, adding that being “reasonable” fared well in the end.
“Merck knows what their taxes will be for the next two years,” Joho said, explaining that the borough will still get that $9.8 million for 2011, but for 2012 they will pay $8.7 million, or 25 percent of the tax base, and for 2013, $7.7 million, or 22 percent of the tax base.
Still, on Oct. 1, Joho, Mayor Kathi Fiamingo and the rest of council were under the impression that Merck’s facility in the borough would be vacated. No one was more surprised than Kenilworth’s elected officials when the announcement came that the mega-pharmaceutical company would be vacating the Summit campus and moving back to the borough.
“I guess it was significant that we negotiated a fair settlement with Merck,” Joho said, adding that it was “a fair evaluation of the property.”
“That is refreshing in itself,” the council president said, pointing out that “for them to move their global headquarters here, it reaffirms that Kenilworth is a great place to live and work.”
Not to mention what bringing back 4,000 employees to the site will do for local businesses.
“That will definitely help,” Joho said, adding that when Merck took over and the employee base gradually was reduced, the impact was not felt all at once. But eventually there was a decline in patrons at local businesses.
“This should help home values too because there could be a demand for more homes in the area,” he added.
But as Kenilworth prepares for the return of Merck, Summit officials are pondering the loss of a major company on their tax base.
Summit Mayor Ellen Dickson said last week that she was caught off guard last week when Merck said they were moving out of the city.
Merck planned to move its global headquarters to Summit from Whitehouse Station, but decided to move the operation to Kenilworth because the site is larger. The Summit campus is about 88 acres, while the Kenilworth site is 100 acres.
Summit will lose $9 million in taxes, but Dickson was optimistic that another major company will buy the property.
Meanwhile, news surfaced Tuesday that Merck’s Whitehouse Station facility was officially on the market.
The headquarters relocation is part of Merck’s ongoing program to consolidate its global footprint and lower annual operating expenses, following the merger with Schering Plough in 2009.