Merck’s exit strategy

Pharmaceutical giant plans to leave Summit

SUMMIT – Tuesday Merck announced that they decided to move their global headquarters to Kenilworth, leaving the Summit campus vacant as early as the end of 2014.

The move, touted as a “global initiative” by company officials, has everything to do with the potential $2.5 billion cost savings the company says will be realized by the end of 2015. The switch came on the heels of a global workforce reduction of 7,500 employees, and combined with new layoffs will result in an approximate 20 percent reduction of the pharmaceutical company’s workforce. The transition is expected to be completed by 2015.

“While these actions are essential to ensure that Merck can continue to fulfill its mission into the future, they are nevertheless difficult decisions because they affect our dedicated and talented colleagues,” said Merck Chairman and Chief Executive Officer Kenneth Frazier in a statement to the press.

Just a year ago Merck announced they would be moving their global headquarters from Whitehouse Station to Summit, and downsizing the Kenilworth operation. Ironically, the worldwide pharmaceutical company announced the major change in plans, on the last day of work for many long time employees at the Merck Kenilworth site.

As it stands now, Merck’s Animal Health and Consumer Care divisions located in Summit will be relocated to another facility in New Jersey. In addition, certain manufacturing, laboratory and other functions located in Summit will be relocated in New Jersey or Pennsylvania.

Summit Mayor Ellen Dickson swiftly reacted to the news that could see as many as 1,000 employees out of work and a $2.5 million annual financial blow to the city budget.

“From our perspective it is obviously disappointing that Merck has decided to consolidate its operations to the Kenilworth campus,” the mayor said, adding that “the impact of Merck leaving will be felt throughout Summit.”

Dickson did say Merck has been a good neighbor and contributed positively to the community.
“The Summit campus is a highly desirable location and never stays available for long. We are optimistic that Merck’s departure will be another company’s gain,” Dickson said.

Meanwhile, at the county level, officials moved to assure employees affected by the change that county resources are available for those who have lost their job.

“Although most large companies like Merck provide resources for their employees when there is a change like this, we want people to know that the county has retooling resources available for them,” said Freeholder Chairman Linda Carter, adding “we are there for them.”

Union County Human Services Director Frank Guzzo explained the county “One Stops” in Elizabeth and Plainfield offer resources and services for any individual who has lost their job or will in the future.

“We offer retraining for eligible citizens,” he added, noting, for example that when General Motors shut down in Linden, One Stops was there to aid those in need.
Funded by federal and state grants, One Stops received a $2.3 million National Emergency grant after the Sept. 11, 2001 tragedy in New York. The money went to help residents in the county whose positions were affected by the terrorist attack.

Guzzo said that according to information he was receiving, many of the positions that will be lost at the Summit campus are “high end pharmaceutical jobs,” he nevertheless felt that the county could be of assistance to anyone who is faced with losing their job.

While the news that Merck would be moving out of Summit and downsizing was a shock, Carter said this was not unusual for a large company.
“Companies are continually looking to be efficient,” she said, adding once again “we want everyone to know we are here to help.”