The Massachusetts town where EMD Serono plans to spend $50 million to expand its R&D campus has invited company officials and a union seeking a construction contract to a meeting it hopes will result in an agreement that would satisfy both sides — and stave off a labor dispute the union has threatened as part of its broader campaign against life-sciences giants.
Billerica, Mass., Town Manager William Williams told BioRegion News last week he is hopeful the meeting will lead to dialogue between the International Brotherhood of Electrical Workers Local 103 of Dorchester and EMD Serono, which has previously told the town it would not restrict the construction work to union contractors.
Instead, EMD Serono has begun soliciting proposals from union and non-union contractors for work associated with the expansion project, which would add 125,000 square feet to the current 85,000-square-foot R&D/office campus at 45 Middlesex Turnpike. Lab space will account for 160,000 square feet, or 76 percent, of the resulting 210,000 square feet of space.
The expansion would enable EMD Serono to double its Billerica-based staff of 100, which is expected to include 200 scientists specializing in cancer and fertility research, and 50 technical operations employees specializing in process development and protein production.
Ninety of the researchers would be shifted from EMD Serono’s headquarters in Rockland, about 45 miles southeast.
EMD Serono is in the planning phase of its construction project, and has solicited proposals from contractors through its construction manager, Jones Lang LaSalle. "They expect to begin awarding construction contracts in May 2009 and beyond," company spokeswoman Jennifer Bianco told BRN via e-mail.
"We anticipate to break ground in May 2009," Bianco added. "We have communicated throughout the entire process that we welcome bids from both union and non-union organizations. In fact, we anticipate that a significant percentage of the project will be completed by union tradesmen."
Replied Lou Antonellis, business representative for Local 103: "We were hoping that they would make a commitment to using people that guarantee healthcare for workers."
Before Jones Lang LaSalle selects from the contractors that responded to the company's proposal, Williams said, he is set to meet company executives, "at which time, we're going to discuss the proposals, the quotes received."
EMD Serono has "agreed to meet with 103 and myself over the electrical wants. That won't occur for a few weeks," Williams said in an interview.
Billerica chose to involve itself in the dispute between EMD Serono and Local 103 at the union's request, Williams said, because many of the union's business agents and members live in the suburban town located 22 miles northwest of Boston.
Another reason cited by the town manager: Before Williams took office, in September 2008, Billerica officials negotiated a tax increment-financing package for EMD Serono that would lower its property taxes by more than 30 percent over 20 years, an incentive valued at $7 million. Additional reductions are possible because, as part of that package, the town had designated the company's 42.7-acre R&D campus a lower-tax "Economic Opportunity Area" for up to 20 years.
"Fortunately or unfortunately, we agreed to be involved," Williams said. "We're sort of semi-married to this. It's a little different than coming in from a site plan. Either morally or otherwise, we got involved."
To win the economic-opportunity designation, EMD Serono and the town had to certify in part that the expansion project "will increase employment opportunities for the residents of Billerica by allowing for continued growth and expansion of facilities in the Economic Opportunity Area." At the time the town put together its tax increment-financing package, the company promised to create 30 new jobs for Billerica residents, which would account for 10 percent of all new hires, according to local news reports.
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Most town residents favor setting aside "some percentage" of new jobs for local residents, according to a Billerica Minuteman poll published last week, showing 98 respondents (82 percent) in favor and 22 respondents (18 percent) opposed.
EMD Serono also capitalized on another benefit enjoyed by larger projects, among them the certitude of land-use review decisions occurring within 180 days, but after the town had approved expedited permitting for the project under Chapter 43D of Massachusetts General Law.
Williams said EMD Serono has refused to agree to a project labor agreement similar to those worked out in other plans between developers and unions in heavily unionized cities such as Boston and New York. PLAs in those cities typically restrict developers to hiring union-only contractors in return for a no-strike pledge and an expedited construction timetable.
"I'm not saying that it won't work out that way, but [EMD Serono] wouldn't agree to it ahead of time," added Williams, who took office last September after managing the New York City suburban village of Port Chester. "You're getting PLAs mostly in the city of Boston, but you're not getting them in the 'burbs. Outside here, it's usually open-shop," referring to the practice of developers hiring builders on their own terms.
Williams spoke March 19, three days after the town Planning Board approved site plans for the EMD Serono expansion over objections from several dozen members of Local 103 in attendance. Union members had asked planning board members to require, in return for their approval, that the company use only unionized contractors for its construction. The planning board refused, with several members concluding the stipulation went beyond what the board can require of applicants.
Antonellis said he was "very disappointed" at the board's refusal to add the union-only stipulation, and added: "They could have at least, at the very least, even if they couldn’t put those types of stipulations into their resolution, they could have at least held up the vote to say, 'We do have some concerns here, and we'd like to see this company work with the local people to do the right thing, seeing that they're getting so much money from the town, and they're not really making that much of a commitment."
Not so, counters EMD Serono, which cited the cost of its expansion, the jobs it plans to create, in addition to the size of its current Massachusetts workforce. The company currently employs more than 700 people in Billerica and Rockland.
EMD Serono is among six biotech and pharma companies targeted by Local 103 for refusing to preclude the use of non-union subcontractors, in many instances despite winning tax breaks from state and local governments. The union has called for the state to suspend its $1 billion, 10-year Life Sciences Act in order to add provisions requiring companies that receive the money exclusively to use union workers on construction projects.
Local 103 has sought to reinforce that argument through a public outreach and advocacy campaign it launched last month. The campaign and namesake website, both called "Stop Biotech Looting," takes aim at tax breaks, multi-million-dollar CEO salaries, and other economic "privileges" enjoyed by the region's largest life-sci companies and their leaders [BRN, March 2].
Where EMD Serono is concerned, Local 103 has included a link to local newspaper reports on the Billerica planning board site-plan approval by the Billerica Minuteman and Lowell Sun, as well as a web page laying out complaints against the biopharmaceutical giant. The site cites years of litigation against the company over the sales and pricing practices for its AIDS drug Serostim, as well as what Local 103 calls high executive compensation.
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Local 103 has also cited the compensation of president and CEO Fereydoun Firouz and four other members of the company's executive board, who together received €24.9 million (about $37 million) in total compensation in 2007, or an average of about $7.4 million each.
The union has juxtaposed that level of spending with the town's fiscal situation. Over the coming year, Williams has said, Billerica plans to eliminate 11 town government positions through attrition in order to avoid layoffs. The town has absorbed a $2 million loss of local aid based on its assumption that the state was unlikely to fund wage increases for town employees.
Less lucky is the town's school department, where two staffers of Billerica Memorial High School will be axed at the end of this school year because too few employees agreed to retire from their posts to generate sufficient attrition savings.
"The town is aware that times have changed economically since the TIF was approved, and they are losing police officers and firefighters and teachers to attrition because the budgets are just stretched so thin," Antonellis told BRN. The town is "starting to rethink the commitments that were made, and we're really hoping that this company will do the right thing with regard to local workers."
Williams re-stated the town's no-layoff forecast for the coming year earlier this month during his first State of the Town forum with elected officials, saying the town was in good-enough financial shape to get through the fiscal year ending June 30, 2010, with no additional job cuts.
Antonellis, a lifelong Billerica resident, told BRN his union supports Williams' effort. More than 150 electrician members of Local 103 live in Billerica, "probably the most of any city or town north of Boston," according to Antonellis. He said his union has received support from unions representing local plumbers, sprinkler fitters, laborers, and carpenters.
"These companies that come into town and whore out the construction work to non-local people does not sit well," he added. "Big Fortune 500 companies that hire contractors that don't pay healthcare is an atrocity in my eyes."
Bianco the EMD Serono spokeswoman defended the company's outreach to Local 103 and other unions.
"EMD Serono has been open and transparent with the unions, including Local 103, about the construction project," Bianco said. "We have communicated with the unions throughout the planning phase of the expansion project that we welcome union bids, and in fact, anticipate that a significant percentage of the project will be completed by union tradesmen."
EMD Serono's expansion is one of two suburban life-sci expansion projects being watched by Local 103. The other is a Biogen Idec facility planned for Weston, Mass., but not yet pending before that town's planning board.
In approving EMD Serono's site plans, the planning board gave the company two exemptions from town zoning:
• Reducing the percentage of open space EMD Serono is required to maintain on its site from 73 to 60.1 percent.
• Reducing the number of on-site parking spaces from 673 to 365.
The company also tweaked its plans to address concerns from residents of nearby Burlington whose properties abut the project site. They have complained in the past about the potential for noise from the rooftop HVAC system and excessive reflection of light from its glass exterior windows.
EMD Serono is the US affiliate of Geneva, Switzerland-based drug firm Merck Serono, which is owned by German pharmaceutical giant Merck KGaA.