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Bayer Will Stay in Berkeley

By Riya Bhattacharjee
Thursday September 17, 2009 - 09:55:00 AM
Berkeley Mayor Tom Bates talks to Bayer’s Joerg Heidrich as Douglas Hoffner looks on during the announcement Wednesday that Bayer was staying in Berkeley.
Berkeley Mayor Tom Bates talks to Bayer’s Joerg Heidrich as Douglas Hoffner looks on during the announcement Wednesday that Bayer was staying in Berkeley.

Bayer Healthcare announced Wednesday that they will remain in Berkeley, allaying fears of city officials who were alarmed at the prospect of losing the city’s largest private sector employer. 

City officials confirmed a month ago that Bayer was considering whether to relocate or start manufacturing an advanced version of Kogenate, a drug which treats hemophilia, at their 46-acre campus next to Berkeley Aquatic Park.  

Joerg Heidrich, Senior Vice President of Bayer’s Product Supply Biotech in Berkeley, told the Planet Wednesday that the company had been ready to outsource the manufacturing to two firms in Europe and the East Coast instead of doing them internally, but changed its plan when staff and officials of the City of Berkeley offered them attractive incentives through a private-public partnership involving PG&E, the state’s California Business Investment Services, the East Bay Economic Development Alliance, and the cities of Oakland, Berkeley and Emeryville. 

In particular, Heidrich said, a new enterprise zone designated for West Berkeley and Emeryville offered a chance at creating additional local businesses and attracting new ones as the East Bay expanded the Green Corridor. 

The Oakland City Council approved a motion July 28 to ask the state to include West Berkeley businesses within Oakland’s enterprise zone. 

The Berkeley City Council is scheduled to vote on accepting the expansion of the zone at its Sept. 22 meeting. 

“City staff have been working on this because they feel it will help to keep Bayer here,” said Councilmember Kriss Worthington.  

Worthington said that critics of enterprise zones believe them to be seriously flawed 

“There have been hearings at the state legislature on how the zones are not working to get low income people jobs,” he said. “But at this point, we will be discussing whether it makes sense to add it to this area.” 

If Berkeley is successful in getting Bayer incorporated within the zone, the company could receive as much as $10 million in tax incentives and reduced electric rates from PG&E, Heidrich said. 

Heidrich said Bayer had made the decision to stay in Berkeley after evaluating the Berkeley site carefully. 

“We had a lot of people here—developers and manufacturing experts, and that was crucial,” he said. “A $100 million investment cannot be taken mildly. We followed our framework of ‘make and buy’ and went out and evaluated external manufacturers. There were attractive bids on the table, but in the end we went with Berkeley.” 

Bayer’s investment is by far the largest the company has made in Berkeley, and will take place over the next four years on facility upgrades, new equipment and state-of-the-art technologies.  

  “Bayer’s decision is a smart investment that will save hundreds of jobs, help those suffering from hemophilia and further both California’s and Bayer’s leadership in the biotech industry,” Governor Arnold Schwarzenegger said in a statement. “This investment is an excellent example of how California’s incentive programs can encourage great companies like Bayer to continue working in our state.” 

Calls to Berkeley Mayor Tom Bates, who was present during Heidrich’s announcement at a news conference Wednesday at Bayer, were not returned by press time. 

California State Labor and Workforce Development Agency Secretary Douglas Hoffner, Emeryville citycouncilmember Nora Davis and President of the Alameda County Board of Supervisors Keith Carson were also present at the conference. 

Prior to the news conference, Bayer officials had been tight-lipped about their plans, which Heidrich said had been unavoidable. 

“For a global organization like us, information around investment decisions such as this needs to be handled with a high level of sensitivity,” he said. “The fact is that the Berkeley site competed to have the entire process established here at the site. The fact is it is expensive to do business in California. We reached out to state and local authorities, we asked them to explore tax and other incentives that would help make the Berkeley proposal as cost  

competitive as possible. And the fact is that these state and local authorities responded quickly. Their solutions were innovative and incorporated into our proposal.” 

Berkeley’s Economic Development Manager Michael Caplan told the Planet that he was very pleased to hear the news. 

“It has a number of implications for Berkeley,” he said. “It will mean that many local jobs that might have been at risk by outsourcing are no longer at risk. It means that Bayer will spend over $100 million on a new facility to produce Kogenate that will create a huge number of construction jobs and related economic benefits to the City. Overall, Bayer's decision is a huge vote of confidence in the Berkeley community, the local workforce, and the East Bay's regional biotech and biopharmaceutical cluster.”  

Caplan said that besides helping Bayer to stay in Berkeley, an enterprise zone would provide “a huge economic benefit for all West Berkeley businesses regardless of size.” 

The zone would provide state tax credits to any business who purchased new machinery and equipment and hire workers who met certain criteria, including veterans, low income people, certain minority groups and others with traditional barriers to employment, Caplan said.