Arbor Update

Ann Arbor Area Community News

Pfizer Closing

22. January 2007 • Juliew
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The entire Ann Arbor facility is closing.

From A2News Flash
From CNN
From Pfizer Web Site
In Research and Development, the company is planning to close three research sites in the United States — Ann Arbor, MI, Esperion (also in Ann Arbor) and Kalamazoo, MI (where the company will continue to maintain a large manufacturing and Animal Health presence).

Here are a few breakdowns of the Pfizer facility in Ann Arbor:

  • 177 acres dedicated to Pfizer Global Research & Development (PGRD) functions
  • 2,700 employees
  • More than 2 million square feet of facility space broken down as follows: 33% laboratory, 28% office, 17 percent lab support, 14% production, and 8% amenities.

  1. Yikes!!! =(

       —Ross Johnson    Jan. 23 '07 - 12:21AM    #
  2. Wow. Kind of makes those Google parking spaces look like a good idea.

       —JennyD    Jan. 23 '07 - 12:48AM    #
  3. The Ann Arbor campus is to close by the end of 2008. Pfizer is saying that up to 70% of its people here will be able to transfer to other Pfizer facilities.

       —David Cahill    Jan. 23 '07 - 12:50AM    #
  4. More bad news for Pfizer

       —abc    Jan. 23 '07 - 12:55AM    #
  5. Man, this is gonna hurt. It’s great for the individuals that Pfizer may be able to transfer the majority of them, but all those people moving out of town are going to put even more downward pressure on an already declining real estate market here locally.

    And Pfizer has supported lots of non-profits around town – I assume that will end, too. I’m just cringing thinking about the ripple effects of this closing. It’s just not going to be pretty.

    Upside, maybe Google won’t need those downtown parking spaces if they move into Pfizer’s space!

       —Laura Fisher    Jan. 23 '07 - 12:56AM    #
  6. I had the same thoughts about our local Real Estate Laura.

    Glad I am not looking to sell anytime soon…

       —Ross Johnson    Jan. 23 '07 - 01:03AM    #
  7. Pfizer is the city’s largest taxpayer. What happens to that now? And didn’t we give the company some choice tax breaks a couple of years ago?

       —JennyD    Jan. 23 '07 - 02:01AM    #
  8. To me it seems like this is a sign that we need to be courting more medium- and small-sized businesses in a diverse set of industries.

    If we turn ourselves into solely a high-tech or bio-tech town, there’s nothing preventing this from going on indefinitely.

    There’s also nothing to prevent this from going on indefinitely if we continue to look mainly at big companies and chains. The pressures to pull up stakes and move on are much higher a huge firms than small ones (no matter how many tax incentives and parking spaces we hand out).

       —kena    Jan. 23 '07 - 02:30AM    #
  9. As I noted elsewhere, expect a lot of doom-and-gloom as the immediate reaction because of the uncertainty introduced by this. But I expect a lot of Pfzier people will see this as an opportunity to get out on their own. In the long-run, having a lot of smaller companies may be healthier for the local economy.

       —John Q.    Jan. 23 '07 - 02:51AM    #
  10. As I noted in the other thread…I could be wrong, but I am pretty sure that Pfizer was given huge tax abatements (and cheap land) to stick around here. Nice. Are we going to get that back and give it to the now unemployed workers?

    Good point about Pfizer’s involvement with non profits…I know they have been very generous with the Michigan Theater. What a sad day in A-squared :(

       —TeacherPatti    Jan. 23 '07 - 03:00AM    #
  11. The tax breaks only kick in as long as employment is higher than the 2001 level (so claimed the mayor at the Leopold Bros. meetup).

    I agree wholeheartedly with John. I was living in Kalamazoo when Pfizer acquired Pharmacia (formerly Upjohn, a big pharma company based in Kalamazoo). As soon it was announced, I thought so long to that sector of our economy (which was major and is still significant). Pfizer at that time and no doubt still spends more on marketing than on R&D, a recipe for disaster if I ever saw one. The bottom line is that a community of any size that relies upon the presence of a multinational is courting disaster.

       —Dale    Jan. 23 '07 - 03:04AM    #
  12. How big a bomb would have to hit the average city of Ann Arbor’s size to take out: *177 acres of real estate *2,700 jobs *>2 million sq.ft of laboratory and office space (incidentally, that’s 46 ACRES)?

    The biggest cause of this is Pfizer’s failure to develop a “blockbuster” to follow up on Lipitor, which is going off patent soon. Its trial for torcetrapib failed, so nothing in the pipeline. Zoloft also went off patent last year, which brought in generics.

       —faithandreason    Jan. 23 '07 - 04:20AM    #
  13. This is crap! Pfizer is a profitable corporation that made ~$19 Billion on sales of ~$48 Billion in 2006. It sickens me that this city ever considered any tax breaks for Pfizer. I spoke to the Mayor about this a few years ago and at the time, he thought the tax breaks were well worth it. In my mind, this is a very good argument for why tax abatement is a bad idea. The city cannot afford to give away parking to Google and should renege on the deal. The city now has a good excuse to back out of giving Google free parking.

       —Chuck L.    Jan. 23 '07 - 04:36AM    #
  14. There were some Pfizer people at Casey’s today with t-shirts that said Pfired.

       —Edward Vielmetti    Jan. 23 '07 - 05:50AM    #
  15. This is also a disaster for the schools. Estimates are already coming in that some schools may lose 40 students per grade. Combine that with a likely severe drop in residential property values, and we have a serious funding problem.

       —Barry S    Jan. 23 '07 - 05:52AM    #
  16. Life just got more difficult in Ann Arbor. Pfizer’s demise makes me wonder about the following:

    1) Will the University buy Pfizer property for its own life sciences research? The Pfizer property is on the tax roles but it has tax abatement already, reducing its tax liability for at least the excess land.
    2) Pfizer is no longer a growth industry with poor performing pharma research and a job culture that is stale. Selling off the building(s) to young, aggressive biomed research might be as good to Ann Arbor 5 years from now is as recycling auto mgf, industry into auto R and D, knowledge based industry.
    3) Losing 2000 high paying jobs at Pfizer and perhaps 1000 admin, mtg processing jobs at AB Ambro, but gaining 1000 advertising jobs over the next 4 years at Google is a big net loss for the county, both in number and salary value.

    So how does the community attract replacements? I think it will be the U of M, downtown, low priced housing, great public schools, and quality of life issues like recreation, culture, and world connectivity.

       —Peter T. Allen    Jan. 23 '07 - 06:26AM    #
  17. Just to note: Ann Arbor has low-priced housing—compared to the coasts. People coming here from NYC or CA think it’s a good deal.

       —JennyD    Jan. 23 '07 - 06:28AM    #
  18. Just to note: Ann Arbor has low-priced housing—compared to the coasts.

    Ann Arbor has low house prices compared to the coasts. Rental housing is a quite different story.

       —ann arbor is overrated    Jan. 23 '07 - 06:48AM    #
  19. Last year Pfizer donated $2 million to the local United Way (employees gave $1 million and Pfizer matched it for a total of $2 million donation/25% of the total). They donated $10,000 for school environmental education programs in Ypsilanti, $1500 to the Adopt-A-Class initiative for the Leslie Science Center, somewhere between $50,000 and $100,000 to the University School of Music Theatre and Dance, they sponsored a horse for the Therapeutic Riding Inc., sponsored SPARK, the Ark, Michigan Theater, Ann Arbor Summer Festival, the Miller’s Creek watershed study, K-9 police dog Czar (and his vehicle), Huron River Day, and many other programs large and small (to the tune of about $1 million corporation donation to these types of programs annually, not including the United Way). Not included in this are all the donations made by individuals, most of whom made quite a good salary. I can’t imagine there is a single nonprofit or social organization in Ann Arbor that will not be affected by this closing.

    Pfizer has been in Ann Arbor in some form since 1960 (as Warner-Lambert, then Warner-Lambert/Parke-Davis) so they and the employees are an entrenched part of our community. Honestly, the tax abatements given to Pfizer are a drop in the bucket compared to what we lose when they leave (for so many reasons). As it stands, they are the largest taxpayer in Ann Arbor by far. As a matter of fact, the tax abatements given in 2001 were considered a win in many ways for the city because although they were giving 50% tax relief on a large piece of land, it was land that Pfizer bought from the University (which had paid no taxes on it at all). For one synopsis of the tax abatements, see the following site. As one person noted at the time of the tax abatements, half of something is far better than half of nothing.

    Barry S is correct, the public schools are going to take a huge hit in state funding with the loss of students and this will affect not only Ann Arbor, but the surrounding communities. Many Pfizer employees live in Chelsea, Dexter, Saline, Brighton, and Ypsilanti.

    As John Q. and Dale point out, there are undoubtedly silver linings in this, but there is no doubt that the next few years are going to be extremely tough.

       —Juliew    Jan. 23 '07 - 07:30AM    #
  20. Thanks for the great synopsis on the tax issue, Julie.

    I hadn’t even thought about the schools :( (Sadly, this piece of bad news counters the good news from this morning—that MEAP scores are up)

       —TeacherPatti    Jan. 23 '07 - 07:52AM    #
  21. Good points made by all. Agreed, good news for the workers on their potential relocation. I have to say you sort of saw this coming…the warnings on the patent expirations began a while ago, and when torcetrapib was canceled all of a sudden…you had to seriously wonder what was coming next. I was a little surprised that they would be shutting it down completely, but it was always a possibility. I also always wondered what would happen to the facility if they did. Now we get to find out.

    I like John Q and kena’s attitude—this will hurt very big in the short term, but may well be worthwhile in the long term. I would be surprised if it became abandoned—surely someone, somewhere can use it, somehow…

       —Young Urban Amateur    Jan. 23 '07 - 08:30AM    #
  22. They’re also leaving Brooklyn, but Brooklyn will fail to notice.

       —Scott T.    Jan. 23 '07 - 08:39AM    #
  23. It won’t become abandoned, as Pfizer pays taxes on the buildings as long as they own them. They will demolish it if they can’t sell it as is. When they bought Pharmacia they knocked down brand new buildings in northern Indiana worth tens of millions of dollars because they transferred those operations and knew they could sell the land but not with the buildings. In Kalamazoo they seem to have made a hobby of knocking down historic buildings on their campus (including a gorgeous Albert Kahn tower) rather than pay taxes [the sites were not rebuilt].

       —Dale    Jan. 23 '07 - 08:49AM    #
  24. Huh—sounds like the next few years will bring some finagling as the city and private interests decide what, if anything, to do with the land.

       —Young Urban Amateur    Jan. 23 '07 - 08:57AM    #
  25. Juliew,

    On what basis do you make the claim that the choices were a) give Pfizer $84 Million in tax breaks or, b) Pfizer goes somewhere else? You see, I believe there was another option c) CALL THEIR BLUFF! In fact, I contend that if the worst case scenario had come to pass, that is, the council said no to tax breaks and they had taken the expansion somewhere else, the city would still have been better off. The city had to expand infrastructure in part to support Pfizer (for example, build a new comprehensive high school) and now they are leaving. I believe they would have expanded anyway in Ann Arbor without tax breaks and all the city had to do was just say no. Furthermore, if the expansion was made or broken by tax breaks alone, it was a house of cards to begin with. Does slow but sustainable growth beat fast but volatile growth? I think it does at least in this case.
       —Chuck L.    Jan. 23 '07 - 09:14AM    #
  26. Ann Arbor officials would be smart to see what they can learn from the Kalamazoo experience. Kalamazoo lost out when both Pharmacia’s and First of America’s headquarters left the city within a couple years of each other. At the same time, the City government was struggling to stay afloat. It seemed like the City was heading to become the next Flint or Saginaw. Yet, if you go there today, the downtown is in better shape than it has been in years and people are moving into the city (thanks to The Promise). Ann Arbor has way more going for it than Kalamazoo does. There are a lot of lives that have been hurt and disrupted by this news. But the city and many of those same people will be fine. Don’t ignore the negatives but start looking at where opportunities might come out of this.

       —John Q.    Jan. 23 '07 - 09:39AM    #
  27. Tax abatement: My neighbor (who BTW works for Pfizer) checked the tax numbers: In 2002, the last year before the abatement, Pfizer paid taxes to the local governments of $9.2 million (schools, city, county, library, WCC, etc.) in 2006 they paid $13 million, ($12,948,396) so it would appear that although they received a tax abatement, they hardly used it or at least the city and the other governmental units made out well on the abatement. Pfizer had to meet investment targets of $100? million in real property every year as well as increase jobs, I don’t know if they did either.

    Employment: Pfizer is already down to 2,100 in A2.

       —Laura B    Jan. 23 '07 - 09:54AM    #
  28. Laura, thank you for posting the tax numbers. I respectfully disagree with Julie regarding Pfizer’s tax break. We are Monday morning QB’s on this issue. It looks like adequate protections were put into the agreement, Pfizer is paying way more in taxes than they were before the abatement.

    I don’t see how City Council could have “called their bluff.” What if it wasn’t a bluff? They could have moved the whole operation to KZOO three years ago. How could council know? Every large corporation plays these games, if you want them to stay you have to play.

    This deal does not seem to have hurt the city in any way and we have had 4 years of Pfizer in the community, paying mega taxes, contributing mega bucks to United Way and the arts and employing over 2000 local folks. Everything comes to an end sometime but they have built a site that is even more valuable than before and pays even more taxes. Aside from the personal property that they will move out, whoever owns it has to pay the taxes. I think Pfizer has to pay the full rate again next July 1 as they were here at the end of 2006.

    The jobs will be harder to replace but Google will help some and as others have said, a lot of little companies would be better anyway plus the UM continues to expand their job base. The city was wise to capture Google.

       —Dustin    Jan. 23 '07 - 10:18AM    #
  29. Yeah, the city, county, and state should move fast to look for the opportunities available. Advertise the newly available workers…consider talking to Pfizer about acquiring facilities if they could be useful…etc. If Pfizer’s moving on, so should we.

       —Young Urban Amateur    Jan. 23 '07 - 10:22AM    #
  30. Re: 15 and others. Do we think that the home occupied by Pfizer families will sit empty, as tumbleweeds blow down the street? Ghost town. Empty Starbucks and no one at the Quality 16? This is still the most desirable place in Michigan (for whatever that’s worth) and if the mayor and governor (arrghh) would start to do something smart to lure businesses here this might not be su.

    I like Granholm. And then she starts to talk.

       —JennyD    Jan. 23 '07 - 12:04PM    #
  31. So, will Granholm get the message that the people of this state are hurting economically and her proposals for massive tax increases will be the nail in the coffin? Can we get a majority to see that our state government can’t afford to provide all things for all people and we need to cut costs and services?

       —Karen Luck    Jan. 23 '07 - 05:42PM    #
  32. The Pfizer closing has been inevitable since early December (and really before that) — I’m surprised that the city seems surprised. Hopes dashed for a blockbuster drug, clinical trial deaths, stock plunging 11% in a single day, firing of the CEO, and, a couple days ago, the announcement of a new R&D strategy. Someone in city hall really should be keeping an eye on what’s happening with the city’s major employers if they actually didn’t see this coming.

       —Anna    Jan. 23 '07 - 07:15PM    #
  33. Will Ann Arbor residents change their mind about building a new giant jail with expanded services now that their tax revenues are diminished – now that it’s not only the automotive factory jobs that have vanished? What will it take to make tax and spend liberals change their habits?

       —Karen Luck    Jan. 23 '07 - 07:27PM    #
  34. “What will it take to make tax and spend liberals change their habits?”

    Karen – Would it kill you to not use every economic event to roll out your idealogical hobbyhorse? You hate government and you hate taxes. We get it. Haven’t you flogged that dead horse enough already?

    There’s no connection between the “tax and spend” position that you say liberals have and Pfizer’s decision to leave Michigan. If companies only made location decision based on the relative tax rates of various communities, why would any business ever locate in Ann Arbor or Kalamazoo or any of Michigan’s cities when they can locate in the bucolic hinterlands where tax rates are much lower? Taxes are one part of the equation and as many studies of economic development have noted, there rarely a key factor in where and why companies locate in or leave communities. As others have noted, Pfizer’s problems have almost everything to do with failures on the research and development side and very little to do with anything that Michigan governments at any level did.

       —John Q.    Jan. 23 '07 - 07:42PM    #
  35. I’ve known that this was in the works for around a year (and that’s setting aside Anna’s reference to the Pfizer’s performance). It was only a matter of time. I have to say that I’m amazed at some of the reactions of a few of the Pfizer employees claimed to be surprised. The Pfizer employees that I know told me that this has been in the works for some time…

    I’ve also been told by a reliable source that several months ago UMich Med School bigwigs conducted a ‘walkthrough’ of the facilities.

    It doesn’t take much to connect the dots, but I can’t confirm this from other sources, so please take this for what it is worth.

    This would, obviously, be a financial disaster for the city and region if it proves true.

       —todd    Jan. 23 '07 - 08:26PM    #
  36. “This would, obviously, be a financial disaster for the city and region if it proves true.”


       —John Q.    Jan. 23 '07 - 08:34PM    #
  37. Because U of M doesn’t pay taxes and Pfizer did.

       —Anna    Jan. 23 '07 - 08:38PM    #
  38. Millions of dollars in tax revenue would vaporize instantly.

    UMich won’t pay taxes on the property or the operations therein.

    Epic tax shortfall virtually overnight.

       —todd    Jan. 23 '07 - 08:42PM    #
  39. Just out of curiousity, did anything ever come of the “cool cities” initiative? Seems like the closing of Pfizer could be an opportunity to create an entreprenurial incubator, sort of like what RTP did in 1958. Other places have successfully used public/private partnerships to stimulate economic growth. CT’s “innovation fund” started with government money but is now self-sustaining via successful exits and has brought at least 20 new small high-tech small businesses to the local economy. However, unless Ann Arbor’s leadership started planning a while ago, it would be pretty hard for them to turn this challenge into an opportunity in the next months.

    I don’t think the lesson here is “big business = bad,” rather, it’s “reliance on too few businesses = bad”, and, “not having businesses in all stages in the business lifecycle = bad”.

       —Anna    Jan. 23 '07 - 08:46PM    #
  40. “There’s no connection between the “tax and spend” position that you say liberals have and Pfizer’s decision to leave Michigan.”

    That’s exactly correct and certainly not the connection I was trying to make. If I post that the sky is blue, John Q. immediately posts that I am completely wrong. I’ve just been reading this site recently, but make a couple of posts and John Q. has to immediately respond with some snide comment. Why don’t you stop and take a breath and read what is written before you respond. The reality is, John Q., that you don’t get it. Stop the personal attacks and learn how to rationally discuss an issue with someone who might hold a differing opinion. Talk about a dead horse, John, government isn’t the solution to every problem, much as you would like to believe.

    The connection I was making is that the major taxpayer is leaving the city of Ann Arbor and the white collar workers of Ann Arbor are impacted just like the blue collar workers of the outlying townships. Ann Arbor may now have to choose how to spend limited tax dollars wisely and may gain empathy for the economically disadvantaged townships. Perhaps you should consider returning to a regionalized police force to provide a more cost effective use of your tax dollars? Maybe the county can scale down it’s elaborate, costly plan to add 90 beds to the county jail – especially since we all know that only 90 beds will not alleviate the problem?

    Our community is suffering in the economic climate of Granholm’s administration. The Sunday Detroit News had an article that listed an enormous amount of new taxes that are under consideration in our state. With families losing their jobs, homes, and struggling to make ends meet, how can the state think it is a good time to raise taxes?

       —Karen Luck    Jan. 23 '07 - 09:01PM    #
  41. If the UM is intersted in the Pfizer facilities, perhaps a land swap could be worked out so the effects on taxes remain neutral.

    UM still has some undeveloped property in the area, some of which is inside the city. Or, they could give up some of their land over near Earhart Rd.

    There are plenty of ways this potential development could be beneficial to the city.

       —kena    Jan. 23 '07 - 09:11PM    #
  42. “There are plenty of ways this potential development could be beneficial to the city.”

    I appreciate your optimism here, and I agree with your view that we can come up with something good or even great for the long term.

    The State and the City has to be proactive to make this happen… does UMich. It’s no accident that Coleman was on hand for this announcement. It would be very hard to believe that UMich wouldn’t be involved with the property in some way or another.

    John Q (or at least I think it was John Q’s) idea that smaller BioMed firms might divy up the land/facilities is a good one. If we all recall, this whole tax abatement thing came out of an idea for a “Life Sciences corridor” in the region. This idea is far from dead, and it’s possible that Pfizer’s exit many allow for an entrance of other smaller, better companies that fit into this Life Science model.

       —todd    Jan. 23 '07 - 09:26PM    #
  43. “Millions of dollars in tax revenue would vaporize instantly.

    UMich won’t pay taxes on the property or the operations therein.

    Epic tax shortfall virtually overnight.”

    As the city’s largest taxpayer, threre’s no doubt it would hurt. But what percentage of the city’s taxbase does Pfizer represent? Most taxes paid go to the schools and most school tax dollars go to the state. The state can’t afford to lose those dollars but that pain is spread across all state taxpayers, not just those in Ann Arbor.

       —John Q.    Jan. 23 '07 - 09:46PM    #
  44. I was impressed with John Hieftje’s statement to Council yesterday evening. He pointed out that Ann Arbor has 100,000 jobs, and that we are losing 2% of them – not immediately. So let’s keep things in perspective.

    Yes, this is a really awful event. But, as Peter Allen pointed out (hi, Peter!) AA still has a bunch of good things going for it.

    The psychological blow to us may be more severe than the actual job loss.

       —David Cahill    Jan. 23 '07 - 09:47PM    #
  45. Last session’s legislature rashly wiped out the Single Business Tax, and thus eliminated billions of dollars in state revenue. Naturally, the Governor and Legislature are trying to figure out how to make up that loss.

    People like Karen Luck who warn about “enormous new taxes” and Detroit News columnist Nolan Finley who says “not a dime more to Lansing” don’t want the SBT to be replaced by anything.

    Let’s be clear: this is an extremist agenda. Karen and Nolan (and a whole chorus of highly paid shills for the Chamber of Commerce) want pretty much all state functions to shut down, and corporate income to be exempt from state taxes: a multi-billion dollar windfall.

    The “families struggling to make ends meet” would be unlikely to benefit much from a zero percent business tax and the disappearance of state services.

       —Larry Kestenbaum    Jan. 23 '07 - 10:09PM    #
  46. A 2% loss in jobs is huge. Significant slowing of job growth is enough to throw an economy into a tailspin. Here we’re not talking about slower growth, but rather, job shrinkage. Not good. Unless Hieftje has it on good authority that job growth in Ann Arbor is going to track population growth (or shrinkage) in Washtenaw, he really shouldn’t be saying stuff like that; it’s totally misleading.

       —Anna    Jan. 23 '07 - 10:13PM    #
  47. Yeah – extremist shill for the Chamber of Commerce. Except, I’m a low paid employee who has never paid a capital tax in my life. I’m just trying to keep up with an ever increasing personal income tax and pay my mortgage and property taxes while my personal income diminishes in real dollars. But hey, I’m one of the lucky ones who hasn’t lost my job and defaulted on the mortgage – yet. The News article described state “Internet use” tax and dozens of other personal taxes and had nothing to do with making the corporations pay.

       —Karen Luck    Jan. 23 '07 - 10:30PM    #
  48. What are the chances of Ann Arbor reconsidering the city income tax proposal again to make up for the shortfall?

       —Brian    Jan. 23 '07 - 10:34PM    #
  49. “A 2% loss in jobs is huge. Significant slowing of job growth is enough to throw an economy into a tailspin. Here we’re not talking about slower growth, but rather, job shrinkage.”

    Except that the 2% represents the city alone. The city economy doesn’t exist in a vacuum. Many residents don’t work in the city and many workers don’t live in the city. The actual impact will be much smaller.

       —John Q.    Jan. 23 '07 - 10:40PM    #
  50. Yeah; except that Ann Arbor is a supposed beacon of economic health in a region that’s hurting. Is job growth in the rest of Washtenaw exceeding the loss of the Pfizer jobs? If not, the idea that a couple thousand jobs is not really that big a deal is just wrong.

       —Anna    Jan. 23 '07 - 10:44PM    #
  51. The 2% figure is true as far as it goes, but it does not take into account the ancilliary businesses that will be hit by this. The restaurants and watering holes, the gas stations and stores around the Pfizer campus, the suppliers of everything from chemicals to paper clips to contract janitorial services will suffer as a result, and there will be job losses too in those businesses.

       —Tom Brandt    Jan. 23 '07 - 10:47PM    #
  52. “I’m just trying to keep up with an ever increasing personal income tax and pay my mortgage and property taxes while my personal income diminishes in real dollars.”

    How’s that Karen? The state income tax has dropped 0.5% since 1999. Likewise, federal income tax rates have dropped in the same time period. So if your income taxes are going up, it’s not for reasons that have anything to do with income tax rates.

       —John Q.    Jan. 23 '07 - 10:53PM    #
  53. I just looked up the numbers, and the loss of 4000 jobs in Washtenaw county in 2002-2003 was enough to nose the unemployment rate up by around .5% Given that unemployment rates usually hover at around 4-6%, .25% (approx. the unemployment you can expect when Washtenaw loses 2000 jobs) is not trivial. And, as Tom Brandt points out, there are likely to be other losses as an indirect result of Pfizer’s closing.

       —Anna    Jan. 23 '07 - 10:59PM    #
  54. How many of those job losses will be reported in Washtenaw County? If I live in Plymouth and work at Pfizer in Ann Arbor, is the loss of employment in Washtenaw or Wayne County? The unemployed person lives in Wayne, not Washtenaw County.

       —John Q.    Jan. 23 '07 - 11:27PM    #
  55. “Except that the 2% represents the city alone. The city economy doesn’t exist in a vacuum. Many residents don’t work in the city and many workers don’t live in the city. The actual impact will be much smaller.”

    John, I really appreciate your optimism, but with all due respect I strongly disagree with you here. Tom Brandt points to at least one reason why. I wouldn’t want to own a business on Plymouth for the next five years, that’s for doggone sure. Heck, all you have to do is look into yesterday’s paper to see which bars/restaurants the Pfizer employees gathered at to figure out who is going to get hit by this.

    I’m trying real hard to keep from posting negative comments about this, so I’ll leave my thoughts about impact, and what we have to do to mitigate this impact for another time. (Not that anyone necessarily want to read my opinions.)

       —todd    Jan. 23 '07 - 11:30PM    #
  56. John Q.,
    You’re right, my bad. I should have written ever increasing personal taxes and fee increases and that would have been inculsive of the proposed 5% tax on all services in the state. It seems everything I buy or pay for is increasing at a faster rate than my paycheck.

       —Karen Luck    Jan. 23 '07 - 11:30PM    #
  57. Oh – I forgot to answer John Q’s question about the tax base. According to Hieftje, Pfizer has about 4% of the City’s real property assessed valuation.

       —David Cahill    Jan. 24 '07 - 12:02AM    #
  58. I respectfully disagree with Julie regarding Pfizer’s tax break. We are Monday morning QB’s on this issue. It looks like adequate protections were put into the agreement, Pfizer is paying way more in taxes than they were before the abatement.

    Dustin, I respectfully suggest you actually read what I post before you disagree with me. Since I was supporting the tax abatements for Pfizer, I think you and I actually agree on this. I think you disagree with Chuck L.

    The Pfizer closing has been inevitable since early December (and really before that).

    The Ann Arbor facility has always been the R&D facility that has the highest productivity numbers on every standard that Pfizer measures. Yes, people knew there would be cuts, especially when torcetrapib stopped trial (which was just last month), but no, it was not clear that the entire facility was going to be closed. What probably killed Pfizer Ann Arbor in the end was the very large facility here. I think Pfizer had to make some big cuts to show their investors that they were serious and this was one way to do it.

    The 2% figure is true as far as it goes, but it does not take into account the ancillary businesses that will be hit by this.

    For example, Pfizer had 1000 contract workers in Ann Arbor. While they are not included in the official layoff numbers, they will lose their Pfizer jobs. It would be hard to find positions for all of them in the area.

    The Google jobs, while great, are very different jobs than the ones at Pfizer. They are more entry level, lower pay, less skilled. Gaining the Google jobs over three years is important, but in no way offsets losing the Pfizer jobs in one year.

       —Juliew    Jan. 24 '07 - 12:14AM    #
  59. The below from eleven months ago, in the Michigan Daily. Of course, Hank M. has parachuted away since then. And so has some of the pipeline. Lyrica remains a scheduled drug as far as I know.

    Lots of subjunctives in HM as cited—could, might, would, etc. Was he trying to tell us something? Or was he trying not to tell us something?


    Pfizer aims to create new drugs, more jobs
    Drug giant employs 8,500 people in Michigan, 2,500 in Ann Arbor

    LIVONIA (AP) – Pfizer Inc.‘s Ann Arbor research center will produce a large number of new medications during the next decade, increasing the prospect for more jobs, the company’s chairman and CEO said yesterday.

    Speaking to reporters after addressing a meeting of the Detroit Economic Club in suburban Livonia, Hank McKinnell said Ann Arbor has produced the epilepsy drug Lyrica, which was introduced last year and looks like it will become company’s most successful drug this decade.

    Ann Arbor also produced the blockbuster cholesterol-lowering drug Lipitor.

    “Our employment level depends on the success of our business,” he said, adding that the infrastructure in Ann Arbor could support a larger work force.

    Pfizer, the world’s largest drug maker, late last week forecast earnings for this year that are below Wall Street projections and said its sales will be essentially flat.

    It now employs 8,500 people in Michigan, mainly at sites in Ann Arbor, Kalamazoo and Holland, and is in the midst of a restructuring that could cost some jobs in the state.

    But McKinnell said he was optimistic about prospects in Michigan, particularly Ann Arbor. He said the Ann Arbor facility’s history of drug research, its ability to attract talented staff, a good relationship with the University of Michigan and a large number of smaller biomedical companies to partner with all contribute to good opportunities.

    “If our business does well, if the environment here continues to be strong, as our business grows, our employment here will grow,” he said.

    Pfizer in 2003 bought the Ann Arbor-based Esperion Therapeutics, a small company that has developed a drug that shows promise in reducing arterial plaque. Pfizer is in the early days of a 10-12 year cycle of getting the drug to market and is spending $800 million on its development, McKinnell said.

    The Ann Arbor site is one of six Pfizer research centers. The company also has its largest manufacturing center in the Kalamazoo area. Holland is home to a 200-person Pfizer facility that will close by the end of 2006, said company spokesman Rick Chambers.

    Pfizer employs nearly 5,000 people at its Kalamazoo-area facilities, with 500 of those jobs targeted for reduction in the restructuring, Chambers said. But many of those posts, in pharmaceutical sciences, will move to Ann Arbor, where about 2,500 people are employed, Chambers said.

    Chambers said some jobs will be eliminated in Ann Arbor as well. He said he can’t give specific employment numbers in Michigan because the restructuring is still in progress.
    © Copyright 2007 Michigan Daily

       —Harry    Jan. 24 '07 - 12:38AM    #
  60. In a message I received from the County Finance Director, the estimated tax paid by Pfizer is $4,465,618 to the City of Ann Arbor and $1,519,811 to Washtenaw County. That is a big chunk o’ change.

    I don’t believe Pfizer ever used their tax abatements because they did not reach the employment level required for them to kick in. Does anyone have reliable information on this?

       —Leah    Jan. 24 '07 - 12:43AM    #
  61. I want to hear what Todd has to say.

       —Dale    Jan. 24 '07 - 12:51AM    #
  62. Juliew, I agree with a lot of what you said, except that the signs of trouble for Pfizer were there. The president has been in place for six months and there were rumored to be thousands of job cuts in the works. There were also hints at planned reorganization. For example, the WSJ reported on 1/16 that there were plans to reorganize R&D’s scientists into smaller units, by theraputic area, and that facilities would be closed.

    There was also trouble with the drug pipeline, as I think you pointed out, with lots of bets riding on a single drug, even before the real trouble began. The WSJ reported on 12/3 and 12/4 that Pfizer had put the stops on torcetrapib (the first hints of trouble actually started to appear on 11/1). One of their Parkinson’s drugs was reported to be implicated in heart valve problems (WSJ 1/4). On 11/29 they announced a 20% cut to their sales force.

    In Connecticut, people have been fretting about Groton/New London for months, not because of press releases and articles in the WSJ, but because of leaks and rumors.

       —Anna    Jan. 24 '07 - 02:16AM    #
  63. In Connecticut, people have been fretting about Groton/New London for months, not because of press releases and articles in the WSJ, but because of leaks and rumors.

    I think they fretted in La Jolla too, but I’m not sure they were fretting so much here. I know someone who just started at Pfizer recently and everyone up and down the chain said that they would be fine because even if one division was cut, other divisions would have positions available here. They said rumors always went around but the results were usually not too traumatic here, that Ann Arbor was the shining star, people in Ann Arbor wouldn’t move (they have refused before and Pfizer kept divisions here because of it), they had the best employees here, they had good drugs in the pipeline, they were the most efficient, they got the best results (Lipitor for example), and everything would be OK. Yes people expected some cuts, but I honestly don’t believe people expected Pfizer to close this facility entirely. After all, they still have something like 90,000 employees and half of their income comes from a drug developed here. There is never a sure thing in pharmaceuticals, but this seemed as close as possible.

       —Juliew    Jan. 24 '07 - 03:11AM    #
  64. Remember also that not only does the governor’s plan also call for a reduction in the sales tax, but that taxes on goods and services don’t always just end up getting tacked on to the original price. Prices can’t always rise accordingly, so they sometimes do serve as taxes on businesses—the businesses sometimes just have to take some or all of it out of the bottom line.

    I agree that hopefully the UM won’t end up buying every inch of Pfizer property—or, if they do, then they will compensate either by selling off some other parcel, or selling some of the Pfizer property back for development.

       —Young Urban Amateur    Jan. 24 '07 - 03:23AM    #
  65. My understanding is that Phizer had not activated the tax abatements offered by the city and state. There were investment and employment targets that Phizer had to meet as referenced in other posts; and, obviously Phizer has no intention of hitting those targets.

    Perhaps Phizer knew this might be coming and delayed these additional investments, perhaps not. Either way, the abatements were not sufficient to outweigh the larger economic forces impacting Phizer. In hindsight it appears that Ann Arbor was very wise to include these conditions in the abatement agreement in an attempt to cement the company’s investment in the area. Unfortunately, that strategy didn’t work out.

    The positive spin on this is that the reasons Phizer chose Ann Arbor for this R&D operation are many of the same factors that drew Warner Lambert in 1960 and Parke Davis later (Thanks Juliew for the history in post #19). Ann Arbor and Washtenaw County have a long history with innovation and I don’t think that will change because one corporation pulled up stakes on an essentially successful operation on Plymouth Rd. Phizer will be leaving behind a state of the art facility and many of the talented people that made billions of dollars for their shareholders. Maybe some other enterprise will be savvy enough to pick up these pieces and make the ‘next Lipitor.’ Alternatively, the Phizer facility could become the greatest bio-med incubator in the world. There are some exciting and positive results that could arise from these ashes.

    The loss of millions in charitable contributions and revenue for collective resources from schools to police and parks is a very grave concern. Still, I believe that our region has a workforce too smart to be ignored by the pharmaceutical industry and that Ann Arbor will still be a hub in the growing “Life Sciences” corridor. I hope and expect to be here to find out if my optimism is well founded.

       —Jeff Irwin    Jan. 24 '07 - 03:30AM    #
  66. I’ve been through this kind of thing before (on a much smaller scale) — a parent company shutting an Ann Arbor facility and trying to get employees to move. Pfizer is apparently offering transfers to workers it wants to keep (a substantial percentage of the total and, presumably, their best employees). One question is — how many will stay and how many will go? It’s not obvious. Many will have roots in Ann Arbor, a jaundiced view of Pfizer, fears that Pfizer will continue to shrink (they might move only to be laid off somewhere else), and possibly a somewhat weak level of attachment to the company (the Warner-Lamber/Parke Davis buyout wasn’t that long ago).

    Anyway, the point is, a pretty large fraction of the workforce might be inclined to stay if there are opportunities. But that means putting things together very quickly. I hope we’ll have local leaders talking to rival big Pharma companies immediately about the possibility of starting an Ann Arbor facility and poaching a lot of Pfizer’s researchers.

       —mw    Jan. 24 '07 - 03:46AM    #
  67. Assuming that another Big Pharma company doesn’t move into the Pfizer digs, what is the property good for?

       —David Cahill    Jan. 24 '07 - 04:06AM    #
  68. “Assuming that another Big Pharma company doesn’t move into the Pfizer digs, what is the property good for?”

    I would say pretty much anything assuming that the development potential can justify the costs. It’s a good location, on a major road, near an interchange and not directly adjacent to residential in the area so you can probably do a more intense development than might otherwise fly along Plymouth Road. I’m guessing that the City will be inclined to give more leeway to those interested in pursuing redevelopment of the site.

    I have to acknowledge the severity of the tax impact of Pfizer’s departure. I didn’t recognize the overall value of their operation from a property tax viewpoint. They’ll have to continue to pay on at least a portion of the value, even if they close up completely. So the tax revenues don’t go away entirely. But it’s still a significant hit. One other thing to keep in mind is that it’s likely that a major portion of this is likely personal property taxes (research related equipment, etc.) that may not be replaced by other users. So unless you see a Pfizer-like operation or some high-tech operation move in, some of those tax dollars are likely gone for good.

       —John Q.    Jan. 24 '07 - 04:24AM    #
  69. Trying to entice other big Pharma companies is exactly what we don’t need to do as a solution to this problem. If we do, we risk ending up in the very same place 10 years down the road when that company pulls out because management and stockholder pressure in other states believes it is appropriate. We need to invest in local companies and entrepreneurs that have loyalty to and interest in Ann Arbor. Other posters are right – we do have a lot of talent, and much of it would be a lot more interested in working at small, innovative forward-thinking companies than a huge company.

       —Lisa    Jan. 24 '07 - 04:32AM    #
  70. To divert slightly from the topic at hand, I think several comparisons to Kalamazoo have been apt. An interesting feature of that city people don’t seem to focus on is that the two major companies there (Upjohn, acquired by Pfizer) and Stryker (the people who paid for the scholarships) were both founded by graduates of U-M med school. One invented a pill that could be crushed into a powder in the 1880s and the other a bed for wounded veterans that could tilt to allow nurses to roll and move people more easily in the 40s. The way to economic development now is the same as it was then and as a number of other people have suggested — drawing upon entrepreneurs from the city’s unimaginably fertile resource, the university.

       —Dale    Jan. 24 '07 - 04:53AM    #
  71. I find the polar reactions interesting:

    1. “This proves we shouldn’t have given them those tax breaks!”

    2. “This proves we should give Google whatever they want!”

    Because free parking would have kept Pfizer around, right? Right?

    I think one thing this demonstrates is the hazards of relying on monolithic large businesses for your tax base / employment base / anything. Big Business, whether automotive, pharmaceutical, or search engine, really can just decide tomorrow that they’re going to up and leave. They don’t have to worry about whether the spouse can find a job, or how the kids will handle the school transition (remember, corporations are legally people) – they can just go.

    On the other hand, I’ve heard some people assert that this proves the lie of Michigan’s attempt to diversify its economy. “What good is branching out from the auto industry if pharma’s just going to up and leave?” I disagree. I think this proves why we desperately need as much diversification as we can get – replacing one big industry with another doesn’t gain you any stability.

       —Murph.    Jan. 24 '07 - 05:34AM    #
  72. I think entrepreneurship is great, but you need to have a good mix of established companies and new firms (often, one will feed the other). Only 1 in 7 entrepreneurial ventures make it. Furthermore, to grow a life-sciences company you need venture capital (or quasi-non-profit money like that provided by Pacific Community Ventures or NC IDEA) because they aren’t the types of companies you can start in your garage with funds from a second mortgage on your house or even angel investors. It’s sort of a chicken-and-egg problem, because VCs go where there are lots of entrepreneurs and the entrepreneurs tend to go where there is VC money; the government or the university is going to have to provide some of the initial funding if the dream of making Washtenaw a center of entrepreneurship is going to be realized.

       —Anna    Jan. 24 '07 - 05:35AM    #
  73. I would be interested in seeing some stats on who are the largest taxpayers in town and what sectors of the economy they represent. Before yesterday, I doubt anyone would have said that Ann Arbor was a company town. While Pfizer’s loss is likely to have a huge impact, I still don’t think that it demonstrates a failure to diversify the economy. Instead, I’m betting that the numbers will show that the overall tax base needs to grow to the extent that even a loss of a Pfizer will never represent more than a percentage or two of the city’s tax base.

       —John Q.    Jan. 24 '07 - 05:45AM    #
  74. To answer my own question:’s/taxpayers.html

    In many ways, Pfizer is an abberation. No other employer or property owner dominates the City’s tax base in the same way (except the University in a negative way) and retail centers and apartment complexes represent most of the major taxpayers.

       —John Q.    Jan. 24 '07 - 05:49AM    #
  75. I think one thing this demonstrates is the hazards of relying on monolithic large businesses for your tax base / employment base / anything. Big Business, whether automotive, pharmaceutical, or search engine, really can just decide tomorrow that they’re going to up and leave.

    OK, show me a thriving region that’s doing so without the benefit of large businesses. We don’t want a single large business dominating the city (well, except for the U, of course), but having a number of largish businesses is a good thing.

    I don’t think the scale of Pfizer in Ann Arbor was a problem — losing it will hurt, but it won’t decimate the town in manner of factory towns whose factory closes. And it’s not like there aren’t other businesses in the area with similar scale. Toyota, for example — with Google coming, everybody seems to be forgetting about Toyota. And the ABN Amro announcement kind of got lost, didn’t it? Apparently they have around 1000 employees down at State and Textile. Not in the city itself, but …

       —mw    Jan. 24 '07 - 05:53AM    #
  76. >I think one thing this demonstrates is the hazards of relying on monolithic large businesses for your tax base / employment base / anything. Big Business, whether automotive, pharmaceutical, or search engine, really can just decide tomorrow that they’re going to up and leave.<

    What has happened in Ann Arbor reflects the “blockbuster” business strategy that got Pfizer (and other pharm companies) wher they are. In essence, we became generic.


       —Harry    Jan. 24 '07 - 06:20AM    #
  77. To Kena and the others posting positive, thoughtful comments here: Thank you for being part of the solution. Yes, this is a hard blow, but your postings are helpful as we as a community regroup to figure out what’s next. Much appreciated.

    To Karen Luck: May I respectfully suggest that this is not all about you. I honor your right to post your opinions, but in my view courteous and constructive dialogue goes a lot farther than sarcasm, no matter how frustrated/stressed we may be.

    Just a thought from a frequent observer of this site (no relation to John Q.!) who appreciates the insights but is distracted and disturbed by the snarky negativity.

       —concerned citizen    Jan. 24 '07 - 09:03AM    #
  78. Time to get real about consolidating city services and creating regional government for much of what the public sector does. Consolidating overlaping services is going to be necessary to keep service levels up and expenses in line. Public sector expenses simply have to come down if the revenue is not flowing in to pay for them.

       —Andy Piper    Jan. 24 '07 - 09:10AM    #
  79. Andy,

    What did you have in mind? I know there are areas where there is overlap. But regionalization is a whole step beyond eliminating duplication of services.

       —John Q.    Jan. 24 '07 - 09:29AM    #
  80. On the one hand, I have to say it’s kind of odd to see people suggesting that ‘the city should have been prepared’ and then citing negative events to Pfizer that took place in December. It is only January, folks. No matter how prescient people may be, this is still something of a shock to everyone, given the relative importance of the AA facility to the company as a whole. But that’s history.

    I think the idea that Todd referenced “John Q (or at least I think it was John Q’s) idea that smaller BioMed firms might divy up the land/facilities is a good one” and the mention of the CT innovation fund are perhaps the best combination approach for this particular problem. The logistics are, of course, enormous and the city is not in a great position to support the creation of such a thing at this time. But perhaps the city and county together are. Or perhaps the city and a private entity(ies). It doesn’t even need to be confined to biotech. This could be a genuine ‘cool city’ program, as opposed to a few thousand used to paint alleyways…

       —Marc R.    Jan. 24 '07 - 09:53AM    #
  81. It is really interesting to hear that Pfizer didn’t take advantage of tax breaks. Seems the stipulations set by the city were a useful negotiating points.

    I’m curious whether or not it would have been (or, more importantly, would be) helpful to include a right of first refusal as a negotiating point. In this case, the city might be able to keep the land on the tax roll if they had the option of getting it before UofM. On the other hand, maybe involving the city in redistribution of the land would create a bigger mess than it would clean up.

       —Scott TenBrink    Jan. 24 '07 - 10:03AM    #
  82. Let’s keep in mind that this isn’t an ophaned brownfield site. Pfizer is still a viable operation, not a bankrupt shell looking to sell off its assets for whatever they can get. Presumably, they’ll be looking to recoup as much of their investment as they can. It’s probably not necessary for the city to get actively involved in that side of the action, except to make it clear to UM (or anyone else) that the city would prefer to keep as much of that land as possible on the tax rolls.

    Where the city can be helpful is providing clear direction on what they see as the future of that site. Will they want to retain it as just R&D? Will they allow other kinds of development? How much will they assist redevelopment through flexibility in zoning or financial incentives? It’s possible that Pfizer may want to encourage the continuation of the use of those facilities by start-ups. On first thought, I assumed they would see that as competition. But maybe not. Since Pfizer can’t see to develop viable products on their own, having a potential pipeline in place from start-up companies that you’ve assisted get going is probably the next best thing. If any of their products ever pan out, you can buy them up as Pfizer has done in the past.

       —John Q.    Jan. 24 '07 - 10:24AM    #
  83. Returning to the collateral damage issue, a researcer at U-M’s Institute of Labor and Industrial Relations estimates that an additional 2,000 to 4,000 jobs may be lost, in two areas: contract workers, and retail and service industries. Story here .

       —Tom Brandt    Jan. 24 '07 - 06:35PM    #
  84. Hopefully the economy outside of Michigan is strong enough that most of these people can find good employment elsewhere; the national unemployment rate for adults is about 4% last time I checked.

    On the positive side, when they leave Michigan it will bring down housing prices here for a while, or balance the Google influx.

       — UMP    Jan. 24 '07 - 08:16PM    #
  85. I think “a concerned citizen” is a City Council member, but I won’t “out” him/her.

       —David Cahill    Jan. 24 '07 - 10:38PM    #
  86. I post this hoping that concerned citizen is a council member, and if not, that someone will notice.

    There are lots of people around who might be able to help make something like lemonade out of this situation. But you might have to listen to others besides the folks who follow you to the Aut Bar.

    This is the time to reach and tap all resources.

       —JennyD    Jan. 25 '07 - 02:26AM    #
  87. Of course positive solutions are preferable to snarky negativity, but positive solutions come only from an accurate assessment of the problem. Implying that a 2 percent job loss is not that big a deal is irresponsible.

    As for whether the folks in city hall should or shouldn’t have known; I suppose it doesn’t matter (though I would say they shouldn’t have found it all that shocking when the announcement was made this week). Regardless of what happened with Pfizer, some of the entreprenuership incubator and funding programs should have already been in the works (have they been?). The Life Science Corridor idea has been around for almost ten years now. I don’t think it is “snarky” or unproductive to try to get a picture of what the problems are (if any) and what has been standing in the way of e-ship in SE Michigan. Maybe the answer is that nothing is wrong, maybe it’s a lack of leadership, maybe it is a lack of money, maybe it’ as simple as macroeconomic factors. But an unconditionally positive attitude is unlikely to be the solution.

       —Anna    Jan. 25 '07 - 04:36AM    #
  88. It’s time to think outside the box. This is a great loss no doubt. The good news is that when the market is low, then it is time to buy. Coupled with inflation on a thirty year fixed (low) rate =‘s success. If you want to stay in the middle class, pose yourself for gain.

       —Jason D.    Jan. 25 '07 - 05:34AM    #
  89. I don’t consider it “snarky”, I’m just quicker to face the reality than some of the “Pollyannas” who are trying to put a spin on this negative situation in our community. UM has thousands of square feet of unused new laboratory space and for years hasn’t been able to get qualified individuals to accept offers of employment to fill existing labs. Just like all businesses, most start-up biotech companies fail within a few years. Let’s not invest taxpayer money on highly speculative business ventures. And please, don’t look to the county to bail out AA. In the short term, cost-cutting measures and budget tightening will be necessary. Additionally, a city income tax is not conducive to attracting new business, especially considering the relatively high housing costs in our area and an unstable State financial situation. But what do I know – I’m just a shill for the Chamber of Commerce, right?

       —Karen Luck    Jan. 25 '07 - 06:02PM    #
  90. Who has difficulty reading.

    Karen and Nolan (and a whole chorus of highly paid shills for the Chamber of Commerce)

       —Dale    Jan. 25 '07 - 07:43PM    #
  91. Regardless of what happened with Pfizer, some of the entreprenuership incubator and funding programs should have already been in the works (have they been?).

    Yes, these sorts of programs have been in place for some time now. Spark is the most well-known, but there are also many companies like MichBio which Murph posted on that had been created just for this purpose. Unfortunately, many of these organizations were funded in large part by Pfizer. Hopefully Pfizer will continue with this funding even though they are leaving the city.

    The life sciences initiative has been seriously hampered by governmental restrictions on stem cell research. Many of the best and brightest researchers have taken their research to other countries. This has certainly affected how the University could recruit (and is being felt around the country).

    Ann Arbor does have a lot of startups, many of them very successful. The problem is, it takes a lot of small startups to equal the economic impact of one large company (both positively and negatively). It will be interesting to see what happens. I think there will be quite a large number of Pfizer employees who will work as hard as they can to stay here.

       —Juliew    Jan. 25 '07 - 07:58PM    #
  92. “Just like all businesses, most start-up biotech companies fail within a few years. Let’s not invest taxpayer money on highly speculative business ventures.”

    Good point. Because, as you know, other industrialized countries’ businesses don’t have public/private partnerships to encourage new business.

    Japan just broke into the “Big 3” using magic beans rather than an effective partnership with the Japanese Government. Just Lexis Nexis “Magic Beans” and “Japan Car”, and you’ll find the article that describes these beans.

    Maybe we can lease these beans, Karen. I’m in for a ten spot. :)

       —todd    Jan. 25 '07 - 08:17PM    #
  93. Juliew,

    There are no governmental restrictions on adult stem cell research which are the cell lines that most recent publications conclude are the most promising as a source for future treatment of diseases and this type of research is fully funded by government and taxpayers. Also, no one has to leave the country to work with embryonic stem cells as this research remains completely legal. The only restrictions on embryonic stem cells are that we cannot clone human beings in the United States and funding must come from sources other than government or taxpayers. The best and brightest researchers are working at other Universities or governmental agencies in the U.S., e.g. NIH.

       —Karen Luck    Jan. 25 '07 - 08:33PM    #
  94. I don’t want to disparage MichBio and Sparks because they perform valuable services, but they are not enough. To give you an idea of the scale of the investments needed to get a biotech company off the ground: $1-5M every 18 months-2 years.

    By the way, Karen, taxpayer money is being invested in highly speculative businesses all the time via pension and university investment funds (they invest in private equity and venture capital firms; these are usually called “alternative investments” in the pension fund’s annual report; pensions also usually use derivatives and swaps). Those portions pension funds are usually the most profitable — you don’t get return without risk, and a properly balanced portfolio with high-risk projects has lower risk than other low-risk financial products. The kicker is that when a pension fund can’t find VC/PE funds to invest in in-state, the money that’s invested goes to places like Silicon Valley.

       —Anna    Jan. 25 '07 - 08:48PM    #
  95. The city has been doing a lot more for economic development the last 5 or 6 six years as well as tech startup cooperation with the U. Spark has grown out of that and the city – county partnership. Spark took over from the Wash. Econ. Devel. Council.

    Spark has $8 million from the Govs 21st Century Jobs Fund plus local money from a small TIF district.

    Google is one result and there are many, many smaller ones like Zoran.

       —Dustin    Jan. 25 '07 - 10:27PM    #
  96. I have a question: why do we have to invest in Life Sciences? It takes years for companies to become profitable, etc. How about we start investing in IT companies. We have Google, proquest, Compuware still here. Probably others.

       —JennyD    Jan. 25 '07 - 10:37PM    #
  97. JennyD – we should (and are) investing in IT companies. But, just like the auto industry, and just like Pfizer, we shouldn’t just bet on IT. We should spread our eggs across several baskets, within and across industries.

    My dad worked at Comshare for 20 years, until – whoops! – Comshare’s gone. He was offered a chance to keep his job…by moving to Phoenix. I know people who worked at Ann Arbor Computer, until – whoops! – corporate reorganizing; AAC no longer exists, and the parent company’s closest remaining office is in Farmington Hills (which is commutable, yes). Of course, these cases also demonstrate the benefit of having more, smaller baskets – individually, each of these companies’ departure made only a small impact on Ann Arbor, because they were one among many. A firm with 100 employees can leave without tipping the whole cart, if there are enough others.

       —Murph    Jan. 25 '07 - 11:20PM    #
  98. We should (and are) investing in IT companies. But, just like the auto industry, and just like Pfizer, we shouldn’t just bet on IT. We should spread our eggs across several baskets, within and across industries.

    More than that, ‘we’ (we as in local government) should expect most economic development to happen without making any direct bets or investments at all. That is, if we create an attractive environment, businesses will locate here (or be founded here) and grow larger without any direct involvement by local authorities.

    For example, Ann Arbor didn’t decide to become a regional dining and entertainment center and then establish a VC fund for restaurant startups.

    Japan just broke into the “Big 3” using magic beans rather than an effective partnership with the Japanese Government. Just Lexis Nexis “Magic Beans” and “Japan Car”, and you’ll find the article that describes these beans.

    Japan has a pretty mixed record with this kind of thing. Remember in the 80’s and early 90’s when Japan’s MITI was going to enable Japanese companies to leapfrog competitors in supercomputers, semi-conductors, and ‘fifth generation’ AI? It didn’t work at all.

       —mw    Jan. 26 '07 - 02:01AM    #
  99. For example, Ann Arbor didn’t decide to become a regional dining and entertainment center and then establish a VC fund for restaurant startups.

    It’s arguable to me whether that’s economic development, but the rehab of numerous Main Street buildings and the redo of the streetscape was heavily incentivized and subsidized.

       —Dale    Jan. 26 '07 - 02:03AM    #
  100. Some ideas to strongly consider:

    Postpone, scale back or eliminate the ~$50 million construction/renovation of court, police and jail space by the city and county. Use the funds to compensate United Way charities and other programs losing governmental and/or corporate sponsorship/donations. Ask Google to pay for all or at least more of their parking so the city can fully fund United Way agencies.

    Implement an Ann Arbor city income tax so the funding of our city government is less dependent on property taxes. This would require U-M employees living outside the city, many of whom realize great convenience and amenities for no cost (e.g., our City Administrator), to foot some of the bill. The U-M is not moving. Counting on multinational corporate support for a community is a high risk venture (ask Flint). Its high time we made this change.

    Bold moves from our elected officials are needed.

       —Tim Colenback    Jan. 26 '07 - 03:49AM    #
  101. You’re right, MW, making the environment attractive is the key. Making the environment attractive for entrepreneurship — biotech, software, telecom, financial services, med devices, energy, semiconductors, entertainment (the more diverse the better) — is going to involve investing some money to get things going so that investors and potential entrepreneurs look to (or decide to stay in) SE MI.

       —Anna    Jan. 26 '07 - 04:22AM    #
  102. Tim:
    I suspect you are a homeowner. With a city income tax, landowners win but lower income renters lose.

    In Michigan, people who live in the city would have to pay one percent of income, those who only work here would pay 1/2 %.

    Under the charter, the city would have to give a big property tax break (6 mills) to the land owners (Pfizer included!) but would the landlords pass this savings along to renters? Highly doubtful. People who own property (like you?) win, those without, lose.

    Should the government give taxpayer funds to United Way? I guess the taxpayers would need to answer this for themselves.

    Your plan would as you say, take money from out of town workers (1/2%) many of whom do work at the UM but many who are also lower income service workers who live in Ypsilanti because they can’t afford to live here. Your plan would take twice as much (1%)from in town renters who are often paying way more than 30% for housing, more like 40 or 50 .

    It seems like there will be a reassessment of budget plans in the city, schools and elsewhere.

    But if the city does not build a courthouse, where will the court go in 09 when they must move from the county courthouse? (The Pfizer buildings should be resold to tax paying entities.)

    If the jail is not expanded… what do you say to all the relatively low to moderate income Ypsilanti residents who are fighting to save their neighborhoods. They are up in arms (and starting citizen patrols) because the same criminals who are ripping them off this week and are caught, are right back on the streets next week to rip them off again. No room in the jail. Many here in A2 don’t pay much attention to it but people are being shot right here in Washtenaw County. Explain your plan to not build onto the jail to the residents of Ypsilanti.

       —Laura B    Jan. 26 '07 - 09:02AM    #
  103. Laura,
    Ypsi city residents should be up in arms because they have the most expensive police force in the county. (Cost per sq. mile of coverage) They should be up in arms over the very expensive plans to build only a portion of the jail space that is needed. They should be up in arms because the former county BOC has acted in a manner that shows little regard for their economic plight. They should be contacting the current BOC to encourage cost concious expansion of jail space. They should be encouraging the county prosecutor and area judges to find alternative methods of handling accused criminal offenders for whom they have little hope of convictions; something other than holding them in jail without bond prior to their court date after which they are released back into the community due to lack of evidence. They should be holding their elected representatives responsible for the excessive costs of the current jail – twice that of Livingston county. But if their increased attention to these matters would result in cost savings, the savings should not be donated to charity, they are needed to continue essential services: police, fire, schools, roads.

       —Karen Luck    Jan. 26 '07 - 05:13PM    #
  104. Ypsilanti has the highest cost per square mile? That should hardly be surprising given that Ypsilanti also has the highest population density (persons per square mile) of any Washtenaw County jurisdiction.

    The way to get cheaper jail operating costs would be to level the current one and rebuild a more modern jail from scratch. But that would be super expensive up front, and would never fly politically.

       —Larry Kestenbaum    Jan. 26 '07 - 08:08PM    #
  105. Karen, have looked at the cost of police in Hoboken, NJ? The city is one-square mile, it’s got a chief, six captains, and a bunch of cops. It spends $13 million a year on police salaries. So that’s $13 million per square mile.

       —JennyD    Jan. 26 '07 - 08:52PM    #
  106. I haven’t checked recently, but a few years back they had an officer (supervisor) for every 3 patrolmen, plus a chief, assistant chief, ... Now they have a few unfilled positions, so it’s not as bad as it once was. The cost isn’t slightly more than other areas in the county, it’s significantly more. No – I haven’t checked Hoboken recently, but I sure hope they aren’t the standard used for comparison.

       —Karen Luck    Jan. 26 '07 - 09:18PM    #
  107. Also, if you read “Freakonomics,” one of the analyses in the book is what actions cause reductions in criminal activity. Two stand out: Increase the number of cops, increase the length of incarcerations. Either one works.

       —JennyD    Jan. 26 '07 - 10:07PM    #
  108. The City Council and the DDA are having a working session on Monday. What the city fathers and mothers intend to do about the courts/police facility and other projects should be a lot clearer after that meeting.

       —David Cahill    Jan. 26 '07 - 10:18PM    #
  109. That working session has been changed to Feb. 12 and will be televised.

       —Leah    Jan. 27 '07 - 02:01AM    #
  110. Thanks, Lee!

       —David Cahill    Jan. 27 '07 - 02:52AM    #
  111. JennyD,

    I read “Freakonomics” and it also pointed to safe, legal abortion as another causal factor. However, what he did not address is why the incarceration rate in the USA is higher than any advanced industrial nation in the world. The conventional wisdom is that there is more incarceration because there is more crime, but that only begs the question of why there is more crime. I would submit that a big reason has to do with our strong tendency in this country to house the poor in ghettos and to just let them rot(let’em kill each other.)

    The statistics are poignant, at one point in the early 90’s, Detroit had about three times the cops per capita that the city of Indianapolis had. It should not come as a surprise that Detroit had and has a hard time paying its bills.

    It’s too bad, Washtenaw is rich enough and Ypsilanti is small enough such that you’d think something could be done to eliminate the ghettos in Ypsilanti, then you would not have to spend money on cops, jails and judges.

       —Chuck L.    Jan. 27 '07 - 11:43PM    #
  112. Chuck L., if you had unlimited resources, what would you do with the folks in the “ghettos” in Ypsi?

       —Anna    Jan. 28 '07 - 04:36AM    #
  113. But, Chuck, why would we as a region want to do anything to eliminate the ghettos? I mean, they’re all the way over there! What do we care?! Surely you’re not saying that poverty has wide-ranging effects, are you? (Much less concentrated poverty. That’s the best kind. Get all of “those” people in one place, where you can keep track of them, and you don’t have a thing to worry about.) That’s what Ypsilanti is for, after all. A place to keep poor people, so that the rest of “us” don’t have to worry about “them”.

    (Thoroughly sarcastically stated, as I hope is obvious.)

    (Interesting that this made its way from an economic development thread to a “stop the giant jail and bash Ypsi” thread. Karen does her job well.)

       —Murph.    Jan. 28 '07 - 04:36AM    #
  114. It’s true; if I ever need somebody to copy and paste right wing talking points about Michigan cities and apologies for Joe McCarthy while dressing up entitlement as a self-sufficient meritocracy, I will know whom to hire.

       —Dale    Jan. 28 '07 - 04:54AM    #
  115. Just to put some numbers to the question, Ypsi City’s 2006-2007 budget puts the cost of all police related services (I’m including drug/gang education programs in the schools, bullet-proof vest purchases paid by grants, etc) at $4,199,472. By comparison, Ypsi Twp uses 44 “patrol service units”, at an estimated total cost in 2007 of $199,000 per PSU (about $99k of which is paid by the Twp.), or $8,756,000.

    Using SEMCOG’s population estimates for Jan 1, 2007, as population is certainly a better measuring stick for police needs than land area, this comes to about $200.75 per capita for Ypsi City, $165.15 per capita for Ypsi Twp. At this point, we’ve probably got numbers good enough for Karen to continue bashing Ypsi City, though I’d personally be happier if I could find cost multipliers based on household income, presence of college students, etc.


       —Murph.    Jan. 28 '07 - 05:04AM    #
  116. I think “economic deterioration” is a better description of this article, unfortunately.

       —David Cahill    Jan. 28 '07 - 05:21AM    #
  117. Anna,

    Hopefully, it would not take unlimited resources. First, I would define a ghetto as a place where a lot of poor people live. I believe one of the reasons poor people are poor is that they live amongst too many poor people! There’s no opportunity and it is like being stuck in a very deep ditch with very steep walls. When someone is stuck in a ditch, they need help getting out. I like what Chicago did (or maybe still does?) on a small scale, they helped people living in the inner-city projects move to areas with more opportunity. It’s not just spreading the poverty around; people can take care of themselves when they have opportunities. The same people who will stay poor in a ghetto can be far more productive when they live in a community with more resources and opportunity.

    In my mind, from a public policy perspective, ghettos should be viewed like the plague. Just don’t let them get started. When they form, break them up, move poor people out to better areas and better off people in (the Kalamazoo Promise does a good job of that.) The object should be to never let one area get too poor.

    I would point out that European cities are far better at this than we are and I think the results speak for themselves. We are willing to spend billions to lock people up but never ask the hard question of why our society seems to be so good at cranking out criminals at a rate far higher than other places (we just blame the criminals and leave it at that, “Why are you a criminal? Shame on you!”)

       —Chuck L.    Jan. 28 '07 - 08:18AM    #
  118. I was guesing that Pfizer will demolish its two million square feet of top-notch labs in Ann Arbor rather than pay the property taxes.

    This evening, I spoke with a local developer, who made exactly the same prediction.

    This is about like the Butterfield theater chain, which owned dozens of historic theaters in various Michigan cities. Whenever the chain closed a theater, it made sure to destroy all the fixtures so that no later owner would be able to reopen or rehab them (and theoretically compete with the remaining Butterfield theaters).

    Pfizer is not going to make its facilities available to any competitor. So the notion that the hit to property tax revenues and local employment will be cushioned by the continuance and reuse of Pfizer’s lab buildings is probably a fallacy.

       —Larry Kestenbaum    Jan. 28 '07 - 09:05AM    #
  119. Remember, the citizens of Ypsilanti City pay for their own police out of their own pockets. The citizens of Washtenaw County pay 51% of the cost of police in Ypsilanti Twp. Maybe that will better clarify the tax burden on Ypsilanti City. About $200,000 of their county tax money goes to subsidize police services for townships – for Ann Arbor that figure is about $2.8M (that’s per year). So what the citizens of Ypsi Twp. actually pay themselves is a LOT less.

    In addition, lawyers’ fees for all the suits are approaching $1M, when you add together county and twp. costs. I don’t know what the Sheriff has paid his lawyers in the lawsuit against the county, but the county paid also to defend him in the inmate case. The judge ruled that the Sheriff must release inmates who have served up to 70% of their sentences, but it is my understanding that he is appealing that decision. The county must pay again.

       —Leah    Jan. 28 '07 - 05:26PM    #
  120. Since this article has already drifted beyond repair, I will mention a stunning political event, from this morning’s AA News:

    Obama strong in straw poll

    It’s early, but Democratic presidential hopeful Barack Obama would run away with the party’s presidential nomination in 2008, according to a straw poll conducted at the Western Washtenaw Democrats annual meeting in Chelsea on Thursday.

    The Illinois senator and media darling received 33 percent of the 59 ballots cast in what is believed to be the first informal gauge of Democratic presidential candidates in the state, said Frank Grohnert, chairman of the local group.

    Former senator and 2004 vice presidential nominee John Edwards finished second with 20 percent, edging out former Vice President and Oscars-bound Al Gore by a single vote. Sen. Hillary Clinton finished a distant fourth with 13 percent followed by former Gen. Wesley Clark with 8 percent.

    The strength of Obama this early in the campaign took some by surprise.

    “He’s the hot name right now, but I thought there would be more support for Clinton,’‘ said Grohnert, who intends to send the results to the Michigan Democratic Party and the individual candidates’ campaigns.

    Other potential candidates to receive single votes were U.S. Sen. Joseph Biden, New Mexico Gov. Bill Richardson and former Iowa Gov. Tom Vilsack.

    End of posting from the AA News. Western Washtenaw is almost entirely white, so the poll is a test of strength among white liberal Dems.

    Hillary Clinton was worshipped here in Washtenaw County during husband’s presidency. To think that she finished fourth here, of all places, is truly unbelievable!

       —David Cahill    Jan. 28 '07 - 08:48PM    #
  121. Thank you for all your good work Leah. Stay the course.

    Ypsilanti Twp. has had a free ride for far too long. It is outrageous that the people of Ypsi, Northfield Twp. Chelsea, Manchester, Pittsfield Twp. Saline and A2 must pay for their own police AND pay for Ypsi Townships. If anything, move up the deadline and don’t be afraid to cut them off when time expires.

       —Laura B    Jan. 28 '07 - 10:55PM    #
  122. Larry,

    It sounds like you are right to say we should not hold our breath waiting for another taxable entity to take over the facility (although it is not impossible). I was thinking Pfizer might go for donating the facility to UofM to get the tax break if a buyer could not be found. I have also heard that the lab facilities are very specialized and useful only to a narrow slice of the bio industry.
       —Chuck L.    Jan. 28 '07 - 11:36PM    #
  123. Thank you for your kind words, Laura B.

       —Leah    Jan. 29 '07 - 12:47AM    #
  124. I think we should turn it into a bubblegum factory, where all we made there was bubblegum.

       —julie    Jan. 29 '07 - 07:06AM    #
  125. Now that we’re back on the economic development bandwagon, might I share the suggestion of a close friend of mine:

    Amsterdam in Ann Arbor . . .

    By dramatically de-criminalizing marijuana and turning it into a commodity for legal businesses, Ann Arbor could grow independent businesses and the jobs that come with them more quickly than 10 Google advertising offices are able to.

    Just a thought; I’ll live it to the brains around here to play with the idea.

       —sheldon    Jan. 29 '07 - 07:55AM    #
  126. Murph’s numbers don’t include the portion of county revenue that is paid by the township residents. The township taxpayers pay 5.5 mils to the county for police services and they contract for dedicated patrols in addition to that. How can you call it a subsidy when it is the townships own tax dollars that are earmarked for police services and used for their intended purpose? The patrols that we pay for exclusively are frequently used to backup Ypsi city police and are unavailable to the township at those times, with no reimbursement from the county or city. If the township didn’t pay for dedicated patrols the county wouldn’t have the manpower to respond to Ann Arbor or Ypsi city emergencies.

    And Leah’s figures for the county are totally distorted from those numbers which were calculated by an independent consultant: Northwestern University experts who were paid by the county in 2002/2003 to determine the actual cost of each PSU. The independent experts calculations determined that the township was paying full cost of each PSU. One PSU consists of: Deputy, Supervision (Sergeant, Lieutenant, Commander), Investigation support, clerical support, Dispatch services, transportation costs, and non personnel support costs. It was only after the entire county voted not to fund the giant jail that Mr. Gunzel and the County BOC decided to scrap the independent assessment and arbitrarily more than doubled the estimated cost of the deputy patrols.

    You are not being truthful and are relying on the hope that the average citizen doesn’t have the facts to dispute your claims. But the lawsuit continues and the appeals process will force the county to abide by the original long-term contract. And if that’s the case, the county will pay for all the court costs, at a time when you can least afford it, and to the disadvantage of us all. The BOC offer for mediation is extremely disingenuous considering that they want the judge from Monroe, who seems to be in their pocket, to appoint the mediators.

       —Karen Luck    Jan. 29 '07 - 09:34AM    #
  127. Quote:

    I was guesing that Pfizer will demolish its two million square feet of top-notch labs in Ann Arbor rather than pay the property taxes.

    This evening, I spoke with a local developer, who made exactly the same prediction.

    This is about like the Butterfield theater chain, which owned dozens of historic theaters in various Michigan cities. Whenever the chain closed a theater, it made sure to destroy all the fixtures so that no later owner would be able to reopen or rehab them (and theoretically compete with the remaining Butterfield theaters).

    Pfizer is not going to make its facilities available to any competitor. So the notion that the hit to property tax revenues and local employment will be cushioned by the continuance and reuse of Pfizer’s lab buildings is probably a fallacy.

    My Reply:

    This is very important information, folks! And I wouldn’t put it beyond Pfizer, either. In fact, we may all be in denial about the lab’s closing, and in denial of the possibility that it’ll be torn down. It’s time to bump some heads together, and THINK about what will be done about all that vacant land. If you don’t believe me, LOOK AT BUICK CITY, IN FLINT!!!


       —NorfolkSouthern    Jan. 29 '07 - 12:38PM    #
  128. Karen: There is no getting around the fact that many of the governmental units in the county are paying for their own police services while Ypsi Twp., a BIG USER of police services, has had a free ride for years. As a taxpayer in a gov. unit that pays for its own police services why should I also be paying for yours?

       —LauraB    Jan. 29 '07 - 06:22PM    #
  129. LauraB,

    The county has a statuatory responsibility to pay for police services throughout the entire county. Most cities, and a few townships have opted to start their own police force, so that their local government officials could have direct impact and control over police matters within their municipality. Townships cannot raise tax revenues by increasing millage rates to similar levels as cities. Ypsilanti township, realizing that they use a significant portion of the county sheriff deputies, has voluntarily agreed to pay their full costs through contracting a specific amount of patrols. The township could have ignored the need, and relied solely on the county and state forces, as could your governmental unit.

    As a taxpayer in a gov. unit that has its own police services, your governmental unit has voluntarily opted to tax it citizens for a duplication of some services. You also pay for county police services that aren’t duplicated, but necessary for your protection. In addition, you benefit by having adjacent municipalities with a contiguous policing ability.

    As stated in my previous post, you are not paying for Ypsi township police services – we pay for our own. The cost is cheaper because the service provided is not as extensive. I don’t have patrols in my neighborhood, I don’t get a vehicle to come to my house to file a complaint – I go to the station to file reports. And the majority of the township is still rural – the cornfields do not require the constant police presence that a housing project does. There is no free ride – you get what you pay for.

       —Karen Luck    Jan. 29 '07 - 07:51PM    #
  130. Some points about the jail et al:

    1) The jail renovation is not supported by the majority of the people in Ypsi or Washtenaw County.

    2) We already incarcerate way too many people.

    3) Our crime rate is going down, not up.

    4) The war on drugs has led to the explosion in the number of incarcerated people in our society and is part of the local problem. This leaves us way out of line with other western cultures which have much more successfully dealt with crime than the US. We have a failed system.

    5) If we had as strong a committment to provide jobs with living wages and health care to everyone who is willing to work, our crime rate would be reduced (freakonomics notwithstanding).

    6) Freakonomics and everything from the conservative U-Chicago economics dept should be taken with a large grain of salt.

    7) The city/county do not need to give $$ directly to the United Way, but could increase allocations to the agencies providing social services.

    8) The State of Michigan has effectively dismantled much of our mental health system (mainly during the Engler years). To effectively address crime we need a public health oriented response to substance abuse, not a criminal justice response. By paying for incarceration we are basically funding an education on how to be a better criminal for many in the system. There are many alternatives to incarceration which are effective and less expensive. We must be more creative.

       —Tim Colenback    Jan. 29 '07 - 08:41PM    #
  131. Quote:

    I was guesing that Pfizer will demolish its two million square feet of top-notch labs in Ann Arbor rather than pay the property taxes.

    This evening, I spoke with a local developer, who made exactly the same prediction.

    This is about like the Butterfield theater chain, which owned dozens of historic theaters in various Michigan cities. Whenever the chain closed a theater, it made sure to destroy all the fixtures so that no later owner would be able to reopen or rehab them (and theoretically compete with the remaining Butterfield theaters).

    Pfizer is not going to make its facilities available to any competitor. So the notion that the hit to property tax revenues and local employment will be cushioned by the continuance and reuse of Pfizer’s lab buildings is probably a fallacy.

    My Reply:

    This is very important information, folks! And I wouldn’t put it beyond Pfizer, either. In fact, we may all be in denial about the lab’s closing, and in denial of the possibility that it’ll be torn down. It’s time to bump some heads together, and THINK about what will be done about all that vacant land. If you don’t believe me, LOOK AT BUICK CITY, IN FLINT!!!


       —NorfolkSouthern    Jan. 29 '07 - 10:23PM    #
  132. Let’s get back on the original subject, OK? Thanks.

       —NorfolkSouthern    Jan. 29 '07 - 10:26PM    #
  133. I was guesing that Pfizer will demolish its two million square feet of top-notch labs in Ann Arbor rather than pay the property taxes.

    This evening, I spoke with a local developer, who made exactly the same prediction.

    I’m sure Pfizer would like to avoid paying the taxes, but from a PR-perspective, bulldozing the place without warning would be a tough thing for Pfizer to do.

    But it seems to me that they certainly could make a good faith effort to sell the complex — at a price that reflected only the value of the land. If the site failed to sell, they’d then be in a position to demand a reassessment of the value. And if that, too, failed, then it would be time to bring in the bulldozers. One way or another, though, they’d be able to avoid paying taxes on the value of the buildings.

    Pfizer will have a large, one-time restructuring charge and so they probably won’t mind writing off the value of the facility as part of that, but they won’t want to be paying millions in property taxes going forward, since the whole point is to show reduced operating costs.

    They might even try to solve the problem and end up looking like good guys by offering to donate the whole thing either to the city or the University.

       —mw    Jan. 29 '07 - 11:30PM    #
  134. I am sorry to go back to the old thread but what Karen Luck said is simply not true. If you want to see where your money goes, go to and click on Property Tax Allocation.

    As to what Pfizer will do, maybe we will hear from the folks who attended this morning’s meeting on the subject. It would be a shame if they tore down their buildings, but they have done it in Kalamazoo and elsewhere. Can they take that big a tax write-off if they donate it to the University or the City? And how would those institutions pay to maintain it?

    It’s a real dilemma, and one that I am very sorry that we must face.

       —Leah    Jan. 30 '07 - 12:08AM    #
  135. Leah,
    That’s a pretty lame response from an elected official. About 42% of the tax collected from everyone in the county goes toward public safety. And then Ypsi Township pays an additional sum to pay for 44 dedicated patrols, because these positions are not subsidized by everyone else in the county.

       —Karen Luck    Jan. 30 '07 - 12:26AM    #
  136. Karen: You continue to obfuscate. Sure Ypsi twp. has been dragged into paying a portion of the cost for their police protection, but what about the rest of us who live in places that pay for 100% of their police. Again, why should we pay for ANY of Ypsi Twps. police protection?

       —Laura B    Jan. 30 '07 - 02:28AM    #
  137. Finally, some good news! According to an announcement made this afternoon, the state’s Department of Labor and Economic Growth will provide $1 million to help retrain Pfizer workers to obtain other jobs in the state.

    Eight committees have been set up to tackle issues such as how to keep Pfizer employees in Michigan, the future of the site, and the impact of Pfizer’s departure on the community.

       —David Cahill    Jan. 30 '07 - 02:40AM    #
  138. I’m really happy for those Pfizer folks who are eager to stay in Michigan, but in terms of the bigger picture, but isn’t that sort of a shell game? More people will be unemployed, it’s just a question of which people?

       —Anna    Jan. 30 '07 - 04:13AM    #
  139. I would like to see the former Pfizer employees stay in the area, and it looks as though they wish the same. While the Pfizer offices may end up torn down, there may be a possibility of new businesses start ups, we can hope. These are people who have substantial sums that they can invest, many making over $100,000 annually. And, they have functioned in a competitive business environment for many years. I would not put the potential to start successful enterprises beyond these people, I believe they are entirely capable. It would be especially grand to see these former employees generate more jobs than Pfizer took.

    As for the property: I would really like to see it converted to some form of manufacturing. It is fairly close to a railroad, and I don’t think a spur would be cost prohibitive. But, we would definitely need to become more competitive in wages due to global competition. Michigan could pull it off, if people would be willing to work together and make compromises for the benefit of the community.


       —NorfolkSouthern    Jan. 30 '07 - 04:57AM    #
  140. I like Norfolk Southern’s idea of a manufacturing facility, which might work. I am sure that Pfizer will move the valuable lab equipment from the inside, but that leaves some pretty large square footage that could be redeveloped. I am assuming that the higher paid people will be asked to relocate – as they are of more value to the company. I worry about the lower paid people and all the ancillary businesses that may suffer.

    In the end, Pfizer is, after all, a global company that is in the business to make a profit. I don’t think they probably care all that much about our community.

       —Leah    Jan. 30 '07 - 05:47AM    #
  141. I used to work as a janitor at a university lab, Leah. It was a wet lab, very much like Pfizer has on their property. I have never seen a piece of equipment there that could not be moved with a standard dolly. In fact, the largest machinery could probably fit in the back of a standard Dodge Caravan, easily. So a relocation will be no problem. It’s not much more difficult than exporting computer programming and service jobs to India or China. You have some strong, valid points.

    The way a typical laboratory is built, the whole building is supported by its walls. There are no concrete pillars, so you can’t open up space and expect the building to support its self. It’s not much different from what you see in a medical center, or office building. So, there is little that can be done with it, except perhaps convert it to a hospital or apartments, if that even. Most of the buildings would need to be demolished and replaced with more suitable structures.

    We should not focus so much on extreme wage jobs that benefit only a few select people. That would result in a class-based society, and an increase in the number of homeless and destitute. Rather, I would like to see numerous jobs that pay modest wages, that don’t require so much training or specialized skills. Manufacturing can achieve that, as long as workers don’t expect to get paid as much as scientists or medical doctors! Quite obviously, the cost of living would have to decrease, especially housing. More modest wages, yet a greater abundance of jobs, is why the South keeps growing while Michigan continues to suffer. Are you listening, UAW?


       —NorfolkSouthern    Jan. 30 '07 - 10:18AM    #
  142. Although I would like to think that many employees will stay and possibly try to start new smaller companies, I think that the difficulty in obtaining decent medical insurance coverage at a reasonable rate will be a deterrent, especially for those with families, unless their spouse can obtain coverage at another job. It would also be difficult to attract new employees without a competitive benefit package as well, a problem that I am dealing with in the company I work for.

       —jcp2    Jan. 30 '07 - 05:05PM    #
  143. Is it too crazy to suggest that once Pfizer invests in a community, brings people into a community, puts their logo all over a community, they have some obligation besides expressing regrets and doing their best to make the “transition” as bearable as possible?

    Don’t misunderstand. Ann Arbor and the surrounding area has gained immensely from Pfizer being here. It is much better to have “received their love” than not to have been loved at all. At least, for most of us (not all of those who remade their lives to be part of it, or who established businesses on the north side near it).

    Unionized workers in Amboise, France, are not as quiet as most Pfizer employees here. Perhaps there is something appropriate to be feeling besides sad and gut-punched.


       —Harry    Jan. 31 '07 - 11:34AM    #
  144. LauraB: You continue to mislead. Ypsi township pays for all of its police services and your municipality pays for services that the county provides for your municipality. Your costs for local police are to provide services above and beyond what the county provides to everyone. The county does not provide police services equal to what a city police force does.

       —Karen Luck    Jan. 31 '07 - 07:01PM    #
  145. Please Karen, give it up.

    The county does not provide any police services in my community. We have our own police force and unlike Ypsi. Twp., make minimal use of the jail.

    Our tax dollars go to support your police services, above and beyond what we pay for our own. The people of Northfield and Pittsfield Townships and Chelsea, Milan, Ypsilanti, Saline, Manchester and A2 have been ripped off for years by a county policy that favors Ypsi Twp.

       —LauraB    Jan. 31 '07 - 07:18PM    #
  146. Harry: I think it goes beyond that. Pfizer came into A2 and bought a smaller, homegrown company that provided much of the same benefits to the community although on a smaller scale. They bought that company to get Lipitor, the number one selling drug on the planet. And now, after $10’s of billions in profits, they are throwing the community asside and leaving a big hole where the homegrown company used to be. It would have been much better if Pfizer had never come to this area at all.

       —LauraB    Jan. 31 '07 - 07:23PM    #
  147. It would have been much better if Pfizer had never come to this area at all.

    How do you figure that?

       —Bruce Fields    Jan. 31 '07 - 07:57PM    #
  148. Bruce, I assume she envisions an alternate scenario where Parke Davis had survived as an Ann Arbor-based pharmaceutical company, and never became part of Pfizer.

    I don’t know all the history, but that skips a step. I assume the thalidomide disaster made it impossible for Parke Davis to continue as a standalone company. Hence, it was acquired by Warner Lambert, which in turn was acquired by Pfizer.

    Warner Lambert was no more local or homegrown than Pfizer.

       —Larry Kestenbaum    Jan. 31 '07 - 08:03PM    #
  149. Larry,

    I am a little confused by your statement about thalidomide and Parke Davis. I don’t Parke Davis had anything to do with thalidomide. It was developed by a West German company and sold in the US by a Cincinnatti company called Richardson-Merrell.

       —Tom Brandt    Jan. 31 '07 - 08:35PM    #
  150. That should read “I don’t think Parke Davis …”

       —Tom Brandt    Jan. 31 '07 - 08:36PM    #
  151. When I’m shown to be wrong, I am willing to admit it. Just check the archives. However, in this case, if Ypsi Township were to start their own police force tomorrow, every taxpayer in the county would still have to pay to support county sheriffs.

    Detroit also has its own police force AND pays for Wayne county sheriffs as well. The vast majority of townships in our country do not have their own police force – probably because it would be economically INSANE.

       —Karen Luck    Jan. 31 '07 - 08:39PM    #
  152. Re: Pfizer buying Lipitor:

    Esperion was the local Ann Arbor biopharmaceutical company that discovered Lipitor, and Pfizer bought them in 2004 to the tune of $1.3 billion. I think that’s the company that Laura was referring to as the homegrown company.. And now Esperion is closing, too, as a part of this Pfizer pull-out. Perhaps those folks that started Esperion in the first place will break away again and stay here in town to rebuild their once successful company.

       —Lane Maiden    Jan. 31 '07 - 08:41PM    #
  153. Hmm, like I said, I’m not totally familiar with this material. It seems to me I read a long article in the Observer some years ago about the history of Parke Davis, and I thought it pointed to thalidomide as a disaster that brought it down. In any case, Parke Davis was acquired around 1970 by Warner Lambert.

       —Larry Kestenbaum    Jan. 31 '07 - 08:59PM    #
  154. A quick Google search turned up no link between Parke Davis and thalidomide.

       —Tom Brandt    Jan. 31 '07 - 09:10PM    #
  155. I think the real issue here is that it is no longer reasonable to expect that just because a company has a presence somewhere they will remain there permanently. So what if Esperion started here – why does anyone expect them to stay? The same applies to Pfizer, and more importantly to the auto industry in Michigan.

    I have seen similar things when I lived in North Carolina, when the textile and furniture manufacturers left. The era of a city or state getting permanent tax revenue and employment from a company, like the era of individuals having a single employer for their entire career or living in the same state for their entire life, is on its way out.

    The rational thing for local governments to do is to assume that these companies will not remain in place for longer than about a decade, and to lessen reliance on their tax revenue accordingly. Or we can stick our heads in the sand and then say it is “completely unexpected!” when a big employer decides to move.

       — UMP    Jan. 31 '07 - 09:11PM    #
  156. You describe a lot of the problems quite well, UMP. Ann Arbor tends to rely too much on bio-tech and services. Well, bio-tech is fast becoming the domain of Taiwan and services are making a mass exodus to India. Don’t expect medical equipment manufacturing to save us either, as the Chinese continue to become more technically advanced in that area, and there have been no new medical device factories built in the U.S. recently, that I know of.

    There are more auto workers in this country than at any time in the past. However, those factories are scattered throughout the nation. Much of that is due to the cost of labor and benefits. When workers ask for too much so they can afford that new Lexus, everybody else suffers due to the lack of jobs available. And the jobs that replace those are highly specialized and require a PHD from Harvard. Like lottery winnings, very few people win while everybody else loses.

    I am not a socialist, I support the constitution and individual rights like any other American. On the other hand, I believe that anybody who holds ANY job should be able to buy a new car and afford a decent apartment to live in, even if they work for Wal-Mart. Yes, we need to diversify, but we need to do that by bringing in more jobs that are available to the common folks!


       —NorfolkSouthern    Feb. 1 '07 - 01:12AM    #
  157. Right. Parke Davis was unrelated to thalidomide, which was withdrawn in ’61 in Europe and ’62 here. The Richardson Merrill company which only distributed it (made by Chemie Grunenthal in Germany) were also the owners of Vicks, of Vapo rub and cough drops. The Richardson family foundation, like Scaife and other right wing foundations, ended up heavily supporting Gingrich’s attempts to undo Kefauver Harris amendments which created the modern FDA and were passed only after the thalidomide disaster. Had Gingrich & Co., succeeded, as they very nearly did, it would have been “thalidomide’s revenge.” Now thalidomide is back as an apparently useful treatment for multiple myeloma, leprosy, and a few other serious illnesses. Originally, thalidomide was marketed as a tranquilizer.

    Ironically, Warner Lambert probably had the worst criminal record of any major pharm company. The Justice Dept. almost never goes after drug companies, leaving it to civil litigation and
    FDA warnings. But Warner Lambert was busted more than once—for criminal fraud cover up of repeated manufacturing defects (especially of Dilantin) for which they were eventually fined $10 million and warned many more times; and for the Neurontin off-label scam for which Pfizer ended up paying $430 million. Whether Rezulin also involved criminal fraud remains a question.


       —Harry    Feb. 1 '07 - 03:36AM    #
  158. re. message 152… wrong about Lipitor. Esperion was formed long after Lipitor was around. Esperion’s recent drug focus has been on HDL raising related stuff..

       —techweenie    Feb. 2 '07 - 06:41PM    #
  159. My mistake — “Based in Ann Arbor, MI, Esperion was founded by a group of scientists who worked on the discovery and development of Lipitor. Esperion will operate as a division of the Pfizer Global Research and Development organization, and remain in Ann Arbor.” –×98cg

    But my second statement remains valid — perhaps the folks who founded Esperion (and who were involved in the discovery/development of Lipitor) will stick around and rebuild their business here in Ann Arbor…

       —Lane Maiden    Feb. 2 '07 - 07:01PM    #
  160. A few comments:

    1) “70% will be offered employment elsewhere” – that’s entirely bogus. About 400-500 will be offered, the remaining 1900 people are on their own.

    2) AA does not have nearly enough jobs in biotech sector to retain more than ~100-150 ex-Pfizer people.

    3) Most of us will move to the greener pastures

    4) Start-ups require venture capital, angel, etc. investments – of which AA has to offer what, exactly? Most of the venture capitalists on the list at SPARK have yet to return calls and emails of the several start-up attempts I know of.

    Prepare for a lot of foreclosed properties in the AA area and for the next ~20 years of near-total biotech boycott.

       —Pfe    Feb. 5 '07 - 05:44AM    #
  161. That’s a very interesting observation, pfe. It just confirms the point that Biotech is going the way of China, India, and Taiwan. The United States excells in aerospace, and heavy manufacturing of vehicles and equipment. But in order for the jobs to come back, wages and the tax structure will have to become more competitive. Perhaps the Pfizer land can be developed into a casino if there are no other takers.


       —NorfolkSouthern    Feb. 6 '07 - 01:13AM    #
  162. The First Presbyterian Church of Ann Arbor is holding a community worship service on Wednesday, Feb. 7 at 7pm, to pray for and support all those affected by the closing of the Pfizer campus. All are welcome.

    The First Presbyterian Church is located at 1432 Washtenaw, between S. University and Hill. For more information call the church at 662-4466, or email the Rev. Melissa Ann Rogers, mrogers at

       —Tom Brandt    Feb. 6 '07 - 07:18PM    #
  163. Oh, give me a break, Norfolk — or at least stick to what topics you know something about. There was nothing in Pfe’s comments that confirm or disconfirm your completely false assertions that “biotech is going the way of China, India, and Taiwan.” The amount of new investments in just this quarter alone are in the BILLIONS in biotech in the US. To give you some data: In the third quarter of 2006 (the most recent numbers I have within arm’s reach), there was $1.1 BILLION invested by venture capitalists in biotech companies (out of a total of $6.2 billion, other sectors include IT). Biotech venture funds typically return an average of over 12% per year, meaning new companies are created and acquired in biotech all the time. Biotech funds tend to invest locally, because oversight of portfolio companies is difficult from afar, so almost all of that single-quarter $1.1 billion is being invested here in the US, not in Taiwan. The fact is, Michigan just isn’t a real hotbed of biotech activity compared to a lot of places in the country. That does not mean biotech is going overseas.

       —Anna    Feb. 6 '07 - 07:24PM    #
  164. NorfolkSouthern – I work nearby the Pfizer facility. Just what railroad are you speaking of in #139? A spur cutting across neighborhoods and Plymouth Rd would be rather costly. See for yourselves.


    peace&pizza -rs

       —robert s.    Feb. 7 '07 - 02:56AM    #
  165. I hate to admit, that you do have a point, Robert S. Unfortunately, I suppose they would have to convert some of Huron Parkway to railroad use, and then link it up to the Great Lakes Central spur, north of the Ann Arbor Railroad. Providing that there was a large enough manufacturer to move in. The worst part of this, is that there are many other industrial areas that have fallen into disuse, so it most likely is not practical.

    Here is part of what gives me the idea about countries like Taiwan, Singapore, and so forth:


    Many folks are optimistic about the new bio-tech industry taking over the rust belt. While it may be the “next big thing”, the need to be competitive is still there. Does Ann Arbor really stand a good chance of leading the bio-tech industry? Well, I don’t know. I just know what everybody else does: that Pfizer is leaving and somehow, we all hope the gap can be filled. We will have to wait and see.


       —NorfolkSouthern    Feb. 7 '07 - 03:51PM    #
  166. NS – I agree with you that it’s never good to rely on just one industry. If you look at Tiawan’s numbers, though, you can see that they are tiny compared to ours — Their growth target by 2010 is $4.5 billion, and our biotech industry grows by more than that each quarter. The big pharaceuticals are very visible, but there are over 4,000 pharma companies that do no manufacturing, many of which do very well.

    Ann Arbor doesn’t really have a very good chance of being a leader in biotech, but it may have a chance of having a piece of the pie. That will only happen with some government intervention to get the ball rolling because there’s a major chicken-and-egg problem — few local entrepreneurs lead to few local venture capitalists and few venture capitalists lead to few entrepreneurs. It’s pretty much impossible to get a biotech venture going without VC money because they are very capital intensive.

    Entrepreneurship is something that America does very well, and I think it’s the best chance for most of the economy, so it should be encouraged in all its forms (biotech, restaurants, software, financial services, whatever). If I were making public policy in Michigan, I’d look to NCIDEA as an example of a very successful non-profit economic stimulus organization.

       —Anna    Feb. 7 '07 - 07:00PM    #
  167. Anna (or anyone), is there a distinction between biotech and pharma? Or are the two terms used interchangeably for the same industry?

       —Tom Brandt    Feb. 7 '07 - 09:37PM    #
  168. Depends on who you’re talking to… biotech really is sort of the superordinate category. There are things that we would probably think of as pharma that aren’t (e.g., tests for diseases) and biotech also sometimes includes things like farming products and technologies like IVF. If you’re talking to people who are investing in new companies, they tend to split the world into just a few categories — life sciences (including pharma, medical devices, other biotech products and processes), tech (including internet and software and everything else) and services (which would include marketing, consulting companies, banking, etc.). So, I guess to answer your question, most people use the terms interchangeably.

       —Anna    Feb. 7 '07 - 11:30PM    #
  169. The good news now, is that it doesn’t look like the buildings will be demolished. Rather, there is talk about mixed-use of the facility by several non-profit organizations, developers, and Pfizer employees. Maybe there’s less to worry about than originally anticipated. Here’s the link to a recent article:


       —NorfolkSouthern    Feb. 17 '07 - 05:51AM    #
  170. The News reports that the University of Michigan announced Thursday that it is donating $1 million to “attract and retain” Pfizer scientists as UM employees. In addition, they have also allocated funding to help Pfizer scientists become teachers.

       —Juliew    Mar. 10 '07 - 12:58AM    #
  171. I think it was $1 million per year for three years, which is even better!

       —David Cahill    Mar. 10 '07 - 05:48PM    #
  172. Nobody responded to the person that wrote let’s turn Ann Arbor into a U.S. Amsterdam , I assume that besides a marijaunna culture thats been here that would include prostitution and other vices . Actually that has gone on forever here underground we might as well bring it to the surface . The FBI busted massage parlors here over and over the past several decades . Am I the only one that remembers 4th aveneue or has been privy to what slides through at the Campus Inn around the Athletic Teams put up there ? We have always had prostitution but off the streets out of the publics eye yet accessible . Massage Parlours , Nude modeling , Escort Services . We all know about the drug culture here .

    Could a up front Amsterdam situation build up the economy absolutely . This has been seen in parts of Canada as well that adopted enclaves of saftey besides in the U.K. .Is it acceptable or moral …I find problems with some of it myself and I am pretty liberal .

    However could it ever happen in the USA in current times NO absolutely not were not free to make that choice . We cannot even get Bayers Sativex in fast track trials …while most of the World has already accepted it as a benificial drug the US is allowing trials only in patients certified to have 6 months or less to live and stalling it merciously the first will not conclude until late 2008 and are for a minute fraction of the populations that could benifit . Its pure discrimination against the substance period the results are good for many . It’s a weed that grows along the railroad tracks from Chicago to Detroit still from workers in the 70’s cleaning seeds .

    It does help certain people yet we dump dangerous opiates and anti depressants into them while not even having appropriate detox facilities that return unfortunate’s to sanity . Methadone is a life long answer to a real problem of illegal herion or perscription opiate use which in some individuals that for unknown reasons can cause dependancy so severe insanity and or death occurs if they go off . We basically create these individuals now and abandon them as cured after 7 days of treatment saying if their not normal they must of been mentaly defective . No matter if they were fine before being placed on these drugs proven to kill and cause insanity for as long as man has manafactured them .

    I am all for Ann Arbor becoming a Amsterdam to challange what goes on elseware and common thoughts today in across the nation . “ Refer Madness “ was a joke that backfired on Goverment and in it’s place we now have society percribing yet not even recognize opitates kill and pot does not yet . We literly kill people with ridiculous policy of precribing out of sympathy for pain but do not build back up a sanatarium sytem to do it responsibly . I never saw a person beg on their knees if they couldnt get pot . I have seen them sell their souls and bodies for opiates .

    Ann Arbor is a Amsterdam of sorts with a underground economy and always has been . Bringing it to the surface would be benificial but no it will never happen . The fact nobody would even respond proves it ..any sane person would be scared too and yes I was .

    I live in Ann Arbor and hold quite a bit of PFE stock and thus was on this thread . I deplore what passes for safe “drugs” in this country without question or support to correct damage from them when and if it occurs .I find fault with our war on illegal drugs is the real key not constricting supply to create a enviroment more profitable for illegal activity in substances that basically have nil cost otherwise . The money should be spent on education and real inpatient treatment not incarceration , and a system of profit for criminals and law enforcement . Yes they both benifit under the current corrupt policy .

    I deplore cancer and aids patients in areas States have declared legal are arrested and accosted by federal agents for trying to use a weed to ease their suffering and instead are pushed into much more dangerous medications often with unknown consequences for decades .

    If it was up to me the facility would become a grow house for patients all over the United States or a facility for Bayers Sativex a drug that has immense benifits for MS , Aides ,Cancer and severe chronic pain patients as well as many others .

    In recent years the U of M has been open to Chinese herbal and Naturapathic medicine . I am sure people find what I have written very offensive though I do not wish it to be . However if you throw out that and just key in on the Herbal , supplemental , Naturapathic medicine area’s wouldn’t it be wonderful to see the facility be used for that similar to the corridor for that type of thinking in Mesa Az .

    For the “ Freedom Fighters “ if that is the type of person this individual spoke too their best bet is to live in Ohio which amazingly has the most lenient law in the country on marijaunna . Canada has and now even Mexico talk’s of Amsterdam type zones . Ann Arbor and Madison are no longer as tolerant your better off out west if you want that kind of University Town attitude .We are not free . You want to talk about culture shock . I was on a Russian site the otherday they were showing pictures of Detroit where I grew up as a child . The article stated how we had fallen so far behind the rest of the world . How democracy never works once the voters comprehend all they have to do is vote themselves entitlements . They showed Detroit and its abandoned schools , factories and home as proof of the imminent decline and fall of the United States of America . Scarey ..truly scarey . Lets bring some solid blue collar jobs back to Ann Arbor somehow we have enough service sector employment . Let’s rethink our drug policies and especially lets be open minded in them towards our sick and suffering yet responsible .

       —NeverInAmerica    Mar. 24 '07 - 08:48PM    #