Georgia’s workforce training program and the potential for $78 million in state incentives helped convince a global medical company to pick a site east of Atlanta for a $1 billion bio-pharmaceutical manufacturing plant.
Baxter International announced its plans Thursday, saying the plant will employ 1,500 people when it is operational by 2018.
The deal is the latest in a string of economic development coups for Georgia and marks a milestone in efforts to build up its biosciences industry.
“It will be one of the larger if not the largest expansion of our bioscience-type industries in our state,” Gov. Nathan Deal said. “It will actually be second only to Kia in terms of initial job creation.”
The plant, to be built off I-20 near Covington, will make plasma-based treatments for patients with immune deficiencies, burns and other ailments.
As part of the deal, Illinois-based Baxter could qualify for state incentives that draw from different pots.
Roughly $32 million would come from job tax credits that depend on jobs actually being created and a variety of factors such as salaries and a county’s unemployment rate. Baxter could also qualify for an estimated $32 million in savings from a sales tax exemption on machinery and equipment plus construction materials included in a new tax law.
Another $13.75 million grant comes from the OneGeorgia discretionary fund.
The Baxter announcement comes on the heels of another major jobs announcement in February. Heavy equipment maker Caterpillar has started work on a manufacturing facility near Athens that would create 1,400 jobs. The company could receive roughly $75 million in state and local incentives.
Georgia’s workforce training program, Quick Start, and extensive university system also gave the state an edge over competitors in Baxter’s decision, said Ludwig Hantson, the company’s global president for bioscience.
“It always starts with the people,” Hantson said. “The workforce will define the success.”
The company will need a range of employees and experience levels, from high school graduates to those with advanced degrees. Its work involves complex manufacturing, and engineers will be needed almost immediately, said Julie Kim, Baxter’s general manager of bio-therapeutics.
Quick Start proved its worth with Korean automaker Kia, which needed 3,000 workers for its West Georgia auto plant, said Chris Cummiskey, the state’s economic development commissioner. Part of the Technical College System of Georgia, Quick Start provides free training and recruitment for employees to be hired by new companies coming to the state.
“Quick Start has never failed,” Cummiskey said. “I don’t expect them to now.”
Baxter could qualify for tax breaks under new legislation signed into law Thursday by Deal. The law eliminates the sales tax on energy used in manufacturing as well as for construction materials for building the facility.
The company was one of the state’s targets in pushing for those tax breaks, Cummiskey said.
Construction on the plant will begin this year with the first building ready by 2015, Hantson said. It will be fully operational by 2018 -- a time frame that allows for inspection and approval by the Food & Drug Administration as well as by similar agencies in other countries.
Roger Tutterow, an economics professor at Mercer University, said the economic boost is enhanced because Baxter makes products sold around the nation and world. That’s different from the construction, finance and retail industries that have long propelled Georgia’s economy, he said.
“To some degree, we’re just kind of shuffling the dollars around among friends,” he said. A company that sells products all over the world “is bringing that buying power back into the state.”
Tutterow said the deal is a big symbolic win for Georgia, which has lagged competing states in building its bioscience industry.
Georgia has 320 small to mid-sized firms, and Dendreon Corp. is building a large drug plant in south metro Atlanta. Baxter pushes the state to a new level, Cummiskey said. North Carolina with its research triangle has long had a niche in the bioscience market and was likely a big competitor for the Baxter deal, he said.
“I think we were aggressive on this one,” he said.
A study last year by Georgia Bio and the University of Georgia’s Selig Center for Economic Growth found that the combined economic impact of the life sciences industry, university research and the U.S. Centers for Disease Control and Prevention was $23 billion annually, and that the sector employs more than 100,000 Georgians.
The sector’s employment has increased slightly over the past few years even as Georgia has logged a higher jobless rate than the nation.
Life sciences jobs pay on average about $64,500 annually, about 50 percent higher than the state average for all sectors.
“Every state is competing for a life sciences sector, and competing for companies like Baxter,” Craig said.
Baxter makes niche products used in virtually every hospital in the nation, said Kathryn Momary, an assistant professor at Mercer University’s College of Pharmacy and Health Sciences. The company has more than 48,000 workers worldwide with sales of $13.9 billion last year.
“Very few [companies] make these plasma-based products,” she said. “They make these products well and they have a great reputation in the hospital community.”
Baxter sees growing demand for treatment products like the ones it will make in Georgia, Hantson said. The company could later expand on the 160-acre Covington site.
“This is about helping patients in need,” he said. “This is about saving lives and sustaining lives.”
-- J. Scott Trubey contributed to this article
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