HandyLab closing Pittsfield Township office after $275M acquisition in 2009
(Note: This story has been updated several times with additional information and interviews.)
Becton, Dickinson and Co., a New Jersey-based global medical devices manufacturer, is closing its Pittsfield Township office after paying $275 million last year for the University of Michigan spinoff firm HandyLab, a spokeswoman confirmed this afternoon.
BD plans to shutter the HandyLab office by July 2011 and consolidate manufacturing of HandyLab's rapid detection infection device at a facility in Maryland, BD spokeswoman Colleen White said.
The future of the company's 50 local employees is unclear, though BD won't have employees in this area.
Former HandyLab CEO Jeff Williams, who left the company a few months after its $275 million sale late last year, is shown here in 2007 with the startup's rapid detection-infection system.
File photo | AnnArbor.com
"There will be an impact," White said, declining to offer specifics about whether they would be offered severance packages or buyouts. "Basically it’s a difficult but necessary business decision, and there are significant expenses associated with maintaining a separate manufacturing facility."
The company still considers HandyLab's technology very promising, White said.
HandyLab was held up as an example of the momentum of the Ann Arbor region's technology community, and its closure is an economic and emotional blow.
The Michigan Economic Development Corp., which gave a $672,000 tax credit to HandyLab in August 2007 on a promise to add 56 jobs and invest $3 million over several years, called the company a Michigan "success story."
The company's exodus from Michigan is also sure to turn into an issue in Michigan's gubernatorial campaign.
GOP candidate and Ann Arbor venture capitalist Rick Snyder was chairman of HandyLab when the company was sold to BD, though he left the company after its sale. On his campaign website, Snyder lists HandyLab as an example of how he's a "job creator."
"The thing that shocked Rick the most was, had he still been an owner of this company, the company would still be here," Snyder campaign spokesman Bill Nowling said. "That said, this illustrates just how tough the economy is here in Michigan. We’re making it easy for businesses in other states to argue that the businesses should go elsewhere, and we need to change that."
Cullen Schwarz, a spokesman for Democratic gubernatorial candidate Virg Bernero, suggested that HandyLab's exodus should not come as a surprise.
"Snyder's whole campaign is based on the fact that he's a business man, but his businesses end up eliminating jobs, not creating them," Schwarz said in an e-mail. "He brags about Gateway and HandyLab, but each ended up laying people off while making him rich. Somehow Mr. Snyder always manages to make himself money while leaving laid off and outsourced workers in his wake."
HandyLab has two years left on a lease for 22,000 square feet at a facility at 5230 S. State St. The company had added 4,500 square feet of space just seven months before its sale in late 2009.
BD's departure is catching the Ann Arbor business community off guard.
"It’s an unfortunate and disappointing turn of events," said Stephen Rapundalo, executive director of MichBio, the state's life sciences association, and an Ann Arbor City Council member. "I recognize that all companies need to make decisions that are in their own best corporate interests. But clearly there was a good set of expert talent here and certainly I think the atmosphere for expansion and building the franchise here further was quite high."
Former HandyLab CEO Jeff Williams, who built HandyLab into the company it became and left to become CEO of Scio Township-based Accuri Cytometers in January, said he hadn't heard anything.
"Last I heard everything was going well, they were adding people and everything was going great," Williams said. "They have to do what they think is right for their business. They own the business, they bought it, and they the make the decision that’s appropriate for their shareholders. That’s part of capitalism.
"I hope that the employees of HandyLab go on to start the next tech company in Ann Arbor. That’s how we grow a technology (industry)."
The company's sale was a big win for the Michigan venture capital community. Ann Arbor VC firms EDF Ventures, Arboretum Ventures, the student-run Wolverine Venture Fund and Ardesta, which Snyder co-founded, financed the company before outside investors came along.
The sale of Ann Arbor startup companies to large outside corporations has had an uneven effect on the community over the years.
The community benefits when an outside company acquires a local startup and decides to invest in its growth. That's what happened when U-M startup HealthMedia, another one of Snyder's investments, was sold to Johnson & Johnson in 2008.
But sometimes outside corporations buy up startups and consolidate jobs and offices elsewhere. That's what's happening here.
BD (NYSE: BDX) has some 29,000 full-time employees and annual revenue of $7.54 billion, according to Yahoo! Finance.
Calls placed this afternoon to HandyLab's offices and its co-founder, Kaylan Handique, were not immediately returned.
Rapundalo said he was hopeful that the Ann Arbor region would "retain the talent and have them end up at other area companies."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Michisbest
Thu, Oct 7, 2010 : 4:22 p.m.
Sounds like UNI Solar in Auburn Hills after Granholm and all showed up for a photo op and gave them a bunch of money they are pulling up and moving to Mexico. Maybe she should have given a loan to that guy in Flint at least he may blown the money in Michigan.
Nathan Bomey
Thu, Oct 7, 2010 : 11:08 a.m.
In case you missed it, here's our follow-up story focusing specifically on the political implications of this news: http://www.annarbor.com/business-review/handylabs-demise-in-ann-arbor-october-campaign-issue-for-rick-snyder/
Bob Martel
Thu, Oct 7, 2010 : 10:47 a.m.
Thanks, Nathan for the explanation on how those tax credits work. For once "the system" seems to make sense.
Nathan Bomey
Thu, Oct 7, 2010 : 8:47 a.m.
A few people have asked about HandyLab's MEGA tax credit from the MEDC. Here's how it works: The credit reduces the amount of taxes the company owes based specifically on how many new people it hires each year. So, for the years prior to the company's departure, HandyLab has had some taxes reduced due to the jobs its added in Pittsfield Township. Those reduced taxes will not be refunded to the state. However, moving forward, HandyLab will not receive reduced taxes after it leaves Pittsfield, since the company will no longer be adding jobs here. Hope that helps explain it. In effect, the tax credit expires because the company is leaving, but previously reduced taxes will not be refunded to the state.
golfbum
Thu, Oct 7, 2010 : 4:37 a.m.
What happened to the $672,000 tax credit to HandyLab in August 2007?
Peregrine
Thu, Oct 7, 2010 : 12:45 a.m.
If Rick Snyder's focus were really creating jobs, he wouldn't have sold the company but instead built it up in SE Michigan. But jobs were never his focus. His focus was on making money. The jobs were simply a means to his making money. He sold the company sold and quickly walked away, cash in hand. And as for those who say the problem was the business or economic climate in Michigan, the article clearly states it was a consolidation move. It's cheaper to run one facility than two, and their Diagnostic Systems division is headquartered in Sparks, Maryland.
DonBee
Wed, Oct 6, 2010 : 10:05 p.m.
Think back to the mid-1980's there was a large startup in Ann Arbor called Irwin Magnetics. It had over 300 employees all of whom would not have had jobs if it had not been started. Herb Amster and the board decided to sell the company and in a few months it was all but gone from Ann Arbor. I can point to at least 2 dozen other companies that started here and were bought and moved. The good news this time is the founder and key brain in the organization already has a new start up. I suspect that a number of the people who are at HandyLab will land at the new company. In a couple of years the cycle will repeat if they are lucky =OR= we change the business environment. I still don't see a leader in either candidate. Virg was pandering in Detroit today on the Promise Scholarship - where is he going to find the money? More taxes? From 8th to 37th in personal income in less than a decade. How long can we live with a divided broken state? We need a united government regardless of party to make the hard choices and fix this state. None of the candidates from any party strike me as the person to do that.
Seasoned Cit
Wed, Oct 6, 2010 : 10:01 p.m.
If Michigan had a better climate for business...BD might have moved their other manufacturing TO Ann Arbor vs moving the HandyLab production to Maryland. That's what Snyder has been trying to preach, fixing the business taxes in Michigan is critical to not only getting new wave companies started but most importantly keeping them here. Small companies being bought or absorbed by larger.. commonly move more often than not... and for anyone to claim that the people that grew them to the stage where they could be sold did something wrong 'cause the buyer moves them out.. doesn't understand what's normal business. It was trying to keep board and stockholders happy that resulted in Pfizer moving away.. again a business decision. Before blaming SPARK and local govt for the tax breaks given to Handylab, has anyone asked if there were any conditions added when the breaks were offered.. such as staying in the area as well as hiring the projected number of employee's? There is always the option of granting tax refunds like the State is doing for the Film industry.. which has created lots of new film activity..but I believe the State's own figures show that the film related income and Michigan jobs are not there and the we're really paying Hollywood to come.. vs making any positive cash flows. Doesn't make economic sense.. just like the $200,000/ job spent on the west side of the state by the Feds and praised by the President.
calmic
Wed, Oct 6, 2010 : 9:31 p.m.
"The Michigan Economic Development Corp., which gave a $672,000 tax credit to HandyLab in August 2007 on a promise to add 56 jobs and invest $3 million over several years, called the company a Michigan "success story."" I wonder whether the MEDC can recover any of the tax credit not that the jobs are gone?
Cash
Wed, Oct 6, 2010 : 7:13 p.m.
Nathan Bomey, Thanks!!
Ann Arbor Tom
Wed, Oct 6, 2010 : 7:10 p.m.
When I learned of Becton-Dickinson's purchase of Handylab, memories of this same conglomerate's purchase of Difco a few years earlier sent cold chills through me. And now, here we go again.... MORE Michigan jobs lost! Thanks for nothing, B-D! I'll be sure and avoid purchasing any of your products whenever I can.
Bob Martel
Wed, Oct 6, 2010 : 6:39 p.m.
Just another example of a local start up being acquired by an out of state company with a lot of fanfare, initial promises of "no changes in operations, no layoffs, no moving out of state, blah, blah, blah" and accolades of how great the Ann Arbor area is for start-ups, blah, blah, blah. And of course, throw in a few tax credits for good measure. Then eighteen months to a couple of years later, boom, the company is moved out of state. This is not unique and has NOTHING to do with Rick Snyder. It's been going on for at least the 30 plus years that I've lived in this community. We need to carefully analyze this phenomena and figure out what we can do to avoid it. This does not happen in Boston Massachusetts, Research Park, North Carolina, etc, etc, etc... Otherwise, all Ann Arbor will ever be is the Farm Team for the successful communities.
Nathan Bomey
Wed, Oct 6, 2010 : 6:12 p.m.
@Cash, I contacted the Bernero campaign by phone and e-mail about 2 hours ago. I just received a response minutes ago and will be adding shortly. As you can imagine, the campaigns are quite busy and it can take time to get responses. Thanks for reading.
Cash
Wed, Oct 6, 2010 : 5:42 p.m.
Nathan Bomey, Why am I not surprised that you went to Snyder's campaign to ask for his opinion/story. Maybe now you should go to Bernero's campaign and ask what he knows about this, eh? That might be in keeping with a balanced story. Because you are neutral right?
Basic Bob
Wed, Oct 6, 2010 : 5:36 p.m.
So B-D moved the products out of state. They did not take anyone's brain with them. That is the real asset. As long as another venture capitalist is willing to put these folks to work again, they will create a new business. If nobody puts them to work, well they will all go out of state and find jobs. Then WE have lost it all. There's also a chance B-D won't know what to do with their orphaned products and have to contract out for services to the same people they just axed.
Lets Get Real
Wed, Oct 6, 2010 : 5:20 p.m.
Let's Get Real here about this whole process. Snyder helped to start a company in Michigan that provided jobs. He help grow it to a point where a bigger company wanted to acquire it - was given tax credits to stay here, and there for said they would stay - hence Snyder's comments. Any speculation here that once they took over, the Big Company saw the oppressive business climate here and began crunching numbers to determine where they would get the best return on their investment? Any speculation it wasn't in Michigan? Gee, is this a surprise? Have we seen this before? Snyder didn't drive this business out; the current policies and economic climate did. Change those policies, and our economic future will be brighter. That's for Real.
Nathan Bomey
Wed, Oct 6, 2010 : 5:09 p.m.
Just spoke with Snyder's spokesman and added this to the story: "The thing that shocked Rick the most was, had he still been an owner of this company, the company would still be here," Snyder campaign spokesman Bill Nowling said. "That said, this illustrates just how tough the economy is here in Michigan. Were making it easy for businesses in other states to argue that the businesses should go elsewhere, and we need to change that."
Somewhat Concerned
Wed, Oct 6, 2010 : 5:03 p.m.
Neither Snyder nor anyone else on the board of HandyLab at the time it was sold have anything to do with the decision by the buyer to move the facility. All they did was build a company that wouldn't have existed at all.
Cash
Wed, Oct 6, 2010 : 4:30 p.m.
The only people "crowing" about this are the people who took the sale money....and ran.
javajolt1
Wed, Oct 6, 2010 : 4:01 p.m.
Look. It's not really Snyder's fault BD is consolidating and pulling out of Michigan. It's a business decision and part of the M & A process. Period. The silly thing is it was Snyder that crowed about them staying on his website "...Not only is Handylab staying in Michigan..." If you're a big man in business, you might not want to say something like this because you've seen a hundred companies acquire another business, consolidate resources and move. That's a reckless claim for a nerd to make. Now he has to take it back ans look a little silly in the process. So much for "inside" information!
FeatOfClay
Wed, Oct 6, 2010 : 3:58 p.m.
This is a loss to SE Michigan. I'm a little perplexed as to why people are crowing about it. Sure, it appears to have caught Rick Snyder unawares, and maybe it does make for a little egg on his face. But he's far from the only entity who boasted about HandyLab as a success story for job creation in MI. I'll bet SPARK and U-M, among others, are making similar adjustments to their PR stories about HandyLab. Optimistically you hope that the staff will, as said above, go on to create other SE Michigan successes. Hopefully their experience in taking a company from startup to acquisition will be helpful in other entrepreneurial ventures, ones that will not only create wealth for a lucky few but will also lead to long-term jobs right here in our community.
Cash
Wed, Oct 6, 2010 : 3:46 p.m.
@tdw, Well, it hasn't touched him, has it? After being CEO, he sells it and walks away. In less than a year the company is gone out of Michigan. And he is smiling all the way to the bank while 50 people are out of work. Sound familiar?
tdw
Wed, Oct 6, 2010 : 3:43 p.m.
Well, let the blame of Snyder begin.Perhaps if Michigan did'nt make it so hard on companies to do business they would'nt be leaving
Cash
Wed, Oct 6, 2010 : 3:20 p.m.
http://www.rickformichigan.com/meet-rick/job-creator Here is the link for Mr Snyder's brag about creating Michigan jobs and how HandyLabs will stay in Michigan.
javajolt1
Wed, Oct 6, 2010 : 3:20 p.m.
It will be interesting to start the stopwatch and see how long it takes RICKFORMICHIGAN.COM to modify or remove this apparently overly optimistic forecast! The clock is starting.......NOW!
Cash
Wed, Oct 6, 2010 : 3:15 p.m.
From RickforMichigan.com: 'HandyLab, in which Ricks company was an early investor, and for which Rick was board chairman, makes revolutionary medical diagnostic testing equipment and currently employs around 50 Michiganders. The company was recently acquired by Becton, Dickenson and Company (BD), a $6 billion medical equipment company. Not only is HandyLab staying in Michigan, but BD announced in a press release that HandyLabs novel platform will allow further expansion of the BD molecular diagnostic menu. ' Incorrect, Mr Snyder, the job creator for Michigan.
Nathan Bomey
Wed, Oct 6, 2010 : 3:13 p.m.
That's supposed to be BD -- already fixed it. Thanks.
Cash
Wed, Oct 6, 2010 : 3:09 p.m.
"GOP candidate and Ann Arbor venture capitalist Rick Snyder was the chairman of HandyLab when the company was sold to HandyLab, though he left the company after its sale." I'm confused.