Good news for Ann Arbor

Happy New Year! I need to make a resolution to blog more frequently!

I saw this encouraging article in the Detroit Free Press. Since the media continues to paint mostly doom and gloom, it's refreshing to see something optimistic. Here it is! Make sure you make it down to the good news in green!

January 21, 2008
BY KATHERINE YUNG
FREE PRESS BUSINESS WRITER
Part of an occasional series on Michigan's journey to economic change.
Nearly a year after Pfizer Inc. announced the shutdown of its massive Ann Arbor research campus -- a move that Gov. Jennifer Granholm called a "punch in the gut" -- a surprising turn of events has occurred amid the misfortune and uncertainty.
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Economic development officials have already offset the lost jobs with new ones to be added over the next 18 to 24 months.
Some of the 2,100 ex-Pfizer workers chose to stay in the area and are taking the entrepreneurial route, forming start-up companies or joining small firms.
And despite their lack of experience handling a sudden economic crisis, community and business leaders came together like never before to respond.
An affluent community of 113,206, Ann Arbor has learned a valuable lesson the past 12 months: No longer can it afford to be complacent about its economic prospects.
"We are no different from the rest of the state," said Michael Finney, president of Ann Arbor SPARK, the area's economic development group. "We have to be very proactive."
This kind of attitude speaks volumes about the types of changes taking place in Michigan as its economy adjusts to the challenges of a rapidly globalizing world. What's happened in Ann Arbor over the last year shows that it's possible to overcome some of the negative effects of economic forces that governments and communities can't control.
While factory closings have become commonplace, it's rare to see longtime research and development centers get the ax. The news on Jan. 22, 2007, that hundreds of scientists, researchers and other professional and technical workers would no longer have jobs rocked this college town.
Nobody saw it coming.
"We used to be able to say, 'We've got the University of Michigan and Pfizer.' You can't say that anymore," said Jim Carey, a realty agent at University GMAC Real Estate and the president of the Ann Arbor Area Board of Realtors.
Of the 2,100 Pfizer employees, 850 accepted offers to move to other Pfizer locations. Only 35 to 40 of these people landed new jobs at the company's remaining Michigan operations in Kalamazoo.
How many of the rest of the workers stayed in Michigan remains unclear. Feelings of bitterness still linger as evidenced by an anti-Pfizer video making the rounds among ex-employees.
But to a large degree, the worry and fear sparked by Pfizer's pullout has given way to a kind of cautious optimism that things won't turn out as badly as feared.
'I'm really hopeful'
A year later, the job fairs have ended and the number of online resume postings has dwindled. Though some ex-Pfizer workers are still searching for work, many have found new employment.
Even the businesses on Plymouth Road near the drug giant's campus have learned how to survive the turmoil. Though the Holiday Inn fills fewer rooms these days, the hotel has been able to charge higher rates to offset the decline.
At Crown House of Gifts, foot traffic is slower at noon and at the end of the workday, but sales haven't dropped thanks in part to the addition of new merchandise.
"I'm really hopeful," said manager Margaret Leftridge.
To be sure, there have been problems.
The large number of job transfers depressed what was already a weakening market for home sales. Pfizer offered generous moving allowances so people could afford to sell their houses at a loss.
Last year, the average sale price for a home in the area fell 3.3% to $250,286. And the number of homes and condominiums sold tumbled 9.4%, according to the Ann Arbor Area Board of Realtors.
Local charities have also felt the reverberations.
They are bracing for lean times since Pfizer and its employees regularly donated hundreds of thousands of dollars, not to mention untold hours of volunteer work.
"If I think about the impact, it makes me crazy so I try not to think about it," said Sandy Rupp, president of the United Way of Washtenaw County, which overhauled its operations to cope with the situation. "Pfizer was like an anchor to the community."
'You can't look back'
The city is still anxiously waiting to see what happens to the pharmaceutical company's 177-acre campus, which is about the size of its downtown. The complex will remain open through the end of the year and currently employs 350 workers, most of them scientists.
Pfizer hired the Staubach Co. to sell the 2-million-square-foot site. It's launched a global marketing campaign using the Internet, direct mail and telephone calls.
"Requests for information about the site have run the gamut, from leasing to buying all or part" of it, said Pfizer spokesman Richard Chambers. "It's too soon to say whether any of these might pan out."
Despite the uncertainty, Ann Arbor has fared better than many less economically diverse cities in similar straits. Its November unemployment rate of 4.7% is up slightly from a year ago but remains the lowest in the state.
The city expects new cost-saving efficiencies in its operations to offset lost tax revenues this year of $500,000 to $1 million dollars, said Mayor John Hieftje.
"We certainly felt it, but it hasn't turned out to be the worst case that we envisioned," he said.
And while Pfizer moves out, other companies are coming in, though on a much smaller scale. Last year, the city got an unexpected boost when Grupo Aernnova, which designs and makes aircraft parts, announced plans to hire 600 engineers and other workers at a new engineering center in nearby Pittsfield Township.
The Spain-based company was one of six new employers headed for the Ann Arbor area last year. Several local companies are also undergoing significant expansions. The moves should generate 2,200 jobs over the next 18 to 24 months, according to Ann Arbor SPARK.
Pfizer's departure even resulted in a few pharmaceutical contract research firms setting up offices in the city, lured by the sudden availability of thousands of talented scientists.
One of these companies, RTI International, a nonprofit research institute based in Research Triangle Park, N.C., hired Kati Copley-Merriman and six of her colleagues from Pfizer's global outcomes research department. Though Pfizer offered job transfers to everyone in the group, none wanted to leave Ann Arbor.
"We're just trying to make this work and look forward," said Copley-Merriman, who worked at the Plymouth Road campus for a decade. "You can't look back."
Another company, United BioSource Corp., also opened an office in the city in September at a site formerly leased by Pfizer. The pharmaceutical services firm, based in Bethesda, Md., snapped up 14 ex-Pfizer statisticians, medical writers, clinical programmers and others.
It's looking for clinical programmers and statisticians, with plans to expand from 16 employees today to 50 by 2010, said Barbara Withers, the company's Ann Arbor site manager and project director.
'A sense of ownership'
The ripple effects from Pfizer's closing, though, went way beyond these kinds of gains. Workers who didn't leave are helping to remake the region's business landscape.
A number of them have launched their own companies. Ann Arbor SPARK helped 23 of these firms last year.
One of them, AlphaCore Pharma LLC, formed in June. Founders Bruce Auerbach, Reynold Homan and Brian Krause hope to develop a drug for heart attack victims that will remove the bad form of cholesterol. They just got approval to license a patent owned by the National Institutes of Health.
Auerbach, AlphaCore's president, had tried to do something similar while at Pfizer, but his efforts never gained traction.
The three men have known each other since 1990 when they all worked at the Plymouth Road campus, then owned by Parke-Davis. Several years ago, Homan and Krause joined Esperion Therapeutics Inc., an Ann Arbor developer of cholesterol drugs. Pfizer wound up acquiring the company, but closed it last year.
Armed with severance and early retirement packages plus the proceeds from Esperion's initial public offering in 2000, the trio decided to strike out on their own.
They soon discovered that despite their wealth of scientific expertise, they had no idea how to write a business plan or apply for government grants. So they got help, from Ann Arbor SPARK and a local company called Biotechnology Business Consultants.
Today, the group meets regularly in the basement of Auerbach's home in a quiet northeast Ann Arbor neighborhood. Gone are the days when they worked in beautiful, modern laboratories and offices, regularly interacting with other scientific minds.
But for the first time in their careers, no one is going to interfere with their plans or say "no." And the lengthy reviews that used to delay their work don't exist anymore.
"The bigger the company, the more risk-averse they are," said Krause, AlphaCore's chief scientific officer. "We are working on something I don't think Pfizer would let us work on."
SensiGen LLC, an Ann Arbor biotech company, has benefited from the Pfizer shutdown. It is developing diagnostic kits to help researchers quickly detect cervical cancer, kidney disease and lupus.
Last year, the start-up company began leasing a specialized lab formerly occupied by Pfizer for a fraction of the normal cost, thanks to efforts by Pfizer, Ann Arbor SPARK and the University of Michigan.
The company plans to hire six ex-Pfizer scientists by year's end, aided in part by a low-interest loan from the state. It hopes to pick up some equipment Pfizer no longer needs.
It also hired Tom Goodman, a 50-year-old former Pfizer scientist. He took a pay cut and can no longer tap into big budgets for his research. But he now enjoys working with fewer than a dozen people rather than being one among thousands at Pfizer.
"You know very much what you do has an impact," said Goodman, who spent 21 years working for first the Upjohn Co. and then Pfizer. "You have much more of a sense of ownership."
Contact KATHERINE YUNG at 313-222-8763.
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