Tuesday, September 16, 2008

Napa leaders begin exploring response to Dey’s planned exit

Napa leaders begin exploring response to Dey’s planned exit
Monday, September 15, 2008

NAPA – Napa business and government leaders are scrambling to respond to the closure within two years or sooner of Dey Laboratories’ 540-employee campus.

Following the layoffs at Queen of the Valley Hospital and the imminent closure of the Napa Mervyn’s, last week’s announcement stunned the business community.

Of huge concern is finding another use for the Dey facility, which was developed for and by Dey and has never been on the commercial market.

“We’re in meetings and discussions,” said Napa City Manager Mike Parness. “We’re putting out feelers and talking with brokers.”

Napa had been intending to sharpen its focus on filling commercial developments downtown. The pressure has now increased considerably.

While Dey generates very little in the way of sales tax, property taxes on the company’s 25-acre holding are significant. With an assessed value of more than $48 million for the land and $42 million in buildings and assets, Dey pays about $1 million a year, making it the city’s largest generator of property tax, according to Napa County Assessor John Tuteur.

“The impact on Napa will be slight if the building is sold to another pharmaceutical or med-tech company. If it becomes vacant for a time and needs to be reconfigured to other uses, the impact could be substantial,” said Mr. Tuteur.

Finding the right tenant is crucial, and although parent company Mylan said it hoped future use would re-employ Dey workers who remain in California, it has no obligation to make that happen.

Up until now, Napa has not offered fiscal incentives for companies to locate within its limits, but, “We’ll sit down and look at all the options,” said Mr. Parness.

According to Mike Moffett, a broker with Coldwell Banker, Dey’s departure strikes a serious blow to work force diversity, something Napa has tried hard to develop.

“Housing and retail in Napa won’t be affected because the greater percentage of Dey workers live out of the county, many in Solano,” he said. “Short-term there may be some easing of traffic coming into the valley, but long-term the loss of well-paying, skilled jobs outside the wine industry will have a negative effect on the longevity of the business community.”

Brian Kelly, president and CEO of Charter Oak Bank in Napa, feels that the long-term stability of Napa is assured.

“The displacement of so many employees will be difficult for the community, and the nonprofit community will be affected, but the region has rallied in the past,” he said, mentioning the closure of Mare Island.

“But I’ve been here for 25 years, and I’m not concerned for the future. Napa consistently has the lowest unemployment of counties in the state.

“Dey’s leaving is a function of the down economy and general business trends, which follows a cycle of growth and retrenchment. The community leadership needs to come together and figure out the best way to handle it,” said Mr. Kelly.

Already turning are the wheels of the Napa Workforce Investment Board, which has put into motion its Rapid Response mechanism.

“We’re setting up a meeting with Dey’s human resources director, who is also a member of our board,” said Executive Director Bruce Wilson.

The Napa WIB is currently in data-gathering mode, he said. Once the number and the timing of the layoffs has been determined, it’ll work with Dey and with individual employees to determine job skills, retraining possibilities and where similar jobs might be found.

“We also bring in representatives from the State Department of Labor and Department of Employment Development. There are lots of people already at work on this,” he said, adding that he’ll apply for a state dislocated worker grant to fund the activities.

In Solano County, the Solano County Economic Development Corp. Director Mike Ammann compared Dey’s closing to the acquisition of Berlex in Richmond by Bayer. Several hundred of its workers lived in Solano.

“Fortunately, our own business community includes a biomed sector and several large manufacturers. Most of the laid-off workers were able to retrain and find good jobs here in Solano,” said Mr. Ammann.

“We’re hopeful that will be the case with Dey employees,” he said.