The right prescription
Challenge: Find a site that could satisfy infrastructure and workforce needs for a major pharmaceutical manufacturing expansion.
Solution: Partner with utilities and local governments to provide reliable energy, water and wastewater services for a massive new plant, and tap into the state and region’s abundant resources for finding and training skilled workers.
By D. Lawrence Bivins
The telephone request for “high-level” workforce information sounded routine. A large, anonymous life-sciences client was requesting a summary of what the Research Triangle region had to offer.
“We didn’t know who the company was,” recalls Anna Lea Moore, who took the call from a site-selection consultant in spring 2014 while she was a business recruiter at the N.C. Department of Commerce. “They told us the company was doing preliminary investigations in the U.S. and Europe, and that we needed to be prepared.”
About 16 months later, top executives from Novo Nordisk A/S joined state and local officials in announcing the Danish insulin manufacturer’s choice of the Johnston County town of Clayton for a $1.8 billion investment that will create nearly 700 jobs. The new complex will sit across the street from the company’s existing plant, where about 800 workers assemble insulin pens for the North American market.
“They’ll be hiring workers who will make diabetes care products to help patients in North Carolina and all over the world,” Gov. Pat McCrory said at the August 2015 announcement. The company’s move “underscores the Research Triangle’s global leadership in bio-manufacturing,” he added. “When it comes to life sciences and manufacturing, North Carolina can compete — and win — against any location in the world.”
Behind Novo Nordisk’s investment is an alarming global trend in human health. An estimated 415 million people live with diabetes, according to the Brussels-based International Diabetes Federation. By 2040, the figure could reach 642 million — or one out of every 10 adults. The estimated $673 billion spent treating diabetes around the world amounts to 12% of global health care expenditures, IDF says.
Novo Nordisk’s leadership in diabetes medication is reflected in its worldwide business footprint. Founded in 1923, the Copenhagen-based company employs 39,700 across 75 nations. Its presence in North Carolina dates to 1993. The new plant will manufacture the active pharmaceutical ingredients of Novo’s diabetes treatments, which have, until now, been produced only in Denmark. With more than 44 million cases of diabetes in North America, according to IDF, the U.S. is Novo’s largest market.
Competition for the historic investment was stiff. After considering numerous global locations, the company narrowed its search to the U.S. “They looked hard at Boston,” Moore says, where a well-educated workforce and extensive roster of life-sciences firms were sweetened with a generous array of tax exemptions and other financial incentives. But North Carolina is a growing hub for life-sciences companies: Jobs in the industry grew at triple the national growth rate from 2012-14, according to the Biotechnology Innovation Organization, a trade group. More than 600 biotechnology companies have operations in the state, employing 63,000 people.
Novo Nordisk’s site selectors looked at several locations within the state, including Holly Springs, Garner, Wilson and Research Triangle Park. “Johnston County really had to fight for this,” says Moore, who is now vice president for economic development at the North Carolina Railroad Co. Site criteria included ample acreage for future growth, easy access by trucks and car traffic, industrial zoning and convenience to a four-lane highway. The property would need to have already met preliminary environmental and archaeological standards for development.
And the facility, the size of seven football fields, will require power — lots of it. “There was no question we would need a transmission source to serve a facility like this,” says John Nelms, economic-development manager at Duke Energy Corp. “We couldn’t provide a load like that through distribution lines.” That meant the Charlotte-based utility would build a substation at Novo’s site, which typically calls for a seven-figure investment. That’s not unheard of for major bio-manufacturers, Nelms says. “We do that for numerous customers.”
In addition to high quantities of electricity, Novo Nordisk would also need highly reliable power. “If we’re in the middle of a fermentation cycle and the power goes out, we’d have to throw out an entire batch,” explains Gary Lohr, project director and deputy site head for Novo’s Clayton expansion. The consequences would include not just lost production, but also the costly burden of safely disposing of the waste. “If we lose transmission through a natural disaster, it leads to a whole range of issues,” he says.
Lohr says Duke Energy and subsidiary Piedmont Natural Gas Co., which also will provide energy to the site, were valuable partners during the company’s search. So too were utility officials from the town of Clayton: To meet the new facility’s extensive wastewater demand, local officials are now working to build a regional wastewater pre-treatment plant adequate to meet not just Novo Nordisk’s needs, but also those of Grifols, the nearby maker of blood-plasma products. In March 2016, just seven months after Novo’s announcement, Spain-based Grifols unveiled plans for a $210 million addition to its Clayton operations, adding another 250 jobs to Johnston County’s bio-manufacturing workforce.
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When you look at what Novo and Grifols have done in Johnston County, you see a significant biotech corridor,” says Dan Gerlach, president of the Golden LEAF Foundation, which is granting Clayton $4 million for the pre-treatment plant. Rocky Mount-based Golden LEAF was created to allocate funds derived from the 1998 Master Settlement with cigarette makers, providing aid to rural areas or communities once largely dependent on tobacco. While communities like Clayton are now linked economically with Raleigh and the Research Triangle, the county as a whole was once among the state’s most tobacco dependent. “Looking at where the labor force is coming from, Novo and Grifols are drawing heavily from surrounding rural counties,” says Gerlach, who notes that Novo’s $1.8 billion investment alone will spur an economic impact comparable to that of an automotive assembly plant.
Workforce mobility was central to the search criteria Novo Nordisk explored in early 2014, Moore says. “Their team was obviously interested in skills,” she recalls. “But they also wanted to look at where our life-science workers live.” Evidence suggested biotech talent in the Triangle region didn’t mind getting in their cars for a daily commute. Clayton is about 18 miles southeast of Raleigh, the state capital, and close to the Triangle’s research universities.
Lohr confirms that the area’s strong workforce tipped the scales, though he says the company also liked the administrative economies it could achieve in Clayton as its two facilities will share technical, financial, facility-management and other support services. “There are local synergies with the current site,” he says. The company’s own experiences with the region’s workforce over more than two decades were its most powerful testimonial. “We’ve been fortunate with talent acquisition at the current site,” Lohr says. He points to committed employees such as Luis Romero, a shift manager at Novo Nordisk who began there as a technician in 2010. Romero commutes to Clayton from Louisburg, about 38 miles away.
Romero, who served in the U.S. Navy in the early 2000s, holds a bachelor’s degree in information systems management that he received courtesy of the GI Bill. Novo officials like not only educational credentials, but also what military veterans bring to the company. Military experience translates well to biomanufacturing operations, Lohr says. “About 20% of the workforce at our current site are veterans.” Veterans are used to following standards and procedures, he says. “They’re good at documenting what they’ve done. We’ve found that’s a nice, neat fit on a day-to-day basis in a regulated industry like ours.”
Given the presence of sprawling bases like Fort Bragg and Camp Lejeune, North Carolina employers can tap a unique workforce resource. “North Carolina is No. 6 in the nation for veterans transitioning out of the military,” says Will Collins, assistant secretary for workforce solutions at the N.C. Department of Commerce. An estimated 78,000 service members will leave the military through North Carolina bases by 2018, a Commerce study found. “These are people with both hard and soft skills that can drive results for any business,” Collins says.
But the transition process is often fragmented. That’s why state leaders established North Carolina For Military Employment (NC4ME) in 2015. The initiative pulls together workforce-development leaders, military officials and private-sector human-resources representatives to create a common language to describe skills, aptitudes and experience. “We’ve taken military occupation codes and translated them into civilian terms,” Collins says. Staff members at 81 NCWorks Career Centers placed conveniently around the state are trained specifically to work with military talent and the companies needing them.
In recent years, the state has transformed the fusty image of “unemployment offices” into one of a proactive career-development site capable of serving both employees and employers. “The perception used to be that these offices were there only to serve people in dire situations,” Collins explains. Today, NCWorks Career Centers help job seekers write impactful resumes, improve interviewing skills, and connect with relevant education and training opportunities along with grants and scholarships that help with tuition. The centers even advise on transportation solutions and affordable child-care options for workers. Employers post open positions through NCWorks and, if necessary, receive assistance in writing job descriptions and community-specific salary data for various professions.
“We’ve got a brand new NCWorks Career Center in Clayton about half a mile from Novo Nordisk and Grifols,” Collins says. Also nearby is the Johnston County Workforce Development Center, a 30,000-square-foot training facility constructed by local leaders on property donated by Novo Nordisk. Opened in 2005, the center hosts customized training as well as classes leading to certificates, associate and bachelor’s degrees in biotech-related fields.
“When they made the announcement last August, our phones started ringing off the hook with people wanting biotech training,” says Joy Callahan, dean of economic and workforce development at Johnston Community College, which partners with Novo Nordisk and Grifols in funding the center and designing its programs. Qualified high-school students can take college-level courses at the center, whose mission is to build and maintain a reliable “pipeline” of local life-sciences talent. “Students can start a pathway to a biotech career as early as ninth grade,” Callahan says.
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Solid local and state leadership also was pivotal in Novo Nordisk’s attraction to Clayton. In addition to providing data and technical support for the company’s search, North Carolina offered Novo Nordisk a package of financial incentives that included $16.8 million in performance-based grants, customized community-college training, in-kind support from the N.C. Department of Transportation and the Golden LEAF’s wastewater grant. “The incentives were integral — we’ve always been honest about that,” says Lohr. “They were key in the evaluation process.”
County and municipal governments showed similar seriousness. Johnston County is providing more than $94 million in refunded taxes to the company over 15 years, while the Town of Clayton is putting in an $800,000 grant. “We’ve agreed to share some of the risks of this investment,” says Tony Braswell, chairman of Johnston County’s Board of Commissioners, “and in return the county and the company will both benefit.”
And benefit the county it will: Construction of the plant will create 5,100 full-time and part-time jobs, according to an economic impact analysis by N.C. State University, enough to yield a $1 billion one-time impact to the local economy. After that, the 691 new permanent positions at Novo Nordisk will churn $21.5 million in annual payroll through the area’s economy.
Winning big in the global site-selection arena also requires a partnership ethos among local government officials, according to Clayton Mayor Jody McLeod. “We were successful in competing for this facility because of the close relationships that exist between Johnston County and its municipalities,” says McLeod, a Clayton native who has been mayor since 2004. “All of us stepped up to the plate to make this happen.”
Chris Johnson, head of the Johnston County Office of Economic Development, agrees that collaboration is at the heart of Novo Nordisk’s historic investment. “This was the result of visionary decisions local leaders here made years ago, such as the Workforce Development Center and our life-science partnerships,” Johnson says.
With its enviable location, industry-grade highways, Class A rail service, abundant housing options and affordable costs, it would be easy to chalk up Johnston County’s success to geography and money alone. “But the real story of our growth has been people,” Johnson says, “starting with our excellent workforce.” Leadership, he agrees, also has been key. “At the end of the day, nobody here really cared who got credit for Project Bright Sky,” he says, referring to the code name of Novo Nordisk’s confidential search. “All of us were united by a common, simple objective: winning the deal.”