By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Johnson & Johnson will establish a new technology office in Providence to develop health-related software, with initial plans to employ 75 people, state and company leaders announced Monday.
Gov. Gina Raimondo’s aides confirmed a deal with the Fortune 100 company to locate a new health technology center in the city. The new office will employ high-skill IT workers such as developers and engineers, creating software and running analytics to support Johnson & Johnson efforts to improve health outcomes, they said.
“I’m excited,” Raimondo said in an interview. “It’s a big deal. It’s another sign of our momentum. It’s a big, brand-name company that quite literally could have chosen anywhere they wanted – everyone would want Johnson & Johnson to put a center of excellence in their hometown, and they picked us.”
Raimondo said she views the potential for Johnson & Johnson in Rhode Island along the same lines as General Electric, which earlier this year reached a similar deal with her administration to put new tech jobs in Providence.
“Plant the flag,” she said. “Open a center. I have no doubt they’re going to fall in love with Rhode Island and grow and grow and grow, and I’ve been – as you can imagine – not shy about expressing to them that that’s my plan.”
Raimondo’s office said Johnson & Johnson will seek nearly $5 million in tax credits over 10 years as part of the deal: $4.1 million in Qualified Jobs Incentive credits tied to the new employees’ income tax payments, and up to $500,000 to subsidize worker recruitment and rent payments. A spokesman said the new office is projected to generate about $775,000 in new state revenue per year.
Johnson & Johnson becomes the third major global company to announce plans to put tech jobs in Providence this year, along with GE and Virgin Pulse, which Raimondo suggested is a sign her economic strategy is starting to pay off. All three companies have been attracted in part through incentive programs championed by the governor, at a combined price tag of about $16 million.
Steve Wrenn, a Johnson & Johnson global vice president who previously worked at CVS, lavished praise on the state during a news conference at the Providence Public Library that was attended by university presidents, business executives and nonprofit leaders.
“Providence is an unknown gem to a lot of people,” Wrenn said, adding that the company was also lured by the new tax incentives created in recent years by Raimondo and the General Assembly.
Raimondo acknowledged that providing such tax breaks frustrates many people, but defended it as a necessary evil for economic development.
“I find it annoying myself,” she said. “I do, really. But the best analogy is, we can’t unilaterally disarm. If every state said at the same time we’re disbanding our economic-development incentives, then I would do it. But when I have places like Boston – which is about as hot of an economy as you’ll find – throwing $130 million to get a few hundred GE jobs, it’s foolish to think we can compete if we don’t.”
She added: “And 10 years from now, when GE has 700 employees there and J&J has 700 employees there and Virgin Pulse has 700 employees there and it’s tens of millions of dollars of revenue for the state, great, I did my job.”
Congressman Jim Langevin said before the new tax breaks were put in place Rhode Island had difficulty competing for new jobs with its neighbors in New England. “Rhode Island didn’t really have those kinds of incentives at all,” he said. “It was a source of frustration for so many of us.”
Johnson & Johnson is based in New Jersey and posted $70 billion in sales last year. Its consumer division currently has an office in Cumberland that works with Woonsocket-based CVS Health, a major seller of the company’s products, which include Band-Aids, Tylenol and Listerine. It also has a sizable medical-device factory across the border in Raynham, Massachusetts.
Johnson & Johnson plans to start hiring for Providence just after the new year, with plans to open the office by the spring, Raimondo’s aides said. The new office will initially be located at One Ship Street, a property owned by Wexford Science & Technology, the developer that reached a deal last week to build a new innovation complex on the old I-195 land; Wexford is receiving about $1 million in tax breaks to renovate the building.
Raimondo said she hopes Johnson & Johnson will make the Wexford complex its permanent home once that facility is ready, though she said the decision will be up to executives there. She said the company has similar offices to the new Rhode Island one in Limerick, Ireland, and Sao Paulo, Brazil, and she hopes it will grow to a similar size as those.
Johnson & Johnson’s interest in Rhode Island was first piqued last spring when Raimondo appeared on a panel in Washington at The Brookings Institution, a think tank that has advised her administration. Also on the panel was Johnson & Johnson Chairman and CEO Alex Gorsky, who Raimondo said told her afterwards he was intrigued by her description of Rhode Island’s potential.
Raimondo said that conversation started months of discussions between state and company officials led by Sandra Peterson, a top Johnson & Johnson executive, including a meeting Commerce Secretary Stefan Pryor had during a trip to the U.K. A “turning point” in the talks, Raimondo said, was a State House meeting last summer where senior Johnson & Johnson executives met with officials from local colleges including RISD, URI, CCRI and Bryant.
“The I-195 corridor is uniquely suited to support Johnson & Johnson’s new health technology center and Rhode Island gives us access to the economic development tools and university assets we need to stay competitive in the rapidly growing health tech space,” Wrenn said.
“That’s another reason why I’m so excited,” Raimondo said. “This isn’t just them tossing a few jobs here. This is them having spent a year – they did a deep analysis on why Rhode Island.”
That was also another sign, she argued, that tax breaks are “necessary, but insufficient” to attract companies.
Raimondo said she’s hopeful more companies will announce new commitments to Rhode Island next year, though she also emphasized that she spends a significant amount of time talking about expansion with businesses that are already in the state. She singled out Electric Boat as a key example, noting the company provides good-paying jobs to workers who don’t have a college degree.
“As I go into 2017 I have to stay focused on creating jobs at every level,” she said.