Pharmaceutical giant Merck to pull out of economic incentives agreement with state, city of Austin for IT office

Pharmaceutical giant Merck is set to withdraw from separate economic incentive agreements with the city of Austin and the state of Texas for its Austin-based IT hub.

Pharmaceutical giant Merck is set to withdraw from separate economic incentive agreements with the city of Austin and the state of Texas for its Austin-based IT hub.

After internal decisions to pump the brakes on its local employment efforts, pharmaceutical manufacturer Merck & Co. will forfeit economic incentive funds from the city of Austin and the state of Texas.

Merck, which develops medicine and conducts medical research, signed separate economic incentive agreements with Austin and Texas in 2017 totaling $7 million if the company hit certain employment benchmarks at its IT center in Austin.

While Merck has pulled back on its employment rate, company spokesperson Pamela Eisele said the company intends to maintain a presence in Austin.

“We are exiting our incentive contract with the city as well as with the state. This will allow funds to be redirected elsewhere,” Eisele said in an email to Community Impact Newspaper. “While we are pleased with the talent we have hired so far, internal priorities and events over the last two years have slowed our hiring trend there.”

Eisele declined to comment on the extent of Merck’s future investment in its Austin IT offices.

The city of Austin in April 2017 signed an $856,000 economic incentive agreement with Merck to bring an IT hub to the city. Terms of the deal included the creation of a total of 600 full-time jobs by 2025. Merck additionally agreed to invest at least $28 million in property improvements.

Two months later, Merck reached an economic incentive agreement with the state of Texas that would have awarded $6 million for its IT hub.

John Wittman, a spokesperson for Gov. Greg Abbott’s office, confirmed no state money has been awarded to Merck. Wittman said Merck requested June 25 to terminate the agreement.

“It didn’t sound like they were going to hit their job payments,” Wittman told Community Impact Newspaper.

Merck began opening IT hubs in 2014 in order to centralize its IT staff. The company has opened hubs in Branchburg, New Jersey; Prague, Czech Republic; and Singapore.
By Iain Oldman

Iain Oldman joined Community Impact Newspaper in 2017 after spending two years in Pittsburgh, Pa., where he covered Pittsburgh City Council. His byline has appeared in PublicSource, WESA-FM and Scranton-Times Tribune. Iain worked as the reporter for Community Impact Newspaper's flagship Round Rock/Pflugerville/Hutto edition and is now working as the reporter for Northwest Austin.


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