Johnson & Johnson Cuts Plans in Rhode Island, Wexford Opens With Only 12 New Jobs

Johnson & Johnson Cuts Plans in Rhode Island, Wexford Opens With Only 12 New Jobs

In 2017, Johnson & Johnson was awarded millions in incentives, subsidies and tax credits to build out new space on Ship Street in Providence and create 75 high tech healthcare jobs. It was supposed to be the beginning of potentially something much bigger for Rhode Island.

The package approved by Rhode Island Commerce Corporation in January of 2017, was robust, "incentives up to $4,425,860 in foregone state revenue, up to $1 million in renovation and fit-out costs at 1 Ship Street, and up to $700,000 in workforce services and talent attraction grant funds.”

In total, it was a more than $6.1 million package for 75 jobs -- $81,333 in subsidies per job.

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Rhode Island officials knew the cost was high, but the potential was to lure a top U.S. corporation to the state with the potential to create hundreds or thousands of new jobs. Johnson & Johnson is an $81 billion company which employs more than 130,000 employees globally.

Johnson & Johnson Cuts Space Needs

The $1 million to build out Johnson & Johnson’s space at 1 Ship Street in the Jewelry District proved to be wasteful as the company used the space for less than two years.

As the Wexford Innovation Center was being developed it was agreed between Commerce RI and Johnson & Johnson that the company would move from the newly built on Ship Street to Wexford.

Johnson and Johnson was scheduled to take a full floor in Wexford — 25,000 square feet for their 75 employees and for potential future expansion.

But now Johnson & Johnson has slashed their space needs and only leased 40 percent of what they planned — just 10,000 square feet in Wexford.

With the cut back by Johnson & Johnson and Brown University moving just 85 existing jobs, the only new permanent jobs in the $88 million building are Cambridge Innovation Center employees -- just 12 new hires in the Wexford complex.

Missed Jobs Target

Commerce’s economic analysis for Johnson and Johnson stated, “the Company expects to hire a total of 75 employees in 2017 to work at its Digital Health Technology and Analytics Center at 1 Ship Street."

But Johnson & Johnson has missed its hiring target by 25 percent, for now, two years.

“As for job #, we have 56 FTEs presently in our Health Technology Center. W/R/T the space, it is about better aligning our resources to most efficiently and effectively meet the needs of the business,” said Michele Baer, a spokeswoman for Johnson & Johnson in an email to GoLocal.

The state estimated that Johnson and Johnson would have a big impact on Rhode Island’s economy.

“Using the IMPLAN input-output modeling system (a modeling tool commonly used in economic impact studies), Appleseed estimates that when fully staffed the new Center will directly and indirectly support:

147 full-time-equivalent (FTE) jobs in Rhode Island
$14.6 million in annual earnings
$33.2 million in statewide economic output
An increase of nearly $19.3 million in Rhode Island’s annual GDP. “

Wexford’s Promise

The Wexford complex. which has received strong review for design, opened in July.

GoLocal architectural critic Will Morgan wrote about the new innovation structure prior to the ribbon-cutting. “The almost completed Wexford Innovation Center, despite the sort of lackluster design review that governs the I-195 redevelopment land, is surprisingly quite handsome. While not lovable, Wexford is a sleek and handsome office block–a decent example of a Modernism," wrote Morgan. 

The project has received about $40 million in taxpayer subsidies, $18.8 million in incentives from the 195 Redevelopment Fund, $15 million in Rebuild Rhode Island Tax Credits, a million in sales tax credits and the project has a tax stabilization agreement (TSA) with the City of Providence. 

The seven-story building opened with more than 50,000 square feet — two floors — vacant.

The two other floors in Wexford leased by Brown University will be used by the staff being moved from other locations, but will include significant classroom space.

“As demonstrated at last week's ribbon-cutting, Johnson and Johnson is a committed anchor tenant of the Wexford Innovation Center and is creating good-paying jobs for Rhode Islanders. We are pleased they are part of our innovation ecosystem and look forward to their continued growth in the Ocean State,” said Commerce spokesman Matt Sheaff.