Here’s a storyline you might find hard to believe if you get overdoses of election-year rhetoric about protecting American jobs. It goes like this: A growing conglomerate from India takes over an 86-year-old drug manufacturing operation in a small city in America’s Pacific Northwest. It decides not to ship the highly-skilled, high-paying jobs to a cheaper location overseas. Instead, it preserves wages and benefits, hires more, and invests millions of dollars in an expansion plan.
That’s what has happened over the past year at Hollister-Stier Laboratories, a contract drug manufacturer and community institution in Spokane, WA. Plenty of people in town, and employees too, were more than a little fearful in June 2007 when India-based Jubilant Organosys purchased Hollister for $122.5 million, says Kirk Wood-Gaines, the company’s vice president of human resources and communications. The time had simply come, eight years after Windward Capital Partners invested in the company, for it to cash out and move on, letting somebody else pump in more capital for expansion, Wood-Gaines says.
When the search for a buyer settled on Jubilant, there were plenty of questions among employees and the community. Jubilant makes generic pharmaceutical ingredients, explores for oil, and manages Domino’s Pizza outlets, among other things. It’s fair to say the folks in Spokane didn’t immediately consider the situation predictable.
“There was trepidation,” Wood-Gaines says. “But now people can see the money’s still there, the benefits are still there, and the expansion is still there. This continues to be a great place to work.”
Wood-Gaines was able to back up what he said with numbers. Hollister-Stier has 520 employees, and it has continued to add about 50 workers a year for the past three years. Turnover in the last year was 4 percent, he says. Jubilant has kept its word to continue investing in administrative offices and labs, build out a second manufacturing line, and install technical equipment to produce powdered drug ingredients. The total bill has been around $60 million, Wood-Gaines says.
One big change: Longtime CEO Anthony Bonanzino stuck around for a year of transition, but left the company a couple months ago to do some teaching, golfing, and “enjoying life,” Wood-Gaines says. Three other executives also left the company in recent months, according to a report in the Spokane Journal of Business. That team is being replaced by a new four-person leadership committee that includes the heads of the two business units, Jeff Milligan and Jason Keene, along with finance director William Huss and Wood-Gaines.
Hollister-Stier has kept its name, and divided up its work into two business units. One that has been around for decades purifies ingredients used in allergy shots. The other, faster-growing business unit works on contracts with pharmaceutical companies to take bulk drug ingredients and put them in vials for injection. It’s known as the “fill/finish” work in industry lingo.
Hollister-Stier doesn’t identify its clients or the products it puts into vials, so it’s a bit tricky to get a handle on what’s driving the growth. It counts five of the world’s top 20 pharmaceutical companies as customers, and it does some work for Northwest biotechs with drugs in clinical trials, Wood-Gaines says. Hollister generated sales of $55 million and $10.9 million in profit in 2006 when excluding certain costs, the company said in a statement. The contract manufacturing work has been growing at a more than 40 percent compound annual growth rate over the past four years, the company says.
I asked Wood-Gaines what has surprised him most about the changes brought by Jubilant. The answer made me laugh at the irony. The Indian bosses apparently have a serious commitment to Six Sigma, the lean-manufacturing management philosophy popularized by that All-American business icon, former General Electric CEO Jack Welch. I’m no political consultant, but that doesn’t sound like grist for a good fear-based attack ad.
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