An $84 Million Tax Break to Pfizer and Not Even a T-Shirt for Ann Arbor

In 2007, Ann Arbor’s civic leaders were shocked and near panic because the worldwide pharmaceutical giant Pfizer had decided to close its facilities in that city. Pfizer employed 2,100 people in Ann Arbor, and economists projected a total impact of 6,000 lost jobs over three years. Gov. Jennifer Granholm described the decision as a “punch in the gut.”

Six years earlier, the Ann Arbor City Council had negotiated a 20-year, $84.2 million tax incentive deal with the company to keep its Michigan operations open. During those negotiations, David Canter, a senior vice president for Pfizer, said the City Council appeared to be “anti-business” and implied the company may leave the state if the tax deals were not approved. Pfizer got the deal, and then bolted anyway.

Eight years have passed since the departure, and Ann Arbor has recovered. The city's unemployment rate had been 5.7 percent just before the Pfizer announcement in June 2007. Two years later, in the depths of the nationwide Great Recession, the unemployment rate jumped to 11.2 percent. As the economy has improved, Ann Arbor’s unemployment rate has fallen to 2.8 percent as of October 2015.

So in today’s economy, how important are large “anchor” employers?

“Great question, I really don't know the answer,” said Don Grimes, a University of Michigan economist. “My guess is the big firms are less important, but I need to figure out a way to address the issue. … But, the economy in the city of Ann Arbor, and its suburbs, is doing great.”

Grimes said the eastern part of Washtenaw County is not doing as well as Ann Arbor. Grimes cited Ypsilanti Township as an example, which has an unemployment rate of 5.1 percent.

In June 2007 when Pfizer was still in town, Washtenaw County’s private sector employment was 127,959. In March of 2015, it was 124,901.

“There are places that can withstand, and in fact, thrive after major employers leave,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy. “Landing and retaining these big employers is not as meaningful as it may have been in the past.”

Tom Crawford, Ann Arbor’s city administrator, didn’t respond to an email seeking comment.