HC 805 Pfizer's decision to close its research and development facility at Sandwich

Written evidence submitted by
Laura Sandys MP, Roger Gale MP, Charlie Elphicke MP, Damian Collins MP and Julian Brazier MP (PZ 04)

The Pfizer Announcement

The impact of the Pfizer closure on East Kent cannot be overestimated. While the headline figure in relation to redundancies has been 2400, the impact includes:

· Redundancies for thousands of additional contractors on site

· Impact on local suppliers to Pfizer

· Reduction of the spending power of employees within the local economy

· Withdrawal from supporting local community groups, charities and science and technology education

This closure would have a dramatic impact on any part of the country; however the increased significance of this decision is compounded by the economic environment in East Kent.

· Currently the average wage is £17,000 – the lowest in the South East and one of the lowest in the country

· The impact of losing the largest high paying employer in our area will have a significant effect on the average wage / disposable income in East Kent

· There are no similar jobs available in East Kent with Pfizer being the largest employer other than the Port of Dover

· Deprivation in East Kent rivals many parts of the North East and Northern industrial towns with Thanet ranking as the 64th most deprived district in the country

Actions of the company:

· The Model: While there are new models emerging in the pharmaceutical sector with some companies divesting themselves of their research capacities, there are also others who are choosing a different model and buying research capacity. Pfizer has taken the former route while some Swiss based companies are increasing their portfolio. Will Pfizer merely emerge as a packaging and marketing company with some limited research into the future?

· Manner of withdrawal: The company could have made a staged withdrawal migrating their operations to other companies or promoting the creation of new companies over time. The dramatic announcement has undermined the value of their assets - both the potential value of spin off companies and the property - and has not provided the locality time and space to plan for a new future.

· Staff Retention to secure a future of the site: The ability for Government, Kent County council and the Pfizer management at Sandwich to identify replacement activity on the site has been significantly hampered by the short time scale that we have been given. Crucial to the future of the site is retaining the key staff and all staff have been placed on a 90 day consultation period with the widely held perception that redundancy notices will be issued straight afterwards. We are urging the company to extend that period to allow for us to work on securing a new future for the site and give the employees some greater understanding of the exact timeframe.

· Confidence in Management: There are dedicated local managers who are committed to deliver the best future for the site and the employees; however the reputation of the company following closures in other parts of the world has significantly undermined confidence with the staff.

· Dialogue with Government: It is extremely unfortunate that the company did not feel that it could have opened a dialogue with Government prior to their decision to close the site. While the nature of this announcement is market sensitive some discussions - however oblique - would have offered a greater opportunity for Government with all its resources to consider the situation and put plans in place.

· Awaiting Clarity: There are still some important questions unanswered in terms of the company’s plans for the site and the staff. What is the future of the site – a site that they own and are liable for into the future – contamination / flooding / maintenance; the timeframe of their withdrawal in terms of each different field of research/activity; the legacy that they aim to leave in East Kent; the nature of potential Pfizer contracts that could be given to spin off companies to help kick start a new community of smaller operators on the site; and their commitment to Life Sciences in the UK into the future.

· Employee information: Communications with staff has been patchy in their view. The options in terms of the future of the site that might be open to them are not widely known or understood. We have urged the company to take communications very seriously and to do all they can to retain confidence in the future of the site with their staff.

· Contractors: There is a major concern about the lack of information / advice / support for the many contractors on the site. They have received even less information and are extremely concerned about their futures. We have urged the company to treat contractors in a similar manner to employees in terms of communications and work more closely with the contractor companies to ensure that information is effectively cascaded through the organisation.

· Global Employment Contracts: We have been informed that contracts have been changed over the last few years. This was in order to create similar contracts across Pfizer’s operations around the world. This resulted in employees in the UK losing some of their severance entitlement – from 3.5 weeks per year worked to 2.5 weeks. There has been concern that this was implemented with the knowledge that large redundancies would be required in the foreseeable future.

· New Recruitment: The company has been recruiting new staff onto the site even up until January. We have been approached by several people who have joined since October – having moved home / changed employers (thereby losing previously held employment rights) / relocated children in new schools. With the knowledge that the site was at risk were these appointments responsible?

The Future

It is important that the committee recognises that the Sandwich site – both the employees and the equipment / facilities – are world class. We have a national asset that needs to be regarded as an important part of the UK’s Life Science future. Losing the employees will be a body blow to the local economy, but if some of these leading scientists leave the country, the UK will also lose out.

There are many different visions for the site but there are three levels of activity being prioritised:

· A Life Science Service Hub: The skills and equipment on site could become a national science and technology asset that could service the rest of the sector – both in the UK and across Northern Europe. This model could include some larger CRO operations with satellite hub companies providing world class services to the Pharmaceutical sector and securing a wide range of clients beyond Pfizer. This however requires some strong commitment from Pfizer to support these spin-offs with some contractual relationships into the future; sensible property rents and service charges; and most importantly more time in terms of retaining staff on site beyond the 90 days so as not to create a hiatus with staff migrating from the site in the immediate future.

· New uses for the rest of the site – There are several key opportunities particularly if transport links were enhanced. It is a significant sized site with a range of possibilities. Some of the staff have transferrable skills particularly in the field of technology / education / wider scientific applications. There is already a range of interested parties and concepts being proposed from Technology centres through to renewable energy projects.

· A strategy to support the East Kent Economy: The underperformance of the East Kent economy needs to be addressed. With economic indices that are more in common with the north of England than in the South East; high dependency on public sector work; reliance on Pfizer as one of the few premium employers and bad transport links, East Kent is very vulnerable economically.

However we have an opportunity to establish an exciting and vibrant science service Hub (Life sciences and beyond), that would not only attract businesses from within the UK but is also geographically located to service companies across Northern Europe. These options however are predicated on Pfizer’s commitment to support this process by giving staff a long term employment horizon (retention on site) and by maintaining focus on striking deals with replacement companies for the site.

The Government

The government has moved into action extremely fast establishing the Sandwich Taskforce with the Rt Hon David Willetts MP deeply involved. The mobilisation of government resources and expertise- at both national and Kent level - has been very impressive. Government ministers across other departments are involved and their commitment to finding a long term solution is evident.

There are four key commitments that we require from Government:

· On-going commitment to finding a future or futures for the site – this is not something that will be resolved quickly

· Continued leadership from Government in our discussions with Pfizer about their commitment to the site and the staff

· Economic incentives to locate businesses in East Kent and on the Sandwich site

· Continued interest from other departments – Transport in particular – to resolving the long term under-achievement of the East Kent Economy

Laura Sandys MP, Roger Gale MP, Charlie Elphicke MP, Damian Collins MP and Julian Brazier MP

February 2011