Boston Globe: Boston Scientific fails to add jobs

By Todd Wallack, Globe Staff  |  April 10, 2010

Boston Scientific Corp. has not created the 331 jobs it promised in return for millions of tax incentives to expand its Marlborough campus four years ago, state records show.

Rather, the medical device maker told Massachusetts officials that it had actually cut 100 jobs in Marlborough as of last summer. Statewide, the company has cut hundreds of jobs since it received the tax incentives.

And Boston Scientific recently disclosed plans to eliminate as many as 1,300 jobs worldwide – raising the possibility that more could be lost in the area – though the company will not say where the reductions will be.

State Senator James Eldridge, Democrat of Acton, said Boston Scientific’s failure to fulfill its jobs promise highlights the need for stronger laws to make sure the state can reclaim tax money when companies don’t hold up their end of an agreement.

“You are dealing with public dollars,” Eldridge said. “If the state is giving companies public dollars to create jobs, and that promise is broken, then the state should have the power to take back the tax break.”

A spokesman for Boston Scientific, Paul Donovan, said the company has no plans to return the subsidies. As of last summer, Boston Scientific said it had already saved $689,907 in local property taxes and nearly $2.4 million in state taxes.

Massachusetts officials say there is usually little they can do when a company fails to meet its job commitments, other than to end its tax breaks early, which it has not done in the case of Boston Scientific.

“The state is reviewing the project and currently requesting additional information,” said Kofi Jones, a spokeswoman for the Economic Assistance Coordinating Council, the state board that oversees the tax incentives.

Boston Scientific won its tax break by promising to expand its Marlborough campus, retain 669 jobs in the city, and create at least 331 new positions by 2010.

Boston Scientific said it planned to renovate its existing 500,000-square-foot facility and was considering building an additional 500,000 square feet of office and lab space by 2014.

Marlborough officials said the company has completed the interior renovations, but hasn’t expanded its footprint yet.

In return, the company won a discount on its local property taxes for up to 20 years and qualified for state tax credits worth up to 5 percent of the amount of money Boston Scientific invested.

Boston Scientific recently said it had about 2,000 employees statewide, down from about 2,300 when it applied for the tax break.

But Donovan, the company spokesman, declined to say how many workers the company now has in the state or how many additional jobs it plans to cut.

The company told the state it has invested more than $12 million in the Marlborough campus since it received the incentives.

Marlborough officials said they have already reduced Boston Scientific’s local property tax break, according to a formula in the city’s pact with the company.

“We have safeguards in the agreement,” said Arthur G. Vigeant, president of the Marlborough City Council.

But city officials haven’t taken any action to end the tax incentives altogether. “We don’t want them to pack up and leave,” said chief assessor Tony Trodella.

The latest job cuts come at a time when Boston Scientific has been trying to slash expenses.

The company has lost money for four straight years, including $1 billion last year alone, because of sluggish sales, costly litigation, and regulatory problems.

Still, Boston Scientific is hardly on the verge of failure. It had more than $8 billion in sales and $864 million in cash at the end of 2009. And it gave its new chief executive, J. Raymond Elliott, a pay package valued at $33 million last year, making him one of the country’s highest paid CEOs.

Governor Deval Patrick recently signed legislation that will make it easier to force companies to repay the state in the future if they don’t fulfill their job commitments, but the law only applies to new projects approved starting this year.

Noah Berger, executive director at the Massachusetts Budget and Policy Center, a Boston nonprofit research group, agreed with Eldridge that the state should be able to recoup tax money when companies don’t create the jobs they promised. But ideally, he said, the state wouldn’t offer such incentives in the first place.

“Corporations hire and fire based on demand for their products, not state tax policy,” he said.

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