Asian and European Companies Bring R&D Jobs to Mercer County

Mercer Business, Sep 01, 2004 by McDaniel, R Stephen

The outsourcing debate in the United States a has move from talk about manufacturing sneakers overseas, to manipulating information. By 2005, the number of business processes transferred abroad, which includes everything from telemarketing, to accounting, to architectural drafting, will be twice what it was in 2000, predicts Gartner Inc., a research firm based in Stamford, Ct. But, at the same time this country loses jobs to places, like China Philippines, it gains them from Europe, Japan and, ironically, India.

The regional architectural industry has certainly been caught up in the outsourcing debate. While the profession worries about the loss of drafting jobs, they also gain commissions from Asian and European companies. Additionally, they are outsourcing major research and development operations, regional headquarters, and other large operations from places like Osaka, New Delhi and Paris to Princeton, Whitehorse Station and Newark, and places in-between. The benefits to these foreign investments include technological innovations, fresh architectural challenges, new ways of thinking, and, importantly, jobs.

Ranbaxy is India's largest pharmaceutical company, manufacturing and marketing generic and brand name prescription drugs. Last year its sales reached nearly $1 billion, and its workforce almost 9,000. It outrsources jobs--to the United States from India. In a move designed to position itself at the center of the pharmaceutical industry, Ranbaxy relocated its U.S. headquarters to Princeton, New Jersey from North Carolina.

"The ability to bring products quickly to the marketplace is paramount," said Charles M. Caprariello, Ranbaxy's vice-president of business development. "Mercer County has the scientific and sales and marketing talent to make that happen."

Ranbaxy's move reflects the workings of the global economy described by economist Saskia Sassen. In her 1991 book, The Global City, the University of Chicago professor cites New York, London and Tokyo as a few of the leading centers of power-each with its own highly refined specialties-in an integrated, though geographically dispersed, global economy. Concentrated in and around these cities, corporate leaders arch for research hotspots, outsource to these areas and forge connnections between them, thus creating powerful international networks. Their companies benefit from a kind of hybrid vigor as they draw upon the unique strengths of each collaborating region.

Benefits of Foreign Investments

On a much smaller scale than the global cities described by Sassen, Mercer County has characteristics that make it a regional center of power. Attracted by its academic and industrial strenghts, global comapnies are opening regional office headquarters and research centers in the county. The benefits of these moves are new jobs and new ways of thinking. Matsushita Electric Industrial Co., Ltd., best known in the U.S. by its Panasonic brand name, is one of the world's largest manufacturers. The company boasts revenues of $68 billion.,and makes everything from digital camcorders to electric toothbrushes. Matsushita turned to Mercer County when it wanted to open a new communication R&D center in the U.S. Matsushita, which spent approximately $4.6 billion on research and development in 2003, continues to search for those ideas that will become the next big thing.

The electronics giant is headquartered in Osaka, but it outsources everything from sales and marketing to research and development. Matsushita often positions these operations in places that demonstrate a high level of demand for the company's products, and offer specialized labor forces.

"The most recent thinking has to do with the proximity of R&D centers to important markets, and technology in those markets," explains Paul Liao, chief technology officer for the Matsushita Electric Corporation of America. Including its Princeton technology center, Matsushita has ten R&D centers in the U.S., and a venture capital arm in Silicon Valley.

These centers are positioned to make use of more than just scientific brainpower. Executives are organizing their R&D centers to take advantage of access to capital, corporate alliances, sales and marketing talent, and everything else that is needed to turn a good idea into a profitable product.

New Jersey may be a congested and expensive place to live and work, but it is a great place to conduct R&D, The pharmaceutical industry puts more revenue toward research and development than most other industries. Some 40% of the world's pharmaceutical sales come from companies that have operations in the state, according to a study commissioned by the Healthcare Institute of New Jersey, a trade group.

"We put our U.S. headquarters here so that we could be close to our future partners," says Hajime Shimizu, Eisai Inc.'s chairman and CEO. Eisai, which operates U.S. headquarters in Teaneck, manufactures Aricept, which fights Alzheimer's disease, and the anti-seizure drug Zonegan. It is one of at least 20 Japanese life sciences companies with operations in New Jersey.