Durham biotech company cancels $18.9M economic incentives deal with NC
BioAgilytix Labs, which had planned to create almost 880 jobs in Durham, terminated a lucrative economic incentives package that included up to $18.9 million in grants — the latest in a string of grant cancelations for the state.
In a letter to state Department of Commerce officials, the Durham-based contract research lab services company said declines in biotech funding have caused the company to shift its strategy to “generate as much return on investment as possible based on our current infrastructure and employee base.”
As a result, the company won’t hit employment targets stipulated by the incentives deal it struck with the state in 2020, officials said Tuesday during a meeting of the department’s Economic Investment Committee. The committee voted to approve the termination. None of the grant money was paid out to BioAgilytix, commerce officials said.
BioAgilytix currently employs 523 employees at its facilities near Research Triangle Park, according to the letter, which was signed by the company’s finance chief, Maureen Marchek.
BioAgilytix has invested more than $20 million in expanded space since October 2020, adding more than 150,000 square feet at a trio of facilities. The company, which initially planned to invest $61.5 million in its expansion, is expected to maintain operations in the state.
“We remain committed to our business and will continue to invest in both people and infrastructure as needed,” Marchek said in the letter.
The BioAgilytix deal was one of three terminated by state officials Thursday. State officials have terminated at least 13 incentives deals in the first three months of the year. The state, on average, has terminated fewer than one per month between 2005 and 2023.
Market shifts and remote work
Grant cancelations don't always reflect the condition of North Carolina's economy, but surges in terminations tend to lag periods of economic instability. Oftentimes grant terminations are due to strategic changes specific to an individual company or due to industry-specific shifts, as was the case for BioAgilytix.
Workplace trends — particularly increased remote work that became more commonplace during the Covid-19 pandemic lockdowns — have also been a factor. That was in part the case for Cognizant Technology Solutions, which also sought to cancel an incentives package including up to $2 million in grant money.
The company had announced plans in 2018 to add 300 jobs and invest about $5 million in Charlotte. Cognizant asked to terminate the deal due to economic uncertainty, decreased demand and work trends, which now has the company’s employees working in-person, remote or a mix of both. Commerce officials approved the cancelation Tuesday. The company didn’t receive any grant payments.
“As we adjust the way we work, it is resulting in the reduction of our real estate footprint in a city or region,” Felix Weitzman, Cognizant’s chief human resources operations officer, said in a letter to state officials. “We remain committed to our presence in Charlotte, but as we adjust our ways of working and embrace our new model, more work will be delivered directly from client sites and/or through remote work.”
Last month, Syneos Health and Clorox Services Co. cited similar reasons for terminating their incentives deals.
Yarn-maker’s deal canceled
Apparel company Gildan, meanwhile, said market shifts in yarn preferences caused a drop in demand for some of its products, causing the company to consolidate yarn-production facilities in Rowan County. The company, which employs almost 2,000 people in the state, plans to stay in North Carolina.
Gildan executives asked state officials to cancel an incentives package worth up to $1.6 million. The request was approved Tuesday. The company, which had planned to add 170 jobs in the county, received $1.2 million in grant payments tied to that package. It currently has 290 employees in Rowan, and it can keep the grant money because it hit hiring targets set in the incentives agreement.
“One of our goals as a part of the transfer of production employees was to retain our North Carolina employees to the extent possible,” John Maness, Gildan’s senior vice president of yarn spinning.
