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Tuesday, January 23, 2007

The Efficiency of Capitalism

As I mentioned yesterday, pharmaceutical giant Pfizer announced that it is shutting down its entire Ann Arbor facility and its 2100 jobs. Let's look at how they prepared for this step. Here's an aerial photo of the Pfizer campus from April 2000:

Image from TerraServer.

And here's one taken more recently, probably last summer:

Image from Google Earth.

Note that buildings A, B and C were under construction in April 2000, while D, E and F hadn't even been started. In addition, Pfizer spent many months building a pedestrian tunnel under Huron Parkway (the north-south street in the photos) and making numerous other changes in parking and landscaping. (I work in the building at the lower right of the bottom photo, the only building in that photo which is not a part of the Pfizer campus, so I've seen it all.) In addition, the city has reworked the traffic patterns several times with islands, left-turn lanes, and relocating sidewalks.

Many of these buildings appear to be laboratories (it is, or was, Pfizer's world research headquarters), so they probably were much more expensive to build than ordinary office construction. I would guess that Pfizer has spent at least several hundred million dollars on expanding the Ann Arbor campus in the past seven years--and now they're abandoning it. Most of the 2100 employees are likely to have a difficult time finding other employment, and local property values (including my house) have just dropped substantially in value. Because Pfizer's fourth-quarter profit of $9.45 billion apparently just wasn't enough.