Inside Tucson Business report

Even if Novartis Nutrition Corp. might be feeling a bit unloved by local government officials in Minnesota where their sole existing production plant for Boost is located, the company has decided it no longer wants to keep the Tucson card in its playing deck of options.

Last week, Novartis informed city officials, it doesn't intend to purchase the old Slim-Fast plant on the southeast side to make the nutritional supplement drink.

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Publicly, Novartis issued a short statement saying "After evaluation of the production site in Tucson, Novartis Nutrition Corporation has decided not to purchase this site. Novartis Nutrition Corporation will continue to evaluate the expansion of its existing site in St. Louis Park, (near Minneapolis) as well as other expansion sites. At this point, no decisions have been made and it is not appropriate to speculate."

City Manager Mike Hein said he hopes to find out more about why Tucson was eliminated when he talks to Novartis people this week. But in the meantime, he says he's not sure how he feels about the company's decision.

"I have plenty of other things I need to do," he said. "They always said that it was going to be a bottom-line decision and that it needed to make economic sense for them to come here."

Hein said he's not so sure the incentives being offered weighed that heavily into the company's decision.

Earlier this summer, the city agreed to a plan that would have allowed Novartis to purchase the plant at 8755 S. Rita Road for $50 million, turn over ownership to the city, which would lease it to Tucson Regional Economic Opportunites (TREO) for $1. The idea was then to have TREO lease it to Novartis for $50,000 a year.

The whole deal was calculated to be worth $3.5 million in tax savings to Novartis over 15 years.

As part of the move, Novartis was to invest about $38 million to upgrade the Slim-Fast plant for its purposes. Additionally, the company said it would employ up to 117 workers within the first five years.

Despite the tax incentives, TREO officials estimated local governments and school districts would take in about $8.6 million more in taxes than what Slim-Fast is paying on the plant, which is still owned by its parent company, Unilever.

The plant has been closed since June 2004.

Novartis had always insisted that Tucson was just one site it was considering and that it had drawbacks. But the company was willing to pursue it largely because the plant here was built to do just what Novartis wanted to do with it, produce a drink.

"I think they found this plant and they owed it to themselves to check it out," Hein said, adding that issues the company felt it had over increased transportation costs weighed against opening in Tucson.

Some local officials were also concerned over the plant using up to 350,000 gallons of precious desert water a day.

Asked if he thought the company might have been using Tucson as a ploy to try to get something out of officials in Minnesota or someplace else, Hein said that might have played in to the consideration but he feels company officials considered it a legitimate option.

In Minnesota, there has been virtually no public discussion over Novartis' plan for the future of its sole Boost production plant or the possibility of moving elsewhere. Officials in St. Louis Park said last week they haven't heard anything.

One business reporter there who has been trying to cover the story Boost's plans said he knew only of the company's consideration of Tucson. No other cities have been talked about. But then he commented "It's really frustrating to try writing about a company that won't tell you anything, not even its criteria."

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