Tax Break Allows Smith & Nephew Expansion

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Tax break in hand, Smith & Nephew can move forward with a $42 million investment to convert an office complex formerly occupied by a casino company into a centralized hub for research, marketing and medical education.

More surgeons will be flying into Memphis to learn about the company’s medical innovations because of the new center, said Joseph M. DeVivo, the president of Smith & Nephew’s global orthopedics division, which is based in Memphis. The money the doctors will spend is lagniappe on top of more than $13 million in annual payroll generated by the expansion. The expansion will create 160 high-salary jobs.

The Memphis and Shelby County Industrial Development Board approved on Wednesday a $6.2 million payment-in-lieu-of-taxes (PILOT) agreement with Smith & Nephew, along with tax breaks for two other large local employers, The ServiceMaster Co. and Nike.

‘Added commitment’

Smith & Nephew plans to close on Jan. 15 the purchase of 7216 Goodlett Farms Road, a property outside the Memphis city limits where Las Vegas-based Harrah’s Entertainment once had its division headquarters for the central United States.

The site will host the research, marketing and development functions of Smith & Nephew’s orthopedics division. The average annual wage for the workers at the new site will be $93,427, excluding benefits.

The company will spend $32 million for the property and invest another $10 million for furniture and equipment. The 40-acre site has 285,000 square feet of office space.

Smith & Nephew already employs 2,005 people at its Brooks Road campus and other locations in the Memphis area. The new campus at Goodlett Farms will make room for more investment at Brooks Road and the company’s Holmes Road locations, where future expansions are possible, Smith & Nephew said in its application for the tax break.

“This is not a move out of Brooks Road,” DeVivo said. “This is added commitment and investment.”

The company will continue pushing for improvements around the Memphis International Airport.

“We will continue our commitment to aerotropolis,” DeVivo said. “As a committee member on that (initiative), we will continue to be very active. We look forward to getting more action, to be quite honest with you. We definitely need to see an improved area for everybody. We will maintain our activism toward that.”

The first wave of the 160 employees who will work at the new property could be in place by next summer, he said. A second phase of the project will be the conversion of a warehouse into a teaching center, which is expected to take up to 18 months to complete. The center will include an auditorium and skills center.

Smith & Nephew has in many cases had to host large gatherings of surgeons at locations outside of Memphis because the company did not have the space it needed here, DeVivo said. The center also will be used for gatherings of the company’s far-flung sales staff.

“We hope to centralize that at Goodlett Farms and really make it a place where we are not only developing technology, but we are also bringing leading surgeons in for education and conferences and training on that technology,” DeVivo said.

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