Juul Labs contractor expanding
Phillips-Medisize has doubled state workforce
As concerns grow over the teen vaping epidemic, a contractor for leading ecigarette maker Juul Labs has been expanding in Wisconsin.
The company, Phillips-Medisize, says it employs 2,717 people in Wisconsin and has another 190 job openings across the state. That’s approximately double the number of workers the contract manufacturer employed five years ago, according to 2014 Wisconsin Economic Development Corporation documents.
Phillips-Medisize, which also makes a broad range of medical devices and other products, began producing e-cigarette components in Wisconsin in 2018, company spokeswoman Heather Ditzler said.
It’s unclear how many Phillips-Medisize workers in Wisconsin are involved in producing e-cigarette components — or exactly what type of contract work they do for Juul.
“For proprietary reasons we do not report employment by specific lines of business,” Ditzler said in an email.
But it’s clear that Phillips-Medisize, which is owned by a Koch Industries affiliate, has been hiring. The company is opening a large plant in Hudson. That plant, a 180,000-square-foot manufacturing facility, is at St. Croix Meadows, the site of a former greyhound racing track.
“This new plant is part of a multi-million dollar investment, and when completed and fully operational, is expected to employ about 400 people in roles that range from skilled manufacturing to engineering,” Ditzler said. “There are already approximately 200 people working in newly created positions at the Phillips-Medisize location at St. Croix Meadows.”
Phillips-Medisize previously was awarded $5 million in job creation tax credits by the Wisconsin Economic Development Corp. to help fuel its expansion in Wisconsin. When former Gov. Scott Walker announced the tax credits in 2014, he praised the company, saying its decision to stay in Wisconsin and expand reflected the state’s strong business climate.
The state agreed to provide up to $5 million in performance-based tax credits to help Phillips-Medisize expand facilities in New Richmond, Menomonie, Hudson, Phillips, Medford and Eau Claire. At the time, the company committed to creating 484 full-time jobs in addition to retaining 1,381 full-time workers.
A tax credit is essentially money that would have been paid to the state to help fund things like schools and public safety, but instead goes back to the company awarded the credit. The credits awarded to Phillips-Medisize were refundable, meaning the company could get cash any year that the tax credits exceeded its state income tax liability, according to WEDC documents.
During the years 2011 through 2017, the company hasn’t paid any income taxes to the state, according to tax information provided by the state Department of Revenue. No tax records were available for 2018 and 2019, the department said.
Ditzler said the tax credits were available between 2014 and 2017 and that Phillips-Medisize qualified for the entire $5 million award before 2018, when it started producing e-cigarette components.
Jobs agency spokesman David Callender confirmed that timeline, saying state records show the company met its job creation targets by 2016 and received all of the tax credits by the end of 2017.
Phillips-Medisize declined to provide specific information about its relationship with Juul, but Ted Kwong, a Juul spokesman, has said his company supports hundreds of jobs in the state.
Phillips-Medisize manufactures vaping device components but not the entire e-cigarettes or e-liquids, Ditzler has said. The company produces vaping components at three Wisconsin facilities: Menomonie, New Richmond and Hudson, she said.
The new plant’s Carmichael Road address in Hudson is listed in the Food and Drug Administration’s list of tobacco product manufacturers and packagers.
Phillips-Medisize provides contract manufacturing services for the medical device, drug delivery and other FDAregulated markets, Ditzler said. The company also manufactures products such as glucose monitors, surgical devices and drug delivery devices used to treat diabetes, anaphylaxis, multiple sclerosis and other diseases, she said.
Juul faces a number of recent lawsuits from people as well as states, with many involving claims that the company illegally marketed flavored e-cigarettes to teenagers, igniting a vaping-related health crisis.
Juul denies the claims, arguing the company doesn’t market its e-cigarettes to youth and instead intends them for adults who are trying to quit smoking.
As of Dec. 27, 2,561 patients have been hospitalized with vaping-linked lung illnesses in all 50 states, the District of Columbia and two U.S. territories, according to the U.S. Centers for Disease Control and Prevention. A total of 55 deaths have been confirmed and more are under investigation, federal officials say.
Most of those lung illness cases have been linked to vaping products containing THC, the psychoactive ingredient in marijuana, federal officials say. And vitamin E acetate, an ingredient frequently added to bootleg THC vaping products, has been found to be a “very strong culprit” in the outbreak of lung injuries, according to the CDC.
Phillips-Medisize began in Phillips, Wisconsin, in 1964, and was initially named Phillips Plastics Corp. It became Phillips-Medisize in 2011 after merging with Medisize, a European-based contract manufacturer.
Five years later, in 2016, Phillips-Medisize was acquired by Molex, an affiliate of Koch Industries, the Wichita, Kansas-based company led by billionaire conservative businessman Charles Koch.