James Klessens

The news that Cody Labs is shutting down and terminating 80 positions, which have an average annual salary of $70,000 each, was an unfortunate development for a public-private partnership that once held great promise.

James Klessens, CEO of Forward Cody, spoke at the Powell Economic Partnership’s monthly advisory meeting Tuesday on how Cody will respond to the job losses and how the events will influence future economic development strategies.

The economic developer said Forward Cody plans to forge ahead.

“Quit is not part of who we are and what we do,” Klessens assured the audience.

Klessens said the closure was not something anyone in the area had any control over. The decisions were made by executives in Pennsylvania with Lannett Company, which owns Cody Labs.

Lannett had previously planned to dramatically expand its facilities and operations in Cody and manufacture more pain-killing medications known as opioids, which were expected to be in higher demand as America’s population ages. But opioids have come under closer scrutiny because of their potential for abuse and the tens of thousands of fatal overdoses involving the substances each year.

“While the opioid market is large, it’s also fraught with a number of very difficult and challenging environments,” Lannett CEO Tim Crew said last week, noting the “large loss of life” associated with the drugs.

Crew made the comments to investors and analysts at the Raymond James 2019 Life Sciences and MedTech Conference in New York, after taking a question about Lannett’s decision to shutter Cody Labs. Lannett has said it tried finding another company to take over Cody Labs, but only found buyers interested in the business’ equipment and property, prompting the decision to shut down operations by early fall.

Lannett officials said in a filing with the federal Securities and Exchange Commission that they expect to spend $5 million closing Cody Labs, including $2 million in severance and other employee-related expenses and $2 million in contract termination costs.

“We never had any material footprint [in Cody]. It was a plan of where we wanted to go,” Crew said at last week’s conference. “And while that is still a great need, pain management, in the market, I think until the industry and government decides how best to manage that, it was a horizon and a level of investment that was unattractive to us.”

While Cody Labs didn’t get far on its planned $50 million expansion on Road 2AB, it did construct a warehouse and the shell of a tall, second building.

The Wyoming State Loan and Investment Board (SLIB) approved a $23 million loan to Cody Labs in 2017, but the company canceled the loan last year and never took the money.

However, the pharmaceutical manufacturer was the beneficiary of a $2.53 million grant from SLIB that helped construct the $3.7 million warehouse in 2015. Forward Cody partnered with the company to secure the grant, and Forward Cody still owns that building.

Klessens said the organization has gotten calls from media across the country concerning the Cody Labs’ closure, and reporters always ask about the future of the building — often appearing more concerned with the fate of the asset than the people impacted.

“What about the 80 people that lost their jobs?” Klessens asked.

Forward Cody is working with employers in the area to determine if any of the skill sets they’re seeking fit those of the people who lost their jobs. This includes a search of Powell employers.

“There may be some opportunities to cross-pollinate,” he said, but it’s going to be a challenge. As much as possible, Klessens said he’d like to keep people from disappearing from the community if they fail to find adequate employment.

As for the warehouse, Cody Labs fulfilled all its obligations to the state.

“The company hired 47 workers at $2.5 million in payroll, which exceeded expectations, and they invested $30 million in the building and in equipment,” said Tom Dixon, a spokesman for the Wyoming Business Council, which oversaw the grant.

At the time the funding was awarded in 2012, the Business Council tracked projects for three years after completion.

“We generally found that was the time it took to recoup the state’s investment through payroll, sales tax, property tax, lease payments, etc.,” Dixon said. “At that point, we turn the project over to the local government and economic development leaders.”

The lease has been a significant source of revenue for Forward Cody, with Cody Labs paying the organization a little more than $100,000 a year to use the building. Another 16 years remain on the lease and Forward Cody is looking to find new tenants.

Klessens said he’s seen some interest from people looking to tap into the state’s hemp industry, which is still awaiting regulatory approval. While such an operation will never produce the kinds of jobs that Cody Labs offered, or even as many, Klessens said it’s an opportunity worth pursuing.

With future partnerships, he said Forward Cody will be looking for companies with a lot more “follow through” when efforts are made to get their business going in the community.

“There’s a quid pro quo,” he said.

Klessens said they’re looking at something they call “repatriation,” which is an effort to help people who grew up or lived a long time in the area and wish to return.

“Bring them back home, back to their families, and create lasting jobs,” Klessens explained.