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Executive Summary

WHITEHALL's ELKHART PLANT CLOSING ELICITS SEC. 936 ATTACK from Rep. Hiler (R-Ind.) in the form of a tax credit repeal bill (HR 4831) with the title, "American Jobs Stability Act of 1990." The bill would cancel Puerto Rican investment tax credits when a corporation eliminates operations in the U.S. to move them to the island. Although enactment of the bill is unlikely this year, the legislation has 28 cosponsors, including several senior GOP congressmen such as Rep. Madigan (Ill.) and Rep. Conte (Mass.). The announcement of the plant closing by the American Home Products' subsidiary on Sept. 7 precipitated a demonstration at AHP's corporate headquarters in New York on Oct. 3. Employees from the Elkhart facility joined members of the Oil, Chemical and Atomic Workers Union at the demonstration. The Company said the Indiana plant closing, to take place over the next 13 months, ultimately will affect more than 150 employees. The publicity surrounding the Whitehall plant comes on top of a squabble between Glaxo and SmithKline Beecham on Capitol Hill about the size of their tax breaks for Zantac and Tagamet production. SmithKline started that dispute by trying to block the suspension of an import duty for ranitidine. In countering SmithKline's arguments, Glaxo expanded the issue to Sec. 936 credits by comparing its suspension request to the Puerto Rican tax credit program ("The Pink Sheet" Oct. 1, T&G-4). That type of publicity on Capitol Hill -- job shifting allegations and finger-pointing over whose tax break is bigger -- could make Sec. 936 harder for the drug industry to protect in future years. The tax credit program is already at risk in the pending statehood referendum legislation. It could also become a likely target of the current Capitol Hill game of raising government revenues without appearing to the general electorate to be raising taxes. The AHP consolidation and restructuring plan is part of the digestion of A.H. Robins. "As is frequently necessary in major acquisitions, a comprehensive review of all facilities has been undertaken," Whitehall said in a press release. "That review indicated the need for restructuring and consolidation of operations." The company also pointed out that "significant changes have already taken place in many locations." For example, "at Robins' Richmond, Va. headquarters the work force has been reduced by more than 500 positions," and "consolidation of distribution facilities of Whitehall and Robins in several cities in the U.S. has already been completed," the release states. A spokesperson added that layoffs are planned in Whitehall plants in Hammonton, N.J. and Puerto Rico as well as in Elkhart and Richmond.

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