Medical Company Angles for Tax Break in Move Toward Robot Workforce

Chembio Diagnostics Inc., maker of rapid tests for HIV and other diseases, is looking to replace 45 production jobs with robots in the consolidation of its Suffolk County, N.Y., operations.

by James T. Madore, Newsday / November 16, 2018

(TNS) —  Chembio Diagnostics Inc. is seeking tax breaks for a consolidation of its Suffolk County operations that will reduce its workforce as it uses more robots to do production work, officials said Thursday.

The manufacturer of rapid tests for HIV, syphilis, Ebola, Zika, malaria and other diseases is proposing to move its office, research lab, factory and warehouse to 555 Wireless Blvd. in Hauppauge. Most of the operations are now in Medford, with the warehouse in Holbrook, according to records.

As part of the $3.9 million move, Chembio said it plans to replace 45 production jobs with robots and hire 23 new workers in higher-paying research and development, engineering and finance jobs.

The company's total workforce would fall from 223 in the county to 201, but the average pay would climb to $60,460, a gain of $7,370, records show. It's unusual for an employer to receive tax breaks when it's laying off workers.

“Consolidating our manufacturing, warehousing and personnel into a single facility is required to maintain competitiveness in our industry,” said Neil A. Goldman, Chembio’s chief financial officer, adding employees now have to walk outside to get from building to building.

The company would rent the Hauppauge space, which would increase its square footage to 70,000 from 60,000.

On Thursday the county's Industrial Development Agency voted unanimously to offer Chembio an incentive package valued at $815,400, including a reduction in property taxes on the Hauppauge building of $530,518 over 10 years.

IDA executive director Anthony J. Catapano acknowledged the company is cutting the ranks of its hourly employees from 163 to 118. But he said the number of higher-paid employees is increasing from 57 to 80.

"Although there will be fewer production employees, there will be more salaried jobs, and the payroll will grow by $300,000 per year," he said in an interview.

Earlier this year the company installed robots on one of its local production lines. Executives have said they are responding to higher payroll costs stemming from a rise in New York State's minimum wage.

Chembio reported a loss of $6.4 million last year on sales of $24 million. The company last reported an annual profit in 2013.

Chembio shares closed up 3 cents to $5.81 on Thursday. A year ago the shares were trading at $6.75.

Besides the United States, Chembio has a factory in Malaysia and recently purchased a developer of test-results readers in Germany.

"Their primary objective is to stay in Suffolk County," David G. Hunt, the company's real estate consultant, told the IDA board on Thursday. "The production lines will ultimately be fully automated."

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