The 29-year-old forward announced on Tuesday that he was calling time on his 10-year career with the Devon club following advice given to him by leading medical experts.
Hanks - who featured 192 times for the club, scoring seven tries in the process - sustained his injury during the final minutes of Exeter's LV= Cup semi-final win against Bath at the Recreation Ground last month.
His retirement is the latest injury blow dealt to Baxter, who already this season has had to contend with the retirements of fellow forwards Tom Hayes and Chris Whitehead.
Paying tribute to Hanks, Baxter said: “I had a chat with Hanksy last week and obviously thanked him for all he’s done, the length of time he’s been here and the successful journey he’s been on with us.
“He turned up as a fresher at Exeter University when I had the head coach role and I did what didn’t happen very much at that time, and that was pick a fresher because he was ready to play for the first team. I liked the look of him straight away. He had that size and athleticism that stood out at university level, but he also had the physicality and toughness about him that stood him out above the other young guys. Pretty soon we had him down at the club and it went from there."
Indeed, Hanks wasted little time in showcasing his abilities and he made his first team debut in a National League One fixture against the Cornish Pirates at the old County Ground.
Since then the Sidcup-born forward has been an integral part of helping the Chiefs not only rise out of the Championship, but more establish themselves as a proven force not only within the Aviva Premiership, but across Europe in competitions such as the Heineken and Amlin Challenge Cups.
“He’s one of the guys who’s progressed at every level he’s played and got better and better," added Baxter. “Obviously this injury is awful and the fact it’s finished his career is bad, but it’s also unfortunate that we haven’t seen more of him because he has had quite a few serious injuries.
“He missed a whole season with an ACL, his collarbone injuries more recently have knocked him back a bit and then to get back and be in contention for a big period of the season for us, appear off the bench in the LV semi, for what happened to happen is awful for him.
“At the same time, he’s had some fantastic moments for the club and I’d like to thank him for everything he’s done.”
With the loss of both Hayes and Hanks this season - both experienced campaigners for the Chiefs - Baxter knows he will need to bolster his options in the Exeter engine room for next season and beyond. Already he has added imposing Aussie Mitch Lees from London Welsh and he's not ruling out bringing in new talent ahead of the 2014/15 season.
Baxter added: “I put some feelers out there as soon as it was confirmed that James would have to retire. It’s a bit late in the season to recruit a front-line lock, but we’ll see what’s on the market and go from there.”
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