Medtronic lays off 240 workers

Medtronic Inc. laid off 240 manufacturing workers at its Santa Rosa vascular division Friday, cutting 20 percent of its Sonoma County work force as the medical device maker shifts production to a lower-cost facility in Ireland.

It was the second major layoff at a Sonoma County technology company this week. On Wednesday, Agilent Technologies cut 300 jobs at its Santa Rosa facility.

“What’s next for me right now, I don’t know,” said one Medtronic employee who lost his job Friday. “With Agilent laying off 300 workers, it will be a little harder to get a good job in Santa Rosa.”

Friday’s layoffs may not be the last for Medtronic’s Santa Rosa operation. In February, CEO Bill Hawkins said the company must cut its work force starting next month because of reduced spending by its customers, mostly hospitals and large clinics.

The company didn’t say how many jobs would be eliminated in the upcoming restructuring. It’s unclear how many jobs could be affected in Santa Rosa, where Medtronic will employ just over 900 workers after Friday’s layoffs. The company would offer buyouts and early-retirement incentives before doing layoffs, officials said.

Friday’s layoff at Medtronic isn’t related to the current recession, said Don Chigazola, director of operations for the company’s vascular unit. It’s the culmination of a 5-year-old plan to shift manufacturing to Galway, Ireland, where there’s a lower tax rate for U.S. corporations.

“It’s about leveraging an existing facility in Ireland,” he said.

Medtronic’s Santa Rosa facility will remain as a center for research and development, marketing, regulatory affairs and other operations. A small number of manufacturing jobs will survive.

“We’ll still be one of the county’s largest private employers,” said Medtronic spokesman Joe McGrath. “We’re here for the long term.”

Minneapolis-based Medtronic is Sonoma County’s largest medical technology business and is one of the cornerstones of its manufacturing sector. It operates facilities in Fountaingrove and near Charles M. Schulz-Sonoma County Airport.

Since 1999, when Medtronic acquired the vascular unit from Santa Rosa’s Arterial Vascular Engineering, it has eliminated or moved more than two-thirds of the 3,000 jobs that AVE created in Sonoma County.

Medtronic has kept its overall employment levels fairly stable in Santa Rosa since 2002. It has been expanding its engineering, marketing and development operations in Sonoma County while shifting production overseas.

Typical manufacturing jobs at Medtronic pay $20 to $28 an hour, according to one longtime employee, who lost his job Friday and spoke on condition of anonymity.

The workers laid off Friday will receive 60 days’ pay in addition to severance of one week’s pay for every year of service.

Medtronic has been working with other Sonoma County employers to find jobs for its laid-off workers, Chigazola said.

“This is possibly the worst time to put people into the job market,” he said. “This is a very difficult thing for us to do. Some of these people have been with us for 10 years.”

Medtronic is the world’s largest medical device company, making products ranging from pacemakers and defibrillators to spinal implants and diabetes treatments. The company has 39,000 employees worldwide and sells about a third of its products outside the United States.

Santa Rosa is headquarters for its vascular unit, which makes stents and stent grafts for treating artery disease. Medtronic’s vascular sales reached $395 million in the most recent quarter, up 20 percent over the prior year.

The layoffs Friday are part of a massive shift of U.S. technology manufacturing jobs to cheaper locations overseas following the tech crash in 2001, said Robert Eyler, an economics professor at Sonoma State University and director of the school’s Center for Regional Economic Analysis.

“Those jobs are going away and they’re not going to come back,” he said.

The layoffs will leave Medtronic with only about 60 production workers left in Santa Rosa, down from 600 in 2006.

Medtronic’s Santa Rosa manufacturing employees have had several years’ notice that their jobs would be eliminated when the company’s Galway facility was ready to begin full production, Chigazola said.

For two years, Medtronic has offered on-site computer training and English language programs to its Santa Rosa production workers to help prepare them for new jobs, he said.

Medtronic also gave regular updates on the transfer of production to Galway, he said.

The company will provide immediate job-hunting assistance for the laid-off employees, Chigazola said. They’re also eligible for retraining and other benefits under a federal program for workers whose jobs have been moved offshore.

Medtronic also is offering to pay half the cost of COBRA medical insurance for two months for workers who choose to continue the benefit.