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Medtronic lays off 60 workers in Santa Rosa
Published: Friday, May 15, 2009 at 12:18 p.m.
Last Modified: Friday, May 15, 2009 at 6:23 p.m.
Medtronic Inc. cut into its Santa Rosa work force again Friday, laying off about 60 workers as the recession spreads into the once-immune medical sector.
Friday’s cuts — which amount to almost 7 percent of its Sonoma County work force — come just three weeks after Medtronic laid off 240 manufacturing workers in Santa Rosa.
The latest cuts targeted mostly higher-paid white-collar workers, such as R&D and marketing staff, project coordinators and technicians, company officials said.
Unlike the April layoffs, which resulted from a long-planned shift of manufacturing jobs to Ireland, the latest cuts stem from pricing pressure as cash-strapped hospitals seek to cut costs.
“We think of health care as being recession-proof. That is not the case,” said Sean Salmon, a vice president with Medtronic’s CardioVascular division.
The continued job losses at Medtronic are a sign that the health care industry is no longer immune from the pain afflicting other sectors of the economy, said Ben Stone, director of the county’s Economic Development Board.
“For the first time I think we’re seeing the recession come home to the health care sector,” Stone said.
Combined, the two rounds of cuts will reduce Medtronic’s Sonoma County operations by nearly 26 percent. After the latest round, the Santa Rosa vascular division will have about 840 jobs, down from its high of 2,800 workers in 2000.
The company avoided cutting 20 additional jobs by offering workers early retirement, buyouts and new jobs within Medtronic, spokesman Joe McGrath said.
Despite the latest cuts, the company said it remains committed to its Sonoma County operations.
“We will maintain a significant presence here in the long term,” Salmon said. “We are committed to a very, very vibrant R&D facility here that will develop life-saving technologies.”
Medtronic remains Sonoma County’s largest medical technology business and is one of the cornerstones of its manufacturing sector. It operates facilities in Fountaingrove and near the Charles M. Schulz-Sonoma County Airport.
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 of the United States.
Santa Rosa’s vascular division makes stents, the tiny mesh tubes that prop arteries open, and stent grafts, which repair artery walls damaged by aneurysms.
In April, the company said its cutbacks in Santa Rosa were not related to the recession, but rather were aimed at reducing manufacturing costs. Ireland has lower taxes on business than the U.S.
But the latest round of cutbacks is directly related to the global recession, Salmon said. Hospitals have come under great financial pressure to cut costs as the recession drags on, he said. Charitable contributions are down, costs are up and the number of uninsured patients is on the rise as jobless ranks swell, he said.
So hospitals are cutting costs wherever they can, including pressuring suppliers to lower prices, which has hurt Medtronic’s sales, Salmon said.
Because of this pressure, “we’re not going to be able to hit the kind of growth trajectory we had planned for,” he said.
The cuts come despite the solid financial performance of the vascular division compared to other parts of the company and the overall economy.
Sales of stents and related products for treating artery disease rose to $395 million in the third quarter ending Jan. 23, up from $330 million a year ago.
Last year, the company also saw strong sales for its next-generation Endeavor drug-coated stent, which releases medication to stop arteries from re-clogging.
The company declined to update Endeavor’s recent performance. More details about the restructuring will be announced Tuesday after the company reports financial results, Salmon said.
Laid-off workers were given 60 days’ pay, severance, two months of COBRA medical benefits and job counseling, Salmon said.
The company declined to give salary ranges for the eliminated jobs. Online job postings for similar positions at Medtronic estimated salaries of $50,000 to more than $100,000 per year.
The job losses are more evidence that the recession continues to rock even strong, well-managed companies.
“Companies are continuing to evaluate and trim as they need to deal with economic forces beyond their control and beyond what anyone would have anticipated even six months ago,” Stone said.
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