Stryker Corporation has issued a press release detailing workforce reductions that may total 1000 jobs. The release comes in the wake of US medical technology industry body Advamed claiming in its own report that President Obama’s Affordable Care Act would see consequential losses of 43000 US jobs. The 2.3% excise tax proposed in the Act has not been well received by the US Medtech industry and announcements from giants such as Stryker are therefore no surprise. Indeed one can only applaud any efforts to position the company optimally for the future. However one might be forgiven for having the perception that company releases like this are perfectly timed to allow them to perhaps leave any bad news at the door of Government, while enjoying short term “efficiency savings” and investor support. Stephen Macmillan, Chairman, President and CEO is a vocal critic of the Government plan and has reportedly stated that; “There is no doubt that we’re already starting to think about actions that offset that additional tax.”
Excerpt from the press release:
Stryker Corporation (NYSE:SYK) announced its intention to implement focused workforce reductions of approximately 5% of its global workforce and other restructuring activities that are anticipated to reduce annual pre-tax operating costs by over $100 million beginning in 2013. The targeted reductions and other restructuring activities are being initiated to provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013, as well as to allow for continued investment in strategic areas and drive growth despite the ongoing challenging economic environment and market slowdown in elective procedures. The reductions and restructuring activities are expected to be substantially complete by the end of 2012. Stryker will provide employees affected by these reductions with severance packages, counseling and job placement services.
The Company expects to record pre-tax restructuring charges related to these reductions and restructuring activities totaling approximately $150 million to $175 million, of which approximately $85 million to $95 million are expected to be recorded in the fourth quarter of 2011.
“As our markets continue to evolve, these actions are part of our ongoing focus on quality, innovation and cost, and position the Company to continue to provide strong, consistent growth in a changing environment,” said Stephen P. MacMillan, Chairman, President and Chief Executive Officer. “Against this backdrop, we are committed to achieving consistent double-digit per share earnings growth in 2011 and beyond.”
Source: medlatest staff, Stryker