Covidien Plans Layoffs and Plant Closures

Covidien's board has signed off on a restructuring scheme that would involve cutting jobs, closing plants, and boosting the firm's use of offshoring. The plan, which is designed to "drive efficiencies and improve the company's cost structure," is expected to yield $250-$300 million in annual savings by the fiscal year 2018. In the near term, those changes would be offset by pretax restructuring costs of $350-$450 million, with roughly $100 million of that being tied to closing facilities and the rest related to severance costs. The plan would begin to yield savings in fiscal 2014, which would accelerate in fiscal 2015, according to the company's projections. The company currently has 38,000 employees located in 70 countries. The number of jobs that the firm plans on cuttings has not yet been disclosed. The company also announced a 23% bump in its quarterly dividend rate, from $0.26 to $0.32 per ordinary share. Earlier this year, the company's stock hit $68.55. During mid-day trading on September 19, it was trading at $63.09. Similar to Medtronic, the company is in the processing of evolving its business model by expanding its focus on emerging markets and service offerings.