Medical Device Tax Blamed for Welch Allyn Layoffs

The company plans to shed around 275 employees.

Jamie Hartford 1

September 11, 2012

2 Min Read
Medical Device Tax Blamed for Welch Allyn Layoffs

Welch Allyn yesterday became the latest medical device company to announce a round of layoffs it’s blaming on the medical device tax.

The Skaneateles Falls, NY-based manufacturer of medical diagnostic and therapeutic devices, cardiac defibrillators, patient monitoring systems, and miniature precision lamps says it will eliminate around 275 jobs over the next three years through voluntary and involuntary measures. The layoffs will affect around 10% of the company’s 2,750 employees. Welch Allyn will also perform a 90-day evaluation of its European operations and reorganize its business in Latin America.

As part of the restructuring, the company will consolidate its North American manufacturing. Production of its patient monitoring, systems, and low acuity vital signs products will move from Beaverton, OR, to Skaneateles Falls, while production of thermometer probe covers, lamps, and some blood pressure cuff will move from Skaneateles Falls to Tijuana Mexico, where the company also plans to open a shared service center. Welch Allyn will also open three new product development centers, in Skaneateles Falls; Beaverton, OR; and Singapore.

"This restructuring plan will help us maintain competitive levels of investment in new products and technologies that are necessary to meet the changing needs of the global healthcare environment," CEO Steve Meyer said in a statement.

Welch Allyn’s announcement comes less than a week after Medtronic announced that has cut about half of the 1,000 positions it intends to eliminate by the end of 2013 in an attempt to save as much as $125 million and less than two weeks after St. Jude Medical laid off 300 workers in a bid to save up to $60 million starting next year. On August 29, Reuters reported that Boston Scientific is also planning an unspecified number of layoffs.

Welch Allyn is also among the growing medical device companies that have blamed the 2.3% medical tax included in the Affordable Care Act for layoffs. Stryker cited that tax in its decision to eliminate 5% of its workforce last November. In late July, Cook Medical said it would curb plans for growth due to the tax, which is set to take effect in January.

Jamie Hartford is the associate editor of MD+DI. Follow her on Twitter @readMED.

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