Stryker Cites Device Tax as Reason Behind Layoffs

Last week, Stryker Corp. announced plans to lay off approximately 5% of its global workforce. The move, combined with other restructuring activities, are "anticipated to reduce annual pre-tax operating costs by over $100 million beginning in 2013," according to a press release.

November 16, 2011

1 Min Read
Stryker Cites Device Tax as Reason Behind Layoffs

The firm cited the medical device excise tax, which is scheduled to go into effect in 2013, as a motive for the decision. The tax is expected to raise Stryker's tax burden by an additional $150 million, according to Styker chairman, president, and CEO Stephen P. MacMillan. The restructuring is anticipated to be mostly finished by the end of next year—just before the device tax is slated to go into effect. Recently, MacMillan also faulted “a challenging economic environment and a market slowdown in elective medical procedures" as further reasons for the layoffs.

In the aforementioned press release, MacMillan explained that the restructuring efforts are "part of [the firm's] ongoing focus on quality, innovation and cost [...]." 

New MD+DI site moderator Paul Stein weighed in on the news: "Frankly, I can't see how getting rid of those people responsible for companywide quality and innovation will improve quality and innovation companywide. The CEO is blatantly doing this to make some statement about the future medical device tax," he writes. "In chess, this is called a gambit; giving up something now for a hopeful future gain. But this is no mere game, and a good CEO should not be treating his employees like pawns. The Wall Street community liked his bold move, initially, but we'll just have to see how his strategy goes over in the long term."

Brian Buntz

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