Medical supplier C.R. Bard Inc. will close several manufacturing plants and the headquarters of injection molder Davol Inc.
The moves, announced Jan. 29, are aimed at cutting costs and funneling more investment into research and new product development, said Bard spokeswoman Holly Glass.
"We took a good, hard, long look at spending in R&D and determined that we were not spending enough," said Glass, based in Gainesville, Va. "Innovative new products are our lifeline and define the future of [the medical supply] business."
Bard, based in Murray Hill, N.J., invests about 5 percent of annual sales in research and development. The company wants to hike that figure to at least 8 percent of sales by 2004, Glass said.
But reaching that goal means making some difficult decisions affecting many of the company's 8,100 employees.
The publicly held company told analysts during a Jan. 29 meeting in New York that it planned some major cuts aimed at saving more than $40 million. It announced three cost-cutting initiatives: consolidating U.S.-based, nonmanufacturing operations at a new headquarters in central New Jersey; reducing the number of plants, which include captive molding and extrusion facilities; and considering the merger of non-U.S. administrative functions.
The pooling of administrative work would affect Bard's nine divisions, including vascular-device supplier Impra Inc. and surgical-supply company Davol Inc..
Davol, based in Cranston, R.I., will close its headquarters within three years, Glass said. An undisclosed number of its 175 workers will be offered a transfer to the new Bard location, not yet identified. The rest will be given severance packages, she said.
Officials at Davol, a molder founded in 1874, referred all calls to Bard. The company shut down molding at the 70,000-square-foot Rhode Island headquarters facility in 1997 and cut more than 300 jobs. Much of that work was transferred to other Davol plants in North America. Bard acquired Davol in 1980.
Bard has not determined yet how many of its 24 manufacturing plants worldwide will reduce staffs or be shuttered by 2004, Glass said. The company will come out with more details in the fall, she said.
The company also has not determined how much work, if any, will be outsourced to other suppliers. Equity analyst Sanjiv Arora of Minneapolis-based Dain Rauscher Wessels said outsourcing could be difficult.
"It will be hard because of their custom products," Arora said. "One thing Bard does well is manufacture plastic catheters. I'm not sure how much tie there would be with another company."
The company is a market leader in all its product areas, Arora said. Bard reported 2000 profit of $106.9 million on sales of $1.1 billion.