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May 02, 2019 02:00 AM

Medtronic plans layoffs in two states

Catherine Kavanaugh
Staff Writer
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    Minneapolis-based medical device maker Medtronic Inc. is laying off workers in its cardiac and vascular group, including up to 100 salaried and hourly employees in Santa Rosa, Calif., and a smaller undetermined number in Minnesota.

    The company is a subsidiary of Dublin, Ireland-based Medtronic plc, which is the world's largest stand-alone medical device maker with sales of $29.9 billion in its 2018 fiscal year. The parent company is in the early stages of a five-year, cost-cutting program aimed at staying competitive.

    In Santa Rosa, where operations support the production of coronary balloons, stents and heart valves, 85-100 layoffs will cut across research and development, global operations, marketing and other departments.

    Medtronic employs about 1,100 people at two sites in Santa Rosa. The company reportedly said the city will remain the headquarters for two of its largest businesses within the coronary and vascular group: the coronary and structural heart division and the aortic and peripheral vascular division.

    The cardiac and vascular group produces pacemakers and implantable defibrillators in addition to heart valves and stents. The group posted revenue of $11.4 billion in its fiscal 2018 year, including about $3.5 million for the coronary and structural heart business and $1.8 billion for the aortic, peripheral vascular business.

    While the cardiac and vascular product group is the largest of four at Medtronic, it is expected to be the slowest growing. Sales are projected to increase 3-3.5 percent compared to 5 -15 percent for the minimally invasive, restorative therapy and diabetes-related product groups, company officials reportedly told investors in February.

    Medtronic officials also are trying to slim the workforce five years after acquiring medical supplier Covidien plc in a $50 billion deal, which increased staffing from 49,000 employees to 92,000. Medtronic Inc. and Covidien plc became subsidiaries of Medtronic plc in the January 2015 deal.

    The number of jobs to be cut in Minnesota is in flux, according to the Minneapolis  Star Tribune.

    Medtronic spokesman Fernando Vivanco told the paper, "We continually evaluate our operations to look for ways we can streamline the organization and be more efficient, as we need to deliver growth to the corporation. The business is prioritizing programs that best position us to have the greatest impact on patients in the future. We needed to make longer-term structural changes to ensure the sustainability of our organization and determined that we needed to reduce a number of positions."

    Medtronic plc announced its cost-cutting initiative in January 2018, calling it the "enterprise excellence program" and saying it is designed to drive long-term business growth and sustainable efficiency, leverage the company's global size and scale, and enhance the customer and employee experience.

    The plan is expected to save Medtronic $3 billion by the end of its fiscal year 2022 but a portion of it will cost about $1.7 billion for training employees who will transition to other company jobs as well as severance and termination benefits.

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