As tax looms, device companies mull layoffs, cuts

A substantial number of medical device manufacturers are already looking at price hikes, cost cuts and layoffs as ways to live with a new industry tax slated to hit next year, according to a new KPMG survey.

The Boston Globe sums up the findings in a solid story that places the issue in context. Device industry lobbyists have bitterly fought implementation of the 2.3% excise tax since it became law as part of national healthcare reform. They claim that the tax will kill jobs and strangle innovation. And they'll likely hold up these KPMG numbers as another way to boost their argument to repeal the tax: 40% of 190 medical device manufacturing financial executives surveyed say their companies are mulling price increases, cost cutting and layoffs to counter the extra expenses created by the tax and keep their operations competitive, according to the story.

It's fitting that the Globe covered the story: Massachusetts is a major device industry hub, and the sector generates $7.5 billion for the state's economy and about 50,000 jobs, the story notes. And many of the companies are small, with fewer than 50 employees, meaning the tax will have a greater financial impact on the little guys.

The device tax also has crept into the presidential and U.S. Senate campaigns. Among the dust-ups: Former Massachusetts governor and Republican presidential candidate Mitt Romney opposes the national healthcare reform law and the tax. Democratic Sen. Amy Klobuchar of Minnesota has been placed on the defensive in her re-election campaign because she voted for the tax as part of the healthcare reform law. Minnesota is the other major medical device industry cluster. Sen. Scott Brown, a Massachusetts Republican, is running for re-election and wants the tax repealed.

- here's the Globe story

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