California cutbacks: Boston Sci to close two facilities, Abbott cuts 160+ employees

Boston Scientific ($BSX) is closing facilities in San Jose and Fremont, CA, and moving their operations to Costa Rica at a cost of 455 U.S. jobs.

Under the Worker Adjustment and Retraining Notification Act of 1988, companies are required to notify states of certain layoffs. Boston Scientific's WARN notice says that 284 employees will be cut due to the plant closure in Fremont. 171 will be cut in San Jose.

The closures are the conclusion of a process initiated in 2013. A Boston Scientific spokesman told FierceMedical Devices in an email: "As part of Boston Scientific's ongoing efforts to streamline its operations to better serve the needs of our customers and their patients, the company announced plans in 2013 to move its single-use device operations in Fremont and San Jose, CA, to our manufacturing facility in Costa Rica. This decision leverages Boston Scientific's current infrastructure, skills and capabilities. We are now nearing the completion of this transfer, and as a result, manufacturing of these devices in the San Jose and Fremont sites will cease by the end of October."

Boston Scientific's facility in San Jose, CA, where 171 layoffs will occur due to closure in October--Courtesy of Boston Scientific

According to the company website, the Fremont facility makes coils, stent systems, retrieval devices and intravascular ultrasound catheters. The San Jose facility makes electrophysiology devices, focused on the electrical system of the heart, radiofrequency ablation catheters, diagnostic catheters and ultrasound imaging devices.

Boston Scientific's Coyol and Heredia, Costa Rica, facilities make devices for the company's cardiology, urology, endoscopy and peripheral intervention divisions.

Meanwhile, the Californian WARN notices revealed that Abbott's ($ABT) vascular division last week laid off 161 employees in Temecula and 81 employees in its headquarters in Santa Clara.

The Temecula facility, located near San Diego, has been shedding jobs steadily, as has been documented by FierceMedicalDevices and FiercePharma, going all the way back to 2007, when 700 jobs were put on the chopping block. The plant, along with the company's operations in French Valley, once employed about 4,000 people. That number is now below 2,000. There were 100 cuts in November 2014. More than 600 cuts occurred in 2013. Additional employees were cut in 2012.

The plant makes stents for the vascular division, which had net sales of $1.42 billion in the first half of the year (down from $1.5 billion in 2014) and generated operating earnings of $564 million during the time period, up from $524 million a year ago.

"As we had previously communicated, internally and externally, Abbott made adjustments to its workforce to increase efficiencies and remain competitive in a challenging global environment. We notified all impacted employees of their last day on July 30," an Abbott spokesman told FierceMedicalDevices in an email.

In fact, in the company's quarterly filing with the SEC, Abbott said that "in 2013 and prior years, Abbott management approved plans to realign its vascular manufacturing operations and core diagnostics business in order to reduce costs."

Finally, the WARN notices show that spinal fusion specialist Alphatec Spine last month cut 99 jobs in Carlsbad, CA.

The wave of med tech mergers like Medtronic's ($MDT) $50 billion purchase of Covidien sparked fears of mass layoffs. Although companies are promising ambitious synergies, large-scale jobs losses haven't occurred, at least so far. FierceMedicalDevices did get word of Zimmer's plan to close its dental facility in Carlsbad, CA, and there are rumors of additional consolidations at the company.

But the layoffs at Boston Scientific and Abbott show that due to the shifting global economy, and rise of new hubs like Costa Rica (where medical devices are now the top export), U.S. med tech manufacturing jobs are no longer guaranteed, regardless of the need to achieve synergies from M&A.

Boston Scientific just closed its acquisition of American Medical Systems' prostate and men's health businesses, but those devices do not appear to be made in either to-be-closed facility.

Suggested Articles

BD will begin offering a point-of-care COVID-19 antibody assay, which operates like a combination of a blood glucose test and a home pregnancy test.

Smith+Nephew is contracting with the U.K. government to build a new ventilator specifically designed for large-scale production.

NantWorks’ ImmunityBio has begun a supercomputing collaboration with Microsoft to map out the spike protein of the novel coronavirus.