Cook Medical is expecting to pay up to $40 million next year when the 2.3% medical device tax kicks in, and the company is shelving its plans to open 5 new plants to prepare for the hit.
Cook's Executive Vice President of Strategic Business Units Pete Yonkman told the Indianapolis Business Journal that the company had planned to open 5 facilities over 5 years, targeting small Midwestern towns with existing infrastructure Cook could expand. "We had hoped, as we get bigger, that that would be our model for expansion," Yonkman told IBJ. "To take these small manufacturing facilities and bring them to these communities, that had been hard hit by jobs leaving, because the work ethic is amazing and the people are really supportive and excited."
Instead, the company will focus its expansion efforts overseas, Yonkman said, scrapping plans that could have created hundreds of jobs stateside.
Cook, the country's largest private devicemaker, has been steadfast in its opposition to the impending tax. Chairman Steve Ferguson called it a "job-killing tax that puts the health of the American public at risk as companies like Cook have to pay this tax instead of investing in new medical technologies that can save lives."
Yonkman's announcement is another sign that the nation's largest devicemakers are steeling themselves for the tax hit and perhaps giving up on the efforts to repeal the law. Medtronic ($MDT) has said that it has resigned to pay the charge, making cuts to its operations in preparation, and Stryker ($SYK) has begun trimming its payroll to prepare for the 2.3% hit.
A bill to strike the tax from the Affordable Care Act passed the House but has sat idle in the Senate, where it is likely to remain.
- read the IBJ story