Covidien plans $18M Florida expansion as it cuts and reorganizes elsewhere

Covidien ($COV) is expanding in Florida, even as the devicemaker plans to slash jobs, closes facilities and pursues outsourcing in a global money-saving move.

The Tampa Bay Business Journal reported that Covidien plans to build a 62,200-square-foot facility in Hillsborough County, FL, and invest $18 million into the effort, which will create up to 165 new jobs after it opens by mid-2014.

In a separate article, the newspaper noted those jobs would include high-paying engineer, scientist and manufacturing positions. Florida lured Covidien to the region with an $825,000 state tax refund program, according to the story. For now, Covidien is leasing space in a temporary facility nearby.

Apparently there was pretty fierce competition for the project, which had been in the works for some time and became final in March (and kept quiet until now). Massachusetts, Minnesota, Texas, Indiana and Arizona were all in the running, the newspaper's coverage noted.

It is unclear at this point the types of devices Covidien will make at the new plant. But Covidien produces a wide range of surgical tools and devices. 

The thing is, Florida's gain will likely mean losses somewhere else. Covidien disclosed in September 2013 that it would eliminate jobs, close other facilities and ramp up outsourcing in a bid to save between $250 million and $300 million annually. The restructuring plan itself is expected to cost between $350 million to $450 million in restructuring charges, $100 million of which will come from plant closures.

Lisa Clemence, Covidien's director of corporate communications, explained to FierceMedicalDevices via email that plans for the new plant come as the company continues "to invest in growing areas of our business while also restructuring to improve our operational and cost structure."

Covidien has said it will release details about its reorganization as it makes specific decisions, with an eye toward finishing the action by 2018. This year, Covidien spun off its drug business into a separate company now called Mallinckrodt ($MNK). It said the reorganization now underway is necessary to reduce operating costs and "meet the challenge of operating as a smaller company."

- read the Tampa Bay Business Journal's coverage here and here

Editor's note: This story is updated to include comments from Covidien.

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