Covidien ($COV) will shutter a South Carolina plant in a move intended to boost "operating efficiency," the device and medical products manufacturer disclosed Wednesday. Nearly 600 full-time and contract employees will lose their jobs over three years as the plant is shut down, and the affected products will be shifted to the company's existing Costa Rican operation, according to two regional news outlets.
The manufacturing facility, in Seneca, SC, makes a number of different vascular compression devices and products, mostly for Covidien's Vascular Therapies division. Covidien's manufacturing facilities in nearby Greenwood and Camden won't be affected, WYFF4.com reported.
Covidien spokesman David Young told FierceMedicalDevices that the plant closure is designed "to improve operating efficiency" across the company and make sure it "is well-placed for strategic growth."
Covidien is the latest medical device company to announce layoffs in recent weeks, following Welch Allyn, Medtronic ($MDT), Boston Scientific ($BSX), St. Jude ($STJ) and Stryker ($SYK). Some, like Welch Allyn and Stryker, have blamed the looming 2.3% medical device industry tax as a factor behind their the job cuts, saying that they need to adjust their costs before the tax kicks in four months from now. (St. Jude has since downplayed the connection between the device tax and its job cuts.)
Young told us that the plant closure and layoffs "is not a direct result of the upcoming device tax," though the company believes the tax "may hurt investment and limit job growth" moving forward.
Affected employees can pursue employment at other Covidien locations and they will also be given severance and outplacement services, the company has said.