Smith & Nephew (SNN) is laying off almost 100 workers at its plants in Memphis, Tennessee, and Andover, Massachusetts.
Smith & Nephew Cuts Jobs, Blames Taxes
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On January 31, 2012 a company statement said the positions had been made “redundant across various departmental functions, ” because the company is not immune from the added expense burden of the 2.3% medical device tax. No further explanation was given of how the new taxes made the positions redundant.
“The nearly $30 billion tax on medical devices that took effect January 1, 2013, has impacted a number of companies across the U.S., ” the company said in a statement to a local television station.
The Memphis Daily News reported that sources familiar with the job cuts say it included about 60 Memphis employees from the Advanced Surgical Devices division at the company’s Goodlett Farm Parkway facility.
Jo Metzger, senior vice president of corporate communications, said the company is providing the affected employees with a comprehensive severance package and outplacement support.”
Smith & Nephew employs an estimated 1, 815 people in Memphis, according to Memphis Business Journal research.
Company Restructuring
About a year ago, the company announced that it was reducing its global workforce by 7% over the next three years. In 2012, the company merged its orthopedic reconstruction unit based in Memphis with its advanced wound management, sports medicine and trauma unit is based in Andover. Both locations saw job cuts in December 2011 in a move to eliminate duplicate positions and the continued restructuring of Smith & Nephew. The Memphis location cut about 80 positions.
The president of the Memphis division, Joseph DeVivo, left the company that August as Mike Frazzette in Andover became president of the new division.
For the third quarter 2012 the company reported revenues of $952 million compared to revenues of $1.03 billion in the third quarter of 2011.
Other Memphis Job Cuts
The layoffs in 2011, reported The Daily News, came late in a year that had already included jobs cuts by its competitors—Medtronic Inc. and Wright Medical—which both also have facilities in Shelby County.
Wright is based in Arlington and Medtronic’s spinal and biologics business is based in Memphis.
Last summer Medtronic cut 500 positions, and another 500 are expected by the end of 2013. In March 2010, Medtronic had warned that taxes relating to the new health care reform could result in a reduction of about 1, 000 jobs.
The Daily News story noted SNN bought the Goodlett Farms Parkway property in January 2010 as part of a $42 million expansion of the global headquarters for the then-orthopedics division.
Local Tax Incentives
In December 2009, the Memphis Shelby County Industrial Development Board approved a $6.2 million payment-in-lieu-of-taxes agreement with Smith & Nephew for the Goodlett Farms expansion, which the company said would create 160 jobs and generate $13 million in annual payroll at an average annual wage of $93, 427 excluding benefits.
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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