Stryker, an orthopedic device manufacturer based in Kalamazoo, Michigan, recently announced that it is on track to lay off 1,000 of its employees by the end of the year. According to information released by the company, the five percent workforce reduction is required for the company to remain viable in the face of new medical device taxes.
The new 2.3 percent medical device tax is part of the Affordable Care Act. According to company estimates, the new tax will cost Stryker an estimated $150 million in compliance costs. The layoffs will be conducted on a rolling basis and will provide the company with an estimated $100 million in additional capital. The layoffs were first announced in November of last year. At that time, the layoffs were planned to free up capital for strategic investments and growth.
Tamara Cutler is a spokesperson at Stryker. In a press conference, she stated, "The estimated 5% workforce reduction was announced in Nov. 2011 and at that time, we had approximately 20,000 global employees, so the 5% was estimated to be about 1,000 employees.”
Over the weekend, there were rumors that the company would layoff an estimated 1,200 employees. While still unpleasant news for employees impact by the layoffs, the layoffs were slightly smaller than expected. Cutler also stated, "The reductions are still expected to be complete by the end of 2012.”