St. Jude Medical is laying off 500 employees as part of a restructuring effort. This is the second round of layoffs for the company since August. The first round of layoffs resulted in 300 job cuts.
According to information provided by the company in a regulatory filing, total layoffs for 2012 will amount to five percent of St. Jude’s total workforce. The additional 500 layoffs will help the company cut costs by $40 to $60 million. By cutting its total global workforce by five percent, the company expects to save $150 to $200 million in costs in the upcoming fiscal year.
The two rounds of layoffs are part of a company-wide restructuring effort. St. Jude plans to consolidate all of its operations into two units: A cardiovascular and ablation technologies unit and an implantable electronic medical systems group. In addition, St. Jude plans to consolidate ancillary departments too. This includes divisions like accounting, HR, IT and legal.
In a prepared statement, CEO Dan Starks said, "We are focused on reducing costs, leveraging economies of scale, maintaining the highest level of quality and funding our entire portfolio of new growth drivers."
The restructuring plan is due to several problems at the company. In the third quarter, St. Jude’s net sales dropped four percent. This decrease was due to lower demand for its implantable cardiac devices. In addition, the company was reprimanded by the FDA over manufacturing practices at one of its California plants. A clinical study also recently showed that the company’s Amplatzer heart plug device is ineffective at reducing the risk of strokes.