US drugmaker Schering-Plough yesterday announced a job cull of 1,100 at its manufacturing plants in Puerto Rico and New Jersey, in a move designed to streamline operational efficiency and boost the company’s competitiveness.
The plans include killing off manufacturing operations at S-P’s plant in Manati, Puerto Rico, as well staff cuts of 50 at the Las Piedras (also in Puerto Rico) site and 500 at its two New Jersey facilities.
According to media reports, the firm has denied that the move is related to expensive modernisation of quality control at its manufacturing plants, spurred by strong criticism of its drug production processes by US regulators in 2002.
“The actions we are announcing today are another step in our Action Agenda to transform this company into a high-performance competitor for the long term," explained Fred Hassan, the group’s Chairman and Chief Executive. “Undertaking these workforce reductions was a difficult decision. To support employees who are affected by these actions, we will be implementing a variety of programs as well as working closely with local authorities and communities to mitigate the impacts.”
Such a significant change to operational structure will not come cheap. S-P says its expects to incur related costs of around $235-$260 million, including severance pay of $60-$70 million, fixed asset and inventory write-offs of $85 million, and accelerated depreciation and closure costs of around $90-$105 million.