SMITH & NEPHEW LAYS OFF NEARLY 100 EMPLOYEES, BLAMES NEW MEDICAL DEVICE TAX
Smith & Nephew has laid off nearly 100 employees across its units in Tennessee and Massachusetts, the company said Thursday.
The company's Orthopaedic Reconstruction unit is based in Memphis, where it employs about 1,800. Its Advanced Wound Management, Sports Medicine and Trauma unit is based in Andover, Mass. The two divisions were merged last year and operate together as the Advanced Surgical Devices unit.
The company said it would not give details of how many employees were laid off at each site but was less than 100 total. It would only say that the positions were "made redundant across various departmental functions."
Smith & Nephew said the layoffs were necessary to absorb the cost of a new U.S. medical device tax.
"The nearly $30 billion tax on medical devices that took effect Jan. 1, 2013 has impacted a number of companies across the U.S.," company spokesman Joe Metzger said in a statement. "Smith & Nephew is not immune from this added expense burden."
The tax is expected to raise $30 billion over the next 10 years to help pay for the Affordable Care Act.
President Barack Obama said the tax is fair as health reform will deliver about 30 million new customers to the industry. Medical device makers and their lobbyists say the tax diverts funds that could create jobs and fuel innovation.
National trade group Medical Device Manufacturers Association said a group of device makers made their first semimonthly tax payment Tuesday of about $97 million.
"While the first payments of the medical device tax may have been collected, the resolve and commitment of the medical technology community is stronger than ever to put an end to this bad policy," the group's CEO Mark Leahey said in a statement.
The tax could have broad implications in the Memphis economy, which touts three major medical device makers — Smith & Nephew, Medtronic and Wright Medical Group — and a host of smaller device companies and suppliers.