Zimmer axes jobs to cut costs ahead of med-tech tax | Personnel Moves

March 6, 2012 by Arezu Sarvestani

Zimmer plans cuts and outsourcing at its Warsaw, Ind., headquarters partially to offset the impending burden of a 2.3% medical device tax.

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Zimmer Holdings (NYSE:ZMH) announced layoffs at its Warsaw, Ind., headquarters, pointing to the expected burden of the medical device tax as partly responsible for some of the losses.

The orthopedics device maker plans to offset the entire burden posed by the impending 2.3% device levy in 2013 through cost-cutting efforts, part of which include layoffs.

The home-base reshuffling is tied to a larger company-wide restructuring program aimed at finding $400 million in cost savings before 2016, prompted in part by an anticipated $60 million tax bill for 2013.

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"The transformation program's more far-reaching than just the device tax, but I think that the device tax is probably a big catalyst in the company looking at the transformation program," Zimmer spokesman Garry Clark told MassDevice.

The orthopedics device maker plans to outsource its 120-employee transportation management team to a hub in Memphis, Tenn., beginning in the 3rd quarter, and will also cut about 50 other positions globally before the end of the year, Clark said.

The company made the announcement early in order to allow some of those workers to shift to other roles, he added.

Zimmer isn't the first to announce layoffs ahead of the tax.

Stryker announced in November that it would cut 5% of its global workforce to save $100 million dollars, the amount it expects to pay when the tax goes live next year. The Kalamazoo, Mich.-based orthopedic device giant eliminated 160 jobs in December.

Industry lobby AdvaMed estimates that the tax will result in 43,000 jobs lost in the medical device field.

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