U.K. medtech giant Smith & Nephew (FTSE:SN, NYSE:SNN) is looking to outsource some of its local manufacturing positions to a site in China in order to save some cash.
The company may shift as many as 140 positions as it attempts to "secure the long-term sustainability of both our plants in the U.K. and China," according to a report. Smith & Nephew announced the coming cuts last night at a special meeting with employees, the Hull Daily Mail reported.
The Hull, U.K., cuts are slated to begin mid-2015 and continue through July 2016, according to a company statement provided to MassDevice.com. Smith & Nephew also plans to invest some $16 million the Hull plant, which was subject to a lot of flood damage last year. Part of the investment will help pay for flood defenses, but most will go to develop operations to manufacture the company’s Acticoat complex silver coating technology at Hull.
"The specialized manufacturing expertise in Hull will ensure we continue our high rate of innovation, developing new and enhanced market leading products," global operations senior vice president Noel Waters said in prepared remarks. "We must also fully utilize our other manufacturing facilities, such as Suzhou, so that we can continue to provide surgeons and nurses with life-changing treatments and innovative products that make a difference to people’s lives around the world."
Smith & Nephew maintained that the company is committed to remaining a major employer in Hull and that the outsourcing to China would help to ensure that both facilities are thriving.
"We are very proud of our heritage in Hull and the site remains a major cornerstone of Smith & Nephew," Waters added. "We are delivering new programs and actively working on bringing new processes to Hull in order to maximize the benefits from our highly skilled workforce and to continue to create a sustainable future for the site."
Smith & Nephew, which is scheduled to release its earnings August 1, said this week that it’s adopting a “no frills” strategy moving forward. Instead of providing a soup-to-nuts solution including medical devices, logistical support and an on-site technician, the new strategy is to supply only the medical device at a reduced cost. CEO
Olivier Bohuon plans to detail the strategy tomorrow.