Steris (NYSE:STE) said it plans to close down a plant in its Mentor, Ohio, base and lay off about 150 workers worldwide.
The layoffs represent a 2.5% cut to the workforce at Steris, which employed about 6,000 workers as of March 31, 2013, according to a regulatory filing.
The plant slated for closure, the Hopkins facility, is slated to close its doors by Oct. 31, 2015, according to a press release. About 100 of the layoffs will be made in Ohio; Steris said all affected employees have been told.
"As a result of the reduced demand for our System 1E product family following the completion of the System 1 transition, the Hopkins Facility is now running significantly below full capacity," said Walt Rosebrough, Steris President and Chief Executive Officer. "While we have not made final decisions on the locations of all of the Hopkins production, this closure enables us to more efficiently utilize our existing North American manufacturing network."
The FDA ordered hospitals across the country to stop using the System 1 devices in 2009, following more than 18 months of legal wrangling, ending in a de-facto recall of a product that hadn’t been linked to any cases of infection or injury. The federal watchdog agency warned that Steris made significant modifications to the SS1 without seeking additional 510(k) clearance, but Steris denied in letters to customers that changes to the device merited a new application. In a February 2010 letter the FDA further warned all endoscope makers that they must change the labeling on any devices that claimed they could be reprocessed using the SS1 system, and even suggested they add language indicating that "The Steris System 1 (SS1) is not a legally marketed device."
Steris won FDA clearance for the next-gen SS1E system in April 2010, and later that month reached an agreement with the agency in setting up a transition plan that enabled U.S. customers – mostly hospitals and surgical centers – to trade in their SS1s for rebates. The transition deadline, which has been shifted a few times, is now set to August 2012.
Steris said it expects the Hopkins closure and layoffs to results in a roughly $20 million charge during its fiscal 4th quarter, including $12 million in non-cash charges. The moves are aimed at saving about $10 million a year beginning during fiscal 2015.
