Teleflex (NYSE:TFX) leadership this week announced plans to cut costs and streamline manufacturing, measures that will result in untold layoffs as the company attempts to respond to market pressures.
Teleflex and its leadership declined to provide specifics about layoffs or plant closures, but chairman, president & CEO Benson Smith said in a conference call with analysts that initiatives would "include the relocation of manufacturing operations from certain higher-cost locations to existing lower-cost Teleflex locations."
Benson added that the company would make arrangements soon to speak with its affected employees. Restructuring is slated to begin in the company’s 2nd quarter and continue until the end of 2017, and there may be "other opportunities" for restructuring as the company moves forward.
"The plan we announced today was developed in response to continuing pressures that companies like Teleflex face in the health care industry and is designed to improve our competitive position," Benson said. "I realize that this may be an unsettling time for Teleflex employees. I want to thank you for all your hard work and dedication, and you have my commitment that we will treat you in a fair manner as we proceed in the upcoming months and years."
Employee termination benefits will cost the company between $12-$15 million, closures will cost $2-$5 million and other depreciation charges will cost $18-$21 million, according to the company’s report. Once completed, Teleflex should realize savings of $28-$35 million per year, starting in 2015.
The Pennsylvania-based company announced the restructuring plan alongside its latest quarterly earnings statement, in which Teleflex reported a 29% boost in profits on a 6.5% increase in sales.
Wall Street has responded positively to Teleflex’s recent news, with TFX shares up 4.2% since the start of the week.
