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900 Jobs to Be Cut in Medical Products: Abbott, Hospira Cite Need to Reduce Costs

Posted on: Thursday, 2 February 2006, 12:00 CST

By Bruce Japsen, Chicago Tribune

Feb. 2--More than 900 jobs will disappear from two of Lake County's largest medical products makers as the companies look for ways to counter high manufacturing costs in the hotly competitive pharmaceutical and medical device sectors.

In all, more than 1,700 jobs will disappear across the United States in separate actions announced Wednesday by hospital products maker Hospira Inc. and drug and device giant Abbott Laboratories.

Hospira said it would trim about 1,500 U.S. jobs, or about 12 percent of its worldwide workforce, including 660 jobs at a plant in North Chicago.

Abbott said it would cut 250 jobs as part of an ongoing initiative--most coming from its diagnostics test-making operations in Lake County.

Both companies said they are trying to improve operating efficiencies in high-cost businesses.

In Hospira's case the company's efforts are focused on cutting or shifting to plants where the cost of doing business is not as high. Abbott, meanwhile, is spending more money on higher growth areas such as heart devices and genetically engineered drugs.

Hospira said about 400 new full-time jobs will be created at other Hospira locations; the net reduction will be 1,100 jobs.

Jobs at a manufacturing plant in North Chicago will be eliminated beginning in 2007 and plant closings will occur in Ashland, Ohio, in the next 18 months and in Montreal during the next 28 months.

"To ensure long-term success, Hospira must take every step necessary to keep costs down while maintaining our high standards of quality and performance," Hospira Chief Executive Christopher Begley said in a statement Wednesday.

Hospira said the moves are designed to reduce manufacturing costs by shifting jobs from the closed plants to factories elsewhere in the U.S., specifically Rocky Mount, N.C.; Austin, Texas; and McPherson, Kan.

The 400 new jobs will be created in those areas as production increases at those sites during the next four years.

The coming end of production at Hospira's North Chicago plant has been in the works because the firm has said it needs to "transition out of this facility in advance" of the expiration of a lease it has had with its former parent company, Abbott Laboratories. Although the lease does not expire until 2014, Hospira said, the North Chicago plant jobs will be phased out by 2010.

Hospira was created in 2004 when Abbott spun off its Lake Forest-based hospital products business. The lease termination was part of the spin-off terms.

The Hospira shutdowns are expected to cost between $95 million and $110 million during the next four years and will carry various charges to cover severance costs and other expenses. Hospira said its earnings will benefit from the restructuring in 2008.

"Since the spin-off our manufacturing optimization efforts have included not only the consolidation of our operations' infrastructure, where appropriate, but also key capital investments in several of our sites," Begley said.

Lake Forest-based Hospira has about 13,000 employees wordwide. Of those, 2,000 work in Lake County.

At Abbott the elimination of another 250 jobs is the latest wave of a three-year cost cutting initiative as the firm spends more on research to develop high-margin products that include cancer drugs and products such as ZoMaxx, a drug-coated stent designed to unclog arteries to the heart. Increasingly, Abbott says it has to free up money for such endeavors.

Abbott has said the cuts, which have been in the works for more than a year, will be ongoing. The company, though, will not disclose the total number of jobs targeted during the three years.

"We continue to communicate with employees and sites as they are affected," Abbott spokeswoman Kelly Morrison said.

Abbott has more than 60,000 workers worldwide including more than 14,000 in Lake County, home to its sprawling north suburban Abbott Park campus just off the Tri-State Tollway, where most of the planned job cuts will occur.

"We expect the total reductions to represent a small percentage of our overall global workforce," Morrison said.

bjapsen@tribune.com

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Copyright (c) 2006, Chicago Tribune

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Source: Chicago Tribune

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