St. Jude to Realign Business Units and Cut 300 Jobs, 80 in MN
St. Jude Medical, Inc., on Thursday announced a realignment of its business units that’s expected to save at least $50 million annually but will result in about 300 job cuts—including 80 in Minnesota.
The Little Canada-based medical device maker said that it is combining its product divisions into two units. Its atrial fibrillation division and its cardiovascular division—which operate out of Minnesota—have come together under a new cardiovascular and ablation technologies division. And its cardiac rhythm management division and neuromodulation division—which operate out of California and Texas, respectively—now operate under a new implantable electronic systems division.
As part of the realignment, St. Jude will also centralize several of its support functions, including information technology, human resources, legal, business development, and certain marketing functions.
St. Jude spokeswoman Amy Jo Meyer told Twin Cities Business that the 80 Minnesota job cuts are primarily concentrated in the metro area. The 220 layoffs that will occur outside of the state are “across the business,” she said, adding that St. Jude has significant operations in both Texas and California. She declined to reveal the types of positions being eliminated but said the last day for affected employees is Thursday. As of the end of 2011, St. Jude employed more than 16,000 people worldwide.
St. Jude expects to incur pre-tax charges of $50 million to $80 million as a result of the realignment—including $30 million to $40 million in employee termination costs. But the company estimates that the organizational changes will reduce its pre-tax operating expenses by between $50 million and $60 million annually beginning in 2013.
“The reorganization we have announced today is part of a comprehensive plan to accelerate our growth,” St. Jude Chairman, President, and CEO Daniel J. Starks said in a prepared statement. “We are focused on reducing costs, leveraging economies of scale, maintaining the highest level of quality, and funding our entire portfolio of new growth drivers.”
St. Jude isn't the only medical device company to announce job cuts in recent months. In May, Fridley-based Medtronic said that it would eliminate 1,000 jobs—including 250 in the Twin Cities. Sales of the two companies' heart devices have slowed, and safety concerns regarding a lead wire from one of St. Jude's devices surfaced earlier this year.
As part of St. Jude's reorganization, several executives are taking on new responsibilities.
Donald Zurbay, formerly vice president and corporate controller, is now vice president of finance and chief financial officer (CFO); he will report to John Heinmiller, who will leave the CFO spot but take on “an expanded role” in his other position as executive vice president, according to St. Jude. Heinmiller will begin overseeing the centralization of the IT, human resources, legal, and business development functions.
Meanwhile, Rachel Ellingson, formerly vice president of corporate communications and investor relations, has been named vice president of corporate relations, and Kathleen Chester, formerly vice president of regulatory affairs and clinical research for the neuromodulation division, has been named to a newly created role of vice president of global regulatory.
Little Canada-based St. Jude is among Minnesota’s 15-largest public companies based on revenue, which totaled $5.6 billion in 2011.