Boston Scientific begins cutting jobs locally
Mark Ungs is celebrating an awkward anniversary this week. He's vice president of new business development at Boston Scientific's Maple Grove facility, and Tuesdsay he marked his 12-year anniversary with the company. That's a little ironic, he says, because last night he got laid off.
"My boss gave me a call, talked through the rationale, and let me know that I was part of the reduction plan," he says.
Ungs is not shattered. He says Boston Scientific has been a great place to work, and he's loved his job -- which involves identifying and investing in new technologies. But he understands why he's a casualty of the reorganization plan.
"With the company having a more short-term focus on the core business and not future businesses, it made sense to reduce the size of my department, which is all the new stuff," Ungs says.
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"[Being laid off] represents a new chapter. It kicks me out of my comfort zone."
A Boston Scientific spokesman declined to comment on the local cuts, and instead deferred to the company's recently stated plans to slash 13 percent of its global workforce - or about 2,300 jobs.
A headcount reduction of that scale in Minnesota, where Boston Scientific employs 6,500 people, could mean around 800 job cuts, though sources inside the company say layoffs likely won't be that sweeping.
Boston Scientific and its med tech competitors have all been watching revenues dwindle in the past few years.
A series of recalls of implantable defibrillators have hurt the industry. And sales of drug-coated stents, which prop open clogged arteries, have languished after studies tied the stents to blood clots and heart attacks. Some are now challenging those claims.
In any case, Boston Scientific lost $272 million last quarter. And the company is carrying a lot of debt from its acquisition of Guidant in 2006.
Piper Jaffray analyst Tim Nelson says the current job reductions are an appropriate response by Boston Scientific to all those problems, including servicing its debt.
"It needs to improve its profitability and cash flow to be able to do that," says Nelson. "So right-sizing is a smart decision, and with further growth of the company, hopefully some of these jobs will come back."
They are, after all, really good, high paying jobs. Med tech workers earn an average weekly wage of $1,400, compared to an $870 average weekly wage in the state's overall labor market.
Medical device jobs have been a mainstay of the Minnesota economy. Employment in the industry is 10 times higher in Minnesota than in other states. Headcount has grown to 29,000 -- up 28 percent since 2000.
So no one likes to see medical device jobs go away, but...
"If you're going to be the victim of a cutback in some area of the economy, medical equipment or medical device manufacturing might be one of my first choices," says Steve Hine, labor market analyst with the Minnesota Department of Employment and Economic Development.
Hine says even though the overall economy has been lackluster lately, the highly skilled workers laid off by Boston Scientific will likely get snatched up by other employers.
Overall, Hine does not take the layoffs as a reason to despair over the future of the state's medical device industry.
"The restructuring we're seeing now, I don't think in any way foretells any long-term scaling back of that industry down the road," says Hine. "It's going to continue to grow. And we're going to continue to see good successes and jobs coming in that area in our region."
A group called the BioBusiness Alliance of Minnesota hopes to see more of those successes coming from startup companies. The group works with government, academia, and the private sector to spur business in the biosciences.
The alliance's executive director says one positive upshot of layoffs at Boston Scientific could be that more talented people are freed up to start new projects.
That's how Mark Ungs, the laid-off Boston Scientific employee, is trying to see things. He says it'll be hard to leave his job.
"But on the other hand, it represents a new chapter, it kicks me out of my comfort zone," says Ungs. "Especially in my case where I live and breathe new startups, it will motivate me to either start a company here in the Twin Cities or become part of a startup."
Ungs says he already has irons in the fire to get new bioscience business ventures rolling.
Additional cuts are expected later this week at Boston Scientific's cardiac rhythm management facility in Arden Hills. The company already eliminated about 500 jobs at that facility earlier this year.
