Medtronic says it will streamline its operations by shedding between 1,500 and 1,800 employees from its global workforce.
Most of the employees will leave Medtronic by the end of June. Four hundred of the cuts are voluntary; those workers will leave by the end of this month.
The company's Twin Cities work force of 8,000 will shrink by 600 jobs.
It's not clear how many workers can reapply for jobs elsewhere in the firm, but Medtronic says it plans to add 700 new people to its global workforce.
“The company's growing. It's just not growing at the same rate as some of its competitors.”Aaron Vaughn, med-tech analyst
Connie Erickson is one of the Twin Cities workers who are leaving voluntarily. She's 60, works as a clinical specialist at Medtronic, and has decided to retire early. "I can say that in 40 and a half years, I've never been unhappy working here," said Erickson.
Erickson says the company is offering her a pension and reduced health care costs. She doesn't know how many people in her division are getting pink slips, but she says since the layoffs were previewed months ago, today's announcement about cuts did not seem to rattle workers much.
"I don't see any different mood than there has been all along here," she said.
Medtronic spokesman Chuck Grothaus says even though the company is still growing and profitable, the cuts are necessary.
"The realignment is more of a plan that began several months ago, in order to make sure that certain business units aren't overly staffed, based on previous plans for growth that didn't transpire," said Grothaus.
"The fact that they're continuing to do this means they're getting more efficient. They're doing more with less," said Aaron Vaughn, a med-tech analyst with EdwardJones.
Vaughn says Medtronic's staffing reductions are positive from an investor's point of view. But he's concerned about the competition Medtronic is facing.
Vaughn says while Medtronic is still a market leader, it's losing ground with key products, including its implantable defibrillators, which are devices used to treat irregular heartbeats.
The company took a hit after a product recall in 2007, stemming from problems with wires that connect the device to the patient's heart. After that stumble, Medtronic's rivals picked up market share. Vaughn says that has made a difference.
"The company's growing. It's just not growing at the same rate as some of its competitors," said Vaughn.
Sales of heart rhythm management devices, the company's top earning unit, dropped 5 percent in the fourth quarter.
Vaughn says new clinical data supporting the benefits of defibrillators will likely give Medtronic a boost.
But David Heupel, a portfolio manager with Thrivent Asset Management, says federal health reform efforts could hurt Medtronic's business. He says health care changes driven by government intervention may eat into sales of profitable products like defibrillators.
"The question will be -- do we need to pay for the higher end one? Can we maybe use a single or dual chamber defibrillator for a lot of patients, versus the higher end one right now?" said Heupel.
Heupel says such pricing pressures could prompt further staffing reductions at Medtronic, even if that just means not filling open positions.
Medtronic also said today its profits for the coming year will fall short of Wall Street's predictions. The company's share price fell 6 percent today.