Edwards Medical Devices to Lay Off 100, Cut Back on R&D; in a Bid to Boost Profits
Edwards Medical Devices and Systems said Tuesday it plans to eliminate 100 of the 400 jobs at its Irvine headquarters and scale back research and development in an effort to boost profits.
Don Rohrbaugh, general manager of Edwards MDS, said employees affected by the cutbacks were notified Monday that their jobs will be phased out by the end of the year. He said at least 20 of them will be transferred to other Edwards divisions in Orange County.
Edwards MDS is one of five Edwards divisions based in Irvine that are part of Baxter Healthcare of Deerfield, Ill. Edwards Laboratories was founded in 1960 and was acquired six years later by American Hospital Supply, which merged with Baxter in 1985.
Edwards MDS, the smallest division in the Edwards group, makes electronic and computerized medical products such as pumps to regulate the flow of intravenous solutions, devices to separate plasma from whole blood and equipment to monitor the condition of a patient’s heart during surgery.
Geoffrey Fenton, a spokesman at Baxter Healthcare, said no layoffs are planned at Edwards’ other Irvine divisions, which specialize in critical care, heart valves, orthopedic devices and catheters. The Edwards divisions employ about 1,800 workers in Irvine, and another 1,200 worldwide, mostly in the United States and Puerto Rico.
Rohrbaugh said the layoffs--involving a broad spectrum of personnel from engineers and technicians to inspectors and assemblers--result from a 10% reduction in research and development expenditures and a consolidation of manufacturing.
The moves are part of a companywide effort to boost profits, Rohrbaugh said. He noted that Baxter Healthcare recently reported that its growth in earnings this year would fall short of earlier Wall Street projections.
Rohrbaugh said his division had increased research and development spending by about 35% over the past year because of Baxter’s earlier optimistic expectations of market growth.
But, he said, “tremendous pressure in the hospital community to control costs” has discouraged hospitals from purchasing the kind of expensive electronic equipment that Edwards MDS manufactures. “The health care market is growing, but not as much as expected,” he said. As part of the division’s new research and development strategy, he said, higher priority is being given “to projects that give bigger pay-back and we have taken higher-risk R & D projects and put them on hold.”
Rohrbaugh said that for the time being, Edwards will focus most of its attention on improving and broadening existing product lines rather than pioneering new markets. “This is sort of a short-term pullback instead of a long-term change in direction,” he said.
Some manufacturing will be shifted from Irvine to an under-utilized Edwards MDS plant in Maryland.
