Getting more efficiency out of an operation is a great thing for companies, allowing them to produce the same, or even more, product at less cost. Tell that to the employees who lose their jobs in the process. That is what Novartis ($NVS) has done, informing 300 workers at a Ciba Vision plant in Canada that it will close next year after three decades of business.
Workers at the plant in Mississauga, Ontario, got the news that layoffs will begin in May and operations will wind down by the end of next year. A spokesman for Novartis' Alcon eye care division told The Globe and Mail that the work will be picked up at a plant in Texas, which will be ramped up with a more efficient process but will not get any new jobs in the process.
"We're continuously reviewing and adapting our manufacturing environment to reflect changing market dynamics and enhancing our competitiveness," said Mark Smithyes, head of government affairs and market access for Alcon Canada. The Swiss-based drugmaker got full control of Alcon from Nestlé several years ago.
One employee told the newspaper that it was a shock, saying that when workers were called in last month to get the news, they believed there would be some layoffs but did not expect to learn that Novartis would abandon the plant, which makes contact lens solution for export around the world.
Novartis paid nearly $50 billion for Alcon in a three-step buyout several years ago. It was one of the plays in the diversification plan of then-Novartis chief Daniel Vasella, some of which is now being unwound by the Swiss drugmaker's new chairman Joerg Reinhardt. When Novartis announced in 2010 that it would pick up the last piece of Alcon it didn't own, analysts predicted it could find $700 million in annual savings, mostly through layoffs.
Alcon recently got caught up in the bribery probe launched this summer by authorities in China into practices of drugmakers selling there. In September, Chinese media reported whistleblower claims that Alcon used funds earmarked for "patient experience surveys" on lens implants to bribe doctors at more than 200 hospitals. The company says it did an internal review of the allegations in 2012 and found it "acted in accordance with the appropriate rules" and regulations.
- read the Globe and Mail story