Swiss authorities are calling it an earthquake. Merck KGaA officials say it's a necessary measure to transform into a "leaner, more agile" company. Whatever its description, the German Merck's decision to shutter its Serono division's Geneva headquarters and cut up to 580 Swiss jobs is a big move to counter recent R&D setbacks.
The basics: Some 750 employees will be transferred from the Geneva HQ to several other sites. About 130 technical specialists in Geneva will relocate to the Aubonne area, close to manufacturing plants there and in Corsier-sur-Vevey; production at a Coinsins plant will also move to Aubonne.
Headquarters functions will consolidate in Darmstadt, Germany, while R&D employees will be dealt out to Darmstadt, Boston and Beijing. The remaining 500 HQ jobs will be eliminated, along with 80 jobs across the Swiss manufacturing plants. Commercial operations in Zug won't be affected, the company said.
Some might argue that the cuts and consolidations are overdue. Since Serono sold out to the German company in 2007, Merck Serono has operated two headquarters and two R&D hubs. Eliminating duplication will make the company more efficient, the company said--and Merck ($MRK) desperately needs to be efficient right now. In fact, analysts expect more cost-saving moves to be announced next month. "We are one of the last of the pharmaceutical companies to restructure," Merck Serono chief Stefan Oschmann told Bloomberg.
Still, it's a blow to the Geneva area, where Merck Serono's flashy headquarters not only provided those 1,250 jobs, but generates electricity for some surrounding buildings. Pierre-Francois Unger, Geneva's economy minister, called the job cuts and headquarters shutdown a "seismic shift" for the economy of Geneva and French-speaking Switzerland, the Tribune de Genéve reported. As for the employees, some told the Tribune that they were shocked by the HQ closure, while at least one called the announcements a "relief, after a year of endless rumors. Now we know."