Teva to cut up to 40 manufacturing sites, with 25 slated to go in next 2 years

Teva production
Teva's new CEO, Kåre Schultz, says Teva needs to cut about half of its 80 manufacturing sites over time.

Teva has worked out agreements with workers to close another plant in Israel. That is two down and about 40 to go.

Workers will return to work on Thursday at an inhaler plant in Jerusalem after Teva and labor unions agreed on details that will see 60 workers laid off by the end of next month with the other 180 being let go when the plant is closed at the end of next year, a Teva spokesperson confirmed today after it was reported by Reuters.

Workers had walked off the lines after new CEO Kåre Schultz said that Teva would cut about 14,000 positions worldwide, with about 1,750 cuts coming from Israel, as the financially distressed generics company scrambles to fix big problems.

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A week ago, Teva reached a deal with about 500 workers at an adjacent tablet plant in Jerusalem to cut 200 in 2018 and the rest when the plant closes at the end of next year. But that is just the tip of the iceberg for Teva’s manufacturing network according to a recorded presentation Tuesday at the J.P. Morgan Healthcare Conference. Schultz said Teva will probably close 20 to 25 manufacturing sites in the next two years as it cuts about $3 billion in costs over that time and will lose 40 sites longer term.

RELATED: Teva spares 140 jobs at Jerusalem plant, for this year only

Schultz said that Teva has “the biggest value chain of any company” and “needs a substantial manufacturing footprint.” He said the two areas which will see the fewest cuts are in sales and “on the manufacturing shop floor.” But if Teva had grown organically, instead of by acquisition, it would probably have just two to four API sites and between eight and 12 functional manufacturing sites, he said. Instead, the company has 80 sites.

“It goes without saying we have too many,” said Schultz. While it takes time to make that kind of reduction, the CEO explained that longer term, Teva must eliminate about half of those 80 sites to achieve sustainable profitability.

A spokesperson today was unable to provide any details about which plants besides the two in Israel will be on the chopping block in the next two years.