At about the same time that workers at Novartis' ($NVS) troubled consumer healthcare plant in Lincoln, NE, were told 300 would lose their jobs, the Swiss drugmaker announced plans to expand a consumer healthcare plant in Switzerland. The drugmaker insists the two decisions are separate, but the U.S. Department of Labor begs to differ. As a result, the laid-off workers will qualify for special federal trade assistance.
According to the Lincoln Journal Star, the Labor Department ruled that the job losses planned over the next two years are tied in part to foreign competition. The department will then provide special assistance to employees that might include tax benefits and, in some cases, moving expenses. The petition was filed in June by the Nebraska Department of Labor. It said that state labor officials were told by employees that their jobs "were being moved to a plant in Switzerland."
The situation tracks back to April when Novartis said in an earnings release that it would narrow the focus of the troubled plant and whack 40% of the workforce over two years. The plant has been a source of frustration for CEO Joseph Jimenez--and expense and lost revenue for the company--since 2011, when inspectors excoriated it for the mess there. In a separate announcement the same week, the Swiss drugmaker said it would invest €60 million ($78.6 million) in a plant in Prangins, Switzerland, that had been set to be closed and its 320 jobs obliterated. The company said it decided instead to modernize the plant and increase its size by 30%. It will invest another €90 million ($118 million) by 2020, with plans to boost its capacity by 70% in the next 10 years.
The good news for the Prangins plant seemed to offset the bad news for the Lincoln plant, which was closed in 2011 for remediation after two years of problems and recalls. Despite the investment in improvements, the FDA issued another Form 483 listing more issues during a reinspection at Lincoln earlier in the year. After that, the company decided it would limit the plant to producing essentially three products, Excedrin, Theraflu and veterinary drug Sentinel. The narrower focus would require fewer workers. The cuts started in May, with Novartis cutting 72 workers and eliminating another 41 jobs that were open, the Journal Star reports.
Since then, another reminder of the plant's troubles has emerged. Novartis recalled 4.4 million bottles of Maalox in August because of packaging issues. A spokesperson said the Maalox was manufactured at Lincoln in December 2011.
- read the Lincoln Journal Star story