Merck job-cutting tensions displayed in public emails from Frazier, union rep

Merck CEO Kenneth Frazier

Merck & Co.'s ($MRK) CEO Kenneth Frazier thought he was doing a good thing when he announced that employees would get an extra day off in appreciation for their hard work. But the fact that union employees are not getting the extra time at the Labor Day holiday has led one union official to publicly lash out at Merck and Frazier, claiming that the tens of thousands of job cuts the company has made in recent years have left employees demoralized and raised questions about safety at the plant where he works.

An email exchange between Frazier and United Steelworkers Union local president Dan Bangert was posted on the local's website and reported by the Philadelphia Inquirer. It comes even as the pharma giant recently reported that it had slashed about 36,000 jobs since its 2009 merger with Schering-Plough and remade itself in the face of patent losses. The back-and-forth between the two men illustrates the depth of hard feelings the job cuts have engendered.

"Do you feel that Union employees are less a part of the Merck Family? ... We are the same employees that are forced to work because your cutbacks have left our West Point plant with inadequate personnel," said Bangert, a 29-year veteran of Merck. He also said that the fatigue of a required 16-hour shift make employees a danger to the community should they fall asleep at the wheel.

Frazier in return, explains that collective bargaining agreements make it hard sometimes to offer the same perks to all employee. The CEO assured Bangert that union workers are appreciated and added, "Merck goes to great lengths to protect the safety and well-being of our employees." He assured him that manufacturing management and HR would "work with local site leaders to address your concerns directly."

The Westport, PA, plant where Bangert works lost 500 manufacturing jobs during the end of year holidays in 2013. The Inquirer said the steelworkers union represents about 1,800 of the approximately 9,700 Merck employees in the area, many of whom work at the Westport manufacturing and research facility.

The repeated restructurings and tens of thousands of job cuts have all been part of Frazier's efforts to restore the company to solid growth after patent losses from blockbusters like Singulair and Nasonex. Some of the job losses at the company have also come from Frazier's decision to sell off Merck's consumer health unit to focus on immunology, vaccines, diabetes, emerging markets and hospital meds. Merck has said in a recent SEC filing that the cuts are almost over. Another roughly 2,600 manufacturing jobs are slated to be lost by the end of 2016.

And the restructuring has paid off on the bottom line for the Whitehouse Station, NJ-based drugmaker. In Q2, Merck was able to piece together enough savings from cost cutting and revenue surprises to exceed analysts' expectations for earnings, and push its forecast higher for the year. While there have been some R&D failures along the way, that improved picture is tied in part to Merck's focus on immuno-oncology. Its first-in-class approval for the targeted cancer drug Keytruda, in particular, is paying off.

But not everyone sees the restructuring in the same light as Wall Street. " I am proud to say that I work for Merck," Bangert told Frazier. "But things have changed, and I am troubled by it. We were once a family ... But by putting money and profits above all else, including the people that work for you, you are tearing that family apart."

- read the Inquirer story
- here's the union posting

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