Covidien: closure linked to bottom line

Covidien's decision to close its Watertown facility and cut all 247 jobs here is a continuation of a $200 million restructuring plan announced last September, its spokesman said Friday.

Richard P. Bevilacqua, Covidien's communications director, said the company recently reviewed its financial data and decided that closing the Faichney Drive plant by August 2010 would help ensure it would be profitable in the long term.

Mr. Bevilacqua said Covidien, which employs 41,000 people in 59 countries, reported $10 billion in sales for the 2007-08 fiscal year and a "good start" to first-quarter profits this year. The company has 60 manufacturing facilities worldwide.

The Watertown plant's three primary product lines were thermometers, vascular feeding pumps and chest drainage devices used in open-heart surgery. Mr. Bevilacqua said Covidien will continue to produce those items when the Watertown plant closes, but where that will be is unknown.

He said the products could be made at Covidien's New York plants in Oriskany Falls or Argyle, somewhere else in the United States or overseas in China or Ireland.

The Watertown facility employs 55 people who repair Covidien items that are produced locally. Mr. Bevilacqua said no other Covidien office repairs items made in Watertown, but said the repair work would be relocated to another plant in the United States during the closure process.

Covidien has service centers in Plainfield, Ind., and Boulder, Colo.

As for the skilled work force that will be laid off starting in June, Mr. Bevilacqua said, "If there are some positions that open up in the other New York plants or elsewhere in Covidien locations, the employees there would be offered the opportunity to apply for those jobs."

Jobs, he said, are not being guaranteed or reserved for displaced workers.

Covidien's hourly salaries ranged from $13.46 for an assembler to $22.41 for an electrician, according to a 2007 community survey of salaries.

"They're going to be extremely difficult to replace," said Donald C. Alexander, Jefferson County Job Development Corp. chief executive officer. "We're certainly going to do anything and everything we can to do to help these guys and gals that are going to be out of work."

Covidien has said that its employees will be eligible for severance benefits and job placement services as they are laid off. Mr. Alexander has offered his agency's help as well, and said he'd like to "marshal the resources the community can bring to the table" to get Covidien's skilled workers into other positions or retrained.

"We don't want to lose these resources," he said of the Covidien work force.

Although the company did not apprise Mr. Alexander of its plans, he said his agency became "very concerned" when Covidien moved four product lines from Watertown to Shanghai from July to January and replaced its local plant manager.

"Obviously it's a terrible blow to a small town, particularly in light of the fact this company has its roots here," Mr. Alexander said. "It's grown up with us. It's evolved to a cutting edge, high-tech company. It's the very type of company that we'd salivate to attract to our area."

Covidien is a descendent of Glass Thermometry, a company that started here in 1888.

The company has said it will save $50 million to $75 million annually after its restructuring is completed. Mr. Bevilacqua said the company's decision about Watertown is final, and won't be affected by any improvements in its economic situation.

The Watertown Daily Times and other media agencies reported Thursday that the plant would close by January 2011, but Mr. Bevilacqua attributed that error to a misinterpretation of a sentence in a memo given to employees that was obtained by local media.