As 2022 drew to a close, Siemens Healthineers announced that it would be embarking on a yearslong cost-cutting campaign within its diagnostics division that would include swaths of layoffs and a slimmed-down product portfolio. The medtech giant still hasn’t disclosed the total number of positions that will be affected by the layoffs, but several dozen are now on the chopping block in New Jersey.
Siemens gave notice of the impending cuts to New Jersey’s labor department this month, according to an agency database (PDF). The filing notes that 67 workers at its Flanders, N.J., facility will be affected, with the cuts slated to take effect by Sept. 7.
The Flanders facility is associated with the Siemens Healthcare Diagnostics division, which was also named in the database listing. In a statement sent to Fierce Medtech, Siemens said around 800 people are currently employed at the site and that the cuts will all affect manufacturing workers.
According to the company, the layoffs stem from Siemens’ decision to discontinue manufacturing of its Atellica Solution immunoassay modules at the New Jersey facility. Instead, starting Sept. 1, all manufacturing of the modules will occur at Siemens’ Swords facility in Dublin, Ireland.
“Upon separation, affected Flanders employees of Siemens Healthineers will be eligible for severance and outplacement benefits under the terms of the company’s policy and will have the opportunity to apply for other positions within the Siemens Healthineers organization and the broader group of Siemens companies,” the statement continued.
The cost-cutting plan, which Siemens unveiled in early November, alongside its full-year financial results for fiscal 2022, was crafted with a goal of ultimately saving the company about 300 million euros per year.
Those savings won’t kick in until 2025, however, after the layoffs and “significant complexity reduction” across its diagnostics product lines are complete. To get there, as CEO Bernd Montag noted at the time, Siemens will rack up one-time charges between 350 million euros and 450 million euros in severance and other restructuring costs.
Most recently, as of the company’s second-quarter earnings report in May, Siemens had already chalked up 23 million euros in severance costs within the diagnostics department for the first half of the year—almost all of which arrived in the second quarter—with about the same amount predicted to accumulate throughout the second half, too, for a total of 50 million euros for all of fiscal 2023.
Meanwhile, transformation costs in the division totaled 111 million euros for the first half; Siemens has suggested that those costs will reach up to 150 million euros for the full fiscal year.
Much of the transformation costs are linked to Siemens’ decision to shift more focus to its Atellica diagnostics systems, which are equipped with automated technologies to simplify immunoassay and clinical chemistry analyses.
During a call with investors about the second-quarter results, Montag said that “radically simplifying the portfolio with migrating faster to the Atellica platform” was at the core of the entire restructuring process. The costs, he said, were coming from the processes of eliminating “certain legacy platforms,” as well as all their related R&D efforts, associated parts of the supply chain and some facilities where those platforms are being manufactured.
Along with shifting the spotlight toward the Atellica system, Montag said the restructuring also intends to create a “much more verticalized way of running the diagnostics business, including really pointing sales and service to where it’s making the fastest progress and contributes fastest to accelerating growth and improving margins.”
The CEO continued, “To some extent, the deeper the cuts and the more decisive the actions in this fiscal year, the more confident we can be about the trajectory moving forward. And we are confident that in the second half of the year, we will return to growth, and we will see the first savings kicking in.”