Saturday, September 29, 2012

New Diggapedia Feature: Calling Bullshit

Skaneateles, New York-based medical device manufacturer Welch-Allyn Inc. says it is cutting its workforce by 10%.  According to the Plastics News, the 100 year old company that currently employs 2,750 people will “close its manufacturing plant in Beaverton, Ore., and consolidate its North American manufacturing at its plant in Tijuana, Mexico, which opened seven years ago, and at its corporate headquarters plant in Skaneateles Falls, N.Y.”  In a news release the company stated “These actions will proactively prepare the company to address the onerous U.S. medical-device tax scheduled to begin in 2013 as mandated in the Affordable Care Act, as well as significant changes driven by health-care reform and market dynamics.”

The company is expanding in Singapore and Tijuana but it claims the medical device tax is what is causing the layoffs.  If that is the case, why expand offshore where the products will still be subject to the tax?  Clearly the company, which lobbied hard to prevent and then repeal the Affordable Care Act is using the excise tax as cover to seek lower cost manufacturing options and more favorable corporate tax provisions compared to operating in New York State.

Why is Diggapedia calling bullshit?  The Affordable Care Act also means that 30million more Americans will have access to healthcare.  Medical device and pharmaceutical companies now have 30 million more customers and Welch Allyn seeks to lay off U.S workers?  As a private company, Welch Allyn does not disclose financial statements, so it is difficult to estimate the true profit and loss (P&L) impact, but is safe to say that its revenues are in the hundreds of millions of dollars.

No, something is rotten in Skaneateles, and it is not the fish in the Finger Lakes.

1 comment:

  1. I would be willing to bet they also receive research money from the feds as well.
    This decision reeks. It is one of the biggest reasons that we need tax reform in this country, especially when big companies move their manufacturing jobs out of the US in order to avoid taxes, regulations, etc. There should be tax penalties involved in taking jobs out of the country.