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Covidien closes legacy catheter extrusion plant in NY

Covidien, a major medical device manufacturer, is closing a catheter extrusion plant in Argyle, NY as it continues an aggressive drive to reduce costs through facility consolidation and offshoring.Slightly more than 180 employees will be affected by the closing, which will be completed by the end of June, according to a statement posted on the New York Department of Labor Web site this week. Company officials did not respond to a request for comment this morning.

April 11, 2013

2 Min Read
Covidien closes legacy catheter extrusion plant in NY

Argyle, which is located north of Albany, NY near the Vermont border, anchors an area called "Catheter Alley" and is home to Precision Extrusion, a C.R. Bard plant, and AngioDynamics. Disposable catheters were invented by David S. Sheridan in Argyle in the 1940s. Sheriden, who held more than 50 medical device patents, died in 2004. The Los Angeles Times has called the Argyle area "the catheter capital of the world".

The plastic extruded catheters invented by Sheridan after World War II replaced reusable catheters produced from strands of cotton braided around piano wire molds, then varnished, heated, ground down and polished.

It's not clear where Covidien plans to produce the extruded catheters, but a web site is currently advertising Covidien job openings at five sites in Ireland, including a plant in Tullamore that does extrusion and molding of medical plastics.

Medical device manufacturers are under intense pressure to restructure to reduce costs in the face of a rapidly changing medical landscape in the United States where there are growing efforts to reduce costs without sacrificing quality.

"Cutting costs and management of internal resources is more critical to market viability and growing the top line," said Venkat Rajan, industry manager-medical devices at Frost & Sullivan, in a presentation at BIOMEDevice in Boston yesterday. BIOMEDevice and Plastics Today are both owned and operated by UBM Canon.

Covidien, once the healthcare business of Tyco, has 43,000 employees in 70 countries and has annual sales of about $12 billion. The number of facilities it operates has dropped from 67 in 2008 to 51 last year. The percentage of its production in low cost countries has risen from 10% to 14% in that same time period. Headcount has declined from 26,100 to 24,800.

Cost reduction strategies include outsourcing, offshoring and improved purchasing practices, Covidien CEO Joe Almeida said in a JP Morgan presentation earlier this year.

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