Smith & Nephew Sells U.K. Facility, Closes Another, Cuts 108 Jobs
By Jof Enriquez,
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Smith & Nephew (S&N) recently announced the sale of its Gilberdyke facility in the U.K., along with its nets and foams product portfolio and manufacturing assets, to DelStar Inc., a unit of SWM. The agreement is expected to close by the end of the year and to be accretive starting in 2015. Other terms of the deal were not disclosed.
The Gilberdyke plant manufactures films, nets, and foams, which are sold as components for first-aid and wound dressings. The total worth of assets to be acquired is about $16 million, according to a statement by SWM.
S&N said in a news release that the sale of the Gilberdyke facility is consistent with its ongoing strategy to optimize its global manufacturing footprint, improve efficiency, and cut costs. The orthopedics, wound care, and sports medicine company said it would transfer the production of polyurethane (PU) film products at Gilberdyke — used for S&N’s other advanced wound management products — to the nearby Hull facility within the next two years. DelStar would receive the rights to market the same film products, according to the agreement.
S&N told the Hull Daily Mail that it would spend some £3.2 million to fund the transfer of production to the Hull site, on top of an earlier allotment of £6.4 million to improve the facility. However, the company did not disclose how many of the 91 employees at the Gilberdyke facility would be affected by either redundancies or relocation to the Hull site.
“Our predominant need for the site was for our internal supplies and we couldn't really invest, or weren't willing to invest, in a third-party bulk net business,” Noel Waters, senior VP of global operations at S&N, said in the Hull Daily report. “What we realised over many years of reviewing our manufacturing strategy was the non-core business would be better-served by being purchased by another company. We will bring the polyurethane assets and the people who work with those to the Hull site.”
In related news, S&N recently closed its St. Petersburg, FL, facility and announced the upcoming termination of 108 workers at that site, according to an article from the Tampa Bay Times. The reasoning behind the shutdown and job cuts was in line with the same consolidation and optimization strategy that prompted the Gilberdyke facility sale.
"The decision to close St. Petersburg was a difficult one," the company said in a statement, according to the Tampa Bay Times. "However, we believe Smith & Nephew's Advanced Wound Management business in the U.S. will be more successful operating from a single location."
Eliminating non-core assets is just one tactic being used by S&N to remain competitive. In August, it slashed the prices of its orthopedic packages for U.S. hospitals. The company also acquired ArthroCare Corporation in June for approximately $1.5 billion in order to boost its position in higher growth segments.