Erik Paulsen (R-MN-03) has been quiet during the August recess which provides a little time to review his claims concerning the “onerous” 2.3% Medical Device EXCISE Tax that he touts as “job-killing”.
Readers of the Sun Post will recall Representative Paulsen’s December 2, 2012 warning of “dramatic jobs losses” in the medical technology industry :
Over the past two years, news headlines have highlighted thousands of jobs being eliminated from this dynamic industry: 1,050 from Stryker, 1,000 from Medtronic, 700 from Abbot, 595 from Covidien, 450 from Zimmer, 300 from St. Jude Medical, 275 from Welch Allyn. In Minnesota alone, 400 device companies, which sustain 35,000 high paying jobs, could be in jeopardy.
Well, the “onerous” MDET has been collected since January and the announcement of massive new layoffs have not materialized … in fact, a new report has just been issued that suggests that Representative Paulsen should correct his OpEd
If death and taxes are the world’s only certainties, the way the medtech sector reacted in 2012 to the then-looming US medical device sales levy might have led an observer to conclude that it believed them to be much the same thing. Analysts warned of pre-emptive restructurings and downsizings throughout 2012, insisting that the job-killing nature of the tax would make itself felt before it even became law.
But as far as the largest medtech companies go, at least, the doomsayers were wrong. The top 15 device makers by market cap actually increased their headcounts by an average of 4% during 2012, according to EvaluateMedTech
Let’s look at Representative Paulsen’s list and compare Year End 2010 to YE 2012 (since Representative Paulsen stated the “past two years” :
Stryker YE 2010 20,036 versus YE 2012 22,010 ~ a gain of 1,974 not a loss of 1,050
Medtronic YE 2010 45,000 versus YE 2012 26,000 ~ a gain of 1,000 not a loss of 1,000
Abbot is not listed as it split operations into two companies Abbot and Abbvie so no data was listed.
Covidien YE 2010 41,500 versus YE 2012 43,000 ~ a gain of 1,500 not a loss of 595
Zimmer YE 2010 8,800 versus YE 2012 9,300 ~ a gain of 500 not a loss of 450
St. Jude Medical YE 2010 15,000 versus YE 2012 15,000 ~ no change not a loss of 300
Welch Allyn is not listed in the report but the plans to cut 275 jobs have to be taken in context of the fact that it built a plant in Mexico seven years ago and is transferring the work down there.
The story concludes :
The medtech tax will bite over the course of 2013, but staffing trends show that it has not scared device manufacturers away from expanding. The medical device sector might not have expanded as fast as big biotech, and the full picture will not become apparent until a year from now, but claims that medtech companies would have to slash jobs to cope with a 2.3% reduction in sales appear to have been wide of the mark.
Considering that Medtronic just announced First-quarter net earnings reached $953 million, a 10% hike over the same period in fiscal 2013, somehow the industry seems to be coping with this “onerous” tax.
Hopefully during Representative Paulsen’s five-week “recess”, he will take the time to review the data and cease the fear-mongering that “35,000 high paying jobs could be in jeopardy.”