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Posted on Mon, Jul 22, 2013 : 3:09 p.m.

Terumo Heart lays off 68 employees following sale of DuraHeart technology

By Ben Freed

Less than one month after parent company Terumo Corporation sold the DuraHeart II system to Thoratec Corporation for $13 million in cash, subsidiary Terumo Heart has laid off more than 65 employees at its headquarters in Scio Township.

Terumo Heart, which had approximately 166 employees before the sale of the technology to Thoratec, had completed a $3.6 million expansion of the company’s offices and manufacturing space in 2009.

Terumo_Cardiovascular_Systems_Scio_Township_division.JPG

The headquarters for Terumo Heart and Terumo Cardiovascular Systems are on the same campus in Scio Township.

File photo | AnnArbor.com

Spokesman Robert Murphy said that Terumo Heart submitted a Worker Adjustment and Retraining Notification (WARN) notice to the state of Michigan July 11 to inform the state of its plans to release 68 workers. An additional 36 employees left Terumo Heart to work for Thoratec as part of the technology transfer.

WARN notices are required by law in the occasion of a plant closing or mass layoff of more than 50 employees. According to the Michigan Department of Technology, Management and the Budget’s website, there were 20 WARN notices submitted to the state between Jan. 1 and June 30 of this year. The only previous WARN notice from Ann Arbor in 2013 was for the closing of the Pall Life Sciences Corporation.

After the layoffs and exits, approximately 60 employees remain at Terumo Heart to continue supporting existing customers of the company’s first DuraHeart model.

“The short-term immediate focus for the company is to continue to support the patients already on DuraHeart technology,” Murphy said.

“They will be relaunching the product in Japan shortly, so all of the patients that have a DuraHeart will continue to be supported by Terumo Heart. It’s unclear at this time whether they will also continue research and development of new products.”

Terumo Cardiovascular Systems, the larger Terumo subsidiary in Ann Arbor, employs approximately 600 people in Scio Township and was unaffected by the layoffs. Murphy said that the larger company is looking to hire in some of the employees who were let go by Terumo Heart.

“There are 10 or so of the Terumo Heart employees who are actively engaged in trying to stay within the Terumo family,” he said.

“That could mean at Terumo CVS here or at another Terumo facility in the U.S.”

Murphy said that all laid off employees were given an “impressive separation package” that included a severance pay and an outplacement package with “full benefits.”

The DuraHeart technology developed by Terumo is a Left Ventricle Assist System, a small pump implanted into a patient's body designed to assist blood flow in the heart. According to the company's website, Terumo Heart was created as a subsidiary specifically to finish development the DuraHeart technology and bring it to market.

Terumo Heart and Terumo CVS are both part of Terumo Medical Corporation, a worldwide health products conglomerate that employs more than 12,000 people and has developed more than 1,200 products.

Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Get in touch with Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2

Comments

Richard

Tue, Jul 23, 2013 : 5:22 p.m.

Many of the people who lost their jobs worked 50-60 hours per week while on salary so they didn't make any more money than they would have if they had worked 40. They were told the company was being sold but most had to wait two weeks to find out if they had a job and most of them didn't. Meanwhile the people at the top keep getting raises and promotions. This from a company who has been promising expansion and growth. Don't be surprised if Terumo Cardiovascular is the next to go and all the people who work there will also be looking for work.

Shawn Letwin

Tue, Jul 23, 2013 : 5:05 p.m.

@Ben Freed. Thanks. My comment was more tongue-in-cheek than inquiring. So was this a press release by a PR company? If I recall correctly, this is the same company that was fined $35 million and had manufacturing restrictions imposed by the FDA around two years ago (as reported by AnnArbor.com). Two years later, they get $12 million in cash and shed over 60% of the employees. What a turn of events, eh? A fine example of capitalism and the price the workers pay for the malfeasance of the management. I guess I am one of those poor suffering fools who just doesn't understand how business works... Would you like fries with that sir, or can I upsell you on the special for the day...

Ben Freed

Tue, Jul 23, 2013 : 5:26 p.m.

Shawn, This was not a press release by a PR company. We found out about the layoffs but my questions were answered by a PR representative (a "spokesperson"). The company that was fined $35 million and had restrictions imposed by the FDA was Terumo Cardiovascular. Both companies are subsidiaries of Terumo Medical Corp. and operate on the same campus but are separate entities.

microtini

Tue, Jul 23, 2013 : 1:09 p.m.

Don't blame Terumo Heart. Capitalism isn't designed to benefit workers; it's designed to benefit employers.

Trepang674

Thu, Jul 25, 2013 : 1:52 p.m.

OWNERs...by making profit

Adam Schubatis

Tue, Jul 23, 2013 : 5:46 p.m.

NSider, Terumo is a Japanese company, although this article is taking about one of its US subsidiaries.

NSider

Tue, Jul 23, 2013 : 1:21 p.m.

So, we have a choice with cardiac products? BUY AMERICAN?? It was Clinton who declared the US was going to become a service economy, my question is, When everyone else is out of work, who are those working in the service economy going to serve hamburgers to?

GoNavy

Tue, Jul 23, 2013 : 11:52 a.m.

The entirety of this thread has solidified my belief that a non-insignificant number of Ann Arbor residents operate in a world where they don't really understand how business works.

FredMax

Tue, Jul 23, 2013 : 12:17 p.m.

Did you have to bust my bubble? I was hoping that the pundits were actually mavericks at the helm of wildly successful growing local companies that will soon be providing everyone with indefinite employment.

Shawn Letwin

Tue, Jul 23, 2013 : 10:14 a.m.

1-Thoughts and best wishes to the 65 people who lost their jobs :( Been there, done that in the last ten years and it ain't easy. 2-Since when do companies need to have a spokesperson? Companies had titled executives or managers speak on behalf of a company, but we have now elevated the business culture to require a "spokesperson"...reminds me of when people were no longer fired, they were "separated". 3-Most alarming about this announcement is that a company that employed 166 people, laid off almost 40% of its entire workforce, then shed another 22% of its workforce for a sum total of slashing 60% of its people. The loss of expenses from the layoffs would be an interesting number...lets say with benefits and being conservative it may be about $75,000. That equals a shedding of expenses for the 65 people of around $5 million. So the company with about 1/3 of the size of employees made $13 million in cash and shed $5 million in expenses from the people who lost their jobs. Again, thoughts and considerations to those who lost their jobs!

Ben Freed

Tue, Jul 23, 2013 : 1:25 p.m.

Shawn, I can't speak to all of your points, but a number of companies do their communication through spokespeople who work for outside public relations agencies. It's extremely common practice these days, especially for smaller companies. Larger companies often have in-house PR people who have the same responsibilities.

mady

Mon, Jul 22, 2013 : 8:56 p.m.

Figures. Thanks for all your hard work now don't let the door hit ya where the good lord split ya!

NSider

Tue, Jul 23, 2013 : 1:18 p.m.

And the best part is the economists and talking heads on TV keep telling us that the economy is turning around and LOOK! the unemployment rate is dropping... (I won't go into how they no longer count a person after they run out of unemployment benefits). Clearly Michigan is an anomaly and doesn't get counted in statistics.

jcj

Tue, Jul 23, 2013 : 12:47 a.m.

They got paid for what ever work they did! They have no right to expect more than an hours pay for an hour worked! And besides you/we have no idea how the employees feel about this. I am sure they would rather be working. But there are people in the workplace that understand, if you are no longer needed you are no longer needed!

dsponini

Mon, Jul 22, 2013 : 8:06 p.m.

Is this the job creation the governor has been working on?

Sparty

Tue, Jul 23, 2013 : 7:34 p.m.

Dennis P, are you forgetting that former Republican Governor Engler moved to Texas as quickly as possible after leaving his term as Governor? Did he ride a Rocket? I'm not certain. And now he's gone to Washington for another job opportunity. Amazing how as job opportunities present themselves, former Governors relocate. Republicans as well as Democrats. I'd call it smart career planning for both former Governors, and not choose to attack them for leaving the State for career opportunities elsewhere as many others have done.

Ben Freed

Tue, Jul 23, 2013 : 1:23 p.m.

DennisP, According to Terumo Heart spokesman Robert Murphy, the employees joining Thoratec will be staying here in the Ann Arbor area.

DennisP

Tue, Jul 23, 2013 : 11:08 a.m.

Oh get over it Sparty. Gov. Granholm is in California and has left Michigan as quickly as she could once her term was over. She left the state faster than a rocket leaves the launch pad. She came to us a carpetbagger and left us holding the bag. And, no, I'm not a Republican.

DennisP

Tue, Jul 23, 2013 : 8:32 a.m.

Nice reply Morris. We have that football game mentality of "our team" versus "their team". Ben, some 38 Terumo employees joined Thoratec. Any indication where they will set up shop? Will they relocate out of state or is Thoratec assuming some operations locally?

Sparty

Tue, Jul 23, 2013 : 4:57 a.m.

Sounds good Ben, but where are you when the Republicans here continue to blame every job loss that occurred during the Granolm Aministration directly on HER on these same boards on a regular basis? It's ridulous how often that still happens, but then they complain that the Democrats point out Bush's faults. LoL.

Nicholas Urfe

Mon, Jul 22, 2013 : 9:36 p.m.

Apparently the censors will not allow us to mention other legislation that the GOP and governor have wasted so much time passing.

Morris Thorpe

Mon, Jul 22, 2013 : 8:19 p.m.

Doesn't matter, Ben. We have been conditioned to choose one of two parties. And when something goes wrong, we blame the other guys. Simple enough. Sure beats the heck out of thinking independently and seeking information. It also keeps the status quo, which is what the Blue and Red want in the end.

Ben Freed

Mon, Jul 22, 2013 : 8:14 p.m.

dsponini, This is not a political statement, but the governor does not have direct control over the workings of private companies. In this case, a company chose to sell the technology it had been developing to someone who offered to buy it. As part of that deal and the ensuing restructuring of the company, layoffs occurred. Again, not playing politics, but there is not really anything that our current governor or any other governor (of any political party) could have done to stop this from happening.

Nicholas Urfe

Mon, Jul 22, 2013 : 7:36 p.m.

DuraHeart? I don't see any heart at all. Any word of bonuses for those who were summarily terminated? Or just the execs and sr management? Any advance notice to the terminated employees? Did they box up their own stuff, or were the doors locked when they came in?

GoNavy

Tue, Jul 23, 2013 : 11:50 a.m.

@johnnyA2: Clearly you don't understand what a bankruptcy means. In bankruptcy, equity is wiped out. That means that anything that the owners have built up is re-valued at "zero." Creditors are repaid either through liquidating assets, or by converting their debt to equity in a reorganized company. In other words, in a bankruptcy, owners are essentially wiped out. If that isn't risk, I'm not sure what is.

Angry Moderate

Tue, Jul 23, 2013 : 12:31 a.m.

CEOs don't share risk? Ever heard of performance-based compensation?

johnnya2

Mon, Jul 22, 2013 : 11:55 p.m.

@ angry moderate, Terumo has ZERO risk in bankruptcy. It is incorporated. Shareholders may lose their investment, but in reality CREDITORS (employees are creditors in a bankruptcy if they are paid in arrears like most people are). Themanagers, CEO, and exectutive team do not "share" the risk. They manage where the funds go.

Angry Moderate

Mon, Jul 22, 2013 : 10:47 p.m.

You're inferring lots of things, but I didn't imply them. Sounds like you don't know what business risk means. Employees are not shareholders. If they wanted in the profits (and losses), they should have bought equity. Companies are not welfare programs for entitled Ann Arborites.

Nicholas Urfe

Mon, Jul 22, 2013 : 10:46 p.m.

@Angry Moderate: You imply that the employees made no sacrifices, and took no risks for the company. That there was no opportunity cost at stake. You imply there was no loyalty, that nobody worked extra hours, "for the team", or otherwise. You imply that employees never skipped or delayed vacations to better the company. Little did they probably know the executives were looking for buyers, and with apparently little regard for how the staff would be treated. And had the company declared bankruptcy, the employees would likely be giving up cash and vacation owed to them. They would be forced to bankruptcy court in order to collect.

Angry Moderate

Mon, Jul 22, 2013 : 9:43 p.m.

Hey Nick, if the company went bankrupt, would you be demanding that the employees pay out their own $$ to the creditors? Or is this a one-way street where they get to take the upside without taking on any of the business risk?

eagleman

Mon, Jul 22, 2013 : 8:01 p.m.

They gave them a severance package with full benefits. What the heck else do you want?

CLX

Mon, Jul 22, 2013 : 7:51 p.m.

I agree that it's a bummer. Same thing happens with so many of these companies - a small number of folks make millions when they sell, and others are just out of a job. I hope this place had the decency to share with those who helped to make it a success.

Ben Freed

Mon, Jul 22, 2013 : 7:48 p.m.

Not sure about bonuses, but all laid off employees were given a severance package. There was advance notice (always is with mass layoffs). The WARN notice was submitted July 11 as stated in the article.