| | | Cook Medical says it won't build five Midwest plants due to med-tech tax
Monday, July 30, 2012
A med-tech company says it's scrapping plans to open five new plants in the Midwest because of the 2.3 percent medical-device tax that goes into effect next year to help pay for the new federal health care law.
Cook Medical Inc., a Bloomington, Ind.-based company that makes a variety of medical devices, told the Indianapolis Business Journal that the federal tax will cost it between $20 million and $30 million annually.
That's enough to force the company to abandon plans to build five plants over the next five years, said Pete Yonkman, Cook's executive vice president of strategic business unit. Cook recently spent $30 million to renovate a Canton, Ill., plant that was abandoned by International Harvester Corp.
Yonkman said the company will instead look to expand internationally. It already has production facilities in Australia, Denmark and Ireland.
Minnesota politicians and med-tech company leaders have been complaining about the medical-device tax that goes into effect next year and is expected to raise about $2.9 billion per year to help pay for President Obama's new federal health care plan.
Earlier this year, Medtronic Inc. said the tax will cost the Fridley-based med-tech giant as much as $175 million a year. Medtronic Chief Financial Officer Gary Ellis told Bloomberg that the company is trying to figure out how much of the tax it can pass on to its customers.
“ We’re going to have to make the tradeoffs, and there’s probably going to be things that we can’t do as a result of that. It means we won’t have as much to invest going forward," Ellis said.
A bipartisan group of Minnesota politicians, including U.S. Sen. Amy Klobuchar, a Democrat, and U.S. Rep. Erik Paulsen, a Republican, have been working to have the tax eliminated. Last month the Republican-controlled House voted to approve Paulsen's bill repealing the tax, but the bill hasn't gone anywhere in the Democrat-controlled Senate.
A study commissioned last year by the Advanced Medical Technology Association said Minnesota could lose more than 2,700 med-tech jobs because of the tax. Minnesota has nearly 25,000 med-tech workers and is home to several med-tech companies in the Twin Cities area, including Medtronic (NYSE: MDT) and St. Jude Medical Inc. (NYSE: STJ).
http://www.bizjournals.com/twincities/news/2012/07/30/cook-medical-med-tech-tax-plans.html
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