Baxter, hospital supply firm, to cut 4,500 jobs over 5 years

November 17, 1993|By New York Times News Service

CHICAGO -- Baxter International Inc., the largest hospital supply company in the world, said yesterday that it would shave 7 percent, or 4,500 jobs, from its work force over the next five years.

The action comes in response to changes in medical practices that have slowed domestic demand for many of its products and services.

The revamping will include the elimination of 25 percent of the company's administrative and corporate management positions, and the sale of its diagnostics products manufacturing operations, as well as several smaller businesses the company has not identified.

The company will also reorganize the sales efforts of more than 20 divisions into regional groups where a single Baxter executive will be the main contact for most customers.

"On the average, 30 different Baxter people might be calling on a sizable customer," said Vernon R. Loucks Jr., chairman and chief executive of the company, based in Deerfield, Ill. "Hospitals don't have time for this and we can't afford it."

Baxter said the changes would result in a pretax charge of $700 million against earnings in the current quarter. It said the resulting pretax savings would total $100 million next year, and rise to $350 million annually by 1998.

Net income for the first nine months was $405 million, on sales of $6.48 billion, but after accounting changes, profits have been falling.

Shares of Baxter edged up 12.5 cents, to $24.25, in heavy trading on the New York Stock Exchange.

A big part of Baxter's future growth is expected to come overseas, where the company generated 28 percent of its revenues last year.

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