Merck to shut down 16 sites, shed 15% of employees

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In a mission to reduce spending and reach its target savings goals of $3.5 billion in 2012, Merck will shut down operations at eight research and eight manufacturing sites, depleting almost 15 percent of its workforce.

In a restructuring plan that began in December, the Whitehouse Station, N.J.-based company will phase out operations at sites to develop a research and development aspect of the company to support manufacturing of its product portfolio and cut costs.

In November 2009, Merck merged with Schering-Plough and, according to the company, the consolidation and restructuring plan could result in a $2.7 billion to $3.1 billion savings.

Additionally, the company estimated that pre-tax costs for the merger restructuring program could reach $3.5 billion to $4.3 billion. Two-thirds of this money would be associated with cash outlays from employee separations expenses, while one-third would be non-cash and linked to the closed plants, said Merck.

"While we believe these actions are necessary to support Merck's competitive advantage, they required difficult decisions that will impact some of our colleagues, their families and local communities. We will implement our restructuring plans with the utmost care and respect for the hard-working and talented employees of Merck," said Richard T. Clark, chairman and CEO of the company.

The company said that the following research sites will be phased out over the next two years: Oss, Boxmeer and Schaijk in the Netherlands; Odense in Denmark; Waltrop in Germany; Newhouse in Scotland; its Kendell Square site in Boston; and its site in Montreal.

Additionally, Merck will cut off manufacturing at plants located in Camazzo, Italy; Cacem, Portugal; Azcapotzalco, Mexico; Coyoacan, Mexico; and Santo Amaro, Brazil, and will sell its Mirador, Argentina, and Miami Lakes, Fla., sites. The company will move chemical manufacturing operations that currently take place at its Singapore site to the Schering-Plough site.

After the restructuring, Merck will have 77 facilities, rather than 91, including 29 animal facilities.