Haemonetics Shutters Massachusetts Plant; Moves Operation to Mexico

Braintree, Mass-based blood management systems provider Haemonetics Corp. has announced plans to move its Braintree manufacturing plant to Tijuana, Mexico. The company will remain headquartered in Braintree, and is currently planning to create a technology center of excellence for product development by adding scientists and engineers who will develop the next generation of new products. Haemonetics is in the process of assessing various locations in the Braintree area for the new center, including its current facility.

In its most recent earnings report, Haemonetics detailed that it is in the process of transitioning its equipment manufacturing capabilities to a contract manufacturer and transferring manufacturing of its disposable products from Braintree to Tijuana. Company Vice President of Investor Relations Gerry Gould told Mass High Tech that the move will take place over the next 12 to 18 months, and will mean the loss of 320 jobs in Massachusetts.

The decision to move manufacturing to Mexico follows the company’s acquisition of the blood collection, filtration and processing product lines of Pall Corp., which was a $555 million deal. The purchase brought Haemonetics facilities in not only in Tijuana, Mexico, but also Covina, Calif.; Ascoli, Italy; a portion of Pall’s assets in Fajardo, Puerto Rico; and about 1,300 employees.

“We picked up new manufacturing plants and spent one year combining those two businesses,” Gould said. “In doing so it became apparent that we had some redundancies and overlap. We needed to change our manufacturing imprint.”

In addition to Mexico, Haemonetics also announced it will be building a new manufacturing facility in Asia closer to its growing customer base in that region. According to company officials, Mexico and the Far East are “foundational elements of a longer term strategy that is expected to provide a competitive cost structure and capacity that can be deployed as needs dictate going forward.”

The company hopes the offshoring will generate savings of approximately $35-$40 million annually by fiscal year 2018. There is no net impact expected in fiscal year 2014 as redundant capacity designed to mitigate the risk of the technology transfers will initially offset savings.

“Encouraged by our recent growth, strong profitability, and the substantial completion of the whole blood integration, we are able to pursue identified [value creation and capture] opportunities sooner with the goal of not just meeting, but exceeding our customers’ expectations in the years to come,” said Brian Concannon, Haemonetics’ president and CEO. “We remain confident in our business fundamentals, our fiscal 2014 earnings guidance, and our ability to realize planned returns on the investments we have committed to make.”

Haemonetics also recently completed the acquisition of St. Paul, Minn.-based Hemerus Medical LLC, a company that develops technologies for the collection of whole blood and for the processing and storage of blood components. The April deal was valued at $24 million, and Haemonetics will pay a further $17 million upon future U.S. Food and Drug Administration approvals of Hemerus products, and after certain sales goals are completed.

“These activities will be important to sustaining our quality, service and cost commitments for years to come,” said Concannon.