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Last week the biotech community in San Diego suffered a tough blow as many positions were eliminated as part of a plan to save $20 million dollars in the hopes that Life Tech will please their investors. People who lost jobs included veterans with the company, many who were loyal and hard-working to the almighty borg of biotechs, sacrificing their nights, vacations, and weekends to promote the success of an organization that never sleeps.
Life Tech was formed out of a merger of two companies; Carlsbad-based Invitrogen and Foster City-based Applied Biosystems. The acquisition of ABI by Invitrogen in 2008 resulted in the $6.7 billion dollar company renamed Life Technologies, which holds some of the hottest IP in the world, including lucrative patents on PCR, qPCR, and market domination in Human ID/forensics. With a portfolio this powerful, how could they fail?
Life has not reported how many people were sent home last week and they have not updated their numbers on the State Employment Development Department website which tracks company layoffs, according to the Worker Adjustment and Retraining Notification (WARN) Act. Anonymous sources say approximately 2-4% of their workforce (11,000 people globally and 1,300 people in Carlsbad) will be downsized by the end of the year. While specific positions were not listed as targets, the layoffs are affecting all areas of the business, including R&D, corporate marketing, product marketing, and operations.
It has not escaped notice of many that the laid off people were predominantly over forty years old and had committed a substantial number of years to IVGN/ABI/Life Tech. No good deed goes unpunished. The age factor has led to speculation that an ageism lawsuit may be in the works.
What reasons were given for the emergency downsizing to rescue Life Tech from a growth rate of only 4.1%?
Greg Lucier, CEO of Life Tech, blames the problems on a lack of demand for their products (although the NIH budget cuts were much less than expected), trouble meeting the demand for the SOLiD sequencing instruments because the earthquake in northeastern Japan interrupted production of needed parts, and low sales in China (ref).
There was not mention of Ion Torrent playing a role, either positive or negative for Life Tech, although, according to posters on an anonymous forum, many people feel too much money was invested in the Ion Torrent technology that is not showing return. Ion Torrent may be the goose that lays the golden egg, but it will be too late for the 200-400 people that will be facing job hunting in an economy that can’t handle more unemployed people at an age where many companies may not choose experience over salary.
Personally, I find the lack of demand an unfortunate excuse. With one of the broadest and best portfolios in the world, there certainly isn’t a lack of demand for the products. Perhaps more marketing should have been done to determine where demand went before eliminating some of the best people in the business.
Many of these people will get picked up easily. Their knowledge and tenacity are worth their weight in pay. Others will struggle as most biotech companies are in a hiring freeze for the rest of the year. People did receive severance packages and won’t be totally abandoned to figure out how to come up with next month’s mortgage. But it’s an employer’s market and many will not be able to demand the salary they once had.
For the people who made the (first round) cuts, their workload will now become so oppressive, they should be begging for a severance package by December.
What’s the lesson in this? The lesson is that loyalty will only get you so far. In the corporate world, the bigger the company, the less significant you are. In the end, you’re a number on a spreadsheet and when the hammer comes down, you might be on that list, even if you do work 14 hrs a day 7 days a week. So your network is more important than ever. Making friends, connections, forming collaborations, and staying in touch with your old co-workers will help you bounce back fast in a down economy. Don’t wait- start now.
And don’t get too cozy in that cubicle.
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I think it also suggests that working 14 hours a day 7 days a week isn't really worth it. Especially if a company can let you go "at will."
I exaggerated a bit, of course, but sometimes people don't have a choice. Depends on your boss and how insane they are.
The whole lack of demand is a crock of shit, if anything we've been spending more $ than ever with them. Maybe the market is a little soft, but sounds like they overextended themselves on R&D and need to trim back. Best of luck to any of the good folks that get laid off or crushed under a mountain of work.
This is sad. I really hope things rebound a bit once I start job hunting in a year. I found out the other day that the value of our house dropped like $20K since we bought it. Looks like we're going to have to refinance and rent it out once our ARM runs out...
I have a hard time believing that too. Perhaps they overextended but not likely on R&D. More likely on marketing. The R&D has already been cut back and they don't have a lot of new inventions coming out these days (they acquire them instead).
Unless it was spent on R&D for Ion Torrent and/or SOLiD which is possible.
With an organization that size, I think it could be easy to overspend without having a good understanding of where it's all going.
Brian- I think you may be ok. As a young person just getting started, you may be just what companies are looking for. Someone with skills in the latest techniques and at the start of the payscale.
But find ways to make yourself more marketable- if you have the chance to learn an unusual technique not many people know that could be very useful to a team, or have some added skills that your contemporaries won't have, it might be a good idea.
Actually I heard that they needed to trim middle management and that meant dead weight. I think the reason most of those folks were in their 40s was simply a consequence of career stage. I don't imagine there was an age-specific firing.
I wonder if they're fighting off a private hostile bid? Their stock took a serious dive starting in July and it is just getting worse. Usually the first sign of the Board fighting off a takeover attempt is to raise immediate capital by selling off secondary assets (furniture & equipment) and firing personnel. And further projected market softening is in the works for the sector. A $12 stock stumble and projected revenue loss puts them in a prime spot for takeover. Especially given that the equity firms in question will only have to raise $8-9B in capital.
@CGP I am changing my comment because, I don't know where the dead weight is. It is spread out among all the levels. The people I know who lost jobs were most definitely not in that category.
What I can tell you is that they didn't make choices based on performance. Positions were eliminated regardless of the person in that spot. Now if they had multiple positions for the same role, as does happen in a merger, and one has to go, then they'll need to be able to show that their choice was not based on age or sex, if it does come down to a lawsuit.
Staying with one company 5-10 years is rare these days, but its certainly no where close to an end career stage- not for a 40 year old by any means. For a PhD, that's only maybe 8-10 years of outside academia experience. That's just getting going.
@Jay Perhaps. But who could afford it? GE? Who would want to own the Titanic?
That's a good question. I can't come up with anyone who would want to own them outright. But maybe they potential buyer is hedging for a runup post-economic crunch? Although that's one giant gamble to make with liquid capital when you could just buy up majority shares and coast in a holding pattern.
The GE speculation over at Forbes and WSJ is unsettling. Especially given that GE's capital on hand is only about $20B. That would drive GE shares down all to speculate on a 9-18 month turn around.
Of course, I could be hoping, since I've been holding onto LIFE since mid-July and looking for a dumping point.
Roche or ThermoFisher might also be in a position to make a move, but I don't think that will happen. It wouldn't make business sense for them.
"Of course, I could be hoping, since I've been holding onto LIFE since mid-July and looking for a dumping point."
Looks like at least one age discrimination lawsuit has been filed...
This is crazy and shows noone is safe from the bad job market. SO much time effort and education and still it can be taken away
I think also what it means is that we have to continually be growing and learning in our jobs and with our skills or we'll become easy targets for elimination. The industry wants new blood and fresh ideas to invigorate their R&D and marketing and how else to get it but hire from the outside. So as an insider, we need to keep ourselves on the cutting edge all the time. I think a perfect example of someone who does that is DivaBiotech.