Posted at: 07/25/2013 5:44 PM
Updated at: 07/25/2013 6:26 PM
By: Berkeley Brean
I-Team10 is learning about possible large scale layoffs at Bausch and Lomb. We've been hearing about plans for massive layoffs at B&L since last week so we talked to local jobs experts.
Here's what we know about the pending sale of Bausch and Lomb to a company called Valeant.
The price is $8.7 billion.
Valeant's CEO told Wall Street investors the purchase includes a plan to save $800 million by cutting duplicate jobs between the two companies. He calls it "cost synergies."
We talked to more than a dozen people for this story. One is Mark Peterson -- the head of an organization called Greater Rochester Enterprise. He has a team of people putting a plan together to try to help as many as a thousand employees if they lose their job.
Brean: So your planning right now to deal with roughly 1,000 laid off employees from Bausch and Lomb?
Mark Peterson, Greater Rochester Enterprise: We are. The exact number will come to fruition over time.
This is what Valeant's CEO J. Michael Pearson said in a conference call with investors in late May after Valeant announced the deal to buy Bausch and Lomb.
"We expect to realize at least $800 million in cost synergies by the end of 2014," Pearson said.
We asked Peterson about that information.
Brean: In a call with investors, the CEO of Valeant talked about $800 million in cost synergies. How do you interpret that?
Peterson: Well to get to $800 million in cost savings, there is no way to do that without significant personnel changes.
Synergies is the key word. It's mentioned several times in the power point that went along with conference call. In everyday language -- it means cutting people and positions that a company, in this case Valeant, already has.
$800 million can cover a lot of people and positions.
In the conference call -- the Valeant CEO Pearson said B&L operates like a "big pharmacy company" and he said he plans on changing that. Here's what he says about the difference in overhead costs between Valeant and B&L.
He refers to overhead as "SG&A."
"We've been able to sustain our strong organic growth spending about 20% on SG&A and I think Bausch is more in the low 40s," Pearson said. "So we believe there is significant space there."
SG&A stands for selling, general and administrative. It's basic overhead like buildings and employees.
Impact on our community
"Remember, Rochester is B&L's headquarters," financial analyst George Conboy said. Some of his clients are B&L employees.
"Therefore, when you have a headquarters staff it's reasonable to expect that a lot of management overhead, oversight, administration, finance and what have you, are located at a company headquarters. So the bulk of the cuts we're going to see are likely to happen right here in Rochester."
"So what kind of impact does that have on our community?" I asked.
"The only thing we have going for us that makes Rochester a little better community is, it's a very diverse employment base, very high tech employment base, a lot of growing companies are likely to want to hire people that come out of B&L. As a community overall, in the long run, shouldn't have that big an impact but at the individual level, it's a tragedy," Conboy said.
Mark Peterson of GRE thinks this community can handle a thousand job losses over a long period of time. But he says the Rochester job placement system isn't equipped to deal with a thousand job losses in short period of time -- like a day or two. The pressure, he says, would force employees to move somewhere else. That's why his organization is putting a plan together right now to help.
Comment from Valeant
Bausch and Lomb directed our calls to Valeant. Late today we got this statement from Valeant's spokeswoman, Laurie Little. "I know there many rumors floating around but we do not comment on rumors.
As for employees, we are still in the integration planning stage and we plan to communicate with employees first once those plans have been firmed up."