Dive Brief:
- Medical device maker Carclo plans to close its plastics injection molding manufacturing facility in Tucson, Arizona, the company announced Feb. 14.
- Operations will be moved and consolidated to one of the sites in the Pittsburgh metropolitan area, bringing the medical device maker closer to its customer bases, the company said in the release.
- The closure is part of Carclo's U.S. restructuring plan, the U.K.-based company’s effort to improve its operational footprint and cut production costs as sales of its COVID-19 diagnostic tests continue to drop, CEO Frank Doorenbosch said in an earnings call in November.
Dive Insight:
Carclo has been implementing changes in response to several operational challenges, including reduced customer demand, high inflation, rising energy costs and ongoing supply chain issues, Doorenbosch said.
Cost reduction actions include increasing efficiency in machine utilization, streamlining plant layouts and more closely monitoring factory expenses.
Carclo began executing this plan by modifying its manufacturing operations in the Europe, Middle East and Africa regions, Doorenbosch told analysts. The company invested in two main operational platforms, one in the U.K. and the other in Brno, Czech Republic.
“The focus of the factories has shown that their operating equipment efficiency has gone up in both of the sites,” Doorenbosch said. “Because if you can do something very well, you will excel in it.”
Due to the plan’s initial success in Europe, Carclo executives made the decision to restructure its U.S. operations the same way, Doorenbosch told analysts.
Part of the plan included shuttering Carclo’s injection molding facility in Derry, New Hampshire last year, Doorenbosch added. The company also plans to establish process and technical training centers in the EMEA, U.S. and Asia-Pacific regions “to drive continuous improvement through a very inclusive business approach.”
The Tucson site has nearly 100 workers, according to a KGUN-9 report.
Moving forward, Carclo will focus on other diagnostic test markets not related to COVID-19, CFO Eric Hutchinson told analysts.
“We are also looking to expand the existing products into adjacent markets,” Hutchinson said.
Other COVID-19 test makers have also had to pivot as sales decline. Medical device conglomerate Danaher’s 4-in-1 test for COVID-19, flu A, flu B and RSV helped the company beat its COVID-19 test sales slump in Q2 last year.
