Merck workers keep working after deadline

Posted: May 03, 2013

The 2,000 or so union employees and management at the Merck & Co. plant in West Point, Montgomery County, agreed to continue working and negotiating after the union contract expired Tuesday night.

Weeks of negotiations and news of weak first-quarter financial results make the prospects for a new agreement and more job cuts - union or otherwise - unclear.

On Wednesday, Merck said revenue and profits were down for the first quarter, and it lowered the profit expectations for the rest of 2013. Chief executive officer and Philadelphia native Ken Frazier told stock market analysts in a conference call that "we continue to decrease costs without compromising our best opportunities for future growth."

Merck said it spent $50 million less than a year ago in the first quarter. Spokesman Steven Cragle said some of the savings came from layoffs "globally," but declined to specify numbers or locations, and added that Merck was hiring for some positions. The company had 82,000 employees as of March 31.

The negotiating committee of the United Steelworkers chapter at West Point met with members Wednesday. Union president Mark "Isy" Snyder said afterward that negotiations were continuing.

In a spring newsletter to members, Snyder wrote that among the company's proposals was a change to 12-hour shifts because many processes run longer than eight hours. "In reality, 12-hour shifts mean less jobs, less pay, disruption of family life, etc.," Snyder wrote.

Merck said first-quarter sales declined from $11.73 billion last year to $10.67 billion in the same period in 2013, a decline of 9 percent. The first-quarter net income fell from $1.74 billion last year to $1.59 billion in 2013, a decline of 8.3 percent.

The results sent Merck shares lower. On a day the Dow fell 0.9 percent, Merck fell 2.8 percent, or $1.31, to $45.69 per share.

On April 5, when asked if West Point was safe, Frazier told The Inquirer: "We have no plans to do anything with respect to West Point. It is still the hub of Merck manufacturing and research."

But the union said last year that management won't guarantee beyond five years.

Merck will spend more on research projects, Frazier said, but he replaced Peter Kim with Roger Perlmutter in March to lead research. Kim's salary was $1.1 million.

"When you bring in a new guy with a fresh set of eyes, there are going to be some changes," Perlmutter told the analysts Wednesday. "I'm doing a detailed review of programs, processes, and people. Already two weeks into the job, I can say there are some opportunities for acceleration and productivity enhancement."


Contact David Sell at 215-854-4506, dsell@ phillynews.com, or follow on Twitter @ phillypharma. Read his blog at www.philly.com/phillypharma.

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