Union President Angered at Merck & Co.'s Restructuring Plan that Includes Layoffs and Mandatory Overtime

August 19, 2015
By Alex Keown, BioSpace.com Breaking News Staff

NORTH WALES, Penn. – The president of a local workers union and a 29-year employee of Merck, decried the recent layoffs the company has made as part of its 2013 restructuring plan.

In a series of email exchanges with Ken Frazier, Merck & Co. ’s chief executive officer, Dan Bangert, president of United Steel Workers Local 10-00086, that represents 1,800 employees at the company’s factory in West Point, Penn., criticized the decision to lay off thousands of employees across the company. He said the layoffs mean those employees who keep their positions are required to perform additional functions to make up for the workforce reduction. If employees do not fill in for what he called mandatory overtime, Bangert said those employees are then subject to disciplinary action, including termination. Requiring employees to work 16-hour days raises safety issues, Bangert said in his email. He said employees could be so tired after work they can become hazards when driving home.

In a response to Bangert, which was posted on the USW website, Frazier sad Merck goes to “great lengths to protect the safety and well-being of our employees.” He added that management at the West Point site would address his concerns directly.

Since the restructuring plan was announced in 2013, Merck has laid off approximately 7,290 positions, including about 1,195 layoffs in the first half of 2015. Merck announced this week that it was eying about 2,500 more positions to eliminate, according to a recent filing with the U.S. Securities and Exchange Commission.

In 2013, Merck targeted $2.5 billion in cuts in annual operating expenses by the end of 2015. At the time the cuts were announced, Merck Chairman Kenneth Frazier said the initiative to sharpen the company’s commercial and research and development programs “will make Merck a more competitive company, better positioned to drive innovation and to more effectively commercialize medicines and vaccines for the people who need them.” Merck officials expect the majority of savings from the implementation of the initiative, will come from marketing and administrative expenses and research and development.

The West Point site has had some issues in recent years. In 2013, Merck had to recall nearly 750,000 vials of the human papillomavirus vaccine Gardasil because of “the potential for small glass particles to be present in the vial,” Philly.com said.

Bangert also took issue that union employees are exempt from a global employee appreciation day set for Sept. 5, which gives employees an additional day off. In his response, Frazier said union contracts identify “a set number of recognized holidays and paid days off.” Frazier said there are constraints on “implementing unilateral changes” to those employee contracts. He added the union’s contract gives those 1,800 USW employees at the West Point site the Friday before Labor Day off, a day other employees do not receive.

While the company has been streamlining its employment, Merck has been making several deals to expand its pipeline. In July, Merck enhanced its oncology pipeline with the $605 million acquisition of privately-held Israeli biotech company cCam Biotherapeutics, which is focused on the development of cancer immunotherapies. That acquisition added the company’s lead product CM-24, a “checkpoint” protein that is being evaluated in a Phase I study for the treatment of advanced or recurrent malignancies, including melanoma, non-small-cell lung, bladder, gastric, colorectal, and ovarian cancers. Merck is certainly hoping CM-24 will show the same promise as Keytruda, which has been shown effective in treating three kinds of cancers -- melanoma, lung cancer and mesothelioma.