FDI of the Month February 2019: Medtronic remains committed to Ireland despite tax woes and reshuffles

FDI of the Month | Wed 6 Mar | Author – Business & Finance
Medtronic

Despite operational reshuffles, the world’s largest medical device producer Medtronic remains committed to Ireland in the face of Trump’s tax reforms.

The world’s largest medical device maker Medtronic headquartered itself in Ireland in an “inversion” to avoid taxes—but February saw it reshuffle operations here as it faces US tax reforms. However, with roots in Ireland since 1981 and around 4,000 people employed here, it remains committed to its Irish operations. 

The Parkmore Business Park West facility features a Centre of Excellence for Operations and R&D to support Global Cardiac & Vascular Businesses, as well as a Customer Innovation Centre.  The Mervue operations focus on the development of Respiratory & Monitoring Solutions.  Medtronic Athlone manufactures airways products and also features an R&D Center of Excellence.

Medtronic’s headquarters and principal executive offices are on Hatch Street, Dublin 2 with the Customer Contact Centre in City West housing customer services, sales and marketing functions.

The US medical device giant was founded in 1949 in Minneapolis, Minnesota, USA, by Earl E. Bakken and Palmer J. Hermundslie. Today Medtronic does business globally in more than 120 countries and employs 38,000 worldwide. The original global headquarters is in Minneapolis, Minnesota. Regional headquarters include Switzerland and Japan.

Medtronic logo art outside its operational HQ in Minnesota.

Medtronic logo art outside its operational HQ in Minnesota.

In 2015, Medtronic acquired its rival Covidien and set up headquarters in Ireland in an “inversion”—a controversial practice which allowed it to reduce its tax bills. The company currently employs around 4,000 people here. Now, in light of Donald Trump’s tax reforms, the company is facing into higher tax bills from 2020 onwards, jumping from about 11% to 16-17%. 

This year the company beat Wall Street estimates for quarterly profits, driven by higher sales in its surgical products unit and restorative therapies group. Chief executive Omar Ishrak stated that, “I am pleased with the growth in technical and technological capability in Ireland over the time we have been here.” 

Medtronic CardioInsight vest, a single-use, disposable multi-electrode vest that gathers cardiac electrophysiological data from the body surface.

Medtronic CardioInsight vest, a single-use, disposable multi-electrode vest that gathers cardiac electrophysiological data from the body surface.

However, tough decisions had to be made around the organisation of its business here. It was announced that the Galway-based Crospon plant, (an Irish business which it bought last year in a reported €38m deal) would be closing and its operations absorbed into other Medtronic facilities with similar capabilities, including elsewhere in Galway city. The Crospon site at IDA Business Park in Dangan will be phased out over the next year. 

Commenting at the announcement of the Medtronic full-year results in February, Mr Ishrak had said of Crospon, “It’s one that we’re pleased with. The acquisition has been integrated fairly well.” Medtronics existing Galway operations is one of the leading Global Manufacturing and Technology Development Centres within the corporation.

Crospon specialises in devices for diagnosing gastrointestinal conditions. The factory currently manufactures the Endoflip imaging system, and Endoflip and Esoflip balloon catheters. 

A spokesperson for Medtronic confirmed that Crospon’s R&D operations will remain in Ireland, saying, “Medtronic operates within a highly-competitive global healthcare environment,” adding that the company consistently evaluates its global operations to improve operational efficiency. 

The spokesperson also stated that the company recognises, “the strong work, dedication, and quality of the Crospon team,” and is “providing employee assistance to help affected employees through the transition.”

Business & Finance, Company of the Month

IDA-IrelandBusiness & Finance, in association with IDA Ireland, recognises excellence in foreign direct investment companies operating out of Ireland through the ‘FDI of the Month’ award. The FDI of the Month award recognises the company which best demonstrates longstanding commitment to Ireland, investment in facilities and R&D, and job creation, as well as business leadership on a global scale.