Business & Real Estate

Medical device maker Volcano plans another 170 layoffs; will cease manufacturing

Volcano Corp. is laying off another 170 workers in Rancho Cordova, where it expects to stop manufacturing altogether by next July. It’s part of a cutback that’s been underway since the medical-device maker moved its headquarters to San Diego and built a duplicate factory in Central America.

In a filing with the state Employment Development Department, Volcano said the latest wave of layoffs will occur Dec. 16. More layoffs will follow “in successive rounds until the production lines are relocated,” the company said in its filing. “We anticipate all the production lines will be relocated as of July 15th 2015.”

The company had no immediate comment. It wasn’t clear how many employees will be left in Rancho Cordova, although Curt Haven, the city’s economic development director, said the company expects to keep research and development jobs in the city.

Volcano has been moving many of the Rancho Cordova jobs to Costa Rica, where it opened a plant in late 2012. On a conference call with investment analysts earlier this year, Chief Executive Officer Scott Huennekens said the company was dealing with high manufacturing costs because of the “duplicate capacity between our Costa Rica and Rancho Cordova facilities.”

Chief Financial Officer John Dahldorf added that those costs will come down and profits will improve because of the transition to Costa Rica.

“The real benefit of going to Costa Rica is the labor rate differential between Rancho Cordova and Costa Rica and that differential is still there and is still very real. … We will see the gross margin pick up as we get into 2015 because, quite frankly, Rancho Cordova won’t be there and that’s a significant amount of expense that we’ll be carrying in 2014,” he said.

The company was founded in 2000 and moved its headquarters to San Diego in 2008. At the time, it kept more than 500 jobs in Rancho Cordova. But jobs have been draining away ever since.

The company has come under pressure from some institutional shareholders in recent weeks over its earnings performance.

Volcano makes catheters and other devices.

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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