Business & Real Estate

Medical device maker, eliminating jobs in Sacramento, is under pressure to slash costs

Volcano Corp.’s decision to close its manufacturing operation in Rancho Cordova is a key element in the medical-device maker’s campaign to slash expenses and placate angry shareholders, company executives said Thursday in a quarterly conference call with investment analysts.

Top executives of Volcano Corp. of San Diego, offering fresh insight into Volcano’s ongoing transfer of factory jobs to Costa Rica, promised investors the company would shore up profitability and reduce costs. Volcano has already announced the layoffs of 210 employees in Rancho Cordova as the 2-year-old Costa Rica plant ramps up, and said last week that all manufacturing in Rancho Cordova will end by next July.

Executives said the transfer of work to Central America is a key element in the effort to raise profits.

“The biggest driver is going to be the elimination of ... the duplicate indirect labor and overhead that we’re experiencing in Rancho Cordova,” said Chief Financial Officer John Dahldorf.

Dahldorf and Chief Executive Officer Scott Huennekens acknowledged they are being pressured by major shareholders to shift Volcano’s focus from revenue growth to profitability. Besides eliminating the factory operation in Rancho Cordova, the company is also scaling back research and development work and cutting other expenses.

It’s unclear how many jobs still remain in Rancho Cordova, which was Volcano’s headquarters until 2008. The company has told city officials that some research and development jobs are expected to remain in Rancho Cordova. At one time, before the headquarters moved to San Diego, Volcano employed more than 500 workers in Rancho Cordova.

Also Thursday, the company disclosed an $8 million loss for the third quarter, a slight improvement over the $8.5 million loss a year ago. For the first nine months of the year, Volcano lost $18.6 million, compared with $14 million a year earlier.

“We have not performed as we had anticipated over the last 24 months,” Huennekens said.

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