Ford Workers, Lawmakers Address Report

DETROIT -- Ford Motor Co. workers and local officials said Friday they'll do everything in their power to keep plants open after a report suggested Ford is considering closing five North American plants as part of a major restructuring. Lawmakers and union officials said they would pile on tax breaks or change plant work rules to encourage Ford to stay. In Minnesota, House Speaker Steve Sviggum, the Legislature's top Republican, said he wouldn't rule out pushing for a special session to consider incentives for keeping a plant in St. Paul. "We're not going to let this go without a fight," he said. "We're going to give every incentive we can to make sure these jobs are maintained." The Wall Street Journal reported Friday that the nation's second biggest automaker is likely to close assembly plants in St. Louis, Atlanta and St. Paul under a still-evolving restructuring plan. It cited two unidentified people familiar with the automaker's product plans. The newspaper said an engine-parts plant in Windsor, Ontario, and a truck-assembly plant in Cuautitlan, Mexico, also are slated for closure. If Ford closes the plants, it would deal another blow to U.S. autoworkers, already reeling from a plan announced last month by General Motors Corp. to close 12 North American facilities and cut 30,000 jobs. The nation's car manufacturers are suffering from declining sales, especially of sport utility vehicles, even as the cost of labor and health care rises. Ford shares rose 5 cents to close at $8.15 on the New York Stock Exchange on Friday. Together, the Ford plants cited in Friday's report employ around 7,000 people, according to Ford's Web site. Ford had a total of 122,877 North American employees at the end of last year. The Dearborn, Mich.-based automaker has around 324,000 employees worldwide. Ford has been struggling with declining U.S. market share, high labor costs and excess plant capacity. The company reported a $1.2 billion pretax loss in its North American automotive operations in the third quarter. Ford Chairman and CEO Bill Ford has said the company is working on a restructuring plan and will reveal details in January. Bill Ford said in October the plan will include "significant" job cuts and plant closures. Ford is only using around 86 percent of its North American assembly plant capacity, compared to 107 percent at rival Toyota Motor Corp. Ford has 23 assembly plants in North America. "Obviously, we've indicated we will address our excess capacity," Ford spokesman Oscar Suris told The Associated Press Friday. "We've been pretty consistent in saying we'll share these plans in more detail in January. Nothing is finalized." The United Auto Workers refused to comment on the report, saying it is speculation. At the Ford plant in Cuautitlan, just north of Mexico City, said rumors about downsizing have been floating around for some time, and the 750 workers there are willing to discuss labor changes to keep the plant open. "We believe that we represent a good business opportunity for Ford," said Juan Jose Sosa, the national representative for the Ford workers union in Mexico. "We are open to considering reasonable alternatives ... and a better use of labor," he said. Danny Sparks, head of the local union at the Ford plant in Hapeville, Ga., near Atlanta, said the report of a possible closure came as a surprise. "We're one of the most efficient plants Ford has. The Atlanta employees have a long history of stepping up to the task at hand," Sparks said. Chuck Moore, director of the Detroit-area restructuring firm Conway, MacKenzie and Dunleavy, said the plants are the subject of speculation in part because of the products they make. The Atlanta plant makes the Ford Taurus sedan, which is scheduled to be phased out next year. The St. Louis plant makes the Ford Explorer and Mercury Mountaineer, two vehicles which have been struggling. Explorer sales were down 30 percent in the first 11 months of this year despite an extensive redesign, according to Autodata Corp. The St. Paul plant makes the Ford Ranger pickup, which also saw sales fall nearly 25 percent between January and November, and the Cuautitlan plant makes the F-150 and Super-Duty trucks that could be consolidated elsewhere, Moore said. Ford has four other plants that make the F-150. GM's announcement got little reaction from Wall Street, in part because many of the changes won't take place until after GM and the UAW negotiate a new contract in 2007. Moore said Ford could get the same reaction unless its restructuring plan takes effect sooner, although Ford also is locked into a UAW contract that won't be negotiated until 2007. Moore said Ford also has to make clear how it plans to stem its market share losses. Ford's U.S. market share fell to 17.4 percent in the first 11 months of the year, down from 18.4 percent the year before. "Without stabilization of the market share, it's just going to require additional cost cuts and additional closures," Moore said.

Expert: short-term Vioxx use causes heart attacks

HOUSTON (AP) - A physician today reiterated he believes Vioxx causes heart attacks -- regardless of the length of use or of the size of dose. The testimony from Doctor Wayne Ray came in the Houston federal trial of a lawsuit brought against drug maker Merck by a woman whose husband died in 2001. Jurors will be asked to decide if Vioxx contributed to the fatal heart attack suffered by "Dicky" Irvin of St. Augustine, Florida. Merck's lawyer repeatedly challenged how Ray, who studies the risk and benefits of drugs, examined data to reach his conclusion. Ray heads the Pharmaco-Epidemiology department at Vanderbilt University School of Medicine. He said no matter how you look at it, Vioxx causes higher risk every time. Also, an economist today testified the Irvin family has suffered at least 402-thousand dollars in economic losses with the man's death.

400 jobs are safe

THE future of Hoddesdon pharmaceutical giant Merck Sharp and Dohme - and the 400-plus workers there - has been safeguarded.
Bosses ruled out its closure and announced plans to develop it into a "global centre of excellence".
The company, a feature of the town since the 1950s, will NOT be a casualty of a massive restructuring by US parent firm Merck & Co Inc.
Instead the site, which is home to MSD's UK headquarters, will be developed into an international base for organic and synthetic chemistry research.
There are currently 440 people employed at Hoddesdon, although 10 could go in the company shake-up.
But just down the road in Harlow, 260 jobs will disappear as the company's neuroscience research centre, Terlings Park, is shut down.
Sixty jobs will also go at the company's chemical plant at Ponders End in Enfield, as the firm scales down its manufacturing operations at that plant, ready for complete closure by 2007.
The restructuring is part of a worldwide £2.3bn cost-saving programme by Merck, which will see workforce slashed by 7,000 - 11 per cent.
Shares in the medical giant have plummeted since it withdrew its painkiller drug Vioxx from sale last year in the face of mounting health concerns. Merck is now facing lawsuits from thousands of Vioxx users who claim the drug caused heart attacks and strokes.
MSD managing director Vincent Lawton said Hoddesdon would be at the heart of the firm's restructured UK operations.
"The recent investment to establish a new global centre of excellence in chemistry at Hoddesdon, to serve the needs of Merck's organics and synthetic chemistry organisation, will be completed in spring 2006," he said.
"The new science centre at Hoddesdon is confirmed as a strategic site within the Merck global network."
Reflecting on the overall changes at the company, Mr Lawton acknowledged that many of his employees faced "difficult times", but said support would be there for those affected.
"I know we have some of the best employees in the country and I hope we can work together to restore the company to top-tier growth and continue to focus our resources where we deliver the best results," he said.

Merck announces 7,000 layoffs—continued attack on jobs and wages in US

The pharmaceutical company Merck announced on November 28 that it would lay off 7,000 workers over the next three years, closing down 5 of its 31 production plants. The cuts, half of which will be in the US, represent more than 10 percent of the company’s global workforce. The move is only the latest in a series of announcements of layoffs and wage cutting at major American companies.
The 7,000 jobs are unlikely to be the last to be eliminated. Richard Clark, who took over as the company’s CEO earlier this year, said that the cuts are “an important first step in positioning Merck to meet the challenges the company faces now and in the future.” Merck has not yet released all the details on its cost-cutting plan; however, it has announced that plants in New Jersey, Georgia and Pennsylvania, as well as in Japan and Canada, will be scaled back, sold or shut down.
Merck’s difficulties are a manifestation of broader problems plaguing the entire pharmaceutical industry. The company faces the end of patent protection on a number of its key, “blockbuster” drugs, particularly the cholesterol-reducing drug Zocor. According to US law, other companies can produce generic versions of a drug after it has been on the market for a certain period of time. Pharmaceutical companies rely on their patented blockbuster drugs, which they spend billions of dollars to market, for the bulk of their revenues.
The company is also facing numerous lawsuits over its last major blockbuster, Vioxx, which it was forced to recall in September 2004. Much evidence exists demonstrating that Merck attempted to cover up the connection between use of Vioxx and an increased risk for heart attacks. The company has already lost one lawsuit, while another was found in its favor. Before it was recalled, Vioxx was heavily marketed and was used by millions of people for whom it was no more effective than much cheaper over-the-counter medications.
Pfizer, the largest US drug company, announced layoffs earlier this year. While other companies are still pulling in high profits, they face similar problems—a heavy reliance on a few major drugs to boost revenues, combined with growing public distrust. This will likely lead to further layoffs and cost reductions throughout the industry in the coming years.
The announcement at Merck comes on top of a number of recent mass-layoff announcements, including 30,000 jobs slotted to be eliminated at auto giant General Motors and massive wage and job cuts at auto parts manufacturer Delphi.
While October experienced relatively fewer mass layoffs than the summer months, only 56,000 jobs were added, far fewer than the number of new entrants into the labor market. This followed a decline of 8,000 jobs in September, following Hurricane Katrina. Some analysts expect low new jobs figures for the remainder of the year. An Associated Press story from November 28 noted, “For seven of the past nine years, American companies have announced more layoffs in the last quarter of the year than during other months, according to the federal Bureau of Labor Statistics.” The jobs figures for November are due out later this week.
US capitalism has focused on eliminating relatively higher-paying jobs, such as those in the auto industry. This has contributed to a long-term decline in real wages, which is expected to continue over the coming year. Workers face rising prices on basic necessities, and home heating costs for the winter will be especially severe.
On the other hand, cutbacks at companies have contributed to generally surging profits and a flow of cash into corporate coffers. A November 27 report by Tom Petruno in the Los Angeles Times (“As Profits Surge, Workers Still Wait”) gave a sense of these developments. The article noted, “Corporate earnings keep rising at double-digit pace while workers are lucky to get even low-single-digit wage increases.... It’s a world in which share prices are underpinned by healthy earnings while inflation risks are muted because employee pay isn’t in danger of an upward spiral.”
The US Federal Reserve has been pursuing a policy of raising interest rates to curb inflation and any signs of wage pressure from workers.
According to the S&P, the third quarter of 2005 was the 14th straight quarter (three and a half years) in which profits for the companies on the S&P 500 rose by more than 10 percent. Meanwhile, wages have been at around 3 percent or lower for most of this period. Real wages for most US workers are actually declining. Petruno notes that “wages and salaries for all private-industry employees rose 2.2% [less than the rate of inflation] in the 12 months ended Sept. 30, according to the government’s employment cost index. That was down from a 2.6% increase in the year ended September 2004.”
Wage stagnation and decline are expected to continue through next year. Another article in the Los Angeles Times, published on November 28, reported that economists expect wage increases to average around 3.5 percent in 2006, just higher than inflation; however, wage increases for most workers are expected to be much lower. “The average is driven up by very high raises—as much as 9%—expected in a few fields with acute staff shortages, including nursing and financial services.”
“If you’re not in a high-demand position or covered by a union agreement,” the Times quoted John Putzier, president of FirStep, a human resources firm, “maybe you’ll get 1% or 2%, if anything at all.”
The continued high profit rates come largely from these cuts being pushed through in wages and jobs, leading to much higher productivity figures—as the remaining workers are forced to work longer hours for less.
Much of these profits are being channeled back into Wall Street and into the hands of big investors. An article in the November 28 Wall Street Journal drew attention to the sharp increase in dividend payments and stock buybacks, as corporations share record-high cash reserves with investors. “This year,” the Journal noted, “the companies in the Standard & Poor’s 500-stock index are on track to pay out more than $500 billion to shareholders in the form of dividends and share repurchases, or buybacks, according to S&P. That’s up more than 30% from last year’s record—and equivalent to nearly $1,700 for every person in the US.”
“Currently,” the newspaper continued, “US companies are sitting on near-record levels of cash. Among industrial companies in the S&P 500, a grouping that excludes financial firms, which are required to hold hefty reserves, the amount totals nearly $631 billion on the books. That figure represents more than 7% of these companies’ market value—the highest percentage since 1988.”
The primary factor generating these large profits and cash reserves is not a major surge in economic growth, but rather “deep corporate cost-cutting in recent years,” according to the Journal. In other words, the protracted assault on jobs and wages has pushed up profits, essentially redistributing funds from workers to the corporate bottom line. Major investors have been clamoring to have this money returned to them, including figures such as hedge fund owner Carl Icahn, who has been pushing companies he invests in to grant larger dividends and buyback programs.
Investors have been helped by cuts in the capital gains and dividend taxes passed in 2003 by the Bush administration with significant support from the Democratic Party.
The glut of cash is regarded by many economists as a sign not of economic strength, but rather the opposite. Corporations are scaling back operations, because there is a general lack of sources for profitable investment in actual production processes. While this downsizing leads to a temporary boost in earnings, the earnings are not being reinvested, which would lead to new hiring and economic growth. Rather, these funds are being redirected to investors or into speculative ventures such as the stock market and hedge funds, as well as the paychecks of executives, which continue to increase. The Christmas bonuses for Wall Street executives are expected to soar this year.
Essentially, the US economy is more and more operating on the basis of parasitism, as a tiny percentage of the population enriches itself in direct proportion to the worsening of conditions for the majority.

Merck announces 7,000 layoffs—continued attack on jobs and wages in US

The pharmaceutical company Merck announced on November 28 that it would lay off 7,000 workers over the next three years, closing down 5 of its 31 production plants. The cuts, half of which will be in the US, represent more than 10 percent of the company’s global workforce. The move is only the latest in a series of announcements of layoffs and wage cutting at major American companies.
The 7,000 jobs are unlikely to be the last to be eliminated. Richard Clark, who took over as the company’s CEO earlier this year, said that the cuts are “an important first step in positioning Merck to meet the challenges the company faces now and in the future.” Merck has not yet released all the details on its cost-cutting plan; however, it has announced that plants in New Jersey, Georgia and Pennsylvania, as well as in Japan and Canada, will be scaled back, sold or shut down.
Merck’s difficulties are a manifestation of broader problems plaguing the entire pharmaceutical industry. The company faces the end of patent protection on a number of its key, “blockbuster” drugs, particularly the cholesterol-reducing drug Zocor. According to US law, other companies can produce generic versions of a drug after it has been on the market for a certain period of time. Pharmaceutical companies rely on their patented blockbuster drugs, which they spend billions of dollars to market, for the bulk of their revenues.
The company is also facing numerous lawsuits over its last major blockbuster, Vioxx, which it was forced to recall in September 2004. Much evidence exists demonstrating that Merck attempted to cover up the connection between use of Vioxx and an increased risk for heart attacks. The company has already lost one lawsuit, while another was found in its favor. Before it was recalled, Vioxx was heavily marketed and was used by millions of people for whom it was no more effective than much cheaper over-the-counter medications.
Pfizer, the largest US drug company, announced layoffs earlier this year. While other companies are still pulling in high profits, they face similar problems—a heavy reliance on a few major drugs to boost revenues, combined with growing public distrust. This will likely lead to further layoffs and cost reductions throughout the industry in the coming years.
The announcement at Merck comes on top of a number of recent mass-layoff announcements, including 30,000 jobs slotted to be eliminated at auto giant General Motors and massive wage and job cuts at auto parts manufacturer Delphi.
While October experienced relatively fewer mass layoffs than the summer months, only 56,000 jobs were added, far fewer than the number of new entrants into the labor market. This followed a decline of 8,000 jobs in September, following Hurricane Katrina. Some analysts expect low new jobs figures for the remainder of the year. An Associated Press story from November 28 noted, “For seven of the past nine years, American companies have announced more layoffs in the last quarter of the year than during other months, according to the federal Bureau of Labor Statistics.” The jobs figures for November are due out later this week.
US capitalism has focused on eliminating relatively higher-paying jobs, such as those in the auto industry. This has contributed to a long-term decline in real wages, which is expected to continue over the coming year. Workers face rising prices on basic necessities, and home heating costs for the winter will be especially severe.
On the other hand, cutbacks at companies have contributed to generally surging profits and a flow of cash into corporate coffers. A November 27 report by Tom Petruno in the Los Angeles Times (“As Profits Surge, Workers Still Wait”) gave a sense of these developments. The article noted, “Corporate earnings keep rising at double-digit pace while workers are lucky to get even low-single-digit wage increases.... It’s a world in which share prices are underpinned by healthy earnings while inflation risks are muted because employee pay isn’t in danger of an upward spiral.”
The US Federal Reserve has been pursuing a policy of raising interest rates to curb inflation and any signs of wage pressure from workers.
According to the S&P, the third quarter of 2005 was the 14th straight quarter (three and a half years) in which profits for the companies on the S&P 500 rose by more than 10 percent. Meanwhile, wages have been at around 3 percent or lower for most of this period. Real wages for most US workers are actually declining. Petruno notes that “wages and salaries for all private-industry employees rose 2.2% [less than the rate of inflation] in the 12 months ended Sept. 30, according to the government’s employment cost index. That was down from a 2.6% increase in the year ended September 2004.”
Wage stagnation and decline are expected to continue through next year. Another article in the Los Angeles Times, published on November 28, reported that economists expect wage increases to average around 3.5 percent in 2006, just higher than inflation; however, wage increases for most workers are expected to be much lower. “The average is driven up by very high raises—as much as 9%—expected in a few fields with acute staff shortages, including nursing and financial services.”
“If you’re not in a high-demand position or covered by a union agreement,” the Times quoted John Putzier, president of FirStep, a human resources firm, “maybe you’ll get 1% or 2%, if anything at all.”
The continued high profit rates come largely from these cuts being pushed through in wages and jobs, leading to much higher productivity figures—as the remaining workers are forced to work longer hours for less.
Much of these profits are being channeled back into Wall Street and into the hands of big investors. An article in the November 28 Wall Street Journal drew attention to the sharp increase in dividend payments and stock buybacks, as corporations share record-high cash reserves with investors. “This year,” the Journal noted, “the companies in the Standard & Poor’s 500-stock index are on track to pay out more than $500 billion to shareholders in the form of dividends and share repurchases, or buybacks, according to S&P. That’s up more than 30% from last year’s record—and equivalent to nearly $1,700 for every person in the US.”
“Currently,” the newspaper continued, “US companies are sitting on near-record levels of cash. Among industrial companies in the S&P 500, a grouping that excludes financial firms, which are required to hold hefty reserves, the amount totals nearly $631 billion on the books. That figure represents more than 7% of these companies’ market value—the highest percentage since 1988.”
The primary factor generating these large profits and cash reserves is not a major surge in economic growth, but rather “deep corporate cost-cutting in recent years,” according to the Journal. In other words, the protracted assault on jobs and wages has pushed up profits, essentially redistributing funds from workers to the corporate bottom line. Major investors have been clamoring to have this money returned to them, including figures such as hedge fund owner Carl Icahn, who has been pushing companies he invests in to grant larger dividends and buyback programs.
Investors have been helped by cuts in the capital gains and dividend taxes passed in 2003 by the Bush administration with significant support from the Democratic Party.
The glut of cash is regarded by many economists as a sign not of economic strength, but rather the opposite. Corporations are scaling back operations, because there is a general lack of sources for profitable investment in actual production processes. While this downsizing leads to a temporary boost in earnings, the earnings are not being reinvested, which would lead to new hiring and economic growth. Rather, these funds are being redirected to investors or into speculative ventures such as the stock market and hedge funds, as well as the paychecks of executives, which continue to increase. The Christmas bonuses for Wall Street executives are expected to soar this year.
Essentially, the US economy is more and more operating on the basis of parasitism, as a tiny percentage of the population enriches itself in direct proportion to the worsening of conditions for the majority.

Over Merck Objections, N.J. Judge Combines Vioxx Cases for Trials

The judge presiding over 3,500 Vioxx cases in New Jersey has set Feb. 27 as the next trial date, this time for a consolidated trial of two plaintiffs' claims, despite drug maker Merck & Co.'s urging that each case be decided on its own facts. One plaintiff, John McDarby, 76, of Park Ridge, took Vioxx for arthritis pain from March 2000 until his heart attack in April 2004. The other, Thomas Cona, 59, of Cherry Hill, took Vioxx from August 2001 until his heart attack in June 2003. Superior Court Judge Carol Higbee in Atlantic County also scheduled three cases for trial on April 24 and two for June 12. Higbee grouped the cases based on the alleged damage as well as the specific years and length of time the plaintiffs took the prescription painkiller. The seven plaintiffs, including McDarby and Cona, are N.J. residents who took Vioxx for more than 18 months and then suffered a heart attack. One died. Merck attorney Ted Mayer of New York's Hughes Hubbard & Reed says his legal team will soon ask Higbee to reconsider her decision to combine cases. "These cases should be tried on their individual facts," says Mayer. "Each plaintiff presents unique medical histories and issues. We'll look at each of the cases that the judge has combined." Plaintiffs' lawyers, who favor consolidation so that more of the cases can be heard sooner, say the groupings would avoid duplication of evidence. Higbee's decision to focus on plaintiffs with longer-term exposure came after a defense verdict in the state's first Vioxx trial last month. That plaintiff, Frederick Humeston of Idaho, took Vioxx intermittently for two months before suffering a nonfatal heart attack. Merck, of Whitehouse Station, N.J., pulled Vioxx off the market in September 2004 after a study showed an elevated risk of heart attack and stroke for patients who took the drug for more than 18 months. The April grouping includes the death case, in which David Jacoby of Anapol Schwartz in Cherry Hill represents a widow. Christopher Seeger, of Seeger Weiss in Newark, the attorney for Humeston, will represent a New Jersey police officer; Rob Dassow of Hovde Dassow & Deets in Indianapolis and Michael Ferrara of Cherry Hill will represent the third plaintiff. Those cases were consolidated because the patients used Vioxx for 18 to 30 months. In the trial set for February, Cona is represented by Mark Lanier of Houston, who won a $253.4 million verdict in Texas against Merck in August in the nation's first Vioxx trial. McDarby' lawyers are Perry Weitz and Jerry Kristal of Cherry Hill's Weitz & Luxenberg. Another Vioxx trial began Tuesday in federal court in Houston.

Merck cuts highlights how game has changed

DEC. 2 2:09 P.M. ET Merck & Co.'s announcement this week that it is slashing its work force by 11 percent and shuttering several plants is as much a reflection of pharmaceutical industry belt-tightening as of Merck's financial and Vioxx-related legal woes.
The reasons are many: Increased generic competition, pressures from health insurers to lower prices, rising drug development and marketing costs, fewer new blockbuster medicines, and worries about possible governmental price controls.
The upshot is that double-digit profit increases, routine for drug companies through most of the 1990s, now look to be history. It's also why drugmakers feel a sense of urgency to focus on leaner, faster production and other ways to hold down costs just as the airline and auto industries have been doing, experts say.
Drug makers "didn't have to worry about efficiency" before because they could demand virtually whatever price they wanted for products, said Albert Rauch, pharmaceuticals analyst at A.G. Edwards & Sons Inc. in St. Louis. "They just sort of got a little fat."
And extraordinarily profitable. The five largest U.S. drug companies -- Pfizer Inc., Johnson & Johnson, Merck, Bristol-Myers Squibb Co. and Wyeth -- earned $29.5 billion in 2004 on sales of $160 billion.
Gross profit margins -- revenues minus the cost of producing goods -- also are still in the range of 70 percent to 80 percent, many times the 10-percent margins in some other industries.
Job cuts are one way of keeping margins high, and they are up 150 percent from the first 11 months of last year. That amounts to almost 25,000 pink slips so far for the industry in 2005, according to John Challenger, CEO of outplacement firm Challenger, Gray & Christmas, who predicted "we're going to continue to see increasing layoffs."
Generic drugs, which now account for 53 percent of U.S. prescriptions, contribute to these pressures. Next year, drugs with $28 billion in annual sales lose patent protection, according to health information company IMS Health. Those include Merck's Zocor and Bristol-Myers Squibb's Pravachol, both for high cholesterol, plus Pfizer's Zoloft and GlaxoSmithKline's Wellbutrin, both for depression.
Brand-name drugmakers also must offer rebates and discounts to get on managed care companies' lists of preferred drugs, a key factor, according to Tony Butler, pharmaceuticals analyst at Lehman Brothers.
Another problem is shrinking pipelines of new drugs.
"For at least 10 years, some of the brand companies were expending a lot of their effort and a lot of their time extending their monopolies instead of using their resources for innovation," focusing on legal loopholes and minor improvements in drugs that could extend their patents, said Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association.
Rauch said it's also getting harder to find drugs that are better and safer than existing ones. "Drug companies have become the next big target for lawyers," after the asbestos and tobacco industries, he added, and their legal costs are mounting.
So the U.S. drugmakers have begun to change, and their European counterparts such as GlaxoSmithKline and Sanofi-Aventis likely will follow suit, Butler said.
When Merck Chief Executive Richard T. Clark announced plans on Monday to cut 7,000 jobs and close or sell eight factories and research facilities by 2008, he said the goal was to make the Whitehouse Station, N.J.-based company more competitive and efficient, starting with its supply chain and manufacturing. Analysts say Clark has been studying manufacturing in the computer industry, which has steadily decreased prices while making better products.
Butler said Eli Lilly & Co. has been working on improving efficiency using a program for boosting productivity and quality. That system is favored by high-tech conglomerates such as General Electric and Honeywell International.
Pfizer, the world's biggest drug company, in April said it plans to cut $4 billion in costs -- about the same as Merck's goal -- partly by closing 23 of its 93 factories. That's despite Pfizer having one of the highest operating profits of any company, 38 percent in the third quarter, Butler noted.
Bristol-Myers Squibb Co. and Schering-Plough slashed costs a few years ago when their profits were down significantly. And Wyeth is restructuring its sales force, one of the last areas companies usually target for cutbacks, to make more sales representatives part time.
Experts say they anticipate the cost-cutting to continue and even accelerate, particularly because the huge costs expected for the new Medicare prescription drug program are likely to drive the federal government to seek price controls or discounts to limit the program's costs.
Despite all the cuts announced at Merck this week, the company has said this is only the first part of its reorganization and it will announce further plans at its annual business briefing on Dec. 15.
Meanwhile, Merck's first federal trial over its withdrawn painkiller Vioxx began this week in Houston. Merck has won a state trial in New Jersey after losing one in Texas, but analysts say its liability could reach $50 billion and that the company will have to start settling cases as its legal bill rises.

Study queries bleed benefit of COX-2 drugs

LONDON (Reuters) - British scientists said on Friday they had found no evidence that prescription painkillers designed to protect against stomach bleeding were safer than older drugs.
Julia Hippisley-Cox, of the University of Nottingham in England, said she had found no proof the painkillers, known as COX-2 inhibitors, were less likely to cause gastrointestinal bleeding than aspirin or other treatments called non-steroidal anti-inflammatory drugs (NSAIDS).
"Overall we found no strong evidence of enhanced safety against gastrointestinal events with any of the new cyclo-oxygenase-2 (COX-2) inhibitors compared to non-selective non-steroidal anti-inflammatory drugs," she said in a report in the British Medical Journal.
In the four-year observational study, Hippisley-Cox and her team studied more than 9,000 patients in Britain who had been diagnosed with a stomach ulcer or bleeding and compared each case with up to 10 control patients.
Forty-five percent of the patients with a stomach ailment had been prescribed an NSAIDS in the previous three years and 10 percent had taken a COX-2 inhibitor. This compared with 33 percent and 6 percent in the control group.
The researchers said the risk of a stomach problem associated with using NSAIDS was lower in patients who were also taking drugs to heal ulcers.
COX-2 inhibitors, which include Vioxx, the arthritis drug made by Merck & Co and Pfizer Inc's Celebrex, have also been shown to raise the risk of blood pressure, stroke and heart disease.
Pfizer said Celebrex was the only treatment found not to significantly increase the risk of gastrointestinal events and had a lower risk of complications compared to Vioxx and NSAIDS.
"Physicians and their patients need balanced and objective information in order to make the best treatment decisions," Dr Gail Cawkwell, the company's senior medical director, said in a statement.
Merck pulled Vioxx off the market last year after it was shown to double the risk of heart attack and stroke among patients taking it for 18 months or longer.

Expert: Vioxx Use Causes Heart Attacks

HOUSTON Dec 2, 2005 — After about three hours of cross examination by a Merck & Co. lawyer, a witness for the widow of a man who died after taking Vioxx reiterated Friday his belief that the drug causes heart attacks regardless of the length of use or of the size of dose.
Merck's lawyer repeatedly challenged how Wayne Ray, who studies the risk and benefits of drugs, examined data to reach his conclusion.
"No matter how you look at it, Vioxx causes higher risk every time," said Ray, who heads the Pharmaco-Epidemiology department at Vanderbilt University School of Medicine.
Jurors will be asked to decide if Vioxx contributed to the fatal heart attack suffered by Richard "Dicky" Irvin in May 2001. The 53-year old manager of a seafood distributor had been taking the drug for about a month to alleviate back pain when his colleagues found him dead at his desk.
Irvin's widow, Evelyn Irvin Plunkett, is suing Merck, which has scored a loss in Texas and a win on its home turf of New Jersey in the first two state-level Vioxx cases. The company faces about 7,000 state and federal lawsuits, and analysts have estimated its liability could reach $50 billion. Irvin was taking 25 milligrams of Vioxx, and Merck lawyer Phil Beck focused on studies related to that amount. Patients were taking 25 milligrams in the study that led Merck to remove the drug from the market last year because it showed a doubling of patients' risk of heart attacks and strokes after 18 months of use.
Ray testified that four out of five epidemiological studies showed that patients taking a 25 milligram dose of Vioxx carried a higher risk of heart attacks.
Beck questioned Ray' logic in reaching his determination, at one point noting that not all five studies were comparing Vioxx to the same drug. Beck also appeared to suggest Ray was selectively choosing data by highlighting Vioxx in comparison to Celebrex, a similar pain reliever made by Pfizer Inc., in a trial that compared three drugs.
Toward the end of his cross examination, Beck said that if you "compare apples to apples," four of those epidemiological studies found that there is no greater risk of heart attack for patients using a 25 milligram dose of Vioxx.
"No, I don't think so," replied Ray. He said that "no matter how you slice the data you see an increase risk of (heart attacks and sudden death) with Vioxx at 25" milligrams.
Epidemiological studies are typically retrospective examinations of data. While they are considered useful because they examine how drugs affect the greater population, blinded, controlled clinical trials in which groups of patients are randomly given either a drug or placebo are considered the gold standard in the pharmaceutical industry.