Invacare Plans Job Cuts

Invacare Corp. is planning to reduce its workforce.

The Elyria, Ohio-based firm announced a “restructuring initiative” that company officials predict will generate $14 million to $15 million in annualized pre-tax savings when fully instituted in 2015. The move includes a reduction to the company’s workforce by approximately 150 associates and 40 temporary associates from the North America/Home Medical Equipment (HME), Institutional Products Group and Asia/Pacific segments.

”Invacare is committed to improving free cash flow and restoring profitability in the North America/HME and Asia/Pacific businesses. While the decision to downsize our workforce is extremely difficult, it is a necessary step toward achieving these objectives in light of our financial results for the first six months of 2014 and the slow sales start to the third quarter,” said Robert K. Gudbranson, Invacare interim president and CEO. ”All of our associates, including those affected by this restructuring, have been committed to Invacare. As always, we will provide support to our impacted associates during this transition period.”

For the second quarter ended June 30, North America/HME net sales decreased 13 percent to $138.7 million compared to $159.3 million in the same period last year. The firms’ Institutional Products Group net sales decreased by 13.6 percent to $25.8 million compared to $29.8 million last year. Asia/Pacific net sales decreased 7.2 percent to $12.9 million versus $13.9 million last year. For the six months ended June 30, overall company sales were down to $640 million from $676 million in 2013.

Due to the realignment, the company expects to incur restructuring charges not to exceed $6 million on a pre-tax basis.

This has been a period of transition for the company. In July, the firm’s president/CEO stepped down.

”It has been a privilege to be a part of Invacare’s senior leadership team over the past 24 years, most notably as chief executive officer for the past four years,” Gerald B. Blouch. “My decision to retire was a difficult one, but it is the right choice for both me and for the company. I am confident that, despite its short-term challenges, Invacare has an incredibly strong future. Its fundamental business is driven by the continued movement of consumers from acute care facilities into the homecare setting. I have full confidence in Rob Gudbranson and the senior leadership team to drive the necessary business improvements to complete the third-party certification audit, as well as turn around the core business.”

Blouch joined Invacare in 1990 as the company’s chief financial officer. In 1994, he became chief operating officer and was responsible for the operations of all domestic and international business units. He was named president and a director of the company in 1996. He assumed the role of CEO in January 2011.

The company also has been working to resolve quality control issues at its headquarters and Taylor Street wheelchair manufacturing facility in Elyria, Ohio, cited by the U.S. Food and Drug Administration.

Invacare makes home and long-term care medical products. The company had approximately 5,400 associates as of June 30, and markets its products in approximately 80 countries around the world.