G-F spins out LaBac

Wednesday, August 31, 2005

DENVER -- LaBac Systems, a one-time powerhouse in the power tilt-and-recline market that did a disappearing act as a division of Graham-Field, emerged from the eaves in July as the kernal business of a spin-off seating company here called Phoenix Seating Systems.
Graham-Field has licensed the LaBac brand to Phoenix in an agreement that gives Phoenix an option to purchase the company at a later date.
"While the LaBac name remains one of the premier names in the rehabilitation market, the unique manufacturing required to produce the LaBac products does not fit into the business model that Graham-Field is implementing," said Lawrence de la Haba, vice preisdent of marketing, in a memo that started circulating among G-F employees in July.
De La Haba said he was referring to a business model as a manufacturer of home medical equipment products that are less labor intensive for customers.
In the meantime, G-F is weighed down by the fate of its CEO Irwin Selinger, who is appealing an 18-month prison sentence handed down by a federal court judge in May. Selinger was found guilty of fraudulently inflating the company's stock price in a stock-swap deal for Fuqua Enterprises, the parent company of Lumex.
G-F has also parted ways with Mike Norby, who worked as the company's senior vice president of sales and marketing until July.
The LaBac shift took place Aug. 1. Phoenix is a new company that's been set up by the principals at Falcon Rahab.
In the internal memo, G-F said that Phoenix will move its operation into the LaBac facility where the new company will make their own products and the LaBac products. LaBac's customer service and fax info remain the same, and Phoenix plans to hire several LaBac employees to maintain an uninterrupted flow of service.
G-F and Phoenix will jointly make several specialized E&J chairs. Phoenix will make G-F's Premier Class Wheelchairs and parts.
Does this signal the end of rehabilitation products for Graham-Field? "Absolutely not," said the memo.
At Medtrade this fall, G-F and Valence Technology plan to debut a 9-pound lithium ion battery to replace the 24-pound lead-acid cell battery. G-F believes this battery will "obsolete" power technology currently in use.
Since LaBac was king, the world of power tilt and recline has become complicated. Manufacturers now own their own seating systems. Funding issues are dicey.
"More and more suppliers are going through Pride, through Quickie and through Invacare because the pricing is better, your dating is better, and they are more able to work within the allowables," said Anne Kieschnik, owner of Seating Profiles in Houston, Texas."
Today, allowables for power tilt-and-recline systems yield as much as $8,000 in reimbursement.
Graham-Field bought LaBac in the spring of 1997, one year after the company fired a shot across the bows of Invacare and Sunrise with the purchase of the one-time wheelchair giant, Everest & Jennings. E&J, like LaBac, is now a shadow of its former self.