Invacare to lay off 225 employees

Sunday, February 19, 2006

ELYRIA, Ohio - Invacare announced last week that it would lay off 225 employees at one of its plants here, as part of a restructuring plan that shifts production of some items to lower-cost facilities.

The company blamed continuing Medicare/Medicaid reimbursement cuts and the pressure of low-cost imports for the layoffs.

Per the plan, the plant will focus on manufacturing manual and power wheelchairs and scooters that are custom configured and made-to-order. The company expects the restructuring to save $7 million annually.

The number of salaried and hourly employees will be reduced over the next several months through a combination of relocations, voluntary departures and involuntary layoffs.

Invacare has 1,500 employees at six northeast Ohio facilities.

Also last week, the company announced net earnings dropped to $10.5 million for the fourth quarter vs. $20.4 million for the same quarter last year, excluding a pre-tax $4.8 million charge related to restructuring activities. Net sales for the quarter dropped 7% to $367.3 million vs. $393.2 million last year.

The decline in sales was largely due to previously reported disruptions and inefficiencies caused by implementing an enterprise resource planning (ERP) system.

Invacare estimates it will see an increase in net sales between 4% and 6% in 2006, excluding the impact of any new acquisitions.

"The company's earnings are expected to increase significantly due to a continuation of our cost reduction efforts, including increased utilization of our Chinese manufacturing and sourcing capability, and modest organic growth," said Mal Mixon, chairman and CEO.

Invacare expects HomeFill and CPAP to see an "improved outlook" in 2006.