Ortho-Kinetics calls it quits

Monday, March 31, 2003

WAUKESHA, Wisc. - Ortho-Kinetics, a pioneering lift chair manufacturer and scooter dealer that reigned as a powerhouse in the1980s, has filed papers to liquidate its assets in state court. The court on Jan. 31 appointed a receiver under Chapter 128. In the meantime, the company is looking for a buyer.

Ortho-Kinetics’ demise cannot be traced to one shattering blow, but to a combination of forces that eroded the company’s position as a $40 million player in the 1980s to a mere sliver of its former self that some believed had disappeared already.

The company’s direct-to-end-user Lark division, according to industry watchers, has been a major factor in the company’s downward spiral. Although Lark, by some accounts, has done well, Ortho-Kinetics’ attempts to sell mobility products as both a supplier and a wholesaler has been troublesome, say industry watchers.

“They’ve been hurt by that,” said one scooter manufacturer. “You need to be in one or other.”

Said another scooter manufacturer: “They never decided who they were going to.”

The problem with direct scooter sales, said one manufacturer, is the absence of a dealer network to handle maintenance issues on products that require regular service. While Electric Mobility Corp. recently abandoned its dealer base in favor of direct sales, other scooter manufacturers, like Amigo and No Boundaries, are making new commitments to the traditional dealer network model.

Ortho-Kinetics also fell behind the times when it came to product innovation. Their products were not competitively priced. Management turnover in the 1990s took its toll. Today, the company is run by the founder’s, Ed Gaffney, daughter, Ann LaMarche.

Liquidation is a sorry chapter for a company that came on the scene in 1962 when Gaffney developed a mechanical device that became the bread and butter of his lift chair package. Together with Leisure-Lift founder, Bill Burke, who patented a pneumatic lifting device, Gaffney ruled the lift chair market through the 1970s and 1980s.

That market collapsed when Medicare, which had reimbursed about $1,000 for lift chairs, made reimbursement for the chairs a much tougher proposition, and then only for the lift actuator, after the Queen City / Saul Fesman fiasco in the early 1990s.

By then, other mobility manufacturers with greater entrepreneurial zest began gaining market share with bolder new products at better price points.

“While other companies were stealing their market share, they were making the same old thing,” said Ted Malkowski, an owner of Westhill rehab in Apple-ton, Wisc. “You know how that is. Let’s say Invacare doesn’t come out with a new power chair for two years. Guess what, they’re going to be in the same boat as E&J.”

The focus the company lost when the lift chair business went south was never really regained, according to one manufacturer. Gaffney, a designer and engineer, devoted a lot of time to the development of one-man golf carts that never really succeeded.

“This was a good solid, clean company with good people,” said one manufacturer. “But they lost their focus and lost their entrepreneurial values.” HME