Invacare to Cut 230 Jobs in Cost-Reduction Plan

ELYRIA, Ohio–After posting a 28 percent drop in second-quarter
profit, Invacare Corp. announced plans last week to cut 230 jobs
and close four facilities as part of a cost-reduction plan aimed at
improving earnings.

While net sales for the second quarter, ended June 30, increased
17 percent to $396.3 million, the DME manufacturing giant reported
net earnings of $12.9 million versus $18 million for the same
period last year, blaming increased freight costs and continued
reimbursement pressures in the North American market.

To improve earnings, the company announced additional
cost-cutting measures including outsourcing improvements utilizing
its China manufacturing capability and third parties; shifting
substantial resources from product development to manufacturing
cost reduction activities and product rationalization; reducing
freight exposure through freight auctions and changing the freight
policy; and general expense reductions. The measures are expected
to total $9 million in 2005’s second half and should result in
annualized savings of $20 million.

The company also said it has begun review of its global
manufacturing and distribution strategy and is evaluating a
multi-year plan “to exit a number of manufacturing and distribution
locations” that would yield annualized savings of up to $21
million.

“With the cost reduction actions … along with the benefits
from Chinese manufacturing and further penetration of the
ambulatory oxygen market with sales of the HomeFill oxygen system,
Invacare is committed to returning to positive earnings growth in
the fourth quarter. With the facility closures over the next few
years, Invacare is further committed to additional actions to make
sure its cost base can support solid earnings growth into 2006 and
beyond,” said Invacare Chairman and CEO Mal Mixon.

Invacare employs 6,250 and sells products in 80 countries.