A Medical Device Daily
Hillenbrand Industries (Batesville, Indiana) this week reported a variety of initiatives involving potential manufacturing moves and employee reductions for its Hill-Rom operations.
Hillenbrand's board, it said, has authorized discussions with the union representing employees of Hill-Rom's Batesville's operations, involving outsourcing projects related to "acuity settings or targeted for market opportunities outside the U.S." Explored, it said, will be the possibility of moving a portion of Hill-Rom manufacturing from Batesville to "lower cost regions."
Job reductions at Batesville are expected to be managed, "in part, through normal attrition where possible." Hillenbrand said it does not expect this initiative to result in a special charge in FY06.
Peter Soderberg, president/CEO of Hillenbrand, said, "[W]e identified long-term benefits associated with diversifying manufacturing alternatives - specifically for lower acuity products, highly price-sensitive categories, and for global markets. . . . [C]ustomers in lower acuity and post-acute care settings are demanding more value at lower price points." Company strategy is "to have global manufacturing capabilities that allow us to compete in these important product categories and in global markets."
The company will also attempt, it said, "right-sizing of the North American organization," primarily within Hill-Rom's rental business.
"Declines in rental revenue and associated reconfiguring of the organization necessitated the termination of about 140 associates, including about 120 in the service organization" - about 7% of the total service organization staff level, it said.
Right-sizing will result in a charge of about $3.4 million in 4Q06 for employee severance benefits and product rationalization.
The company also announced that its previously reported investor conference in New York will be Oct. 26.
Hill-Rom manufactures equipment for the healthcare industry and provides associated services for wound, pulmonary and circulatory care. It is also a provider of medical equipment outsourcing and asset management services. Hill-Rom employs more than 6,200 and has numerous manufacturing, sales and distribution facilities.