FDA action forces Invacare layoffs
Invacare ($IVC) is slashing 143 manufacturing jobs from an Ohio manufacturing plant, largely as the result of an anticipated drop in wheelchair manufacturing brought on by a consent decree with the FDA involving quality issues.
The maker of medical devices and equipment said it will keep another 222 employees at the Taylor Street manufacturing facility in Elyria, OH. Laid-off employees will get an extra two months of pay and benefits, however, and one-time restructuring charges related to the action won't exceed $1.25 million, pre-tax.
Invacare's wheelchair manufacturing has faced a number of quality problems. And as The Plain Dealer reports, regulators nearly closed the entire plant down outright in order to address those issues. A few days before Christmas, Invacare signed a consent decree with regulators that led to an expected manufacturing slump at the plant and precipitated the layoffs.
According to the newspaper, the agreement includes a number of bitter pills for the company; customers purchasing an Invacare wheelchair made at the Elyria plant must sign a paper acknowledging they are aware of the FDA's allegation of quality violations at the facility. Customers who want to buy an Elyria-made wheelchair must also offer proof that they have to buy it rather than another company's product.
Invacare was pretty busy before the holidays. In a related matter, the company announced plans to sell its domestic medical supplies business to AssuraMed for $150 million, in a bid to simplify its business line and reduce debt. Invacare's last layoffs were in 2011, when the company slashed 50 jobs due to sluggish sales and declining customer reimbursements.