Hill-Rom’s proposed restructuring plan calls for the reduction of about 350 positions, including approximately 200 salaried ones in the United States, according to spokesman Larry Baumann, Chicago. The total represents 5 percent of its global work force, noted a Jan. 23 company news release written by Acquire Media about first quarter results and the revised 2014 outlook, which showed first quarter revenue of $393 million declined 8 percent vs. the prior year.
Baumann explained by e-mail, “The basis for the reductions in the U.S. is a voluntary early retirement program, which eligible employees began receiving information about on Thursday,” Jan. 23. “Which employees accept the offer and where they are located is difficult to predict. Eligibility and severance compensation and benefits are based on a combination of age and years of service with the company.”
The spokesman reported, “In Europe, the intended changes, which are subject to discussions with representatives of the employee works councils and unions, will impact employees in our manufacturing locations in France and Germany, where we will close our facility in Hainichen; and finance and commercial operations. We also will open a new shared services center in eastern Europe, which will enable Hill-Rom to centralize part of the European finance and commercial operations roles."
Hill-Rom President John Greisch said, "In the United States and in Europe, what our customers need and see as value is changing, and the economics of our industry are changing faster than we'd previously predicted. The steps we are proposing will help us build a stronger, more sustainable, more agile business. I am convinced that we here at Hill-Rom have an exciting and prosperous future. We have an outstanding brand, industry-leading products, terrific channel presence and – most of all – a committed, dedicated work force that is second to none."
Earlier, in the news release, Greisch noted, "This quarter demonstrates the inherent volatility and current challenges in our capital equipment markets. We are clearly disappointed by our weaker than expected results. However, we remain committed to driving long-term margin improvement through aggressive management of our operating cost structure, as demonstrated by the restructuring actions we announced today. At the same time, we will pursue improvements to our portfolio, in a manner consistent with our disciplined capital allocation framework, in order to continue to deliver value to our customers and shareholders."
Company leaders anticipate substantially completing the domestic portion of the restructuring now through March. The European streamlining is expected to be completed over the next two years.
When all actions are done, savings are expected to be approximately $30 million annually. Savings in 2014 are expected to exceed $8 million, excluding restructuring charges. Restructuring charges are expected to be about $50 million, with $15-$20 million to be incurred in the next few months.
These cuts are the most made by leaders at one time, but the announcement continues a Hill-Rom pattern of downsizing. Twenty-four positions in Batesville were cut in March 2012. About 160, primarily in salaried positions, including 30 here, were let go globally in April 2010.