Hospital bed plant to close S.A. doors

Two months after Getinge Group closed on the acquisition of Kinetic Concepts Inc.'s specialty hospital beds business, the Swedish health care company disclosed it's shuttering its San Antonio manufacturing plant and putting 95 people out of work.

The move is part of a plan to consolidate production at plants in Poland and China, said Alex Myers, president and CEO of Getinge division ArjoHuntleigh. A plant in Perth, Australia, also will close.

At the same time, ArjoHuntleigh plans to make San Antonio its global research and development center, Myers said.

“We'll be strengthening the R&D capacity here in San Antonio,” Myers said.

The company will add R&D staff in San Antonio, but Myers didn't have a figure or a timetable for expansion.

ArjoHuntleigh has about 50 R&D employees in San Antonio, and they will begin to receive more projects, Myers said.

The company employs about another 50 people in San Antonio, including in marketing, distribution and quality and regulatory control, he said. They will remain with the company.

Getinge's ArjoHuntleigh division informed the Texas Workforce Commission of the closing of the San Antonio manufacturing plant in a letter this week. The letter was required under the federal Worker Adjustment and Retraining Notification (WARN) Act.

The layoffs will begin with 35 people in March, followed by 59 in June and a final one in September, as the plant at 4958 Stout Drive is slated to close by the end of that month.

Getinge completed its acquisition of KCI's Therapeutic Support Systems (TSS) unit in November in a deal valued at about $275 million.

The business sells and rents hospital beds, mattress-replacement systems and patient-mobility units.

When the transaction was announced in August, Getinge reported TSS employed about 1,300 people, including about 200 in San Antonio.

ArjoHuntleigh acquired the San Antonio plant as part of its TSS purchase. The property will be listed for sale, Myers said. The building and land have an assessed value of about $4.8 million, according to the Bexar Appraisal District's website.

The plant employs engineers, sheet metal fabricators, welders, assemblers and others.

KCI early last year announced it would pursue “strategic alternatives” for TSS.

That came just a couple months after the November 2011 leveraged buyout of KCI by London-based private equity firm Apax Partners and affiliates of two Canadian pension investment management firms.

The deal was valued at about $6.3 billion.

Last week, J.P.Morgan Cazenove in London issued a research report noting the TSS deal represents “a change in acquisition strategy for Getinge — a low growth, low margin asset vs (a) previous focus on high growth/high margin businesses.”

The report said the “performance of TSS in KCI's hands has been uninspiring, with revenues falling each year from 2007.” That includes a 10 percent decline per year over the three years ending in 2011. TSS generated about $247 million in revenue last year.

“The challenge for Getinge now is to stabilize the decline (which we think should be possible with a little investment) and take out some costs,” the J.P. Morgan Cazenove report states.

The decision to close the San Antonio manufacturing plant is in line with ArjoHuntleigh's strategy to improve efficiencies and to strengthen its competiveness, Myers said.

pdanner@express-news.net