More reorganization, layoffs at Star Trac called path to quicker recovery

Further layoffs – more than 100 when all is said and done -- and company reorganization have shrunk Star Trac to a size that should allow it to “bridge the gap” and, management said, move on to recovery. We count noses and find out what’s going on.
Author:
Updated:
Original:

Further layoffs and company reorganization have shrunk Star Trac to a size that should allow it to “bridge the gap” and jump-start a speedier recovery and quicker steps to the future, new CEO Dustin Grosz told SNEWS®.

“We are in a turn-around,” said Grosz (photo, right). “I’m being very clear.

“We have to bridge the gap,” he said. “The business has been doing a lot to get things turned around, but we’re still far too heavily staffed in the United States.”

The additional layoffs and restructuring began in early April – April 1 to be exact – when about 25 employees in the Southern California headquarters in Tustin were laid off.

At the same time, it was announced the strength-equipment manufacturing facility for the former Flex Fitness, which Star Trac acquired in late 2004, would be shut down as of the end of May 2011, a 60-month notice to abide by federal laws. That plant closure means an additional 48 employees will lose their jobs.

“We needed to reduce headcount because we were missing our revenue numbers,” said Grosz, who was named CEO March 9, days before the IHRSA trade show and a week after 18-year-employee Mike Leveque suddenly resigned from the leadership post after being in it eight months. Click here to see a March 3, 2011, SNEWS story, “Grosz moves to Star Trac as president after Leveque’s surprise resignation.

Grosz noted, however, that the former Flex plant in Murrieta, Calif., would now not shutdown until sometime in June. All manufacturing is being shifted to the Land America facility in China. The move was not unexpected since when Michael Bruno, Land America owner, acquired a controlling interest in Star Trac in July 2010, likely manufacturing shifts to China were discussed.

“It’s been a very under-utilized facility, and the savings are substantial,” Grosz said.

In addition, announced on May 3, was the move to consolidate certain parts of the business with the StairMaster operation in Vancouver, Wash. – a company in which Bruno also acquired the assets in December 2009. Before Grosz, a former Nautilus executive, took over at Star Trac, he had been in the CEO role at StairMaster.

The move will be two-step and will affect another 67 employees, Grosz said. By the end of July, operations like IT, accounting and financing and supply chain oversight will be housed in Washington, while customer service should be moved by the end of September.

That will bring the company down to about 160 employees, not including some on the international team. After layoffs in June 2010 of 102 employees, Star Trac had claimed 450 employees globally. Click here to see that story.

Grosz said that about a quarter of the employees affected by the consolidation could be offered positions but it’s unknown how many or if any would be willing to make the move. Plus, he said that customer service is the trickiest move, and “I’m more than willing to move the dates around to mitigate any risk.”

Even with that move, he guaranteed that Star Trac headquarters will remain in Southern California, including marketing, sales offices and product development offices, as well as the warehouse and showroom.

Star Trac will retain its own identity, he said, but will stay focused on the commercial segment while the StairMaster business will become more and more retail-focused. For example, Star Trac will soon have its own StepMill-like product, while StairMaster will be rolling out more products in an expanded line. For example, at the IHRSA show, StairMaster showed a new adjustable dumbbell called the TwistLock. Plus, Star Trac’s Spinning relationship with Mad Dogg, and StairMaster’s license of the Schwinn consumer segment from Nautilus will operate separately, he said.

“We’re here for the long haul,” Grosz said. “We’re getting stronger as an organization and this will get us there faster. This is a positive move in the right direction.”

--Therese Iknoian

Related

StarTracLogo.gif

Star Trac restructures, seeks new capital after president’s resignation, huge layoffs

Star Trac hit a bump in the road on its recently accelerated growth path and has been forced to make massive layoffs and quicken its search for capital investors. Although not totally unexpected -- the company has been talking to investors for 60 days, the consumer division was ...read more

StarTracLogo.gif

Grosz moves to Star Trac as president after Leveque’s surprise resignation

The announcement hit like a large clap of thunder – and apparently had only been in the works for a few days. Mike Leveque (pictured right), after stepping forward eight months ago to head up Star Trac in its worst times, said simply on March 1 that he was leaving the company ...read more

StarTracLogo.gif

Restructured Star Trac emerging from insolvency by summer

Not much more than a year after Michael Bruno acquired a controlling interest in Star Trac, the company will have completed restructuring, moved its manufacturing, and paid off creditors after it declared in November a less common, state-controlled version of bankruptcy. The ...read more

StarTracLogo.gif

Michael Bruno, owner of Land America, acquires controlling interest in Star Trac

Michael Bruno, owner and president of manufacturer Land America, has acquired a controlling interest in Star Trac Fitness’ parent company in a deal that promises to let the 35-year-old company continue to run separately. The agreement, which culminated after Star Trac started ...read more

Star Trac pumps it up with acquisition of Flex Fitness

In a move to allow it to compete globally with other full-line equipment companies, Star Trac has entered into an agreement to buy the assets of long-time strength supplier Flex Fitness Inc. The announcement was made quietly public at the Athletic Business show on Nov. 12 in ...read more

Star Trac reorganization fueled by Michael Bruno Acquisition

IRVINE, Calif., July 06, 2010 - Star Trac, a global leader in the commercial fitness industry, announced today that Michael Bruno and Star Trac have signed an agreement whereby Bruno will purchase the controlling interest in Star Trac’s parent company. This will strengthen the ...read more

Strength designer Nalley signs on at Star Trac

One of the most highly respected strength-training equipment designers in the industry Mark Nalley has signed on at Star Trac to work with the company on additional improvements in and expansions of its strength line. Nalley, the founder of Flex Fitness, which Star Trac bought ...read more

StarTracLogo.gif

Star Trac retail division starts second year with Ironman brand as new feather in its cap

With the Ironman license now in its family, the retail team at Star Trac is moving into its second year showing greater growth than expected. Not bad during an economic slump that has many running for cover. “We’re trying to zig when the market is zagging,” said Lamar, vice ...read more

Star Trac continues march into Europe, acquires German distributor

After a decade of selling equipment in Europe, Star Trac has taken a full dive into European fitness by buying its German distributor, MPK Cardio Fitness, four years after buying its U.K. distributor Star Fitness and only four months after moving a managing director from Europe ...read more