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.

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



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