Toshiba funnels resources to field operations

December 4, 1991

Toshiba America Medical Systems has trimmed overhead and shiftedresources to field operations in order to compete more effectivelyin a sluggish U.S. medical imaging equipment market. The Tustin, CA, vendor cut 45 administrative and other positionsat

Toshiba America Medical Systems has trimmed overhead and shiftedresources to field operations in order to compete more effectivelyin a sluggish U.S. medical imaging equipment market.

The Tustin, CA, vendor cut 45 administrative and other positionsat headquarters last month, while adding 40 new sales and servicepositions, said Ronald B. Schilling, senior vice president andgeneral manager.

Donald Southard, formerly vice president of sales, marketingand service, also resigned from the company last month. TAMS eliminatedSouthard's position following his departure. The move was partof the vendor's effort to reduce administrative layers. All sales,marketing and service departments will report directly to Schilling,he said.

Southard was hired away from Philips Medical Systems two anda half years ago as part of TAMS' effort to build market sharein the U.S. (SCAN 3/1/89). That effort is still on track, althoughslowed somewhat by the sluggish market, Schilling said.

The recession and a reduction in orders caused by federal safeharbor regulations restricting referring-physician ownership inmedical joint ventures are factors behind the downturn in demandfor medical imaging equipment, he said. Over the longer term,however, market opportunities may arise for less entrenched vendorsas these and other regulations cause a shift in purchasing patterns(SCAN 11/6/91).

TAMS' parent, Toshiba of Japan, is intent upon increasingits position in the vital U.S. market to match stronger positionsin Japan and Europe. The company's goal is to raise its Americanmedical imaging market share from 10% to 15%--or about $500 millionin annual sales--by 1993, he told SCAN.

"Our overall mission statement makes this clear. Ourgoal is to gain a leadership position in the U.S. market in orderto ensure that Toshiba worldwide becomes number one," Schillingsaid. "The Japanese philosophy is to invest for the longterm."

New positions created by TAMS in the restructuring includefield sales representatives, sales specialists, applications personneland service engineers, he said.

Reduced administrative costs will help TAMS maintain profitsin its effort to increase market share, he said. More importantlyfor the long-term health of the medical imaging industry, however,companies must reduce their operating costs so they can offerequipment at prices that enable users to operate profitably.

"The recession and compression of the medical industryas well as the impact of federal safe harbor regulations havepresented some of the most significant challenges this industryhas seen," Schilling said.

While some administrative staff were also let go from ToshibaAmerica MRI (TAMI) in South San Francisco, the vendor plans toincrease its U.S. R&D, engineering and manufacturing effortsthat are run through this organization. TAMI was formerly theMRI business of Diasonics, which Toshiba purchased two years ago.

Toshiba has expanded the responsibilities of TAMI into otherimaging modalities since the acquisition. All x-ray assembly andfinal test procedures have been shifted from TAMS in Tustin toTAMI, Schilling said.