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Auto suppliers turn to medicine
'It's a very desirable place to be as far as manufacturing,' said Chris Buch, sales director at Omega Plastics, Inc., a Clinton Township plastic components supplier that at one time derived more than half of its business from top-tier auto suppliers.
Several years ago, Omega Plastics decided to break into the medical market, which now makes up about a quarter of its business. 'That's an industry that's strong and vibrant and seemingly recession-proof,' said Buch, whose company makes plastic molds and parts for medical supply companies.
Michigan is home to more than 130 medical device makers, including one of the world's largest, Stryker Corp. in Kalamazoo, which has reported double-digit sales growth the last several years. Nationwide, the industry generates annual revenues of $88.8 billion and is expected to grow nearly 9 percent a year over the next five years, according to Frost & Sullivan, an industry research firm in San Jose, Calif.
By contrast, the auto parts industry continues to struggle, with many companies facing bankruptcy or liquidation as automakers slash car and truck production amid the worst downturn in U.S. auto sales in decades. New car sales fell 18 percent in 2008.
While branching into the medical field isn't necessarily a new idea, it's gaining momentum, especially after General Motors Corp. and Chrysler LLC were forced to turn to the federal government for emergency loans to keep them afloat.
Creative Technology Services, a medical device manufacturer in Canton, reports being 'flooded' with calls in the last six months from auto suppliers seeking advice on how to make the switch.
'Years ago, we would have gone to see suppliers and not gotten a second look,' said Stuart Kerr, the company's executive vice president. 'But now you've got auto suppliers happy to diversify into something else.'
Costly retooling of machines
For auto suppliers, crossing over to medical goods has advantages and challenges.
While it's a fast-growing industry, fueled by an aging population and rising use of medical services, it's also strictly regulated by the U.S. Food and Drug Administration. Orders are typically smaller in volume than for auto parts and retooling machinery to make medical devices is often pricey. Some production requires the use of a sterile 'clean' room, frequently inspected by federal regulators.
'There are plenty of folks that can do injection molding but not many that can do it to a level of precision required to meet the quality regulations,' said Patrick Anderson, vice president of corporate affairs for Stryker.
Similarly, medical device companies can be picky about who they work with and the field is crowded with suppliers, said Jay Edelman, president of Top Five Data Services, a medical device consulting firm in Fremont, Calif.
Still, the field is well-suited to auto suppliers accustomed to machining tight-fitting, high-quality parts and equipped to take on high production volumes.
And medical device makers can bank on orders pouring in from hospitals, medical centers and doctors' offices as they rush to meet a surge in health care needs, say industry experts.
'It's a big learning curve for them, but once they can master that, then they can usually make a pretty good go of it,' said Stephen Rapundalo, president and CEO of MichBio, an Ann Arbor trade organization for life science firms.
Delphi adds medical division
Some top tier auto suppliers already have branched out into the medical device market.
Troy-based Delphi Corp. spun off its medical device unit six years ago, hoping to grab a larger share of this multi-billion dollar industry.
But with the persistent troubles in the auto industry, the company, which filed for bankruptcy in 2005, is pushing to make its medical division a bigger part of its business. It is working on a slew of new gadgets, from medicine pumps to portable oxygen tanks, said Al Hoffman, director of sales and marketing at Delphi Medical Systems.
'It's still a very small percentage of our business today,' he said, 'but we expected it to grow rapidly in the next three to five years.'
Several years ago, Omega Plastics decided to break into the medical market, which now makes up about a quarter of its business. 'That's an industry that's strong and vibrant and seemingly recession-proof,' said Buch, whose company makes plastic molds and parts for medical supply companies.
Michigan is home to more than 130 medical device makers, including one of the world's largest, Stryker Corp. in Kalamazoo, which has reported double-digit sales growth the last several years. Nationwide, the industry generates annual revenues of $88.8 billion and is expected to grow nearly 9 percent a year over the next five years, according to Frost & Sullivan, an industry research firm in San Jose, Calif.
By contrast, the auto parts industry continues to struggle, with many companies facing bankruptcy or liquidation as automakers slash car and truck production amid the worst downturn in U.S. auto sales in decades. New car sales fell 18 percent in 2008.
While branching into the medical field isn't necessarily a new idea, it's gaining momentum, especially after General Motors Corp. and Chrysler LLC were forced to turn to the federal government for emergency loans to keep them afloat.
Creative Technology Services, a medical device manufacturer in Canton, reports being 'flooded' with calls in the last six months from auto suppliers seeking advice on how to make the switch.
'Years ago, we would have gone to see suppliers and not gotten a second look,' said Stuart Kerr, the company's executive vice president. 'But now you've got auto suppliers happy to diversify into something else.'
Costly retooling of machines
For auto suppliers, crossing over to medical goods has advantages and challenges.
While it's a fast-growing industry, fueled by an aging population and rising use of medical services, it's also strictly regulated by the U.S. Food and Drug Administration. Orders are typically smaller in volume than for auto parts and retooling machinery to make medical devices is often pricey. Some production requires the use of a sterile 'clean' room, frequently inspected by federal regulators.
'There are plenty of folks that can do injection molding but not many that can do it to a level of precision required to meet the quality regulations,' said Patrick Anderson, vice president of corporate affairs for Stryker.
Similarly, medical device companies can be picky about who they work with and the field is crowded with suppliers, said Jay Edelman, president of Top Five Data Services, a medical device consulting firm in Fremont, Calif.
Still, the field is well-suited to auto suppliers accustomed to machining tight-fitting, high-quality parts and equipped to take on high production volumes.
And medical device makers can bank on orders pouring in from hospitals, medical centers and doctors' offices as they rush to meet a surge in health care needs, say industry experts.
'It's a big learning curve for them, but once they can master that, then they can usually make a pretty good go of it,' said Stephen Rapundalo, president and CEO of MichBio, an Ann Arbor trade organization for life science firms.
Delphi adds medical division
Some top tier auto suppliers already have branched out into the medical device market.
Troy-based Delphi Corp. spun off its medical device unit six years ago, hoping to grab a larger share of this multi-billion dollar industry.
But with the persistent troubles in the auto industry, the company, which filed for bankruptcy in 2005, is pushing to make its medical division a bigger part of its business. It is working on a slew of new gadgets, from medicine pumps to portable oxygen tanks, said Al Hoffman, director of sales and marketing at Delphi Medical Systems.
'It's still a very small percentage of our business today,' he said, 'but we expected it to grow rapidly in the next three to five years.'