By: Roger Renstrom
November 25, 2013
MedPlast Inc. is continuing to invest in its medical business, while contemplating the disposition of certain non-medical plastics processing operations.
The Tempe, Ariz.-based contract manufacturer, while not actively soliciting buyers, is open to the possible sale of three former United Plastics Group Inc. operations in Houston; Cardiff, Wales; and Suzhou, China.
“We operate those as a standalone business and retain the brand,” MedPlast CEO Harold Faig said in a telephone interview. “They are profitable and have good technologies,” employ about 200 of MedPlast’s total staff of 1,700, but do not fit the MedPlast focus on healthcare.
MedPlast was formed in April 2008 and acquired UPG in April 2012. More recently, the company added to its medical capabilities through the acquisition of implantable-specialist Orthoplastics Ltd. on Oct. 14.
Now MedPlast is adding technical molding capability at Orthoplastics’ location in Bacup, England, and working toward constructing a second facility for development work and the manufacturing of implantable devices. For now, Orthoplastics’ manufacturing operations occupy 118,000 square feet.
About 25 percent of MedPlast investments annually are aimed at U.S. Food and Drug Administration criteria to build the company’s medical business. For example, clean room installation is about $125-$150 per square foot, and Faig noted that MedPlast spends about $500,000 per year on clean room capabilities for specific applications, plus another $500,000 to support those requirements.
The total effort includes standardizing metrology equipment, risk mitigation and inspection equipment; software; and integration of systems and training.
“If we are going to have a device with FDA registration, we must have the whole plant compliant,” Faig said. “We have invested heavily in a smart and deliberate process.”
In August, MedPlast completed adding 10,000 square feet for warehousing in Tijuana, Mexico. Now the facility occupies 72,000 square feet, operates 31 presses and increasingly gains volume for final assembly and sterilization of finished goods.
Other 2013 additions involved MedPlast facilities in Fremont, Calif., and Chicopee, Mass.
“We can’t afford to build and hope they will come,” Faig said. “When we build, we build with a little bit of excess.”
In addition to Tempe, Bacup, Tijuana, Fremont and Chicopee, other MedPlast sites include West Berlin, N.J.; Westfield, Pa.; Elkhorn, Wis.; Monticello, Iowa; and, apart from UPG Suzhou, another location in Suzhou.
David Brooks, managing director of Orthoplastics, was assigned additional duties as president of MedPlast International for all operations in Europe and China.
For the MedPlast and Orthoplastics sites, the goal is to move into higher valued-added and more stringent quality-compliant healthcare products, Faig said. Examples include implantables such as vaginal pessaries, ocular plugs, orthopedic implants and hydrocephalus shunts.
Tim Joyner, corporate compliance officer, underscored how MedPlast wants its quality efforts “to be an extension of our customers’ quality and manufacturing systems. When they have regulatory issues, we support them.” Joyner joined MedPlast in June 2009.
Joyner’s staff includes individuals with experience in FDA regulatory issues and biological systems engineering.
Joyner’s team trains MedPlast facility general managers and others to understand and “know the industry we are serving.”
As needed, outside experts provide training on specialized equipment.
“From our perspective, the Orthoplastics acquisition is a glove fit to our overall strategy in filling out the company,” Faig said. “We are creating a MedPlast where the top and bottom look the same from a compliance standpoint. Any [customer] coming in at bottom rung has the same assurance the systems, technology and equipment they are getting is the very best of a system. Tim has been driving that.”
Currently for all MedPlast, Orthoplastics and UPG locations, the company operates about 450 plastics processing machines and occupies more than 1 million square feet for manufacturing functions.
“In general, we are one of largest, if not the largest, healthcare manufacturers in North America and maybe even in Europe,” Faig said.
Robert W. Baird & Co.’s Chicago-based Baird Capital unit owns a majority of MedPlast, and management has a minority position. JZ Capital Partners Ltd. of London and River Cities Capital Funds of Cincinnati were co-investors in the Orthoplastics deal.