As much of the plastics industry waits for recession to lift, processors in the medical field might ask: What recession?
Well, maybe that's a little glib. But many plastics firms selling into the medical market say they expect continued strong sales growth in 2002 and shrug off the effects of the slowing economy.
``I don't remember health care being optional or based on the economy,'' said Thomas Bienias, health-care business unit manager for one of the largest custom medical injection molders, Nypro Inc. in Clinton, Mass.
Other Nypro markets have suffered, but not medical, he said. About 24 percent of Nypro's worldwide sales of $682 million are in health care.
Sales growth, however, does not always translate into profit, as medical device manufacturers get more aggressive and start coming to their suppliers looking for price rollbacks.
``Everybody says that automotive - they're crunching, they're asking for 10 percent a year back,'' said an executive at one medical device injection molder who requested anonymity. ``Medical is asking for that now. They are learning from automotive.
``You might be able to build your sales, but your profitability sucks,'' the executive said.
Still, growth is predicted. Nypro expects faster growth in medical than the 6-8 percent projected for the entire medical device market in 2002, Bienias said.
Financial reports from the only two publicly held medical processors in the Plastics News stock chart belie talk of recession, at least through the first nine months of 2001. Merit Medical Systems Inc. in South Jordan, Utah, reported record sales and profit, and Utah Medical Products Inc. in Midvale, Utah, reported 10 percent growth in profit, to $4.4 million, although international sales remained weak.
Several tubing extruders said they predict growth this year: Putnam Plastics Corp. in Dayville, Conn., expects at least 10 percent growth, and Teel Plastics in Baraboo, Wis., is looking for the overall market to expand about that much.
But Mike Ford, Teel director of marketing and sales, said price pressures will increase as original equipment manufacturers trim their supplier base and ask for price givebacks - trends that already have started.
``I think something very similar to what we've seen in the automotive industry will take place in the medical industry,'' Ford said.
The tight regulatory controls and more immediate, life-and-death issues with products will rein that in to some extent, several processors said. The medical industry needs a closer relationship with its supplier base than do other end markets, they said.
The cost cutting has pushed some OEMs to centralize procurement and consolidate their supplier base, said James O'Dierno, senior vice president of sales and marketing at medical and electronics packaging thermoformer Prent Corp. in Janesville, Wis.
``Only in the last 12-18 months have people really put it to use,'' he said. Still, he called it a win-win situation because it has ``made us a better supplier.''
Like many of the larger processors, Prent said its customers continue to want global suppliers, and the firm has seen business at its Malaysian plant skyrocket.
``The smaller thermoformer may not have the wherewithal,'' O'Dierno said.
Nypro also expanded its global medical platform in 2001, buying a small French medical molder and building a fifth plant in China, for the health-care market, Bienias said.
It all means more evolution for medical processors - providing molding, assembly, design and supply-chain management, Bienias said.