Diversifying into medical devices is a way for manufacturers dependent on the auto industry to grow revenue and avoid the ups and downs of the auto supply chain. But it takes hard work and a long-term commitment, attendees were told during a Nov. 4 panel discussion at the MichBio Expo, held Nov. 3-4 in Kalamazoo.
What's the biggest barrier to diversification? If I had to pick one thing if I had to pick the biggest barrier it [would be] us, said Jeff Kaczperski, president of Clinton Township, Mich.-based Omega Plastics Inc., an injection molder that has grown its medical device business to about 30 percent of revenue in four years.
We tend to be in the way, the decisions we make, the priorities we set. But if you're the biggest thing in the way, then you can deal with it. You can diversify.
But Kaczperski said breaking into the medical market is tough for a variety of reasons, including a lot of competitors, smaller parts and smaller volumes, a much tougher regulatory environment and cleaner manufacturing conditions that could mean an investment of capital.
His tips include:
Study the market, including trips to trade shows.
Don't just think you can carve out a piece of the market by just telling your sales people to sell to it.
Come up with a detailed plan for growing that business, including what you want the share of your medical revenue to grow to and concrete steps for getting there. There's no magic to diversification. There's no magic wand, he said. You have to work your plan and work it hard.
Have an answer ready to overcome the biggest fear would-be customers will have it's not whether you can make quality products and deliver them on time, it's that you'll remain as a supplier when and if the auto market recovers. If sales of the Big Three go back to pre-recession levels, are you going to abandon your new customers to go back to what you know?
Jeff Gibbons, a vice president of J.C. Gibbons Manufacturing Inc., a Livonia, Mich.-based maker of precision screw machine products, said his small job shop wouldn't have been able to make a transition into the medical market without help from state funding programs.
Gibbons credited the Plymouth-based Michigan Manufacturing Technology Center in Plymouth, an affiliate of the National Institute of Standards and Technology, for its database search of medical-device companies that buy products his company already makes and sells.
It was easier to land those customers, and once he had a foot in the medical market, it was easier to land others, he said.
Mark Symonds, president and CEO of Auburn Hills, Mich.-based Plex Systems Inc., a maker of manufacturing software, said a critical component of his company's successful shift to medical devices was to hire sales people with a background in that market.
We found it more effective to bring in sales people who knew the industry. There's so much to know. What is a Class 1 device? A Class 2 device? A Class 3 device? It's just easier to hire someone who knows than to have your people learn it all.
We brought in people who knew the industry and had contacts, said Kaczperski.
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