DG Medical has begun construction on a Class 10,000 clean room within DimcoGray Corp.'s existing manufacturing plant in Centerville, Ohio. The move is a first step toward having medical business account for 80 percent of DimcoGray's sales within three years.
That would be a huge shift for DG Medical's 86-year-old parent company, Dimco Gray, which currently gets only 15-18 percent of its revenue from medical, largely from plastic knobs and handles.
But Mike Sieron, president and CEO of DimcoGray and DG Medical, said the challenge is not as large as it might seem for a firm historically focused on molding commercial and industrial knobs and handles, and valve controls.
The corporate focus on the medical industry began about a year ago, he said, and DG Medical was formed six months ago to underscore the company's commitment to the medical industry. The company did not publicly announce the formation of DG Medical until June 15.
“We looked around at what we could do to capitalize on our core competencies and the medical industry was a natural choice,” said Sieron, who was hired four years ago to “position the company so it would have a stable future,” as he put it.
“We already supply the medical industry with components that have no regulatory requirements and have worked with large OEMs” to injection mold medical components for them during the past 30 years, Sieron said.
“We just never have moved beyond that to do contract manufacturing. We are not looking to be the 800-pound gorilla, but we think we can carve out a very profitable business for a long, long time.”
The 5,500-square-foot clean room will be built within the firm's 60,000-square-foot facility and will be completed by mid-to-late August. The clean room will operate four all-electric injection presses, each with a clamping force of 110 tons. The firm's plans call for an expansion of the 75-person workforce by 30 people during the next four years.
“We have created a plant-within-a-plant concept,” Sieron said. “We are looking at manufacturing things such as cases for hand-held monitoring devices and anything in the disposables market — small-shot, fairly lightweight items with volumes of 50,000-100,000 pieces a year designed for one-time use.
“That is a pretty fragmented market. There is room to move into it and we know the customers in that space,” he said. “Right now we are the bottom of the value chain and if someone came to us and wanted something manufactured in a sterile environment, we couldn't do it. We knew we needed a clean room. We want to manufacture Class 2 devices — things that touch the body, such as catheter guides.
“We liked the device market because it is sustainable,” Sieron said. “We also knew it is resistant to imports because the government regulates it so heavily.” As he notes, 90 percent of device manufacturing is done in the United States because of the need to work with the Food and Drug Administration to meet those regulatory requirements. “That lends to a lot of stability,” as does the typical five- to 10-year length of many contracts, he said.
In addition, Sieron said, “we knew it would be easy to integrate medical manufacturing into our existing facility and that it fits well with the company's core competencies” — thermoset molding, ultrasonic and resistance welding, insert molding and overmolding. Another plus according to Sieron: “Medical manufacturing is a priority for our state,” he said, noting that Ohio has a strategic initiative to attract medical-device companies and vertically integrate related manufacturing within the state.
DG Medical is both ISO 13485:2003 and ISO 9001:2008 certified.
“The first way to get a seat at the medical table is quality, quality, quality,” Sieron said. “The second is to build a clean room manufacturing environment for higher-quality parts. But even after we do all that, we still have to convince the medical industry that we have the quality system in place.”
The other challenge is making sure the company has the capital to grow the medical business.
DimcoGray currently serves the medical equipment, farm and construction machinery, lawn and garden, mechanical controls, heating, ventilation and air conditioning, food equipment, fitness and specialty furniture markets.
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