With the economy in better shape than a year ago, companies are casting their eyes on Asia, in particular China, to capitalize on the need to supply products to that country's growing middle class.
There will be an acceleration to areas outside the United States, said Larry Wilton, CEO of contract manufacturer UPG Inc. in Oak Brook, Ill.
He added that UPG is in position to handle business going offshore.
But we might need to add another plant in China by the end of the year. We are already looking for where we want to be next, Wilton said at Medical Design & Manufacturing East in New York.
We want to be more inland, maybe in northeast China, which he sees as an emerging low-cost area. We won't do that expansion until our current plant in China is at 100 percent capacity.
Generally speaking, a 100,000-square-foot plant is what we look for, Wilton said. But if the plant has room for expansion, we can start with half that.
Other firms are also looking at increasing their China presence.
We are seeing strength internationally and have launched programs with multinational companies in Asia, so we need to be in those countries said Larry Bell, vice president of business development and marketing for GW Plastics Inc. in Bethel, Vt. We will probably start to ramp up production of those programs in China in the second half of the year.
We work with Fortune 500 companies that want and require a global footprint and companies who need precision molding capabilities, Bell said. They don't want to duplicate and reinvent the wheel. We have got a good footprint in the U.S, but to continue to be a global supplier, we need to look to round that out. That will be driven by programs or customer needs. We're bullish on our capabilities and long-term prospects.
Nypro Inc. in Clinton, Mass. which gets 35 percent of its revenue from medical also sees China as a lucrative market.
We are projecting the largest growth for India and China, said Brian Payson, vice president of business development for Nypro Healthcare. We see a strong emergence of device manufacturing in those countries.
Similarly, MedPlast Inc. in Tempe, Ariz., plans to expand internationally with its customers, said Mike Farrell, executive vice president of sales and marketing.
There is a need for global expansion, but it has to be selective and strategic. We are not just going to China to be in China. It will be in support of some or one of our customers, Farrell said.
But clearly, being in China or having a larger presence in China is important for many medical molders and materials suppliers.
You are starting to see more American companies go to Asia to serve Asia and its middle class, said Tom O'Brien, product marketing manager for health care for Sabic Innovative Plastics in Pittsfield, Mass. As an industry, we have to be able to serve customers whether they are in the U.S., Europe or Asia.
Asia will clearly be a big opportunity for us because of the growth in the use of medical devices in that country, said Larry Johnson, health-care marketing director for specialized polymer compounder and distributor PolyOne Corp., headquartered in Avon Lake, Ohio.
[The Chinese] are going to start building their own devices for their own population. We are well-positioned to take advantage of that and that is going to happen within two to five years.
Copyright 2010 Crain Communications Inc. All Rights Reserved.