Helix Medical LLC plans to invest more than $4 million to locate a medical components plant in Costa Rica to service customers setting up operations there.
Part of Germany's Freudenberg Group, Helix Medical said it is in final negotiations on a leasing agreement to have a building constructed in in Alajuela, just outside San José.
Helix expects the facility to begin production in early 2012 and employ more than 100. It will offer contract manufacturing services, including silicone extrusion and molding, thermoplastic molding and assembly.
The plant will be ISO 13485 certified a required standard for medical-device manufacturers and include Class 7 and 8 clean rooms.
We chose Costa Rica to be close to our customers in Latin America, said Andy Becker, vice president and general manager of Helix's Carpinteria and Costa Rican operations. The country offers a large medical-device community with a skilled workforce as well as a good reputation for security and infrastructure.
Helix will use the money to buy equipment for the plant and create infrastructure for the clean rooms, said Jorg Schneewind, president and CEO. He didn't disclose the plant's size, but he said, We chose a building that has room to expand because we expect this business to grow significantly.
The Class 8 clean rooms will be used for molding and extruding, the Class 7 for assembly work.
Costa Rica is one of the top sites showing growth for manufacturing and assembling of medical devices, along with Mexico, Puerto Rico and the Dominican Republic, Schneewind said. All of those areas are either part of the North American Free Trade Agreement or the Central American Free Trade Agreement.
Costa Rica is the current one that is favored for the foreseeable future, he said. Many of our customers are going there and opening new facilities.
CAFTA has been a big factor in the growth of Costa Rica's medical and health-care goods manufacturing industry. Helix is supplying components for many devices that will be sent back to the U.S. for usage, he added. Most device makers import silicone, thermoplastic and other components from the U.S. to assemble into final devices that are shipped to the U.S., he said.
We follow our customers to serve them locally so they don't have to import from the U.S.,he said.
The Costa Rica site will be Helix Medical's seventh facility worldwide, including domestic plants in Carpinteria and Baldwin Park, Calif., and Gloucester, Mass. Its also has operations in Germany, China and a joint venture operation in Ireland. Schneewind doesn't see the Costa Rican factory impacting these other operations.
We see enough new business in Costa Rica to grow locally there and still grow in the others, he said. We see double-digit growth in all our facilities.
Helix Medical does not break out sales from parent Freudenberg. While the company draws on the Freudenberg's resources, it focuses on providing localized solutions, he said. That means each project is given a local team and each location is managed independently, with its own portfolio of capabilities and services.
Not that being part of Weinheim, Germany-based Freudenberg doesn't have its privileges, according to Schneewind. We are part of a 162-year-old, privately held, long-term thinking company that allows us to focus on getting better, not just bigger, he said. That's different than other companies owned by private equity firms that are set up to change ownership in a couple of years.
Helix formed in 1984 and was bought in 2006 by Freudenberg-NOK GP, the U.S.-based joint venture of Freudenberg and Japan's NOK Inc. In July, Helix Medical was carved out of that joint venture and now is 100 percent owned by Freudenberg, Schneewind said.
Our customers appreciate that we are in this for the long term with a healthy balance sheet and know we will be around in five to 10 years, he said.
It also helps that Helix Medical doesn't focus on me-too commodity molding, Schneewind said. We bring value to our customers by addressing technical issues and challenges.
While the medical component maker has shown strong growth, the CEO said it all is part of a plan. We're building this house one brick at a time, he said. Costa Rica is another building block in the long-term strategy to become a leader in the medical market, but one step at a time with more to come.