Precision molder and contract manufacturer UPG International Inc. will open a fourth plant in Suzhou, China, by the end of March as it continues to expand its medical footprint.
The 40,000-square-foot plant will be mostly for electronics assembly. But that will clear space for UPG to add a Class 100,000 clean room in one of its three existing Suzhou plants that now does both medical and electronics work. That facility will then be dedicated completely to medical work.
We just began renovation of the [new] plant this month, said Tom Opielowski, president of UPG China and vice president of UPG International, in an interview at the Medical Design & Manufacturing West show, held Feb. 8-10 in Anaheim.
Opielowski also said a capital expenditure for adding blow molding capacity down the road at the new plant has already been approved.
When the new plant is finished, the existing medical/electronics plant in Suzhou will convert 8,000 square feet of space into a Class 100,000 clean room. That will be the third clean room for medical work that UPG has built in China in the past 41/2 years.
We need to grow our clean room space, he said. We added a second clean room at the beginning of 2010 and that is already full, so we are out of clean room capacity.
With the new clean room, UPG will add space for assembling products such as drug-delivery, filtration and respiratory devices many of which will be portable units that can be attached to the body, he said.
Most of the medical devices UPG makes in China are exported to other countries, as the UPG plants are located in the Export Processing Zone in Suzhou.
We have made quite an investment in equipment, lab space and people in China, he said. We know the language and understand the risks. That is what sets us apart from the competition.
The next step in China will be another medical facility, Opielowski said. We will have to decide on that and where to place it by the end of the year.
UPG, based in Oak Brook, Ill., now has 11 plants in four countries, including four in the U.S. and two in Mexico. The company has more than 300 molding machines ranging in size from 24-1,000 tons of clamping force.
Medical now accounts for 35-45 percent of the company's sales, compared with 15 percent just four years ago, thanks to a shift in direction begun under former CEO Larry Wilton, who retired near the end of 2010.
The rest of its business is about equally divided among electronics, consumer and industrial products, with some custom automotive business.
We have had double-digit growth in our medical portfolio for four years running, said Matt Langton, vice president of sales and marketing. And we will continue to grow at that pace. We are reaping the returns on the investments we have put in place in plants, clean rooms and white rooms for medical the past three years.
Larry did a phenomenal job of shifting the direction of the company, added new UPG CEO Todd Dunn. Clearly, going forward the medical business is going to get the preponderance of our investment dollars for the foreseeable future. The overwhelming majority of our infrastructure spending and our investments will be around the medical business.
We will also significantly enhance our investment in the quality department to support that, Dunn said. That is the linchpin of our strategy for the next few years. We'd like our medical business to be north of 50 percent of the company's total sales.
The new spending in China comes on the heels of investments UPG made in 2010, when it added an 8,000-square-foot white room for medical diagnostic devices at its plant in Minneapolis; two-shot molding capacity and a clean room at its plant in Chicopee, Mass.; and injection blow molding capacity at its medical plant located in Tijuana, Mexico.
We've also added and increased our engineering expertise in both tooling and applications over the last six months, said Chris Sigmon, vice president of North American operations.
That enables us to win more business. We are continuing to grow in medical markets, and our U.S. factories continue to expand in medical.
UPG's plants in Minneapolis and Wales in the United Kingdom both added their first medical customers in 2010. And, in the last two months, UPG's plant in Houston, which is now ISO 13485-certified, added its first medical customer a surgical-device manufacturer, Sigmon said.
That is a good example of how we work with our global customers, added Langton. One of our global customers has a facility nearby our plant in Houston, and we are helping them out on a regional basis.
UPG, which in 2010 returned to the revenue levels it had attained before the economy dipped, is optimistic about its prospects, particularly in medical.
We have had a lot of new tooling projects since last October and November, Sigmon said. The firm set a record for tooling sales in 2010, which he said is typically a good indicator for business 12-18 months down the road.
We are seeing improvements in the overall economy and most restraints on projects are starting to be lifted, Sigmon said. We have a lot of ongoing projects with existing customers.
Langton agreed. You can't stay in your cocoon forever. We see movements across all sectors. New projects are taking hold a lot of them in diagnostics as new tests and point-of-care medical care move into the home.
New technology is driving the portable nature of drug-delivery devices and in the diagnostic arena, he said.
As UPG continues to expand its medical business, Langton said there will be a shift in the company's product mix.
There will be less components and more finished goods and products, he said. That will drive our growth whether it is in diagnostics, drug-delivery devices or instrumentation.
But to do that, UPG executives agree they will need to add more clean rooms for medical work.
It seems like the ability to keep up with clean room space is difficult, said Opielowski. They fill up very quickly. So I see that continuing to be a need for us.
Dunn added that demand is growing quickly in emerging markets, and Eastern Europe is a potential new frontier for UPG.
We will have to explore that region within five years, and likely with three years but probably not this year. Our geographic reach today is clearly of benefit to us and we will look to enhance that where we can, to be where our customers want us to be, he said.