CARPINTERIA, Calif.—Helix Medical L.L.C. plans to invest more than $4 million to locate a medical components plant in Costa Rica to service customers that are 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 the Coyol Free Trade Zone and Business Park in Alajuela, Costa Rica, located just outside San Jose.
Helix expects the facility to begin production in the first quarter of 2012 and employ more than 100. It will offer contract manufacturing services, including silicone extrusion and molding, thermoplastic molding and assembly operations.
The facility 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 Medical's Carpinteria and Costa Rica operations. “The country offers a large medical device community with a skilled work force as well as a good reputation for security and infrastructure.”
Because the factory will be leased, Helix Medical will be spending its money to purchase all the equipment for the plant and the infrastructure for the clean rooms, said Jorg Schneewind, Helix Medical president and CEO.
He didn't give the size of the new facility, but 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 certified to 100,000 particles and typically used for molding and extruding, while the Class 7 ones are certified to 10,000 particles, a stronger requirement needed for assembly work.
Free trade impact
Besides Mexico, Puerto Rico and the Dominican Republic, Schneewind said Costa Rica is one of the top sites showing growth for manufacturing and assembling of medical devices.
All of these areas are part of either 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.”
Costa Rica is part of CAFTA, and that has been a big factor in the growth of the nation's medical and health care goods manufacturing industry. “When medical manufacturers go to Costa Rica, we follow,” Schneewind said.
Most of the devices into which Helix Medical's components end up actually will be sent back to the U.S. for usage, he added. Currently, most device makers import many components such as silicone and thermoplastic goods from the U.S. to assemble into the final devices, which are then shipped back to the U.S.
“We follow our customers to serve them locally so they don't have to import from the U.S.,” the Helix Medical CEO said.
Growth expected elsewhere
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 international factories are 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 doesn't break out its sales from parent Freudenberg. And while the company draws on the resources of its global parent, he said Helix Medical focuses on providing localized solutions for its customers.
That means each project is given a local project team and each location is man- aged independently, with its own portfolio of capabilities and services.
Not that being part of the Freudenberg Group 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 Medical formed in 1984 and was purchased in 2006 by Freudenberg-NOK G.P., the U.S.-based joint venture of Freudenberg and Japan's NOK Inc. In July, Helix Medical was carved out of the 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.”