Parker's medical unit grows into global force

ANAHEIM, Calif.—It's been seven years since Parker-Hannifin Corp. jumped big into the medical market with the purchase of the Hi-Tech Group of companies, and in the ensuing years the Cleveland-based conglomerate has worked to build the business into a global force.

The purchase formed the base of what Parker now calls its Medical Systems Division, which the firm said works to develop and produce components, assemblies and finished devices in the medical, diagnostic and pharmaceutical markets.

“I think we're pretty broad from being able to offer organic materials through liquid silicones to thermoplastics to assembly, electromechanical assembly and tooling,” said Jeff Vihnanek, a product manager based at the Medical Systems Division headquarters in Anaheim. “I think we offer a very broad gamut of capabilities where some firms may specialize in just one or two types of molding.”

The division is headed by General Manager Anthony Gangitano and touts four facilities in the U.S. and one in Mexico, along with sites in the Czech Republic, Singapore and China where MSD has dedicated operations within larger Parker facilities.

The predecessor companies that make up Parker's MSD date back to 1964, with the founding of A.C. Hoffman. Hi-Tech Rubber Inc. was formed in 1982, Accusil Inc. in 1991, Inland Technologies Inc. in 1992 and Ventrex Inc. in 1996.

In 2004, private equity firms Red Diamond Capital Inc. and Century Park Capital Partners L.P., along with some company management, bought silicone rubber molder Hi-Tech Rubber to form the Hi-Tech Group. The group, in turn, bought the other firms in quick succession, with A.C. Hoffman coming on board in 2005, Inland Technologies in 2005, Ventrex in 2006 and Accusil in 2007.

Its U.S. facilities include the 80,000-sq.-ft. headquarters in Anaheim, which focuses on precision molding of elastomeric components; Merrillville, Ind., a 25,000-sq.-ft. factory that does silicone extrusion and device assembly, along with rubber molding; Fontana, Calif., a 35,000-sq.-ft. site focused on thermoplastic molding, including thermoplastic elastomers and thermoplastic polyurethanes; and Ventura, Calif., a 40,000-sq.-ft. plant used for assembly of medical devices.

The Tijuana plant also molds rubber components at a 160,000-sq.-ft. Parker factory, of which 23,000 square feet are for the use of MSD.

At the time of the 2008 acquisition, Parker said the Hi-Tech Group accounted for about $93 million in annual sales, the majority in medical but some in industrial. The deal came right as the Great Recession arrived, something that Vihnanek said hit research and development work particularly hard.

“A lot of (original equipment manufacturing) customers just put their programs on hold, which was systemic throughout the industry,” he said. “It's gradually being turned back on again.”

Sales for MSD currently are in the $100 million range, he said, with an erosion of some of the industrial business offset with growth from some medical customers.

Vihnanek was with the Hi-Tech Group when Parker made the purchase. He said the Cleveland-based company was looking for ways to grow its business in medical, and Hi-Tech showed up on its radar. “They saw the percentage of share we did with medical and thought they could really leverage and grow in that, and they decided to make the investment,” he said.

After the acquisition, Parker started a comprehensive look at how to best sustain and support the existing business, and then organically grow in the medical arena. It also evaluated the industrial part of Hi-Tech to decide where it best fit and, in the end, moved about half of it to Tijuana, with some remaining in Anaheim, Vihnanek said.

The biggest change, he said, was an intense focus on establishing a lean mentality throughout the former Hi-Tech businesses, from operations all the way through accounting. The business became more efficient, more customer-centric and looked to provide value-added services wherever possible.

“We took out a lot of manual operations and incorporated more real time in the actual manufacture of the part,” Vihnanek said. “We've taken out a lot of the waste inefficiencies through Kaizen events.”

He said Renzo Rodriguez, now business unit manager at Anaheim, led the lean effort, implementing the technology and mentality across all of the sites.

It took some getting used to for employees, Vihnanek said, but once they saw the fruits of the effort, the initiatives caught on quickly. “We really transitioned the facility in a matter of years into where we are now,” he said. “We get a lot more bang for our resource investment. We're much more efficient, and we're making better parts.”

Going from being a private company to being part of a global conglomerate also took some getting accustomed to. “The accountability for the departments went up dramatically,” Vihnanek said. “We have an obligation to our shareholders to operate as efficiently as possible and be as profitable as possible.”

With that came an intense focus on forecasting through working with customers and understanding their needs. “That obviously was a learning curve for any small company that's thrust into a big global company,” he said. “From that aspect—being able to forecast and plan better, and understand why things were happening—that's where Parker was really able to add a lot of clarity.”

Being part of a large conglomerate has other advantages. While the individual groups operate as profit centers, guidance is accessible when needed. “If we need help, you call your big brother, and they're ready to support,” Vihnanek said. “We have quarterly and annual meetings to support multilateral functions across the division development programs. We leverage each other's expertise when needed and where needed to achieve the results.”

Access to investment funds and the ability to put together a global footprint are other pluses. He said Parker has made significant investments in molding machinery, maintaining white rooms and achieving needed quality certifications.

And being able to establish manufacturing cells within other Parker sites—such as was done in Mexico, China and the Czech Republic—is much more cost-effective than a private company putting up greenfield sites. “That's the nice thing about Parker being across 50 different countries,” he said.

Overall capabilities for MSD include custom molded elastomers, plastic injection molding, silicone extrusion and assemblies, contract assembly, value-added services, and product design and development. While liquid silicone rubber is the most common material it processes, the group works with organic and gum silicone, along with a range of thermoplastics.

It works on materials development, including such breakthroughs as antimicrobial polymers for medical devices that it recently commercialized, as well as USP-compliant polyisoprene compounds used to make elastomeric closures for medical devices.

The Parker unit also offers expertise in such areas as design and process engineering support, nonlinear finite element analysis and mold flow simulation.

“We're very good at occasionally throwing out something that nobody thought of, or confirming what you thought was going to happen is actually happening,” Vihnanek said.

Hi-Tech Group, under the guidance of the late Bill Sherman, was known for its materials expertise. But while Sherman was somewhat of a “one-man show” in materials development, Vihnanek said Parker is able to put more resources in this area. MSD has a senior chemist, a Ph.D. in materials and recently hired a junior chemist. “Through these chemists and the leverage with Parker's Engineered Material Group and its knowledge base, we're basically ready to take on any challenge.”

MSD can mold parts from 1 1/2 pounds down to sub-grams, and micromolding has been an area of focus in the past year.

“There's some really unique technology that we've discussed with certain tool vendors,” Vihnanek said. “We're trying to leverage that up into value-added offerings to the customer base. It's a good opportunity if you get to work with the customer from design concept through because we can work not only on tooling recommendations but also material selection.”

Target markets for the business include products supplied for cardiovascular, patient care, patient monitoring, patient therapy, respiratory and anesthesia, and surgical. It doesn't work with implantables.

A business development team led by Tim Kolankowski works with finding new opportunities in these markets, and it can benefit from such Parker collaborations as an agreement to work with the Cleveland Clinic on potential products.

“We've had products that have gone seven years in development that we're now in the second year of molding,” Vihnanek said. “It's just because of testing and regulations. In the medical arena, it's a much longer launch.”