Speedboat mentality: Trelleborg spins off medical solutions unit

TRELLEBORG, Sweden—With an eye toward the flourishing medical and biopharma niche markets in LSR and plastics, Trelleborg A.B. will spin off its global health care and medical division into a separate business unit, Trelleborg Medical Solutions.

The split—the global healthcare and medical unit currently exists within Trelleborg Sealing Solutions—will take effect April 1, along with a modest restructuring of TSS.

Trelleborg Industrial Solutions will not be affected by the reorganization, Trelleborg officials said in a Feb. 14 conference call with media and investors.

"Trelleborg Medical Solutions will be a polymer-based, full-solutions provider, partnering from concept to full device production," said Linda Muroski, who will take over as president of Trelleborg Medical Solutions.

Muroski currently heads the global healthcare and medical division within TSS, as well as Industrial Americas, also within TSS.

Muroski, named Rubber News' 2022 Executive of the Year, will give up direction of Industrial Americas, as Trelleborg Sealing Solutions now is under the direction of Jurgen Bosch.

Bosch replaces Peter Hahn as president of the Fort Wayne, Ind.-based sealing division, a transition that also takes effect April 1.

"Jurgen has shown strong leadership and good results for many years," said Peter Nilsson, president and CEO of Trelleborg Group. "He will continue to lead the growth journey within industries such as aerospace, semiconductors, food processing, robotics and automation.

"An important task will also be to realize the full synergies from recent acquisitions."

For Bosch, that means integrating Tukwila, Wash.-based 4M Co. Inc., a manufacturer of aerospace components (window seals) that Trelleborg Group acquired in June 2023; as well as the MNE Group, a South Korean producer of precision seals that Trelleborg intends to purchase for $62 million by the end of this year.

For Muroski, that means integrating the Australian-Chinese Baron Group, a $300 million aquisition that Trelleborg announced earlier this month (a deal that also is expected to close later this year); and a $21 million, 107,000-sq.-ft. healthcare and medical facility in Grecia, Costa Rica.

"The (medical device) industry itself is expected to have a CAGR of greater than 5 percent," Muroski said. "We will work with our customers to bring this life-changing technology to patients, delivering full medical devices.

"We see this industry as having steady growth. The industry is innovating and providing products for a better patient outcome. And these things really do make the market attractive to us."

Trelleborg's third business unit, Trelleborg Industrial Solutions, continues without change, with Jean-Paul Mindermann as its president.

With its headquarters in Minneapolis, Trelleborg Medical Solutions will focus on a broad portfolio of polymer-based solutions.

The new business unit (as of April 1) will be subdivided further into Medical Device Solutions and BioPharma Solutions.

While med-tech is expected to grow at 5-percent CAGR, this sub-unit will comprise about 90 percent of TMS business, Muroski said.

Conversely, the biopharma market is expected to grow at 10-percent CAGR but will comprise only about 10 percent of TMS sales.

TMS initially is expected to generate sales of about $350 million annually (including the acquisition of Baron Group).

"It is our ambition that this division reaches sales of (about $480 million) in the near future," Muroski said.

The Baron Group has annual sales of about $95 million, with more than 1,000 employees who work in complex LSR and silicone technologies. The firm has complementary capabilities in engineered plastics and rubber.

"Baron Group expands us into Asia, China and Australia, pending closure of course," Muroski said. "They are an excellent fit, as they possess a new customer base that is quite interesting for us. They have complementary capabilities in engineering plastics and rubber ... this is a nice fit and sets us up for growth on a global basis.

"Baron brings us into Asia—but our footprint is extensive across the Americas as well."

With about 2,000 employees overall, TMS operations ultimately will comprise 14 production facilities and four tool and innovation centers spread across the world.

Sales and production, geographically, are largest in North America, followed by Asia and Europe, Muroski said.

Nilsson said Trelleborg will report concrete, restated financial figures for both Trelleborg Medical Solutions and Trelleborg Sealing Solutions (in the new structure) sometime in March.

"The health care and medical market segment within the group has grown successfully for several years," Nilsson said. "We are now establishing a platform from which we intend to grow further. With the recently signed acquisition of Baron Group and the upcoming new facility in Costa Rica, the market segment will represent a larger share of the group's sales."

The healthcare and med-tech device markets today are driven by increased healthcare spending, an aging population, a growing middle class and rising demand in the Asia-Pacific region, Muroski said.

Medical Device Solutions will produce end products such as glucose monitoring systems and cartridges for diagnotics for blood composition for diabetes, among other niche areas.

"And we are working on medical disposables and implantables with seals and other components," Muroski said.

BioPharma Solutions will produce single-use systems and bio-reactors

"What we will do within this area is end-to-end development with our customers," she said. "We will go from concept ... to global production. This will allow us to help our customers as much or as little as they need."

Trelleborg already serves many of the top OE customers in the world.

"We have the most global silicone rubber solutions in the market," Muroski said. "And we have a comprehensive portfolio beyond LSR. These approaches allow us to have a competitive edge.

"As we provide silicone, we also provide plastics for integrated medical solutions—so that we can provide an entire device based off their specifications, all under one roof, consolidating their supply chain."

Nilsson added that the new TMS segment will look to gain market share through further exposure to growth segments, increased capacity and global footprint and "accelerated growth through acquisitions."

"These changes are a natural evolution for us," he said. "With a better profile for growth, we are more profitable and less cyclical. We are moving toward this.

"The message is 'climbing the ladder.' We are building a better Trelleborg ... and Linda is well aware of the opportunities in (the med-tech) area. We see all of this as a reinforcement of Trelleborg's commitment to growth in healthcare and medical technology."

"Scale up and accelerate"—that is the message that Trelleborg is pushing with the changes to Trelleborg Sealing Solutions.

Alongside this message is the apt "speedboat" metaphor for the sealing and medical units, Nilsson said.

"This is the 'speedboat' concept now in sealing solutions," he said. "We will maintain a focus on aerospace, renewables, electrification, semiconductors (with the aforementioned South Korea acquisition), modular construction, industrial automation, hydrogen, liquid natural gas and water infrastructure.

"We are targeting organic and inorganic efforts to facilitate this movement of sealing solutions into more, faster growing markets."

Bosch, who currently heads the global aerospace business as well as Industrial Europe, will take on Industrial Americas as president of the revamped sealing segment.

Hahn had led TSS for the past seven years, and has been with Trelleborg for 23 years, Nilsson said. He will continue to work for Trelleborg Group in an advisory role.

"I would like to thank Peter," Nilsson said. "His dedication to provide the best solutions for customers combined with a strong focus on applications in selected segments, has laid the foundation for the positive development.

"I am pleased that he will continue to support the group in a new role as senior adviser."

Bosch, meanwhile, has been heading the biggest geographic region for TSS, Industrial Europe, for several years.

"He is well-versed in all aspects of the business," Nilsson said.