Mike Barbella03.11.11
Jabil Circuit Inc. just might be on to something.
Rather than watch its customer base slowly erode from the tides of foreign competition, the electronics manufacturing services provider is following clients overseas to emerging markets that are providing medical device makers with low-cost alternatives (and in many cases, easier regulatory pathways) to their domestic operations. To stay competitive, Jabil reportedly is investing $10 million in a new injection molding factory in Shenzhen, China.
The facility, according to a published report, is being constructed within a larger existing manufacturing campus that Jabil operates for electronics customers and those in other markets. The molding factory will house 18 Japanese Fanuc injection molding presses to start, though the company plans to increase the number of machines to 50 within two years. Gaet Tyranski, business unit director for the healthcare and life sciences business of St. Petersburg, Fla.-based Jabil, told Plastics News that the investment was driven by cost pressures among device manufacturers.
“I would maintain that the excise tax on medical devices coming out of the most recent [U.S.] healthcare reform act is causing OEMs to look for lower costs to maintain their margins,” he told the weekly newspaper during a January interview at the Shenzhen facility. “If they predominantly have facilities in Europe and the U.S., they are looking a lot more closely at both moving production overseas and outsourcing more production. I think it is an industry that is experiencing more outsourcing and the outsourcing is moving outside the United States.”
Jabil’s newest facility in Shenzhen will manufacture drug delivery devices for export to the United States and Europe. The facility, however, also will be licensed to make products for the domestic Chinese market, a strategy that eventually could help the company achieve significant future growth. “We are starting to see our customers with an eye toward the domestic markets, China for China and eventually India for India,” Tyranski told Plastics News.
The Shenzhen factory will be able to manufacture 12.5 million disposable drug delivery devices annually, and will be certified to Class 8 clean room manufacturing. The operation will be highly automated to help cut down on labor costs, which have been rising quickly in recent years. Jabil employs more than 20,000 people in China, at factories in Tianjin, Suzhou and Wuxi.
Rather than watch its customer base slowly erode from the tides of foreign competition, the electronics manufacturing services provider is following clients overseas to emerging markets that are providing medical device makers with low-cost alternatives (and in many cases, easier regulatory pathways) to their domestic operations. To stay competitive, Jabil reportedly is investing $10 million in a new injection molding factory in Shenzhen, China.
The facility, according to a published report, is being constructed within a larger existing manufacturing campus that Jabil operates for electronics customers and those in other markets. The molding factory will house 18 Japanese Fanuc injection molding presses to start, though the company plans to increase the number of machines to 50 within two years. Gaet Tyranski, business unit director for the healthcare and life sciences business of St. Petersburg, Fla.-based Jabil, told Plastics News that the investment was driven by cost pressures among device manufacturers.
“I would maintain that the excise tax on medical devices coming out of the most recent [U.S.] healthcare reform act is causing OEMs to look for lower costs to maintain their margins,” he told the weekly newspaper during a January interview at the Shenzhen facility. “If they predominantly have facilities in Europe and the U.S., they are looking a lot more closely at both moving production overseas and outsourcing more production. I think it is an industry that is experiencing more outsourcing and the outsourcing is moving outside the United States.”
Jabil’s newest facility in Shenzhen will manufacture drug delivery devices for export to the United States and Europe. The facility, however, also will be licensed to make products for the domestic Chinese market, a strategy that eventually could help the company achieve significant future growth. “We are starting to see our customers with an eye toward the domestic markets, China for China and eventually India for India,” Tyranski told Plastics News.
The Shenzhen factory will be able to manufacture 12.5 million disposable drug delivery devices annually, and will be certified to Class 8 clean room manufacturing. The operation will be highly automated to help cut down on labor costs, which have been rising quickly in recent years. Jabil employs more than 20,000 people in China, at factories in Tianjin, Suzhou and Wuxi.