Frank Celia01.10.07
Uncertain Waters
As the Device Industry Continues to Change, Smaller Machining and Laser Processing Companies Embrace Innovation to Serve Customers
Frank Celia
Contributing Writer
If contract service providers can be seen as pilot fish that swim alongside the great white sharks (OEMs) of the medical device industry, then it is no great stretch to say a feeding frenzy is underway. Our nation’s aging demographics and the prevailing rate of technological advancement all but ensure a rosy future for the big players (as long as healthcare continues to receive adequate funding, of course). To carry the metaphor further, though, the prosperity of the smaller fish may prove less certain. Foreign competitors and other rivals cruise these waters. Hungry fish that once called the auto industry home, for example, are scouting for better territory. Smaller companies that survive and thrive in this environment do so by resolutely embracing innovation, vigorously attacking new markets and confronting jobs that put their skills to the utmost test.
Machining and Laser Processing
The smaller outsourcing providers that serve the OEMs in the medical device industry tend to fall into the category of either machining or laser shops. Some perform both kinds of services equally, but usually one predominates. Companies focusing on laser jobs tend to be younger and fewer in number than operations that focus primarily on machining.
Until the last decade or so, lasers were viewed as too futuristic and high tech to play a substantial role in manufacturing and, thus, were used mainly only on prototypes, if at all. Now lasers are understood as useful in a wide range of manufacturing processes.
Above is the LaserSharp digital converting module integrated with roll to roll material handling equipment. The technology is said to be an improvement over hard tooling for two-dimensional jobs. Photo courtesy of LasX Industries, Inc. |
Both types of contract manufacturing essentially aim to do the same thing—that is, to transfer energy to a material under some form of control. Viewed this way, a laser processing system closely resembles any generic machine tool. They are both used for cutting, welding, surface heating, bending melting, alloying, cladding, texturing, roughening, marking and cleaning. The only real difference is a laser beam is considered a non-contact, non-wearing tool, and, therefore, lasers generally are seen as more effective for smaller-sized jobs that require a high degree of suppleness and versatility. Otherwise, the two systems are essentially a means to the same end.
Many providers alternate bet-ween lasers and traditional machining, depending on the needs of their clients. Tech-Etch, Inc. of Plymouth, MA mainly performs etching, which is a way of converting metal with acid. But sometimes, laser cutting is the better option. “When you get to the thicker metals, etching is not that good,” says company President George Keeler. “The tolerances you can get with etching are a function of the thickness. With laser cutting, you can get much tighter tolerances with thicker materials.” However, he adds, lasers are not as economical as etching, because lasering takes much more time. “In etching, you etch whole sheets of parts at one time, like making postage stamps,” he said.
Lasers processing is seen as a burgeoning market. Peridot Corp. of Pleasanton, CA was started in 1996 by two people—Patrick Pickerell and Debra Van Sickle—with just a few hand-operated machines. The company specialized in small, precision metal parts. A decade later it has sales of $10 million a year and 60 employees—and lasers have played a big part in that growth. “When we started investing in laser equipment, it really opened up a vast untapped market for us,” Pickerell said. “We have probably spent close to a million bucks on new laser systems in the past couple of years.”
Nevertheless, the old-fashioned machining techniques are still vital to the device industry. For example, in the relatively new and growing field of spinal implants and surgery, all of the devices and instrumentation are converted using traditional machining methods, noted Pickerell.
A Changing Environment
The device industry and healthcare in general are undergoing some profound changes. Surgeries are becoming less invasive and devices smaller. Drug and biotechnology treatments obviate the need for some devices but, at the same time, increase the need for drug delivery devices. Percutaneous and endoscopic techniques are paving the way for the less-invasive trend. Yesterday’s surgery scalpel is being replaced by tomorrow’s actuating arms, articulating cannulae and the various catheters and probes that can perform more than one function. These new instruments are guided through the body by remote, screen image or robotic control.
Because such technologies take much of the trauma out of surgery, hospitals become less necessary, and clinics and ambulatory surgical centers are springing up to take their place. Diagnostic tests that once required a laboratory setting will be performed at home and monitored over the internet or by wireless connections.
Co2 lasers are useful for prototyping applications and for cutting thicker materials to precise specifications. Photo courtesy of Tech-Etch, Inc. |
“Our customers see us as someone who will attack projects that no one else will touch, difficult projects that others have passed on because they are out of their little comfort zone,” said Pickerell. “We are willing to undertake them. If we have to, we will work with the factory we bought the equipment from to come up with whole new [manufacturing] processes.”
A job Peridot frequently is asked to perform is laser welding marker bands on trocars. “When these devices are snaking up through a person’s body, the stainless steel trocars do not show up well under the surgeon’s imaging. However, a platinum marker band will show up better, so [the surgeon] can see where that device is positioned in the body.”
Some companies have gained access into other markets simply by deeply understanding their own. For example, Technical Innovations, Inc. of Brazoria, TX specializes in making capital equipment for cutting tiny holes in catheter tubing. “In doing that, we gained a very good understanding of cutter geometry, being able to generate different types of tip geometries for specific applications, and so on,” said Scott Thompson, manager of sales and business development for the company. “And this just led us to offer our services to any company that needed cutters. One of those markets happened to be tissue cutters.” Now the fastest growing sector of the company is providing instrumentation for cutting bodily tissue, for cardiology, oncology and biopsies. “One of the big industries we serve is hair transplant,” Thompson added.
The changing needs of manufacturers also mean that companies must spend a great deal of time perfecting manufacturing processes, which may change from job to job. This can translate into devoting increased time with equipment vendors to design new production methods. Or it can mean designing their own equipment from the ground up, as in the case of Waukegan, IL-based Laserage Technology Corporation, which designs its own laser systems.
Daniel Capp, director of sales of development for Laserage, explained that by going the extra mile and designing its own lasers, the company gets exactly the kind of system it wants at a much more reasonable price. “We have customers who want very specific parts,” he said. “If there are enough parts needed a year, we may combine one of our lasers with a tooling system we have designed as well, and combine those two systems together with some kind of computer control between them.” If the manufactured part is discontinued, that laser system often is employed in some other manufacturing function, he added.
As always, innovation is a two-way street, not only flowing from OEMs to contractors but in the other direction as well. For instance, the production of two-dimensional shapes from sheets or rolls traditionally has been accomplished by flatbed or rotary dies. LasX Industries, Inc. in White Bear Lake, MN, however, seeks to challenge this tradition by convincing industries to employ “laser digital converting technology” that can process intricate, high-technology two-dimensional shapes without the need for tooling. The laser modules are designed to be integrated into existing sheet or web handling systems. Thomas J. Daul, precision medical converting manager for LasX, said digitial converting is enabling technnology becasue it can process small features close together due to the non-contact nature of the laser processing.
“The key thing with going with digital converting is you do so many processes at the same work station, in either a continuous or intermmittent mode,” he explained. “No matter what you want to do, perforate, kiss cut, score, through cut, you can do that all at one work station.”
New Materials Present Challenges
One of the major challenges facing these companies is continuingly keeping abreast of how to handle developments in new materials, or the so-called “exotic” materials and combinations of the same. “There are always new materials coming out,” said Thompson. “We have a lot of experience and knowledge in dealing with every type of material that catheters are made of.”
The trend he has seen in the past several years is OEMs seeking to combine materials in the same device. “Braided tubing, for instance, or stainless steel and plastic,” he noted. “Tubing that has shrink tubing on top of it, both made from two different kinds of materials. Those kinds of things are a challenge. And what you learn from one material does not necessarily translate to another, especially when you are cutting holes. So what we have is a general foundation of experience; we know where to start. That is one of the things we offer to our customers.”
David J. Ehlers, director of business development at Metal Craft Machine and Engineering, Inc. in Elk River, MN, which manufactures instrumentation for the orthopedic and spinal industry, also pointed out that a wide range of newer materials are being utilized by the device industry. “Different blends of titanium, plastics as strong as steel components…There are lots of different ones out there,” he said. Recently his company worked on a type of bone screw designed to dissolve in the body after a broken bone heals, he said, and it presented a host of challenges. The screws needed to be protected from water and extensive precaution had to be taken with packaging, for example.
Prototyping Offers Competitive Edge
Implicit in the increased level of innovation occurring in the medical device industry is the need for more experimentation, and that makes for a growing market for prototypes of all sorts. If an OEM is considering manufacturing a part in high volumes using a stamping tool, that company will have a strong desire take a careful and diligent look at that product before spending $100,000 on a new stamping die.
“That company wants to get some parts out ahead of time to show the customer,” said Keeler of Tech-Etch. “They come to us and ask us to etch [a prototype] or cut one out by laser. We can take a drawing and in a matter of days get out a prototype that they can look at.”
The prototype is used to justify the expense of the tooling. To make even small changes to the product after the die is built would entail building a brand new die tool, and companies would rather avoid that expense, if possible, Keeler noted.
Almost all contract manufacturers offer prototyping services to their clients these days. In itself, prototyping is not seen as a significant profit center, but offering it keeps a company aware of the latest advancements in its field, according to Pickerell. “We target industrial design and product development because those people are working on things that won’t be in the marketplace for five or 10 years,” he explained. “Catching that stuff at the very early conceptual phase won’t make you a lot of money today, but it does put you at the very beginning of the cycle. If you are patient, down the road that can be very lucrative.”
Multipurpose Machines
The trend of medical devices that perform more than one function—a heart stent that releases medication to help reduce blood clots, for example—is echoed on the factory floor by machines that are designed to perform more than one function simultaneously. Such equipment might mill in turn in one step, for instance.
Although these machines are more expensive than mainstay tooling, they are becoming increasingly popular because, in the long run, they save money. In device manufacturing, one of the most expensive things you can do is move a part from one machine to another—it eats up time, adds labor costs and lowers quality, making tolerance goals tougher to meet and increasing the risk of an accident that could damage the part.
“It saves time, there is less handling and it is a lot easier to do ‘lights out’ machining, which means you don’t have to attend the machine,” said Ehlers of Metal Craft. “This really helps us address the manpower issue,” he added, explaining that one of the toughest parts of his job is finding employees skilled enough to run today’s complex machinery.
Another big challenge for smaller companies is deciding which machines to purchase, because no one is completely sure what OEMs will ask for next. “My customers are coming to me to provide more than just laser processing,” said Steve Iemma, president of Accu-Met Laser, Inc. in Cranston, RI. “They may knock on the door for laser service, but by the end of the conversation they want to know if I can purchase materials, do conventional machining, finishing, electropolishing, whatever. My biggest challenge is equipping Accu-Met so I can offer those service and integrating them into the company.”
Competition Looms
Engineers and salespeople at many machining and laser processing firms believe competition from foreign countries is a concern, especially for the more established components that OEMs need in high volumes. “On existing parts, ones where OEMs are just replenishing their shelves, they are sending a lot of that work overseas,” noted Ehlers. “It is really pinching into our market share. But when it comes to the newer parts, the newer designs and launches, we still pretty much have a lock on that market.”
In addition to competition from other countries, many shops are facing increased rivalry from homegrown operations, as manufacturing orders in other sectors of the American economy slow down. Metal Craft works primarily in the orthopedic market, which has enjoyed consistent double-digit growth over the last several years. Up until recently, merely keeping up with new business was a challenge for the company.
“This past year, though, everything has slowed down because we are seeing a lot more competition coming into the arena from the automotive industry,” he explained. “Shops that were catering to the auto industry, with the demise of a lot of opportunity in that field, are looking for work and are moving into the medical arena.”
To stay competitive, not only must contract service providers come to grips with the innovations of today, but those that will occur five or 10 years down the road as well. One way to stay prepared is by paying careful attention to where venture capital flows. Located near the heart of Silicone Valley, Peridot is especially well placed for keeping track of the latest technology trends. “We are lucky because so many of these startups and venture capital firms are located here,” said Pickerell. “They all feed on each other, and on the high tech industry as well…Out here, there are a lot of ‘think tank’ type companies that will lease a building with a bunch of workspaces and let startups come in and tool around to see if they develop an idea worth buying. We just hang around in the lobby of a place like that, looking for crumbs.”