International Manufacturing Considerations—A Medtech Makers Q&A

By Sean Fenske, Editor-in-Chief
 
With the challenges created by the COVID-19 pandemic, many are questioning whether manufacturing internationally is still a smart strategy for U.S.-based medical device firms. The shortages and shutdowns as a result of the outbreak have caused some supply chain managers to reevaluate their sourcing decisions. Reshoring is the term being thrown around by many and some believe we’ll see a return of medical device manufacturing to the U.S.
 
The problem with this is, even with an increased use of automation solutions, the U.S. simply doesn’t have the capacity to meet that type of demand. Certainly some manufacturing can be returned to the U.S., but there’s undoubtedly going to continue to be a need for international and offshore outsourcing for medical device components and systems.
 
With this in mind, Marc Weinmann, president of VEM Medical, offered his thoughts on this issue as well as a number of related factors involved with the medical device manufacturing landscape post-pandemic. Most firms are still going to need to enlist international manufacturers alongside their domestic partners. As such, Weinmann discusses lessons learned from this experience, viable international manufacturing locations (outside of China), and the benefits that can be realized from such locales.
 
Sean Fenske: Medical device manufacturing was turned on its head in 2020 with the COVID-19 pandemic. How did VEM respond to the crisis?
 
Marc Weinmann: For the last five years, VEM has put much more emphasis on capacity for medical device manufacturing. During the pandemic, we enlarged our cleanroom at our ISO 13485 molding and tooling operation in Thailand and upgraded our measurement and testing equipment. VEM has also invested heavily in our wholly owned tool making shops. Most of our new, high-precision machines are solely used to make healthcare and medical device molds. All these new machines are Japanese, German, or Swiss made.
 
Fenske: Were there lessons learned from the experience that can be carried forward to improve services for customers post-pandemic?
 
Weinmann: We have learned the importance of being extremely flexible on new projects. In April 2020, one of our large medical customers asked us to set up a new production line for their COVID-19-related products. VEM delivered the first approved samples within three weeks and started mass production one week later. The audit and approval processes were completed virtually. This was received incredibly well by both our customers and staff; we will continue virtual audits and remote mold trials post-pandemic.

Fenske: As a result of the pandemic, some in the U.S. are questioning the benefit of manufacturing medical devices and components overseas. How would you respond to this?
 
Weinmann: The medical market is so huge it cannot be fulfilled by U.S. manufacturers alone. There is not enough domestic capacity available to satisfy the demand. Low-cost countries are flexible and have an unbeaten time to market. Our advantage is that VEM is a U.S.-owned company led by a highly experienced international management and engineering team. Combine that with best-in-class equipment and rigorous quality and VEM can deliver solutions for the toughest tooling and molding challenges. We operate five locations across three continents to provide our customers with local manufacturing at the best price point.
 
Fenske: How does medtech manufacturing in Thailand compare to medtech manufacturing in China?
 
Weinmann: The labor costs are lower in Thailand and it is easier to import and export raw material, certain components, and finished goods. There is no government interference in Thailand. In general, salaries in Thailand are about 20 to 30 percent lower compared to China. With the right setup, the import taxes for raw materials and components can be close to zero, which gives the location a great advantage.
 
Fenske: Are there still risk mitigation benefits with global manufacturing in a post-pandemic environment?
 
Weinmann: As we have seen with COVID-19, there can be unexpected events that lead to production stops and lockdowns. Being globally positioned gives us the flexibility to internally transfer production. We avoided extended lockdowns in 2020 by shifting production to other locations. Global manufacturing still has cost advantages. More options and flexibility regarding supply chain management, components, and talent.
 
Fenske: What is the vision at VEM for the future of its medical device manufacturing services?
 
Weinmann: Medtech is the main growth area for VEM. We focus on medium-sized medical device companies and stay on top of the market by embracing new technology including 3D printing and high-end machines. We also implement the latest software and service improvements, such as remote customer care and real-time production monitoring.
 
Fenske: Do you have any additional comments you’d like to share based on any of the topics we discussed or something you’d like to tell medical device manufacturers?
 
Weinmann: The last year has shown us that having 100 percent production in China can be dangerous and create too many dependencies. Other LLC countries (e.g., Thailand, Mexico, Eastern Europe, etc.) are starting to be recognized for more advantages like labor cost, import duties, and government regulations. In my opinion, Eastern Europe is the next region for affordable manufacturing and a medical device manufacturing growth market.

Learn more about VEM Medical >>>>>