arpenteria, Calif.-based Helix Medical is following the lead of its customers with its new manufacturing facility in Costa Rica. Founded in 1984, Helix Medical is a manufacturer of thermoplastic molding and extrusions, complex catheter systems for the medical device, pharmaceutical, biotech, and in vitro diagnostic industries.
"Our customers are establishing major manufacturing facilities for the final assembly of their medical devices in Costa Rica," says Jorg Schneewind, Helix Medical CEO. "There was a need to go closer to our customers with our component manufacturing and assembly."
Schneewind declined to identify Helix Medical's customers in Costa Rica, but several major medical device manufacturers have opened plants in the Central American country over the past couple of years, including St. Jude Medical and Moog Medical Devices.
Schneewind says Costa Rica's infrastructure, its education system and work force, and its stable political environment were other factors in Helix Medical's decision. The company is investing more than US$4 million in the new facility in the Coyol Free Trade Zone and Business Park in Alajuela, Costa Rica, just outside of San José. St. Jude, Moog and Hologic are among the medical device companies already located there.
Helix expects to begin production during the first quarter of 2012.
Search Encompassed Latin America,
But Market May Extend Farther
Before choosing Costa Rica, Helix Medical considered several sites in Latin America. The company is a division of Germany-based Freudenberg Group, which has several facilities in Mexico. Sites were considered in Mexico as well as in the Dominican Republic and Puerto Rico, where several of its customers have final assembly facilities. The company also looked at several locations within Costa Rica.
"We benchmarked several industrial free trade zones," Schneewind says. "There are four or five in Costa Rica that are offering space and buildings. We happened to pick one that offered a couple of advantages on a smaller scale."
Helix will be hiring 100 for the new plant. Schneewind says there will be two levels of employees: engineers who will be trained in Helix Medical's U.S. facilities on specific technologies and processes, and local operators who will be trained on-site by the engineers.
Schneewind praised CINDE, Costa Rica's economic development agency, for providing Helix Medical with access to professional services to help it benchmark locations in the country.
The Costa Rica plant will initially serve customers in Central America and other Latin American regions, but Schneewind says the facility likely will eventually serve customers in the U.S. and Europe. Helix already has six manufacturing facilities: three in the U.S., and one each in Ireland, China and Germany.
Helix Medical employs 600 at its current manufacturing sites. Schneewind says the company does not have current plans for any other new plants, but expects continued strong organic growth at these manufacturing sites.
"We think the Chinese market is offering additional growth, so we expect our business in China will require expansion in the not so distant future," Schneewind says.
Much of Helix Medical's growth to date has come through acquisitions by the Freudenberg Group.
The company's most recent expansion was in Germany, where Helix Medical Europe began production in February 2010 at a 55,000-sq.-ft. (5,109-sq.-m.) facility located in Kaiserslautern, within a major Freudenberg nonwovens manufacturing complex. Schneewind says production at the site has progressed well and its customer base is increasing.
"The medical device industry will continue to grow, but over time, cost pressures will kick in," Schneewind says. "The share of GDP that the entire health care system has is 17.6 percent, and this cannot continue to grow forever. As increasing cost pressures kick in, it will be necessary to position global facilities to offer cost reductions."