Why Medtronic Likes to Go Dutch

edtronic first came to the Netherlands 34 years ago when the Minneapolis-based medical device company was looking for a European base. The company grew steadily there and recently opened its largest distribution center in Heerlen, in the province of Limburg.

        The Netherlands, selected by the Economist Intelligence Unit in March as the projected best place in the world to do business over the next five years, is the site of pronounced new investment in the medical device sector.

        Medtronic’s 323,100-sq.-ft. (30,000-sq.-m) facility will distribute medical devices such as pacemakers and defibrillators, neurostimulators to treat Parkinson’s patients and pumps that help to control insulin levels. Medtronic chose the Trilandis business park location because of its central location in Europe, infrastructure and the region’s highly qualified work force. The facility, an investment of 30 million euros (US$34.6 million), employs more than 700.

        Hans Wijnands, Medtronic’s regional director for the Benelux and Nordic countries, says Medtronic’s founder, Earl Bakken, chose Limburg in 1969 for its first European facility.

        “In the course of subsequent years, distribution has become more important,” Wijnands says. “We had to look for a new building, and we decided to build a new center in the same neighborhood. Limburg is a central position in Europe and has very good infrastructure. This particular site in the Netherlands has access to three to five airports, and Brussels and Dusseldorf are just an hour drive.

        “Being in the Netherlands in general guarantees finding qualified personnel,” he continues. “Most are multilingual, including English. In this corner of the Netherlands, they know German. Since we are in the southwest corner of the country, we are very close to Belgium and we have many people speaking French.”

        Medtronic did look at other regions, including Ireland, for the facility, but Wijnands says the advantages to staying put were overwhelming.

        “We asked ourselves, ‘Is there a better location?’ and obviously, the answer is no.”

        Also in the Netherlands, Vitatron, a Medtronic subsidiary since 1986, opened its new world headquarters in Arnhem. The new building houses Vitatron’s clinical research and deve lopment department, which develops implantable medical devices for cardiac rhythm disorders. Vitatron chose Arnhem for its central location between the Randstad and the Ruhr.

        “We wanted to establish our new headquarters in a city that has a professional image that is complementary to our way of doing business,” says Rob ten Hoedt, vice president and general manager of Vitatron.

        The southeastern corner of The Netherlands, as a crossroads of Dutch, German and French culture, is attractive to high-technology firms. About 40 medical device companies are in the region, employing 2,500.

Costa Rica boasts a blossoming cluster of medical device manufacturers. More than 5,000 in this small Central American country work in the sector. Companies include some of the biggest names in the industry: Abbott, GlaxoSmithKline and Baxter, among others.

        Novacept is the latest medical device manufacturer to locate in Costa Rica, after having used a contract manufacturer there until now.

        The Palo Alto, Calif., company will manufacture its NovaSure product (used to control menstrual bleeding in pre-menopausal women) in a 26,000-sq.-ft. (2,415-sq.-m.) facility that will employ 200 within two years. The facility is under construction at Global Park near San Jose, and will be operational in January 2004.

        “Five years ago, I did a global search for an offshore site that would take care of our needs relative to making a disposable medical device that would be very labor-intensive,” says Donald R. Nathe, Novacept’s vice president, operations. Nathe’s search subsequently took him to Malaysia, Singapore, China, Mexico and Hungary.

        “While I was waiting to get information back from these countries, CINDE

        “Labor rates were certainly a consideration,” he says. “China was cheaper and Mexico was comparable, but Singapore and Malaysia were more expensive. Hungary was slightly less expensive. So, it came down to Hungary, China, Mexico and Costa Rica.”

        Eventually, Costa Rica won out due to its proximity to California and its high literacy rate (95 percent). Costa Rica’s historically low employee turnover rate and relative political stability were other factors, he says.

        And, while flying from California to Costa Rica usually means a change of planes in Texas, Nathe says the San Jose airport is much improved over the last few years and describes it as a “very classy place.”