Manufacturing Returns to United States
by mfontanazza on August 4, 2011
|Five international manufacturing locations fell into The Boyd Company’s list of 55 sites. San Jose and Maquiladora were among the lowest cost locations.
|The U.S. medical device manufacturing
locations with the highest operating costs are in California and the nearly tied bottom three are in Kentucky and South Dakota.
Medical device companies have a lot to think about when choosing a site for a manufacturing facility. Although many manufacturers have opted for low-cost offshoring options, a recent study conducted by site-selection consulting firm The Boyd Company, Inc. (Princeton, NJ) predicts that thousands of final assembly and quality control jobs will be returning to the United States from China, India, and the Caribbean over the next 10 years. Factors for the anticipated influx of domestic manufacturing include security concerns related to patents, counterfeit products, and piracy, as well as heightened FDA scrutiny.
San Jose, Costa Rica is the heart of medical device manufacturing in Latin America. It had the second lowest annual operating cost among the 55 manufacturing locations included on the list. Companies that have manufacturing facilities in Costa Rica or Mexico include Medtronic, Boston Scientific, Baxter Healthcare, and Abbott Vascular. They’re often lured by lower operating costs and the tax incentives of free-trade zones.
Within the United States, Minnesota—more specifically, the Minneapolis-St. Paul region—has long been a key hub for medical device manufacturing. However, the Twin Cities are being given a run for their money by nearby cities such as Rochester, MN; Sioux Falls, SD; Madison, WI; and Kalamazoo, MI. Out of the 55 surveyed locations, Sioux Falls also has the lowest annual operating cost at about $22.6 million.
What Could Hurt U.S. Medical Device Manufacturing
- Healthcare reform legislation: 2.3% excise tax on medical device manufacturers.
- Cost of device approval process is responsible for more than 75% of the cost to take a device from concept to market, according to Stanford University.
- FDA approval takes about two years longer than similar product reviews in Europe.
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