Changing Lanes in Michigan

What do contractors do when the industries they serve are on the skids? Just ask Michigan's auto parts suppliers, whose ability to stay on the road is threatened by the collapse of Detroit's Big Three automakers. To compensate for declining orders from General Motors, Ford, and Chrysler, auto parts vendors are increasingly jumping on the medical device bandwagon, eager to make the transition from steering wheels to stents.In the midst of the worst economic crisis in decades, which has taken its toll on virtually every market sector, the healthcare industry is continuing to flourish. Nationwide, the medical device industry racks up revenues of $88.8 billion a year and is expected to grow nearly 9% a year through 2015, according to San Jose-based industry research company Frost & Sullivan. And Michigan, home to the U.S. auto industry, boasts more than 130 medical device manufacturers, with many more hoping to catch a ride.Take Omega Plastics (Clinton township, MI), a plastic injection molder that provides prototype and low-volume contract manufacturing services. In the past, half of Omega‘s business came from the auto suppliers, but today, its medical device services have jumped to one-quarter of the company‘s business.Aware that many vendors are seeking to diversify into the medical device manufacturing sector as a cushion against losses stemming from falling car sales, Oakland County, MI, sponsored a seminar last April for Tier 1 and Tier 2 automotive suppliers with an interest in medical device manufacturing. Part of the greater Detroit metropolitan area, the county advised participants on how to break into the medical device sector, license IP, and become acquainted with FDA regulations.While auto parts suppliers are used to producing quality components, medical device manufacturing requires a much greater level of precision. In addition, production volumes for medical parts are typically lower than those for car parts, and the cost of retooling to produce medical devices is high. Stephen Rapundalo, president and CEO of the Ann Arbor, MI-based trade organization MichBio, notes, “It‘s a big learning curve for [auto parts suppliers], but once they can master that, then they can usually make a pretty good go of it.”Even Delphi Corp., the huge automotive supplier that filed for bankruptcy in 2005, has been attempting to nurse itself back to health via the medical device market. Founded in 2002, Delphi Medical Systems Corp. is expanding its services, manufacturing an array of devices from medicine pumps to portable oxygen tanks. While medical is still a very small part of the company‘s overall offerings, Delphi expects it to grow rapidly in the next three to five years, according to Al Hoffman, director of sales and marketing. In addition to having expertise in the areas of fluidics and optics, the company claims that its ability to achieve system integration and other capabilities enables it to provide moderate-volume, high-complexity assemblies for the medical device manufacturing industry.