Originally Published MPMN March 2008

REGIONAL FOCUS

Inland Empire Valley Presents a Sea of Opportunities for Medical Industry

Stephanie Steward

In this thriving Southern California oasis, medical device OEMs and suppliers have harnessed a network of resources

The vast valley that stretches from the edge of the San Fernando Valley east of Los Angeles to include parts of San Bernadino and Riverside counties is known as the Inland Empire. Here, medical device manufacturers worldwide can gain easy access to a multitude of suppliers and service providers. Roughly two-thirds the size of Connecticut, the IE—as it’s called on the street and in traffic reports—lends itself to facility expansion, inspires exploration, and encourages industry growth. Already an established hot zone for economic development, medical device OEMs, and other high-tech companies, the IE’s industrial market is expected to further solidify its position as Southern California’s leading distribution hub, according to a 2008 forecast from commercial real estate service provider Grubb & Ellis Co.

Proximity Is Everything

The IE’s prime location is within easy reach of snow-capped mountains, beaches, and Las Vegas. Demetrius Chrysostomou, director of technology at PVA TePla America (Corona, CA; www.pvateplaamerica.com), moved to the Inland Empire several years ago and says that he and several of his European friends have been bit by what he calls the Inland Vampire. Once bitten, he says, you can’t leave.

A lot of people seem to share this sentiment: The IE’s general population has been climbing steadily, reaching 4.1 million in 2007, a 3.3% compound growth rate from the previous year. Much of this population spike can be attributed to affordable real estate rates, which have lured flocks of Southern Californians to the region since the 1950s, when the Inland Empire earned its moniker to distinguish it from the cities closely surrounding Los Angeles.

The resulting available employee base and affordable building space is bolstering the presence of the high-tech industry in the region. “The Inland Empire will continue to be an industrial powerhouse in 2008, benefiting from its close proximity to the ports of Los Angeles and Long Beach, competitive rents, Los Angeles’s under 2% vacancy rate, and available space to accommodate large warehouse users,” according to the Grubb & Ellis report.

The economic and geographic advantages of running a business out of the IE have also garnered the attention of companies involved in the medical device sector. Manufacturers and suppliers who have set up shop in the area include Corona-based Accent Plastics (www.accentplastics.com), Thoro Packaging (www.thoropkg.com), and Tamarack Scientific (www.tamsci.com), as well as Becton Dickinson (Franklin Lakes, NJ; www.bd.com), which has a distribution center in Redlands, CA. The IE’s distribution channels—strategically located rail, highway, and air transportation systems—and affordability are key reasons motivating companies to relocate and expand their businesses within the area, according to the Inland Empire Economic Partnership (IEEP).

“Operating out of this region tends to benefit us because a lot of the employees used to work in Orange or L.A. County and are happy to work in this area so they don’t have to spend as much time on the freeways,” says Roy Hornstein, president of RKL Industries (Corona, CA; www.rkltech.com), which manufactures precision components. “The housing prices are a little less than [neighboring] Orange County [and] in this particular location, we’re close to our primary customer base,” he adds.

Thomas Jenkins, president of HTG—A.C. Hoffman (Riverside, CA; www.hi-tech-group.com), says the company chooses to keep its elastomeric-component molding facility in Riverside because the city has its own public utilities department, which offers lower electrical rates than the Southern California Edison grid in the neighboring county. “It was a major thing to consider because that’s one of our biggest overhead costs. We use a lot of power to heat the presses.”

Referring to Corona as a “mold-heavy area,” Dave Semanik, manager, tooling and engineering for Accent Plastics, says that the Inland Empire’s easy access to all of Southern California’s resources has attracted a lot of component manufacturers and mold makers. “The labor force is here; [we have] access to San Diego [where] we’ve developed a lot of customers over the years; [and] we’re close to L.A. and the Ontario airport, which is 20 minutes away,” he says.

Also helping drive and sustain the area’s advances in manufacturing technology for the medical industry are the presence of Loma Linda University Medical Center (LLUMC); the University of California, Riverside; and the Keck Graduate Institute of Applied Life Sciences (Claremont, CA). Based on research conducted at LLUMC, Optivus Technology (Loma Linda, CA; www.optivus.com) has developed a proton particle accelerator that can destroy cells without causing damage to surrounding tissue, according to the IEEP. Moreover, a constantly growing knowledgeable workforce generated from graduating students is a valuable asset to the area. In fact, in 2006, UC, Riverside debuted a department of bioengineering, intended in part to focus on advancing technologies for medical device development.

A Networking Oasis

Like a modern-day oasis, the Inland Empire is simultaneously a major hub for supply chains and distribution networks and a trading post in which caravans of suppliers and manufacturers can quench their thirst for new ideas and extend the reach of their business. Companies that have already set up camp here have an intimate knowledge of how to navigate the region and capitalize on its resources.

“OEMs more and more are looking for a single provider so they can focus on the design and marketing of products and not have to worry about all the technology that they would have to learn,” Jenkins says. HTG—A.C. Hoffman, part of the Hi-Tech Group of companies, has its customers work with one representative from the company who then coordinates with all of HTG’s facilities to provide exactly what the customer is looking for, enabling a strong supply chain.

Likewise, extrusion services provider ExtruMed (Temecula, CA; www.extrumed.com) coordinated with Extrusioneering, the Southern California company it merged with a couple of years ago, to prune their operations and enhance their strongest capabilities. “One of the first things we decided to do was to look at best practices and synergies between the two facilities,” says Don Centell, general manager. Using a materials shortage as an example of how the merger has benefited the outfit, he says: “We used to scan the globe [for supplies]. Now we can just pick up the phone and they ship it [right over].”

Amidst all the networking and outsourcing opportunities of this established marketplace, however, Centell notes that companies that specialize in niche product groupings—tight-tolerance tubing or balloon tubing, for example—tend to grab up business that larger outsourcing firms don’t have the ability to produce. “You can’t just treat [specialty products] as ‘let’s knock out so many widgets per hour,’” he says. “There’s a much higher skill set that’s required to run the tighter-tolerance products. The [companies] that are doing it right are going to be successful, and the ones that can’t [are] going to fall to the wayside very quickly because [the medical device] industry doesn’t have a lot of patience for learning curves.”

Somewhat ahead of the curve is PVA, which specializes in altering the surface properties of materials without affecting their bulk properties. It uses a clean process of energizing gas into a state of electrical conductivity to modify adhesion characteristics. The company recently developed a process to activate Teflon. According to Chrysostomou, Teflon, or PTFE, has historically been difficult to bond to other materials or to activate permanently using plasma technology. However, its inertness makes it great for use in in vivo devices like catheters. “So, what if you could treat the surface to perform specific functions and still keep its inertness? That’s what we’ve managed to do,” he says. PVA is currently customizing its plasma technology, which is a much greener, cleaner process than conventional wet-chemistry surface treatment methods. “One of our plans for 2008 is to develop a plasma system that is designed specifically for the treatment of catheters and guidewires,” Chrysostomou says.

Cultivating the Future

Having ridden out a series of agricultural booms and mastered suburban sprawl, residents and supporters of the Inland Empire are experienced in helping their economy and businesses flourish. There was a high level of agreement among CEOs that the climate for business expansion is positive at city and county levels, according to a Business Press CEO Insights Study conducted by Wilkin Guge Marketing. “More than half agreed positively that efforts by their city were leading to business expansion, compared with 13% who held a negative opinion. Just over 58% felt the counties where their businesses are based are doing a positive job at promoting business expansion.”

In addition to these regional efforts to cultivate business, companies in the IE are staying in tune with the medical device industry’s current trends. Accent Plastics, for example, is looking toward employing more green manufacturing processes, and HTG is branching out into using more organic materials.

But branching out in the IE isn’t limited to a company’s capabilities; there is plenty of space in which to expand their facilities. “Growth at Hoffman Engineering has doubled in three years and will double again in probably two more years. We have the room,” says Jenkins. HTG, Accent Plastics, and ExtruMed all have plans to either add machines or expand their facility floor space within the next year. “The medical [device] industry is a strong, steadily growing industry, and I think the value proposition that the Hi-Tech Group has put together in the quality of our products is allowing us to grow like this,” says Jenkins. “We have the right mix of companies at the right time and business is good.”

Copyright ©2008 Medical Product Manufacturing News