July 14, 2008
Originally Published MPMN July 2008
REGIONAL FOCUS: South Florida
Medical Device Industry Has Bright Future in the Southern Sunshine State
Two flourishing manufacturing hubs are making waves on the South Florida coasts
Renowned for its plentiful orange groves, agreeable climate, and endless sea of palm trees, Florida offers a great deal more than just sunshine and sand. Although it derives much of its economic success from tourism, thanks to Disney World and the bustling cruise industry, Florida has fostered a thriving manufacturing sector—and not where you might expect.
Most OEMs’ thoughts probably turn to the Central Florida High-Tech Corridor or perhaps the Orlando area when associating the state with the medical device industry. But South Florida is quickly gaining traction as a medical manufacturing hotbed. Nestled on each of South Florida’s coasts are suppliers surrounded by several OEMs and supported by numerous seaports, airports, and what seems like a surplus of skilled workers.
Taking the Initiative
In addition to the obvious perks of abundant sunshine and beautiful ocean views, Florida features several incentives for high-tech business development. With no state personal income tax and a corporate income tax of 5.5%—lower than that of various other medical device hubs such as California and Massachusetts—Florida is one of the most tax-friendly states in the nation, according to Enterprise Florida (Orlando, FL; www.eflorida.com), an organization dedicated to bolstering statewide economic development. Furthermore, Florida has no sales tax on the purchases of raw materials incorporated into a final product for resale, no sales tax on R&D equipment, and no sales and use tax on products manufactured or produced in Florida for export outside the state.
And that’s not all. The state government has furthered its commitment to nurturing the high-tech industry in the state through other initiatives. In 2006, the government allocated $200 million for the Innovation Economy Incentive Program, formed with the intention of creating “hubs of innovation.” There also exists the Economic Development Transportation Fund, which can grant local governments up to $2 million for infrastructure improvement or construction as it relates to fostering new or expanding industry.
Because of the lucrative nature of many high-tech industries, such as medical device manufacturing, Enterprise Florida and other economic development organizations in the state are banding together to boost this sector. Although the organization originally focused its life sciences push in the Central Florida High-Tech Corridor, it is now branching out to help facilitate medical device and life sciences growth in other areas such as South Florida, recognizing the potential that this region holds as well.
Not Just a Nice Place to Live
Doug Gyure, vice president of S4J Manufacturing Services Inc. (Cape Coral, FL; www.s4jluer.com) learned firsthand about the state’s support for industry when he moved his company to Southwest Florida in the 1990s from New Jersey a few years after his father, the company’s founder, relocated to the region to enjoy the warmer climate.
Specializing in the manufacture of luer components, connectors, and fittings, S4J found a home in Cape Coral, which is located about two hours south of the High-Tech Corridor. Featuring its own miniature medical manufacturing hub, the Cape Coral–Fort Myers–Naples area is receptive to industry. And it’s not a bad place to live either: all three were named to Relocate-America’s Top 100 Places to Live list in 2008.
Gyure admits that he was lucky because the majority of his 12-person staff decided to move with the company, enticed by the promise of nicer weather and lower housing costs than New Jersey. Further enabling a smooth transition was the state and county support, he says. “I know the economic development people very well in this county; I never knew if we even had economic development in New Jersey,” Gyure says. “There is so much involvement—the local government wants you here. They want to know what they can do to help out.” Through government support, Gyure actually obtained a grant that paid for his company’s ISO certification. Inspired by the help he has received, Gyure is now active in his county’s economic development program.
Contributing to the area’s development are educational facilities tailoring their offerings to suit the needs of the surrounding communities. Gyure points to Florida Gulf Coast University (Fort Myers, FL; www.fgcu.edu) as an asset to the area. The president of the 10-year-old university has reached out to the community for feedback as it develops curricula that can provide students with a career path that will let them thrive in the area they call home, according to Gyure. He adds that his county also has several comprehensive public high schools that have a half-day filled with standard school subjects and the other half is devoted to concentrating on such trades as manufacturing engineering, which gives teens a base knowledge for future career endeavors.
“Before Mexico became the place to go, people came here [to Florida] as one of the sources to get lower wages. But we lost some big manufacturers over the years that went to Mexico,” Gyure says. “That just helped the area mature a little bit and recognize that. . .stable, higher-paying jobs raise the area.
“We don’t have the sophistication of New York, L.A., or even Miami, but we have an employee base that is anxious; there’s a good attitude out there among the applicant pool that is looking for higher-end jobs than what are typically offered in the area,” Gyure adds.
The Cordis Connection
Situated just a two-hour, 70-mph drive straight across Alligator Alley is the more-prominent South Florida medical manufacturing hub. And at the epicenter of this expanding southeastern Florida medical device cluster is Cordis Corp. (Miami Lakes, FL; www.cordis.com), the Johnson & Johnson company targeting interventional vascular medicine and electrophysiology. Founded in 1959, Cordis has had a profound impact on industry in the area surrounding its Miami compound. As it has grown in size and prominence, so has the local supplier base. Companies hoping to cash in on proximity to the OEM over the years have sprouted up all over southeastern Florida, sprawling up the coast from Miami through such areas as Fort Lauderdale, Boca Raton, and West Palm Beach.
As the backbone of the burgeoning medical device presence in southeastern Florida, Cordis has served as a beacon of opportunity in the area for companies equipped with the skill set to serve the high-tech industry. However, it has also sowed the seeds for a blossoming supplier base through its history and personnel.
Small Parts Inc. (Miramar, FL; www.smallparts. com), a distributor serving the medical device industry, among others, is one such company to benefit from Cordis’s influence—it was established by William Murphy, the founder of Cordis. “As [Murphy] went about inventing all of these products, he found that he was ending up with a garage full of extra parts,” recounts Steve Costello, senior buyer for Small Parts. “Along the way, he figured out that there are a lot of entrepreneurs and inventors out there that have the same problem.” From this discovery, Small Parts was originally born in 1963 to serve organizations and companies that require small quantities of parts for sample or prototype production.
Despite being a small business and specializing in, as the name implies, small parts, the company is big in scope. Small Parts recently moved to a new facility to house its rapidly growing inventory of more than 100,000 products, which includes everything from precut hypodermic, polyimide, and PTFE tubing to luer fittings, O-rings, and textiles.
Cordis has essentially caused a ripple effect, Costello observes. Cordis employees have helped cultivate the area as a small medical device hub by often bringing their niche knowledge and expertise to supplier companies. Costello notes that several Small Parts employees have even worked for Cordis.
The situation is mirrored at other manufacturing plants in the area as Cordis backgrounds frequently serve as a common thread among employees.
Mark Two Engineering Inc. (Miami; www.marktwo.com), a medical device and aerospace contract manufacturer and engineering firm specializing in implants, was cofounded by a former Cordis employee.
Equipped as a vertically integrated one-stop shop, the company has thrived over the years because of the local presence of Boston Scientific and Baxter, along with Cordis. However, it has extended its reach beyond the Florida border; an estimated 70% of its business is with out-of-state firms. Securing a sound customer base outside of Florida in addition to its regional business frees Mark Two from dependence upon the local OEMs. However, some OEMs’ fading presence could have benefits as well as drawbacks.
“In this south[ern] Florida region, there are a lot of people that are very skilled at making precision parts for [the local OEMs], and it has been very economical for companies such as ourselves,” says Greg Murphy, CEO of Mark Two. “Some of the major companies are starting to move out. . . When this happens, you’re going to have a workforce that really understands this stuff.”
As both Murphy and Costello point out, the boon of southeastern Florida, like southwestern Florida, is the readily available trained workforce that seems to be constantly revolving. Feeding that worker pool is the high-tech emphasis at several local universities. Murphy cites the University of Miami (Coral Gables, FL; www.miami.edu) as contributing to the high-tech education of the local masses along with Florida International University (FIU; Miami; www.fiu.edu), for which Mark Two has a presence on an engineering program development committee. FIU has an emphasis on biomedical engineering while the University of Miami offers expertise in areas such as neuroscience, orthopedics, and cardiovascular devices. “They’re looking for local industries to support their graduates,” Murphy says. “A lot of the engineers have been raised here. . . and want to stay.”
“We have our own little pocket down here, so in a sense, we are sort of like a mini high-tech corridor,” adds Cheryl Box, company president.
Copyright ©2008 Medical Product Manufacturing News
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