The TPR interviewed Jack W. Sparacio, President & CEO of Plastics. Engineering and Development, Inc., or PEDI, and Sales Manager Dick

Transcription

1 The TPR interviewed Jack W. Sparacio, President & CEO of Plastics Engineering and Development, Inc., or PEDI, and Sales Manager Dick Manson. PEDI is a full-service contract manufacturing company specializing in insert molding, over molding, and also implantable manufacturing using PEEK, of plastic parts primarily for medical products but also for other industries. What is your company niche, and what does your company do that Jack W. Sparacio, President & CEO of Plastics Engineering and Development, Inc. is notable, unique or different? In addition to our core competency in high tolerance plastic injection molding we have successfully executed a strategy to become a turnkey contract manufacturer. PEDI is unique in that we are one of, and maybe the only, injection molder in Southern California manufacturing implantable parts using PEEK (polyetheretherketones) material. There are other companies doing it in the Midwest but on the West Coast we may be the only ones molding that material. For years implantables have been 90% machined but there is a cost savings to injection molding them. Plus the quality is improved since machining leaves edges and burrs on parts. Despite being very difficult to work with PEEK is becoming a viable alternative to other implantable materials. It requires extremely high temperatures to mold as well as specialized tools. High temperature requirements and the use of abrasive materials do require upgrades in the steel used in molds. It is also very expensive, around $1,500 per pound compared to other PEDI Copyright 2008 The Tooling Press Release 1

2 plastic at $1-4 per pound. We have taken steps to become a technological leader in injection molding with PEEK - from extensive on-site training with Novion, the material manufacturer, to acquiring specialized equipment and hiring toolmakers with PEEK expertise. We ve been in Carlsbad since our inception, for more than 20 years now. We re not a young startup and we ve evolved as a company, moving more toward the medical device and life sciences industries (80% now) so that we are not too broadly focused. When you consider the Los Angeles basin, Riverside and San Diego County, it s a Mecca of medical device firms, so it makes sense. Due to our proximity to the region, there is a lot of opportunity for us. We try to differentiate ourselves, too. We provide a turnkey approach to our customer base. 25% to 30% of our tooling has been built in China, but most tooling for the medical industry is built right here in the U.S. Medical companies don t want to go off shore due to FDA requirements, so they tend to stay here. When and how did you get into the industry, what attracted you to it? PEDI began injection molding in 1985 and began focusing on medical in the late 90 s. Dick I got into the plastics business in 1970 and have been in it ever since. That was back in New Jersey. I kept traveling out to California for business and thought it would be a great place to live. I wanted to retire here and decided why wait? I ve been on the custom side of the business since I started. In the early years, before I came to California, I worked in the packaging side of the plastics business, dealing with all the major consumer products companies such as P&G, Colgate and Lever, as well as Avon and Estee Lauder. When I came to California I ended up going into business for myself for 3-1/2 years as a headhunter. Then I got an opportunity to get into MIM, PEDI Copyright 2008 The Tooling Press Release 2

3 and took a position as Vice President of Sales and Marketing for a company that manufactured small metal products for the medical device industry. At that time, there were only five companies in MIM in the country. It s a very interesting technology and has its place, but I m not sure the market can withstand all the people who have now gotten into it. I see some consolidation happening in that industry, but I have been away from it for more than seven years, since joining PEDI. Jack I am not an expert in plastics and never have been. My background is basically in manufacturing but also in general management, mostly medical, having worked at companies such as Lang Manufacturing in Everett, WA for seven years where I was President/CEO. I also served as President & CEO of IMED Corporation of San Diego, now part of Alaris Corp. IMED was a multinational manufacturer of intravenous infusion instruments and disposable administration sets for drug therapy. I worked at Advanced Technology Laboratories, American V. Mueller American Hospital Supply Corp. and Johnson & Johnson as well. I met the majority share holder of PEDI on a social basis and we had some mutual acquaintances here in San Diego and he found out that I was thinking of moving down here from Seattle and called me. The rest is history. We talked about trying to grow the business and some goals have come to fruition and some haven t, but that s how it goes. This was in 2001, just prior to 9/11, and things were tough economically. We ve grown the business just about 2-1/2 times what it was back when I started. Relate a notable "best time" for your company. An earlier milestone for the company occurred in 1994, when the company acquired a product called Kirby Markers, a golf course marker that s very PEDI Copyright 2008 The Tooling Press Release 3

4 unique. At that point it was around 15% of our business, and is a proprietary product and very well recognized around the country. It s used on very prestigious courses. Then in 1997, we moved to a 50,000 sq ft plastics molding facility, which was yet another milestone for us. In 2003 our strategic initiative in sub-contract manufacturing proved to be an important milestone. We use a contract company located in Tijuana, Mexico, which is very conveniently located for us and helps us compete on price when necessary. The present is also a best time, with our expertise in PEEK manufacturing for implantables. Similarly, relate notable challenges that your company has overcome. The price increase in resin is always a challenge. Labor costs have also been an issue and we now work with an alliance company in Mexico to offer our customers FDA approved assembly. There was a huge escalation in the premiums for Workman s Compensation insurance during the period and that presented yet another challenge to the business. On the customer side, our work with one company in the respiratory arena and one on the orthopedic side are of note. We provided guidance to their engineers to help make the product more conducive to manufacturing. They don t always understand all of the development processes a product requires, nor what it will take to actually get it produced. We were instrumental in getting their products to market. We insisted on consulting with them about the right materials to use; and we provided packaging ideas and qualified their products for sterilization quality. PEDI Copyright 2008 The Tooling Press Release 4

5 PEDI is willing to help a company get started with a new product, where many other companies won t do that. Some of the companies that we ve worked with did not even know if they would get off the ground to begin with, but we helped them get started and, in turn, they gave us a good education on contract manufacturing. You have to scrutinize the technology that comes into the door to decide what has a reasonable chance in the marketplace. There are a lot of ideas out there, and it can be a risk. When you are working on projects with your customers, what aspects would you like them to better recognize? We d like them to recognize PEDI s quality, reliability and commitment to meeting their needs. We are responsive. Dick s got two full-time customer service reps that work in direct contact daily with our customers on a variety of different issues. Most companies don t do that. It s a service we feel we need to provide as a conduit toward solidifying these relationships. List newly acquired technology, machinery or key personnel (in last year). We are continually upgrading our PEEK manufacturing capabilities with newly retrofitted presses and specialized tools. Additionally, we acquired a micro-molding machine in the last year, new robotics and an additional Sumitomo press for over molding. It s a constant process. We re always looking for new equipment and technology and it happens based on the availability of capital. Personnel-wise we hired Nolan Bedford as our engineering manager in the last year. Nolan previously worked for one of our customers, Sanyo, and is an asset to PEDI s customer base having come from the client side. He has years of experience in both mold making and plastic injection molding so he is very capable. PEDI Copyright 2008 The Tooling Press Release 5

6 Has your company recently expanded? Plans to expand or form partnerships/alliances? We ve expanded our sales force. We ve added people to support what we re trying to accomplish, including engineering personnel. We re looking at expansion of our clean rooms also, but we re expanding within the confines of our factory. As we also stated, we re looking at new technologies and are considering machines that will help us become more efficient and versatile. As for partnerships, we re always looking and would even consider an acquisition if it was good for us, such as micro molding or silicone injection molding, which would enhance our customer base. But we re not planning to expand this building; rather, we would go to another building. Are you involved in any industry organizations or educational programs related to the trade? Jack is a member of SPE Society of Plastics Engineers, BIO-COM (a trade assoc. for the life science industry), and he is an annual participant in the Wilson Sonsini Goodrich & Rosati (WSGR) Medical Device Conference. We attend the MD&M shows and Bio Med shows as well. PEDI Copyright 2008 The Tooling Press Release 6

7 What do you think about changes occurring in the industry due to globalization? How has it affected the way you do business? Due to San Diego s close proximity to Mexico we have successfully utilized a Maquiladora (a low cost factory) in Tijuana, Mexico, to offer our customer an affordable, FDA approved assembly option. We believe China is a minor threat. In order to be successful and be competitive you have to keep looking for ways to improve the technology and continue to strive to make improvements. It s a continuous improvement mentality where you always look for ways to improve efficiency or you re not going to be around. The profile of our customer base, for the most part, wouldn t go to China because they don t have the kind of volume where they can absorb the costs involved. If you are talking about a lot of different small components that have no labor associated with it, there s no need to go there. What will the industry look like in 3 to 5 years? Fewer mid-cap companies due to consolidation. We re seeing more and more consolidations and roll-ups with companies that are our size and larger. You want a national presence, so if you have a company in Boston but you don t have a physical presence on the West Coast, you find ways to partner or acquire them. But consolidations will continue to happen with plastic injection molding companies because many of them want to have a larger presence, a larger footprint. PEDI Copyright 2008 The Tooling Press Release 7

8 Additional Background Information: Number of years in business: The Company was established in Current number of employees: 150 Current square footage: 50,000 Additional locations: None at this time. Website: Types of tools built and/or run: Injection molding, including insert molding, over molding, micro molding and other applications. Industries served: Medical device and bioscience components (80%), electronic connectors, recreation products, consumer products, industrial products, and irrigation parts. CONTACT INFORMATION PEDI Plastics Engineering and Development, Inc Loker Avenue West Carlsbad, CA Ph: Fax: PEDI Copyright 2008 The Tooling Press Release 8