Focus, Health Care, and Manufacturing

Autocam Medical expands its presence

Acquisition of Tennessee firm should bring combined 2015 revenues to $100M.

December 12, 2014
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Autocam medical
Autocam’s Chad Tyndall, left, and Dennis Weihl check the settings on a coordinate measuring machine. Photo by Johnny Quirin

A Grand Rapids-based medical device company is looking to expand into the contract/manufacturing market by adding to its customer base with the acquisition of a Tennessee-based manufacturer.

Autocam Medical Devices LLC, a contract manufacturer of high-performance parts for medical device applications, announced this month the completion of the cash transaction acquisition of Tennessee-based Southeastern Technology Inc., which was effective Nov. 30.

Southeastern Technology will operate under Autocam Medical as the Southeastern Technology Division and maintain its current leadership and employees, according to a press release. Autocam is not disclosing the transaction amount at this time, but the projected sales for 2015 of the combined companies is anticipated to reach approximately $100 million.

John Kennedy, founder and chief executive officer of Autocam Medical, said the addition of Southeastern Technology will grant Autocam Medical a new strategic regional presence, key customer relationships, and exceptional talent and technology.

“SET has a highly competent and engaged team with an excellent reputation for technical and engineering expertise, quality, value and customer service,” said Kennedy in the statement. “We don’t anticipate any changes in SET operations beyond enhancing some IT infrastructure and certain business systems. We’re excited to bring SET aboard and we have high expectations for our future.”

Lonnie Butner, vice president of operations at SET, said the merger will provide customers with “a single-sourced solution to manage entire implant and instrument platforms” due to the companies’ combined manufacturing technologies.

The affiliation between the Michigan and Tennessee-based companies developed after Autocam Medical began looking into expanding its business through organic growth and identifying possible target customers.

Tom O’Mara, executive vice president of Autocam Medical, said the situation became somewhat difficult due to the consolidation efforts occurring in the medical device industry, which led to the consideration of adding capacity through acquisition.

“Autocam Medical has a strong base of customers which we have added over the last few years as we have expanded our business, and we feel there is a great opportunity for further expansion within the contract/manufacturing space for precision machining,” said O’Mara.

“Some of the customers had already started to consolidate, and it was difficult for us to access those customers with our current strategy. As we looked into the market for these opportunities, the Southeastern Technology opportunity was presented to us.”

Upon further investigation of the potential merger, O’Mara said the company had the “right customer mix, the right technology, and was a really good fit culturally,” and their operations with customers, service levels, engineering and customer assistance aligned.

Both Autocam Medical and Southeastern Technology are specialty contract manufacturers of components, assemblies and engineered solutions primarily serving original equipment manufacturers within the medical device industry.

Some of the implants and instruments manufactured by the companies include orthopedic devices for the knees, hips, shoulders and elbows; disc replacement and vertebrate stabilization in the spine; computer-aided surgery imaging devices; and surgical instruments.

“We are very excited about this. It is a great opportunity for us to add to our company and to give our customers additional capacity and service, globally,” said O’Mara. “We think it is a great culture of people and a great fit for our company.”

SelectUSA, an informational resource created at the federal level to showcase the United States as a premier business location, indicated the U.S. medical device market is valued at $110 billion and is expected to reach $133 billion by 2016. The U.S. market value represented 38 percent of the global medical device industry in 2012, according to SelectUSA.

As it moves forward, Autocam Medical is positioned to become a competitive player in the global market and, with the consolidated supply base, can take advantage of its business scale, according to O’Mara. Autocam Medical serves multiple markets, such as reconstructive, trauma, arthroscopic, endoscopic, orthopedic, ophthalmic and cardiovascular. As access to orthopedic and eye care products becomes more important, O’Mara said the company feels there is great growth opportunity for medical devices in those two markets.

Persistence Market Research published a study in September indicating the ophthalmic device market is estimated to be worth $29.2 billion in 2014 and is projected to increase to $42.7 billion in 2020. The North American market alone is expected to reach $16.2 billion in 2020, up from $11.5 billion in 2014. The market research firm also noted age-related eye diseases such as glaucoma are contributing to the rapid market growth.

“As the baby boomers age, there is going to be an increased need for orthopedic products and also for eye care products, which are our two largest market segments,” said O’Mara.

Although Southeastern Technology is the first presence the company has in Tennessee, Autocam Medical has other locations in Massachusetts, California and Brazil. Due to its philosophy of managing multiple plant locations as one brand with common systems, O’Mara said Autocam Medical is able to provide the same experience to customers, which is a competitive asset.

“We sell as one brand even though we have more than one plant. Our customers can have the same experience whether they deal with the plant in Plymouth or Grand Rapids, or now Murfreesboro,” said O’Mara. “We think that is a great advantage for us because we can have great access to our plants but still have the same level of service, no matter who they deal with.”

O’Mara attributes its growth to several other company strengths to its growth, including its nimble organizational structure, innovative approach, great financial situation allowing investment without major business risk, and attention to the customer.

“Autocam Medical has a very flat organization, meaning we are very flexible in making decisions for the best interest of our customers. We can react very quickly to new opportunities,” said O’Mara. “We also bring fantastic technological expertise when it comes to the types of machining we do, and our service levels are very strong. Our attention to total customer satisfaction is really the key for our growth.”

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