Phillips Plastics eyes further global expansion

Phillips Plastics, strongly anchored in Wisconsin for its 47-year-old history, will continue to expand globally, president and CEO Matthew J. Jennings told in an interview.

The company almost doubled in size two months ago with its acquisition of Medisize (Vantaa, Finland) and now ranks as one of the two largest contract medical manufacturers in the world. Phillips Plastics' revenues are close to $500 million this year, with 75% based on medical.

Matt Jennings
New CEO Matt Jennings has big plans for Phillips Plastics.

"We are listening closely to what our customers are telling us and where they want to be," Jennings said. China often comes up in the conversation. "China used to be regarded as a low-cost manufacturing location for products sold in North America or Europe. China is now emerging as a large market where our customers in the medical market are interested in having a presence."

Jennings noted in the interview that one of the advantages of now being part of Kohlberg & Co., which acquired Phillips Plastics late last year, is that the company has the financial backing to grow.

Phillips Plastics has a footprint in Asia now through Wah Tsun, a joint venture with Eastek International, to make tooling in Dongguan City, Guangdong, China. Jennings said the JV gives customers the option of having tooling made in China to US specfications, while still using Phillips' design engineers and project management.  Medisize makes its own molds, and contracts work to major mold builders in Germany. Moldmaking is also one of the core strengths at Phillips Plastics, which also uses some outside mold makers.

Any expansion that Phillips Plastics might be making in Asia apparently won't be coming at the expense of its manufacturing in the United States. The company operates seven US manufacturing business units--all in Wisconsin--and design centers in Hudson, Wisconsin and Sunnyvale, California. Jennings said that the company has made significant investments in U.S. molding capacity this year to meet strong demand.

More automation

One change will come in the area of automated assembly of medical market devices. Approximately half of the company's revenues come from assembled finished products.

Jennings said there will be more investment in higher volume, highly automated assembly processes to match capabilities of Medisize, which operates plants in Finland, Switzerland, the Czech Republic, the Netherlands and Ireland. "That's one of the strengths that Medisize has that we can leverage in North America," said Jennings. "There has been a lot of in-press and near-press automation at Phillips Plastics. What Medisize brings as well is high-volume automated assembly and quality control. They are very experienced with high-volume products, requiring  hundred million assemblies per year."

Medisize began as a molder making mobile phone components for Nokia. It later focused on medical contract manufacturing, making a similar trajectory as Phillips Plastics.

Jennings said that the 25% of revenues that derive from markets outside of medical will remain important to the combined company. Process and material innovations are not a strong trait of the medical market, generally, because of regulatory requirements, and will be adopted in other markets prior to medical.

"We will look to our other markets as sources of innovation that can be transferred to the medical market." Phillips Plastics has manufacturing capabilities in plastics injection molding, powder metal molding (MIM), ceramic injection molding (CIM), and multi-material (multi-shot) molding where one of the materials may be liquid silicone rubber (LSR).

Jennings became CEO of Phillips Plastics in April after serving as the president of the North American Medical Division of Teleflex Inc., which has sales above $500 million and 12 manufacturing facilities. Previously, Jennings was the President & CEO of Bioenterprise Corp., a bioscience company jointly founded with the Cleveland Clinic, Case Western Reserve University, and University Hospitals Health Systems in Cleveland, Ohio. 

Medical goes global

He said the acquisition of Medisize was triggered by the increasing globalizing of the medical device and diagnostics market. "Phillips' customers wanted a Phillips footprint in Europe, and Medisize's customers wanted a Medisize  presence in North America."

Phillips Plastics bought Medisize from a private investment company called Ratos for €99.8 million ($139 million). Medisize had revenues last year of $178 million. Ironically, Medisize had tried to buy Phillips Plastics over the last seven years when it was owned by Robert Cervenka, the cofounder of the company.

Medisize will operate as an autonomous organization in Europe. There may be some synergies in purchasing, but that was not one of the drivers of the acquisition, Jennings said. "Our synergies are really that their customers do not overlap with our customers. There's also a very good fit in cultures of innovation and investments in people and technology."














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