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When Phase 2 Medical Manufacturing Inc. (Rochester, NH), a contract manufacturer of single-use medical devices, began looking into moving some activities out of country, Mexico and China were immediately ruled out. The company initially set its sights on Costa Rica. Yet, a couple of weeks ago the company announced that it was opening a facility in Tijuana, Mexico. Therein lies a story that CEO Adam Prime shared with PlasticsToday.

Norbert Sparrow

August 11, 2014

3 Min Read
How Phase 2 Medical Manufacturing learned to stop worrying and love Tijuana

When Phase 2 Medical Manufacturing Inc. (Rochester, NH), a contract manufacturer of single-use medical devices, began looking into moving some activities out of country, Mexico and China were immediately ruled out. The company initially set its sights on Costa Rica. Yet, a couple of weeks ago the company announced that it was opening a facility in Tijuana, Mexico. Therein lies a story that CEO Adam Prime shared with PlasticsToday.

"Our medical device customers were telling us that the availability of off-shore, low-cost labor would be a criteria for vendor sourcing going forward," says Prime. "There was no mandate to go to a specific location. We ruled out China because it was not a good fit. Beyond the political situation and rising labor and shipping costs, it was too far away for us to manage." Perceived safety issues took Mexico off the map, as well. That left Costa Rica, which has attracted a sizable number of medical device companies over the years and rightfully earned a reputation as a Central American medtech hub. That was validated as Phase 2 did its research on the country, but it also discovered that Costa Rica may be a victim of its own success.

phase-2-300.jpg"Costa Rica has a good infrastructure, skilled labor, and no safety concerns," says Prime. "The challenge, however, is that recent expansion by OEMs and component manufacturers has resulted in too many companies setting up shop. Now you have scarcity of labor and real estate, with prices going up accordingly. The other complication that arose was the discovery that product shipped from Costa Rica would spend 18 days on the water," says Prime.

Prime and his team kept their ears to the ground, and they started hearing a lot of good things about Tijuana, both in terms of cost and an abundance of skilled labor. "We found that buildings were readily available, and business and labor costs were better than in Costa Rica" says Prime. "Being a finished goods contract manufacturer of medical devices, cost is a huge deal for us, as is proximity to the United States," he adds.

As for safety concerns, Prime concedes that Tijuana is not crime free, but notes that dramatic improvements have been made over the past few years. "When we visit, our team chooses to stay in Tijuana rather than cross the border into San Diego," he says, something that would have been unthinkable in the recent past.

Echoing what other medical device manufacturers and suppliers have told me, Prime heaps praise on Tijuana's economic development agency. "It is focused on developing the life sciences sector and was unbelievably accommodating. Everything from permits to audits happened very quickly," he says.

And so, near the end of July 2014, Phase 2 announced the opening of its 30,000-sq-ft facility south of the border, which includes a 3000-sq-ft ISO Class 8 cleanroom for the assembly and packaging of single-use medical devices. At the same time, it announced that it would begin offering molding services at its headquarters. There again, the company listened to its customers.

"Our customers are looking for more vertical integration, so it made sense to start doing molding in house rather than outsourcing it," says Prime. Initially, a 110-ton electric press was installed for a specific product line, but the company anticipates growth in contract molding, and has planned for rapid expansion and space for additional equipment to fulfill future demand. Will Phase 2 look at its Tijuana facility as a candidate for expansion when that happens, I wondered. Prime admits to thinking about it, but adds that there is no timeline at this stage.

By the end of the year, the company expects to employ 20 people in its Tijuana plant. It has a staff of 170 in New Hampshire.

FDA registered and certified to ISO 13485, Phase 2 offers product development, cleanroom injection molding, cleanroom manufacturing, assembly, testing, packaging, shipping, and sterilization services to its medical device customers.

Norbert Sparrow

Norbert Sparrow is Senior Editor at PlasticsToday. Follow him on twitter @norbertcsparrow and Google+.

About the Author(s)

Norbert Sparrow

Editor in chief of PlasticsToday since 2015, Norbert Sparrow has more than 30 years of editorial experience in business-to-business media. He studied journalism at the Centre Universitaire d'Etudes du Journalisme in Strasbourg, France, where he earned a master's degree.

www.linkedin.com/in/norbertsparrow

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