What Now For Automotive Suppliers?

Chrysler, the #3 American car manufacturer filed for bankruptcy protection with 39 billion more in debts than assets. General Motors (GM), the #1 American car manufacturer filed for bankruptcy protection with 91 billion more in debts than assets. Since February 2000, employment in motor vehicles and parts has declined by approximately 50 percent. (Source: Bureau of Labor Statistics) So what is to become of the automotive suppliers?

Maybe we can all learn from the state of Michigan. Michigan is helping automotive suppliers transition to biomedical device production. The biomedial sector is GROWING at around 5.7% per year and the U.S. is a leader in biomedical exports in the world. (Would you want something installed in YOUR body made in a foreign country?) Automotive suppliers have many of the same skills, capabilities and systems in place to produce biomedical devices… it is a matter of retraining workforce, tracking all raw material lots into a batch of products and understanding ISO 13485. Michigan has provided training for some automotive suppliers to transition to biomedical devices and Michigan is launching a fund to help manufacturers diversify into new emerging sectors such as medical devices. The Michigan Economic Development Corporation (MEDC) recently unveiled the Michigan Supplier Diversification Fund. Its first program, the Michigan Loan Participation Program, will address the current lack of bank financing available to companies that are attempting to diversify. Under the loan program, the MEDC will partner with private lenders to offer loan participations with little or no interest payments for a specific period of time.

I recently attended an event in Ohio about Transitioning Ohio Manufacturers to Medical Device Production and had a few takeaways:

Biomedical has three categories from simple tongue suppressors to heart valves and there are regulations associated with each category

It may take 3-7 years to get a product to market
If a manufacturer wants to get involved in biomedical it begins with early relationships with biomedical companies while they are developing the prototype with the upside that the manufacturing contract may last 10 years or more
Ohio has established incubators for biomedical devices – one across from the Cleveland Clinic and BioStart in Cincinnati
ISO 13485 covers medical device production
Medical devices go through a decontamination phase via gamma radiation or electronic beam. For example, regular plastic or metal devices can go through a decontamination process and then be sold as a higher margin biomedical device.
GMPFirst.com – for Good Manufacturing Practices (GMP) for Medical Devices
DeviceLink.com – to learn about the Medical Device Industry