Matt Jordan
Vice President and General Manager
View from the Top

Advantages of Nearshoring for Medical Technology

Wed, 09/07/2016 - 12:35

Q: Why is a presence in Mexico important for you?

A: Providien provides contract engineering and manufacturing services to many of the top medical device companies in the world. A presence in Mexico is important to us and our customers for a number of reasons. First and foremost, because Mexico offers skilled labor at a reduced and competitive rate. Manufacturing wages in Tijuana are globally competitive and as a result Tijuana is one of the largest medical device manufacturing cities in the world. Second, the in-country local supply base is more sophisticated than that of other low-cost regions. For example, in the Dominican Republic, Asia and other emerging geographies, manufacturing companies need to import commodities and other specialized materials, which drives up cost. In Mexico, those same commodities may be stationed and warehoused only a few minutes away. Third, in relation to the US, Mexico is considered “nearshore”. Providien can build cost competitive products in Mexico, and have the goods imported and distributed across the US in a matter of days. If building in Asia, that same lead time extends into weeks and months.

Q: Who do you provide your products to?

A: We are exposed to and work with valuable intellectual property in the medical industry. As a result, customer confidentiality is paramount. That said, we have partnerships with leading medical device companies in the world and focus on providing class II & III devices. Our product portfolio is diverse, ranging from cardiovascular and orthopedics to women’s health.

Q: What are the advantages of uniting all Providien subsidiaries under the Providien banner?

A: Providien has been operating as one organization for several years, so tactically nothing has changed. The advantage of operating under one unified corporate banner is that we can better market our complete value offering. Providien consists of four primary business units focused on plastics, metals, thermoforming and device assembly, but they all work together to provide solutions in the medical device industry. For example, recently one of our customers developed a strategic objective to reduce costs by a significant percentage. Providien has subsequently made sizeable capital investments in two different business units and has provided that customer with annual cost savings in excess of 1 million dollars per year. We were able to achieve that success by operating as one organization to provide a powerful solution.

Q: To whom do you supply in Mexico and what are the most demanded products?

A: In addition to the leading medical devices companies, we also supply to tier two and tier three Original Equipment Manufacturers (OEMs). Tiers two and three require a slightly different solution, one that has more of an emphasis on engineering and Design for Manufacturing (DFM). At Providien, we have a team of seasoned engineers who not only help improve complex manufacturing processes but also develop them. As far as the products of high demand, there are generally two types. High-volume disposables and/or products that require a high degree of manufacturing labor.

Q: What partnerships and alliances do you have in place in Mexico?

A: We have formed partnerships with many local suppliers in Mexico. These relationships have extended into the US and into our California divisions. We also partner with a Mexican logistics company called JD Group. They have been fantastic to work with. JD Group is the only logistics company that has both US and Mexican customs brokers, which allows Providien to move product in and out of Mexico very quickly.

Q: What are your strategic priorities here in Mexico?

A: Expansion. As cost pressures continue to mount, the demand for cost competitive manufacturing increases. Strategically for Providien, it’s a priority to leverage all of its US supply offerings and consolidate in Mexico to deliver an economical solution. Mexico is a favorable geography with regards to an organization’s ability to scale. The supply and demand ratio for labor is such that adding labor can quickly be accomplished. Having reduced costs and the ability to quickly ramp up operations this close to the United States makes expansion in Mexico a strategic priority.

Q: What has been the impact of the growth of the medical devices market on your operations?

A: The impact has been sizable and our business has grown. One of the top priorities has been to give back to the labor workforce here in Mexico. We’ve invested in improving the employee work experience in Tijuana and offer upgraded facilities and an increased number of local recognition events. We partner with the local government and we provide employees with food and gift certificates. Providien now offers formal education to engineers and sponsors them through technical certifications.

Providien has emerged as the preferred outsourcing partner in the medical device manufacturing industry in Mexico. With continued growth forecasted, 2016 and 2017 will be very important years for Providien. In Mexico, our growth is specific to Tijuana.

Moving to another country in Latin America would mean forfeiting some of the advantages mentioned earlier. Providien always looks to add new customers but organic growth with our existing partners is a strategic objective.

Q: How do you maintain your competitive edge in the medical device manufacturing market?

A: Commercially, we maintain a competitive edge by utilizing all of our business units and providing vertically integrated solutions. Internally, we excel operationally and focus on continuous improvement. We strive for continuous improvement not just in manufacturing, but in all areas of the organization ranging from human resources to logistics. We understand that our people and our teams make us great. We have an impressive team in Mexico and I am proud of our operation.