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News
from the Orthopaedic Shop Floor
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The
following article is reproduced with permission from:
Lansing State Journal, Section: Monday business extra ,
November 6, 2000.
Local firms rebuild lives
Aging population, urge to play drive demand for medical implants
By Andy Henion
If you’ve had a hip, knee or shoulder replacement in the past few years, there’s a good chance the rods and stems implanted in your body were made in the Lansing area.
Jet Engineering Inc. of Lansing and Stealth Engineering & Technologies Inc. of Holt are two of only 10 or so companies worldwide that create the custom alloy parts for medical implant suppliers, industry experts say.
And like a novice roller-blader, business is out of control.
With an expanding elderly population and an abundance of people engaged in sports such as roller blading and mountain biking, more and more bones are breaking and needing major repair.
"Orthopedic implants is currently a $12 billion-a-year industry worldwide and we expect the growth to continue in excess of 10 percent per year over the next decade," said John Engelhardt of Knowledge Enterprises, a Cleveland-area orthopedic consultant and research firm.
Jet and Stealth are helping fuel that growth by forging and finishing hundreds of thousands of implant components a year. The custom pieces are made out of titanium, cobalt chrome, stainless steel and other super alloys.
The structural parts are shipped to suppliers such as Johnson and Johnson, which in turn sell the complete orthopedic replacement kit to surgeons. By buying the main components from smaller companies, medical suppliers save time and money, which conceivably keeps consumer costs down, experts say.
Hospitals charge an average of about $20,000 for a hip or knee replacement, although insurance typically covers most of those costs.
Engelhardt said Jet alone supplies a quarter to half the world market for the implant components it makes.
A closer look at the local companies and their growth:
Jet was founded in 1985 by Robert Soltow, who focused mainly on making aerospace parts. But in the early 1990s, with orthopedics growing, Jet turned most of its attention to implants, said Matt Rudd, chief operating officer. In 1995, a United Kingdom holding company called 3I (Investors in Industry) bought Jet, although Rudd said the work force remains mostly local residents.
Since 1995, Jet has grown from 85 workers to 240 and from $6 million in yearly sales to about $32 million, Rudd said. The company recently added 15,000 square feet of manufacturing space to its Aurelius Road plant and plans to hire an additional 100 workers in the next year – from general laborers to machinists to engineers.
Jet also bought Ultrexx Inc. of Avilla, Ind. – which makes the tools surgeons use to perform implants – and plans more acquisitions of similar manufacturers, Rudd said.
"In a seven-year period, we’ve grown from a pretty small mom-and-pop business to a pretty large company," he said.
For workers like Rick Droscha, a 37-year-old father of three, that transformation has been welcome. Droscha joined Jet 11 years ago as a laborer and worked his way up to floor supervisor and press operator.
"The medical field is a good field right now: There’s a lot of investment, a lot of opportunity to move up," said Droscha, who has an associate’s degree from Lansing Community College.
In the early 1990s Mike Miller and Lawrence Peek left Jet and formed Stealth Technologies with five employees. Growing at about 25 percent a year, the company now has 93 workers and earlier this year added 12,000 square feet to its North Cedar Street factory, Miller said. Stealth recently was bought by Charter Oak Capital Partners of Westport, Conn., he said.
Miller said the company will hire about 30 more workers in the next year. Like many employers, however, both Stealth and Jet are having problems finding skilled help.
"We’re growing daily, but it’s very hard to fill our technical positions" such as electric draftsmen and machine operators, Miller said.
And for the medical-implant industry, there’s no sign of slowing down, Engelhardt said.
In 1998, the United States had 34 million residents aged 65 years and older – the main customers for knee and hip replacements. And coming down the pike is 76 million baby boomers, or those born between 1946 and 1964.
"We’re seeing the baby boomers coming of age. And one of the rites of passage into the elderly society is medical problems like arthritis, joint replacements and so on," Engelhardt said.
Contact Andy Henion at 377-1205 or ahenion@lsj.com