Published in Manufacturing
Kalamazoo-based medical device contract manufacturer Keystone Solutions Group produces products such as the patient warming system for Illinois-based VitaHEAT Medical. Medical device industry experts say that companies like Keystone could help draw business from strongholds along the coasts and in Minnesota through lower manufacturing costs. Kalamazoo-based medical device contract manufacturer Keystone Solutions Group produces products such as the patient warming system for Illinois-based VitaHEAT Medical. Medical device industry experts say that companies like Keystone could help draw business from strongholds along the coasts and in Minnesota through lower manufacturing costs. Courtesy Photo

Coastal Competition? Industry experts believe Michigan can compete in medical device space through manufacturing

BY Sunday, November 13, 2016 01:16pm

While West Michigan may lack the depth of resources and talent that some regions of the country possess when it comes to the medical device industry, it may have one key advantage: the affordability of its contract manufacturing. 

The lower cost structure could be enough to lure business away from more established clusters around the country, if only the state and the West Michigan region heavily market their capabilities to OEMs and others in the industry. 

That’s according to industry insiders who acknowledge that Michigan plays at a distinct disadvantage in terms of the availability of capital and an experienced talent pool compared to regions like Silicon Valley, Minnesota and along the East Coast. 

“Why does biomedical manufacturing make sense in Michigan? Well, it’s because the cost of living is half or a third of California,” said Dr. Tim Fischell, CEO and chief medical officer of Kalamazoo-based Ablative Solutions Inc., who developed a catheter system to treat severe hypertension that’s resistant to medication.

Whether the region is ultimately successful in establishing a medical device manufacturing hub comes down to cost and quality, he said, noting that Ablative splits its operations between its headquarters in Kalamazoo and offices in Palo Alto, Calif., near where its current contract manufacturer is based.

“It’s crazy expensive,” Fischell said of doing business in Silicon Valley. “That is a place where (West Michigan) can compete with California and Boston. We can beat them on cost of goods. In the end, that’s what companies care about. I think that’s sellable today.” 

Ablative Solutions spends as much as $1,800 per device for contract manufacturing services on prototype runs with Cirtec Medical Systems, Fischell said. Those costs, coupled with commercial real estate lease prices nearing $80 per square foot — more than five times the average rates in West Michigan, according to local reports — make sustaining a company in California extremely difficult. 

However, if Michigan manufacturers could offer similar capabilities for complex medical devices at a lower cost, Ablative Solutions would consider moving its production to the state, Fischell said. 

Specifically, Fischell points to companies such as Kalamazoo-based Keystone Solutions Group as one of several contract medical device manufacturers that could benefit from life sciences companies shifting production to Michigan.

“If Keystone came to me and said, ‘You know what, we could do exactly what Cirtec is doing and we could do it for $1,200 a device instead of $1,800,’ come on baby,’” Fischell said. “Those are the kinds of opportunities I’m talking about in manufacturing.”

At Keystone, President Jim Medsker said West Michigan has the manufacturing base to attract business from the coasts. While the engineering, design and contract manufacturing company currently doesn’t have the machining capabilities for extremely sophisticated medical devices, it continues to invest in new equipment as it expands. 

Keystone recently completed a 17,000-square-foot expansion that it intends to turn into a “state-of-the-art” product center, Medsker said. The new addition brings the company’s manufacturing footprint up to 41,000 square feet. Keystone also recently invested in a high-tech sterile packaging machine. 

The company is prepared to continue to expand and add equipment as it gains more medical device manufacturing contracts, Medsker said. 

“We’re continually looking at adding more manufacturing capability,” he said.


Despite the lower cost of doing business in West Michigan, the growth of the region’s medical device manufacturing industry will largely depend on how well the sector can market itself to the OEMs across the country. 

So far, industry groups such as MiDevice, a consortium of medical device manufacturers from West Michigan, have worked to promote the capabilities in the region. The group, which is operated in conjunction with the Grand Rapids SmartZone and The Right Place Inc., attends large industry trade shows such as the annual Medical Design & Manufacturing (MD&M) show to help promote Michigan as a contract manufacturing hub. 

“Our manufacturers are starting to raise some eyebrows,” said Tim Mroz, vice president of marketing and communications at The Right Place. “When you go to trade shows and are talking about your particular solution and the topic wanders into something that you don’t handle but yet there’s a partner company in the same booth, it shows that you have a collaborative relationship with (them). West Michigan essentially becomes a one-stop shop for medical device manufacturing.”

As the medical device industry continues to evolve, Keystone Solutions has found that it’s working more with companies to make smart devices that integrate electronic assemblies, including software, bluetooth capabilities and wireless technology, Medsker said.

While that’s created a steady market on top of Keystone’s existing contract work, Medsker notes that the key to establishing Michigan as a medical device manufacturing hub hinges on the state’s exposure within the greater industry.

“Currently, we have a lot of advanced manufacturing capability, but it’s a matter of visibility of the capabilities we already have and the current medical device manufacturers investing in the specialized equipment,” he said. 


Beyond the issue of visibility, the medical device sector in West Michigan does have its share of challenges. 

Despite having strong medical device manufacturers in clusters around the state in Kalamazoo, Grand Rapids and Ann Arbor, the state’s industry is somewhat fragmented when it comes to targeting large, out-of-state projects, said Stephen Rapundalo, president and CEO of MichBio, a life sciences industry group based in Ann Arbor.  

“Intrinsically, it’s more challenging to form around a larger cluster instead of when they’re closer together,” said Rapundalo, who contrasted Michigan’s life science industry with cities such as Minneapolis where companies are in much closer proximity to one another. 

“They have the advantage of the communities’ densities being much more contained,” he said. “They can work off each other. They’re better connected.” 

Rapundalo also believes that building a hub for life science manufacturing will take more contract manufacturers entering the space. While companies took to medical device manufacturing as a key diversification play during the great recession, many of them have since refocused back on the state’s automotive sector or other legacy industries. 

“I think there is a tremendous amount of capacity, but some of that manufacturing capability has not been applied to the medical device space just yet,” Rapundalo said. “These companies need to be educated as to where else their capabilities can be deployed and open new markets for them. My sense is many folks are so hunkered down and focused on meeting current client needs that they’re not thinking three to five years down the road.” 

For Medsker of Keystone Solutions, establishing Michigan as a life sciences hub that can compete with the coasts comes down to a combination of manufacturers scaling up their businesses enough to meet demand.

“I think we have the potential here to become the next large medical device hub,” Medsker said. “We have a manufacturing base already, but it’s about leveling it up. It’s an investment in the infrastructure and understanding what the market is demanding.” 

Even with the competition from the coasts and other medical device hubs, Mroz likewise remains bullish on the sector’s chances in West Michigan.

“Overall, we’re still on our path to maturity,” Mroz said. “I think the medical device industry in West Michigan is still very much at an entrepreneurial stage. There’s a lot of capital being invested (and) there’s a startup mentality around medical device, which is driving a lot of growth.” 

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