Jeff Somple: [Our] orthopaedics [business] has been growing dramatically and organically over the last few years. We’ve made some intelligent investments that specifically feed into some of the needs that are identified by the orthopaedic space. [Orthopaedics is currently about 15% of Mack’s business]

 

There’s been a trend in orthopaedics to move into disposables, and we were well positioned for that because of our molding [capabilities].  It seems like every investment we’ve made has dovetailed with the needs of the orthopaedics [market].  We invested in laser welding, which is a unique way of attaching the brackets to the trays that we’re making and doubled our capacity there. We added another laser cutting cell to increase our capacity in the sheet metal area. We put in a cleanroom that has six electric presses with an eye toward disposable manufacturing for the orthopaedics world.

 

Orthopaedics companies are under pressure to make the FDA happy and manage their supply base. When you can come to a company that has multiple capabilities under one roof, the orthopaedics companies see a real value to that. Right now we’re in programs with most of the major orthopaedic companies. [Mack has experienced] skyrocketing growth. We’ve not only invested in those areas, but we’ve also invested in people. We spun a business unit off from the medical business unit that focuses on orthopaedics. [The unit has about six dedicated people]. People were vying to get into this business unit, because it’s a real growth area.

 

 

Somple: Our main strategy is to become a significant supplier to the top orthopaedic companies. We already do some work with smaller orthopaedic companies, but [we’re also focusing on working with] the largest players in the industry, and are beginning to get some work there as well.  Our strategy is to do more and more with a smaller group of orthopaedic companies.

 

Somple: FDA has come down hard over the last few years. Orthopaedic companies have come under a lot of scrutiny, and they’re really watching their supply base. We have more audits than I can ever remember having before, and our track record so far has been very good.

 

The basic change is that the FDA has now told medical manufacturers that they’re responsible for the quality of their supply base. So they [the companies] have said, “We have to make sure we’re putting the same pressures on our outside suppliers as we put on ourselves.”

 

 

Somple: I think the biggest challenge that we face, like all U.S. manufacturers, is [recruiting] talent. We have cash and capital— we can grow. The real constraint to our growth might be qualified people. We’re doing some creative things to try to address that, but we’re not going to solve that problem up in Vermont.  This summer we have 11 interns [Mack has also had three interns who returned to work at the company full time].

 

We’re fine in terms of direct labor—we can bring people in and provide the training and skills that they need. But to get a quality engineer or a supplier engineer, that’s problematic right now. You have to either recruit, or you have to try and do things like the internship program to train them yourself.

 

Somple: The internship program is really nice because we pay our interns. It’s a different internship program than most. In order to approve the internship, I need to see a written proposal on exactly what the intern is doing; it has to be a self-contained project with a beginning and an end—something the intern can leave with on a flash drive. Studies have shown that interns who had a project like that are 60% more likely to get a job than those who didn’t.  This year for the first time, we had a waiting list of kids who wanted to be interns at Mack. They’re getting paid well and are working on some interesting projects—they’re not just getting coffee. They’re getting the experience that they can put on their resume, because they’re doing practical work in the medical field.

 

We’re [Vermont] not that different from Indiana or Michigan. [Recruiting talent] is a problem because our young people haven’t been thinking about manufacturing as a career for a long time. The good news is that manufacturing has seen a resurgence; I think people are starting to appreciate that a  manufacturing job can be stable, pay well, and has benefits; and the stuff we’re doing has been pretty exciting. That’s one of the reasons we do the internship program—to let people know that there are some really neat products being made in southern Vermont that they’d be proud to work on and have their name attached to.

We have to be creative. The best thing we can do is to be a growing and profitable company—people want to be associated with that. We’ve been that way for several years, and all through the recession we had double-digit growth. We’ve been fortunate.

 

 

Somple: The other big medical manufacturer in Vermont is GW Plastics up in Bethel. We’re very friendly with them—we don’t necessarily compete.

 

Manufacturing in Vermont, like most of the northeast states, has taken it on the chin over the last 15 years. I think it [has] stabilized, and I think it’s on the uptick right now. I think we’re adding manufacturing jobs. Vermont in particular is very aggressive in going after green technology and green jobs, which is helpful to us, because it brings in engineers and technicians.

In addition to the medical market, we do quite a bit in other markets, one of which is in solar manufacturing. We try to strike a balance, and Vermont tries to strike a balance. We’re not Michigan. We’re not South Carolina. We’re a small New England state with a strong environmental track record in a very clean industry. We’ve been named a Vermont Environmental Leader, and I think we’re one of five manufacturing companies that have earned that designation [Mack was the third manufacturing company in VT to get the Environmental Leader designation].

 

I have a staff of 10, and they all have green goals. It can be as simple as converting the cleaning materials to environmentally friendly products or river bank clean-up [due to the severe flooding from tropical storm Irene last year]. A lot of our customers come in now and ask, ‘what is your sustainability profile?’ what’s your carbon footprint?’ So we’re trying to get ahead of the game.

 

 

Somple: This year our growth will probably be around 20%. That’s pretty dramatic. There’s a limit to which you can grow without an acquisition, and 20-25% is really pushing it. I see that continuing for the next couple of years just because of [our] pipeline of products. Right now medical is approaching 40% of overall sales for Mack’s Northern Operations and will probably get up to 50% and stay there for a while, mainly because other parts of the business are also doing very well.

 

I would see continued growth, continued hiring, and continued investment in new equipment and technologies. The next big investment we’ll make is probably getting into sterile packaging, which would be a significant investment.

 

We’re always looking at acquisitions. It’s a tough market, especially in the medical field right now—everything is highly valued [and] probably overvalued. And for us, an acquisition wouldn’t be to get bigger—it would be a strategic [move to get] a technology that we don’t have right now; [or get into] a geography where we aren’t [located]—maybe on the west coast. There might be an acquisition for us down the road.