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Interview with William “Jay” Cude, President, and J. Michael Cude, Chief
Operating Officer & V.P. of Engineering, of Coeur, Inc. based in
Lebanon, TN. Coeur designs, develops and manufactures medical devices
using plastic injection molding and extrusion processes.
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What is your company niche and what does your company do that is
notable,
unique or different?
 Jay:
Coeur is focused in the imaging sector of the healthcare market.
We’ve always felt like we operated in two arenas, one is the
plastics industry from the manufacturing point of view, then from a
market point of view we’ve operated in the healthcare industry.
We’re a plastics company with a healthcare market focus. For that
reason we’ve always been active in the plastics industry
organizations, which is not characteristic of a typical OEM company
because they often look at the plastics processing part of their
business as a secondary operation.
Our basic niche within the healthcare market is the manufacture of
disposable or single patient use items. In our business these are
technically called medical devices. Our products are registered
with the FDA as are our manufacturing facilities. We manufacture
largely Class II devices. To describe what that means, I like to
put it simply: If something goes wrong with a Class I device, no
one gets hurt. If something goes wrong with a Class II device,
maybe someone gets hurt. Class III means if something goes wrong,
serious injury
or death can occur. The FDA regulates accordingly. We get
audited regularly because there is some risk involved with our
products. Our specific product niche is the sale
 and manufacture
of disposable syringes that are used on power injectors typically
used in the MRI lab, Cath lab and CT lab in hospitals. That’s
really where the company got its start back in the late 80’s. The
syringes are used to inject contrast media during medical imaging
procedures at varying speeds and flow rates, depending on the
procedure.
To grow our business we’re looking at adding products downstream
from the syringe, to grow our product line toward the patient.
There are a multitude of disposable plastic products that are used
to connect the syringe to the patient, the most obvious of which is
the tubing. This led us to our second acquisition of the medical
tubing division of VPI last September. The facility is located in
Sheboygan, WI. |
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When and how did you get into the industry, what attracted you to
it?
Jay: We actually got
into the industry through our dad. My brother Mike and I joined
the family business almost right out of college. I worked for a
Fortune 500 Company for four years first, but actually got into the
medical business through our dad. Dad is known as the father of
the Admission Kit, the personal care kit you get when you are
admitted to the hospital. He kind of built his business around the
success of that, though he eventually sold that company. Later, we
were helping to pioneer a kind of upgrade to the Admit Kit, called
the Surgical Procedure Tray, which is a sterile kit used in
surgical procedures. Because of the nature of its use, quality
standards escalated, but at that time you didn’t find many, if any,
plastic processors who had what we now call “clean” manufacturing
capabilities. So we got into the plastics business to satisfy our
need for clean, high quality parts. We internalized the work and
did it in-house like most OEMs in the medical industry did.
Relate a notable "best time" for your company.
Jay: First, I think the best time
for most companies is when you’re solving problems for a customer.
That was the first thing that came to my mind when I read this
question. Over the years we’ve had customers come to us with some
fairly serious issues, and being able to help them out not only
establishes loyalty on their part but it builds relationships.
Second, as a country we are a world leader in medical technology;
and it’s satisfying to be part of an industry that is providing
solutions today instead of being part of the problem. We’re
competitive on the world market from a technology point of view,
we’re adding jobs, and we’re making a positive contribution to the
balance of payments. If you have those three elements happening
within your company, you’re successful.
 Mike:
To expand on Jay’s comments, we spent the better part of our
careers helping clients solve problems. What Jay said was a good
example of that. In addition, we try to understand our customers’
businesses and the challenges that they face – understanding the
whole dynamics allows us to do things a little bit differently and
work on processes, technologies, and tool designs that may help
bring value to the customer. We don’t wait for them to ask us to
help them with something. It’s amazing when you’ve been able to
help reduce costs and improve processes how it strengthens the
relationships on those fronts.
There’s a second thing that is frequently overlooked in the medical
industry. When you think of technology, you think about
proprietary things, patents, etc., but there’s another angle that’s
important to consider as well and that is the sterilization and
regulatory side of the equation. You just heard us talk about
solving problems, which is technology based, but the other value is
that we really do have a great deal of sterilization and regulatory
experience. Combining that side of intellectual property with
intellectual property in the
arenas of the technology and patents
truly brings real value to the customer. We frequently do
speaking engagements and we try to vary our topics. We put
together a workshop for a medical device
 show
entitled Designing Medical Devices with Attention to Sterilization.
It was one of the most highly attended forums at the show.
Sterilization issues have a lot to do with how a part is designed.
I had a room full of people from Baxter and Abbott and I was just
stunned. I mean, they work with sterilized products all the
time. But they had great questions, and there are many
different types of sterilization and many types of
plastics, and one doesn’t necessarily work well with another, so
this issue really is at the heart of designing a medical device
because most medical devices are sterilized. |
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Similarly, relate notable challenges that your company has
overcome.
 Jay: One of our
secret weapons is our technology. Mike is in charge of that.
We’ve historically been able to make molding machines go where no
man has gone before and we built our business on that. In a
general sense, the challenge that any small business has is that
we’re a midget in a land of giants. That’s always a challenge.
Our business landscape is populated with companies like Johnson &
Johnson. We have to be better at what we do than they are if we
are going to survive. That’s always a small business’s number one
challenge. We are well capitalized and we can act when we need to,
but we are certainly not a public company with shareholder’s funds
at our disposal. We feel very fortunate to have the financial
partners we have. HKW, for example, is a medium sized investment
firm dedicated to investing in manufacturing companies. They are
truly our partner. In addition, a large number of our managers own
shares in our company. You can have all the talent in the world
and the hardest working people in the world, but if you don’t have
the technology and the financial support to back that up on a
long-term basis, it’s very difficult to be successful. |
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When you are working on projects with your customers, what aspects
would you like them
to
better recognize?
 Jay:
We’re a split personality, which is very characteristic of
healthcare manufacturers. We manufacture products for large OEM
medical manufacturers, but we also do direct sales to hospitals and
other healthcare facilities, sometimes in the same market. It
raises some eyebrows at times, to be sure.
On the project side, where we work with the OEMs, we want them to
know that time and money spent up front pays off in the long run.
It’s very difficult to work with some of these folks because they
don’t want to spend money on tooling. They want the cheapest thing
they can get; and they want it as fast as possible. They don’t
take time to think through possible improvements in designs or
systems and that often leads to problems downstream. It also
results in missed opportunities. It always has been a “pay me now
or pay me later” situation with tooling and that will probably
never change. But if I could, I’d tell them to take the time and
spend the money because they’d be a lot better off in the long run.
List newly acquired technology, machinery or
key personnel (in last
year).
Jay: On the technology front, one thing we have done successfully
is that we have gotten into the business of injection molding PET
for medical devices. PET can be used in place of polycarbonate in
some applications. We’re injection molding PET for very high
performance medical devices that require very close tolerances.
PET offers us some interesting advantages but is an extraordinarily
difficult material to injection mold properly. However, we’ve
developed some technology and molding equipment that has helped us
achieve quality products using PET. We’ve also upgraded our
molding machinery for the purpose of processing PET. So the
ability to mold a relatively inexpensive material into very close
tolerance, high quality products has been a great technology
breakthrough for us. The cost advantages are significant. We’re
looking into patents, but it’s not always productive to patent
processes because design around is relatively easy and it’s
difficult to enforce process patents.
Mike: We’re actually currently working on a proprietary
automation product. It will allow us to be the low-cost producer
of some very specific medical tubing products. On the one hand,
you are always trying to improve on things, but what it’s doing
(we’re a very marketing driven company) is opening up a world
market for us because, prior to automation, we’ve simply not been
competitive in those aspects of the market due to price. Now that
we have added automation, we can compete very well. We
historically do things that allow us to build our automation at
generally significantly lower cost than what is available
elsewhere, allowing us to generate a return that justifies the
upfront cost. So we build our own automation and work with our own
people to do it. We expect to bring back some jobs from outside
the U.S. as a result of this work we’re doing. We are very pro
“made in the U.S.A.,” as are most others.
We are also using what we call “cross-over technology.” We
frequently look at what is going on in other industries from a tech
point of view. There’s often technology that can be adapted from
other industries into the medical industry, but it isn’t usually
applied because the medical industry is so much smaller volume-wise
than the other, larger industries like food service. But it
doesn’t mean that the technology they use wouldn’t apply. For
example, the PackExpo was in Chicago the other week. I sent one of
my guys and I also stopped in to see what’s new. Now this is
primarily a food show, displaying the latest in packaging
technology for food. But stop and think about it: everything they
do is regulated; everything is washed down, sterilized, etc., just
like medical. This guy at the show had a tabletop model of
something that is normally the size of a garage, and I stood there
looking at it and asked him if the model is for sale. He was
surprised at first, but I explained that what he had there would be
ideal for use in the medical industry and I was interested in
obtaining one. He’d had the model for 15 years, so I asked him if
he could build another one for me. I see it this way: It’s
already engineered, so I’m not paying for that aspect of
development, and I can get one without much effort. That’s a great
example of cross-over technology if ever there was one. That’s
what we do in general. We work with a very close group of
individuals to design and build solutions, but really 75% of them
you don’t have to recreate the wheel to develop. It’s out there
and we’ll find it and incorporate it into our processes and make it
work for our customers. When I send our guys to trade shows, I
tell them to think differently about what they’re seeing. Look for
what you’re not looking for. We include people from all
departments within our plant when we’re working on developing new
technologies and processes. At the end of the day, I know it’ll be
one of those folks that come up with the idea of the day. Probably
the biggest challenge is not getting caught up in the “Wow, that’s
cool!” part of brainstorming. You have to reign in that creativity
at some point and stay grounded, too. It’s a lot of fun.
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Has your company recently expanded? Plans to expand or form
partnerships/alliances?
Jay: In
addition to the acquisition of the tube extrusion division of VPI
last September, we just opened our corporate headquarters in
Lebanon, just outside of Nashville, TN, in July. Before that we
were kind of a virtual company with most of us on the road and
moving around a lot. We did have some offices in our North Carolina
facility, but this is where most of us live, so it made sense to
have our headquarters here. We also closed a deal with Beaufort
County in North Carolina to purchase and lease back our plant and a
10-acre lot adjacent to our facility there so that we can expand.
The state, city and county have all worked with us closely to try to
keep us in town and we appreciate that. We have signed a long-term
lease agreement with Beaufort County which includes an option to
purchase the property at any time. We also just received a $200,000
grant from the state of N.C. to basically be used any way we see fit
as we add jobs in Beaufort County. The Governor of North Carolina
visited our plant there just last week. It’s important to the state
because they lose a lot more than just jobs and tax revenues when
companies shut down. Whole towns can be affected.
Are you involved in any industry organizations or educational
programs related
to the trade?
Jay: I’ve been involved with the SPI for 10-12 years and am
currently on the executive board. I believe strongly in being
active with these types of organizations. I was one of the founders
of the SPI’s National Certification in Plastics, which is basically
our industry’s training program. We’re currently upgrading the
training and going into a webcasting/CD-ROM based program. Mike is
very active in SPE.
We’re also members ADVAMED, the health industry’s manufacturers’
association. We’re not very active with them but they do have some
good services available. All the big guys as well as many small
companies like ours that work in the medical manufacturing sector
belong to this group.
Mike: As Jay said, I am very active in the SPE. I’ve been on the
board of the Medical Plastics Division for many years, probably
since 1991. I was recently elected to the Council of International
SPE and I am hoping to help formulate the future direction of the
Society. They did, at the annual Technical Conference this year,
give me the Honored Service Member Award and that was quite an
honor. As for involvement outside the Society, for years I have
handled the program for the medical Plastics Division in conjunction
with the Medical Device Show and work with Canon to put those on two
or three times annually, around the country. I am usually a speaker
at those events, but I also help organize and host them.
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What do you think about changes occurring in the industry due to
globalization? How has it
affected the way you do business?
 Jay:
One, I think you are going to see more outsourcing. I don’t think
it has to go overseas, but some will. Two, we need to work harder
protecting our intellectual property, which will allow us to
maintain our competitive edge and help keep work here. Three, it
really is a global marketplace. Coeur is a small company and we do
business in 25 countries. We’ll be formally registered and doing
business in China next year. We do business in Japan. We do
business in most of the major European countries and also in
Canada. The U.S. is a leader in medical technology and this
certainly helps. Frankly, the Internet has helped facilitate
this. For example, we actually ship product to French Polynesia.
That customer came in over the Internet. You can even buy our
product with a credit card on our web site.
What will the industry look like in 3 to 5 years?
Jay: I think the medical industry
is well positioned at the moment to maintain our competitive edge.
I’m very concerned that we are going to lose our edge in some of
our other industries, but medical will continue to be a market
leader. Our market sector is so heavily technology driven – and
companies in other industries have been burned so badly – that I
think we’ll work harder to be protective of our technology and our
competitive position.
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Additional Background Information |
Number of years in business: Since
1998; bought Coeur in 1999; bought VPI last September
Current number of employees: 120
Current square footage (each
location):
Lebanon, TN:
4,000
Washington, N.C.: 42,000
Sheboygan, WI:
17,000
Additional locations: In addition
to its corporate offices in Lebanon, TN, Coeur’s molding and
assembly facility is located in Washington, N.C., and its tubing
extrusion and assembly facility is located in Sheboygan, WI.
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Coeur Corporate Office
704 Cadet Court
Lebanon, TN 37087
T: 615-547-7923
F: 615-547-7937 |
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Coeur Molding and Assembly
209 Creekside Drive
Washington, NC 27889
T: 800-296-5893
F: 252-946-2317
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Coeur Tubing
3411 Behrens Parkway
Sheboygan, WI 53081
T: 920-208-5555
F: 920-208-5500
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Website:
www.coeurinc.com
Types of tools built and/or run:
Plastic injection molding and plastic tubing extrusion
Industries served: Medical |
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