Strong medicine for growth: A New Jersey shop that specializes in medical work combines the latest hardware with innovative software to gain a competitive edge

Modern Machine Shop, Jan, 2002 by Bill Dundas

Finding good news among current reports about the metalworking industry is no easy task. The combination of weakened demand for consumer goods, a nagging shortage of trained workers and strong foreign competition has created some serious concerns. Focusing on short-term business cycles, however, can exaggerate the hazards of an occasional detour. Thus, some pessimists view the current slowdown as an indication that American metalworking shops may be losing their competitive advantage in the global economy.

But in the medical machining business, where the heyday of American manufacturing is still in full flower, no one subscribes to these gloom-and-doom-prophecies. Underscoring this exceptional optimism, a recent U.S. Department of Commerce report states, "U.S. manufacturers of medical equipment dominate almost every export market and consistently earn the country a large trade surplus for this sector. This industry brings money into the U.S. economy and creates high-tech, high-skill jobs, while providing our trading partners with the highest quality, most innovative medical devices in the world."

Because it's less affected by cyclical fluctuations in consumer and government spending than other manufacturing sectors, medical machining continues to enjoy strong and steady growth. Furthermore, the demographics of America's domestic population, as well as surging international demand for high-quality medical devices, promise to make medical machining a very strong business for years to come. In 1999, the U.S. Department of Commerce reported that the value of industry shipments for surgical appliances and supplies was $17.9 billion, while shipments of surgical and medical instruments totaled an additional $20.2 billion.

Seeds Of Growth

Although this prosperous environment supports a number of large and well-established manufacturers, it also creates many opportunities for newcomers who can leverage new technology and organizational flexibility to meet their customers' ever-changing needs. Bob Tarantino, president of New Jersey Precision Technologies, Inc. (Mountainside, New Jersey), personifies the ingenuity that continues to create and sustain growth in this expanding industry. His company is an excellent example of how entrepreneurship is cultivated today by effective partnerships between the public and private sectors.

Mr. Tarantino was a guest of honor at the 2000 State-of-the-State Address delivered by former Governor Christine Todd Whitman to the New Jersey legislature. On that occasion, his firm was recognized as an example of the success of New Jersey's Technology Business Incubators program. This program provides various types of start-up assistance for entrepreneurs who are committed to establishing high-technology businesses in the state. A recent state report reveals that 104 firms have graduated from this program, representing a success rate of 77 percent. These firms have generated a total revenue of more than $38 million.

In 1989, under the auspices of the New Jersey Institute of Technology, Mr. Tarantino and his former partner established their original machine shop in an old industrial building in Newark. Beginning with only four employees and first-year sales of $50,000, the firm graduated from the incubator program with 20 employees and $2 million in sales. In 1995, Mr. Tarantino became sole proprietor of the firm.

Tools For Success

The company specializes in medical and related work, including production-line and packaging components for the pharmaceutical industry and prosthetic devices. Medical work accounts for approximately two thirds of the company's business, with the balance consisting of ordinary job-shop work, mold components and tooling for plastic extrusion operations.

At any given time, the shop's medical work includes a mix of prototypes, new product launches and full-scale production runs. This reflects the nature of the medical device industry, where a continuous cycle of research, testing, product development and high-volume production is ongoing. Like other forward-looking machine shop managers, Mr. Tarantino's general philosophy is to obtain the very latest and best technology, and then to leverage this technology by automating repetitive tasks. He cites the maxim, "You pay for the tools that you don't buy" as the foundation of his approach.

Pursuant to this philosophy, the shop's physical space is divided into two main departments--one for EDM work and a second for CNC machining centers--equipped with the very latest technology. Mr. Tarantino believes in standardizing the machines in each department. Thus, his EDM department uses Mitsubishi machines (FA20 wire machines and EA8 ram machines), while his second department employs Haas machines (VF2, VF3 and Mini-mill).

Mr. Tarantino cites two important advantages that his shop gains by standardizing equipment. First, he maintains a close relationship with his vendors to handle any ongoing needs. Second, because each department uses machines of the same brand, many parts are interchangeable. This lowers the cost to stock spare parts and helps reduce downtime when repair or maintenance is necessary.