If the tariffs actually make a country great again, it might be Malaysia, Vietnam or Costa Rica, global medical device industry suppliers say.
The U.S.-China trade war is certainly affecting where U.S. medical device companies decide to make their products. But don’t expect a bunch of manufacturing to come back to the United States.
“They are looking at what I would call ‘right-shoring,’” Freudenberg Medical CEO Max Kley said of his company’s medtech customers. For 12 years, Freudenberg (Carpinteria, Calif.) has had a plant in Shenzhen, China, just outside Hong Kong, where about 150 workers are engaged in thermoplastic and silicone injection molding and assembly of finished devices.
With tariffs on both sides apparently here to stay, medical device customers are adjusting their supply chains, but it’s more about shifting manufacturing to other low-labor-cost locations such as Malaysia, Thailand, Vietnam, Costa Rica or Mexico, Kley told Medical Design & Outsourcing.
“It’s not necessarily moving them back to the United States,” Kley told us.
“What we are seeing is customers really looking at what they want to do with their supply chain,” said Charlie Mason, SVP of the medical division at Sanmina (San Jose, Calif.). “For next products, where do they want to be? And they’re doing that evaluation.” Sanmina has an FDA-registered facility in Kushnan, outside of Shanghai, that makes complex electromechanical assemblies for medical devices. (Another plant in Shenzhen meets the ISO 13485 standard but doesn’t presently ship to the U.S.)
“Customers are examining the next most competitive footprint that would make sense. So for us, we might look at India, or we might look at Malaysia, both FDA-registered locations. For our customers, it’s a matter of if they want to keep it in a particular region, go ahead and look at our alternative footprint,” Mason explained.
Get the full story on our sister site Medical Design & Outsourcing.