Electronics Component Supplier to Expand to Medtech Sector

A West Michigan-based supplier of electronic components hopes to further diversify its business by seeking more contracts in the medical device sector.

While Firstronic LLC traditionally has supplied the automotive industry with components for lighting controls, various sensors and control modules, the company increasingly is finding a niche serving the burgeoning medical device sector, CEO John Sammut said.

“What we like about the medical sector is the stability of the revenue base,” he said. “It’s a segment that is not economically dependent. For the most part, the medical products are stable year over year with pretty consistent growth and fairly healthy margins.”

Another aspect of the medical device manufacturing sector that Sammut said is favorable: The competition is much less cutthroat than in some other sectors Firstronic serves.

“(The OEMs) are more willing to source business domestically, based on the quality and reliability of their supply base,” he said. “It’s a real win-win opportunity for suppliers that are positioned to support medical OEMs.”

The collegial nature of companies in the medical device sector led Firstronic to become a member of MiDevice, a consortium of West Michigan medical device manufacturers facilitated by Grand Rapids-based regional economic development group The Right Place Inc. The consortium helped Firstronic with networking and sharing ideas with other companies that are part of the sector, but not necessarily direct competitors, Sammut said. Being a member also allows for easier marketing, as the group often exhibits at various symposiums and trade shows where the company can leave brochures, he said.

Its initial success in the medical device sector helped Grand Rapids-based Firstronic secure $300,000 in Michigan Business Development Grant funding from the Michigan Economic Development Corp. (MEDC) last fall. The funds will help create electronics manufacturing jobs in the state, Sammut said.

“Right now, 75 percent of the revenue we are achieving is actually from products we are shipping overseas to places like Mexico, China, India and Korea,” Sammut told MiBiz. “So not only are we bringing jobs back from places where the majority of electronic manufacturing has migrated to, but we are exporting the products to those markets. That is what the MEDC saw and liked in our business plan and awarded us with the grants to help our growth.”

To get to its current period of growth, Firstronic has spent the last few years making a series of strategic changes to the business, including bringing on Sammut to run the company in 2011. Sammut has a long background in contract electronic component manufacturing.

“(The company’s investors and I) put together a strategy to restructure the company in 2011 and focused on customers that have high growth potential for long-term partnerships. We reduced the number of customers while growing the revenue,” Sammut said. “During that period of time, we targeted a few customers that we thought we could establish a long-term, mutually beneficial partnership with. We were able to secure those partnerships, and they are resulting in export revenue.”

To assist with expanding the overseas customer base, Firstronic formed a partnership with Maxtronic, a tool development company in China that allows the Grand Rapids firm to source many of the items necessary for its component manufacturing at a reasonable price.
“As long as we can buy components at a price that is competitive globally and (so long as) we have a high degree of automation in our tooling and equipment, we can be competitive with anyone,” Sammut said.

With the MEDC funding, Firstronic plans to go on somewhat of a hiring spree, committing to add 110 jobs over the next three years. The firm is well ahead of pace on its hiring obligations, having already added about 80 positions since September, Sammut said.

Prior to the MEDC announcement, the firm struggled to find qualified workers, but that all changed with the publicity from the announcement, according to Sammut. After receiving the grant, Firstronic has been inundated with qualified applicants, he said, adding that many of the applicants are people with significant experience in electronics manufacturing who were let go from companies during the last economic downturn.

Currently, Firstronic has about 150 employees and will be over 170 once the round of hiring is finished. However, the company is projecting a number of years of growth that will have it exploring future expansions, Sammut said.

He said that he does not anticipate a physical expansion of Firstronic’s brick-and-mortar facilities in West Michigan, but the company will likely look to get more out of its equipment. Firstronic is also exploring the possibility of opening a facility in Mexico, Sammut said.

The company had revenues of more than $30 million in 2013 and is on track for $50 million in sales within the next couple of years, Sammut said.

“We have had opportunities to improve our production efficiencies by having better equipment that is higher velocity,” Sammut said. “This is the approach we are looking at to enable us to get more capacity and more productivity out of the current facility.”