How Surgical Innovations cut its costs in half by moving its manufacturing back into Leeds.
Graham Bowland
The business, which designs and manufactures devices for keyhole surgery and blood transfusions, has invested £600,000 in new 32,000 sq ft premises in the city, consolidating from a number of Portakabin units amassing 10,000 sq ft, and allowing it to bring manufacturing in-house.
Managing director Graham Bowland says outsourcing manufacturing has a lot of hidden costs.
“A lot of the manufacturing companies abroad are not specialised in medical devices and we travelled several times a year on quality audits.
"We would also pay for individual manufacturing part costs and compared to now, with the infrastructure in place, they were expensive. For high-volume, low-revenue items it may be cheaper to outsource, but not in this case.”
Surgical Innovations’ margins are up and pre-tax profit for 2008 rose from £731,000 to £820,000. The company was fortunate enough to have a share issue approved before the credit crunch set in, and can therefore continue to invest, says Bowland. The next project is a Class 100,000 cleanroom to keep its products sterile during the manufacturing process.
Investing in innovation
“For high-volume, low-revenue items it maybe cheaper to outsource, but not in this case.”
As well as large capital investment, another of which includes the addition of an injection moulding machine to bring plastic manufacturing in-house next year, the business continually invests in innovation, making incremental improvements to its products.
Bowland’s design team of 12 includes co-founder Peter Moran, who still works for the company in his 70s, and develops products with the help of a clinical advisory board.
Its “resposable” range, mixes reusable and disposable parts and is aimed at hospitals whose costs for disposing of clinical waste are three to four times the amount of normal waste costs. And its latest product, Logiflex, a device to fit gastric bands, has created a path into the rapidly growing obesity surgery market.
Obesity surgery increased by 40 per cent in the UK last year, with the NHS carrying out 4,000 procedures. Bowland says this could have been 10,000, if there wasn’t a lack of skilled surgeons to meet capacity. The company has also carried out a review of its US operations resulting in the employment of ten more people in Leeds to cope with the increased demand.
Bowland says the company now has £1m to invest and is going to spend a lot of it developing single-access surgery. “There’s a huge market to go at," he says. "The potential for the company is huge.”
A full version of this article appeared in the June 2009 edition of Yorkshire Business Insider. To subscribe visit our online Shop.
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