Today, Merit offers more than 20,000 products in 120 families. Headquartered in South Jordan, UT, the company employs more than 5,700 people worldwide and operates packaging and manufacturing facilities in West Jordan, UT; Chester, VA; Malvern, PA; Pearland, TX; Galway, Ireland; Joinville, Brazil; Melbourne, Australia; Paris, France; Singapore; Tijuana, Mexico; and Venlo, The Netherlands.

Neil Peterson, Merit’s vice president of operations, has had a front-row seat for much of the company’s explosive growth. When he joined Merit as a manufacturing engineer in 1994, the company tallied $30 million in sales. At press time, the company was on pace to end 2018 with $870 million in sales, and it will likely be a billion-dollar company in 2019.

Recently, we sat down with Peterson to talk about medical device manufacturing, automation and century-long business plans.

ASSEMBLY: In a recent interview, Merit’s CEO, Fred Lampropoulos, said the company has a 100-year business plan. Does that influence how you invest in manufacturing technology?

Peterson: Fred is a very forward-looking leader, which has served us well. This year, we’re on pace for 24 percent growth on our top line. Last year, it was 20 percent. At those growth rates, it’s good to have somebody leading the ship who is looking that far ahead, because things can get out of hand quickly if you don’t.

We’ve always been good about investing profits back into the company, whether it’s acquiring new buildings, automation or other companies. Fred encourages us to look at new technologies and to invest in automation—especially here in South Jordan. Automation has allowed us to be more efficient and cost-effective in every aspect of the business, from processing raw materials through to assembly, packaging and shipping.

We have a highly automated system for shipping finished goods. The system cost more than $6 million, and it allows us to automatically pick products from our warehouse, as opposed to operators going out and getting the products.

We’ve also automated raw material handling. For example, we have 61 injection molding machines here that run 24/7 in clean rooms. When a batch of parts is finished and accepted, those totes—and there could be 10 or 20—get placed on a conveyor, which automatically transfers them to a warehouse 500 yards away. The system reads a bar code on the totes—recording the part number, lot number and quantity—and stores them automatically. I don’t need to have anyone touch them.

There are 22,000 tote locations in our raw material parts inventory. When we get an order for finished assemblies, we scan a bar code on the bill of materials, and the system automatically retrieves what’s needed, taking the oldest lots first. An operator consolidates the parts into a large bin and delivers all the parts to the assembly line.

We have products that go from resin to finished, sterile packages with almost no labor involved. If we are going to compete on quality and price, we need automation.

ASSEMBLY: You produce a variety of products each day. How does that affect how your assembly systems are designed?

Peterson: We’re always adding new products to our portfolio. When we introduce a product, the sales volume is typically low, so we usually start with a manual assembly process. As volume increases, we’ll do a return-on-investment analysis. We’re spending this much on labor. We can spend this much on automation. If the return on investment
is good enough, we’ll automate. Many of our assembly lines evolve from manual, to semiautomatic, to fully automatic processes over time. By the time a line becomes a fully automatic process, the equipment is very specific to that product. It’s not equipment that will run whatever you want.

ASSEMBLY: When you need automation, do you use a systems integrator or do you build it in-house?

Peterson: We have a team of automation engineers here who are very good at designing and building automation. Our projects range from a $1,000 desktop fixture to a small, $200,000 assembly machine. That’s our wheelhouse.

When you start getting into $2 million automated lines, we don’t have enough people to design and build such systems in a reasonable amount of time. At that point, we’ll hire an integrator. But, we work very closely with the integrator on specifications, design reviews and acceptance testing.

ASSEMBLY: According to your annual report, when Merit likes an idea for a new product, it assembles a project team comprised of individuals from sales, marketing, engineering, manufacturing, legal and quality assurance. Why is it important for manufacturing to be at the table?

Peterson: It’s critical for manufacturing to be involved.

When we have an idea for a new product, the team asks several questions. Does it serve a medical need? Is it a business that Merit wants to be in? Can we manufacture it at a low-enough cost that we can sell it for a profit? That last question is a very big hurdle to get over. You can have an idea for a great new product, but if it costs $1,000 to make, and the market is only willing to pay $100 for it, then it’s a nonstarter.

Our manufacturing engineers can provide valuable insight into design for manufacturability. Often, the people who design a new product don’t understand automation. For example, they may not know how to feed and orient parts reliably for automation. But, as a product moves from manual to automated assembly, you don’t want to have to redesign all the parts from scratch. One mold can cost $300,000, so you don’t want to spend that more than once.

ASSEMBLY: What’s the most challenging aspect of making a catheter?

Peterson: Catheters are tricky and difficult to automate. You’ve got a slender tube that might be 4 feet long, and it’s hard to handle. The coating and finishing processes are automated, but there’s a lot of manual assembly: loading and unloading fixtures; bonding hubs; and shaping the tips.

In this case, the goal is to design the process to be as repeatable and efficient as possible. Lines are laid out for single-piece flow, and each process step has been optimized.

ASSEMBLY: What assembly technologies have made a big impact on your operations?

Peterson: Lasers have come a long way. We’re now using lasers to mark parts instead of pad printing. Working with ink is slow, and changeovers take a long time. Lasers are very quick. There’s no changeover time, cleanup or fumes. We’re also using lasers to drill holes in catheters.

Vision systems have also come a long way. For example, we use vision to inspect every needle we make—and we make approximately 8 million needles a year! If that needle tip is not perfectly sharp, the vision system will identify it and reject it. Ten years ago, when we were inspecting needles manually, we used to get 30 complaints per month for damaged needle tips. Now, we might get one a year.

ASSEMBLY: What manufacturing challenges do you expect in the future?

Peterson: Our biggest challenge today is a shortage of labor. We’ve had to move some manufacturing to Tijuana out of necessity. These are products that involve a lot of manual labor and are difficult to automate.

Another challenge we’ve experienced in the past five to 10 years has been obsolescence of raw materials. Most of our products are made from molded or extruded plastic, such as polycarbonate, ABS or nylon. It can take 14 months to two years to validate a new material for a medical device. That includes process validation, design validation, biocompatibility testing and approval by regulatory agencies. That’s not just the FDA, but anywhere we want to sell our product—Europe, Japan, China or Korea.

In the past few years, we’ve been getting more and more notifications that a material we’ve been using is no longer available or has been changed. That has placed a large strain on my engineering resources to identify and validate replacement materials. Compatibility testing alone can cost $100,000.

As a result, we’ve learned to be very careful about which suppliers we work with and what resins we use