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Mar-Co Industries succeeds with contract manufacturing injection molding
Only high-technology cooperative offering pharmaceutical industries injection molding to packaging services
By MARIALBA MARTINEZ
April 21, 2005
In 2002, when Mar-Co Industries Corp.s 26 employees took $5,000 to $25,000 loans from the Roosevelt Roads Cooperative and organized a cooperative to buy the company, they were betting on consultant José Alsinas business plan and extensive knowledge of the pharmaceutical industry to succeed in a very competitive market (CB Sept. 5, 2002).
First known as Comar Puerto Rico Inc., the operation was a plastic injection-molding contract manufacturing company that was ready to close in 2001. After Mar-Co Industries asset buyout by the employees, the company restructured its operations and continued manufacturing plastic injection-molding products for the electronics sector, later on adding new facilities for pharmaceutical drug and medical instruments contract manufacturing.
Most recently, the company was granted $213,000 by the Cooperative Development Investment Fund. Along with another $200,000, the money was used to establish a clean room on-site and purchase a fill-and-finish and packaging production line for pharmaceutical products. The companys first customer has already begun to send partial production orders that are being shipped by Mar-Co Industries to China. Full production will begin in about a month, and the company expects to add another 15 employees to its 36-employee workforce.
"The process hasnt been easy, but we expected it to be so and still managed to achieve most of our goals, such as a 50% reduction in operational costs," said Alsina, who remains CEO & sales manager of Mar-Co Industries. "This was accomplished with the evaluation of the companys supplier contracts and making revisions or eliminating those contracts that werent favorable to the operation."
Mar-Co Industries has continued to expand its client base. In addition to providing contract-manufacturing services to the electronic sector, the company has also added pharmaceutical and medical instrument customers to its roster. To comply with U.S. Food & Drug Administration regulations regarding the manufacturing of pharmaceutical drugs and medical instruments, Mar-Co Industries earned a special permit to process plastic products and expanded its uses to mixing, filling, and packaging. The company also has all the permits allowing it to ship customers products to foreign countries.
The most source of pride for Mar-Co Industries today is its new clean room, where the company will be able to attract contract-manufacturing projects from pharmaceutical drug manufacturers. Mar-Coop Molding Chairman Alfred Alvarado and Mar-Co Industries Executive President Jaime Vélez agree with Alsina that an important niche market within the pharmaceutical sector will belong to contract manufacturers that can produce some of their products more cost-efficiently.
"Look at Mova Pharmaceuticals success over the years with its contract manufacturing relations with some of the top companies in Puerto Rico," said Alsina. "Mar-Co Industries can now offer the larger healthcare companies contract manufacturing services, along with manufacturing services for injection-molding products and dies. The future of Puerto Rico is to become a contract manufacturing center for the pharmaceutical, medical instruments, and electronic sectors."
How did they do it?
Mar-Co Industries is a subsidiary of Mar-Coop Molding, the only cooperative in Puerto Rico to purchase a high-technology contract manufacturing operation and the first to turn it into a pharmaceutical drug operation. Of the initial 26 members of the cooperative, there are 22 left that make up the companies boards of directors and are involved in every step of Mar-Co Industries decision-making process.
While the initial purchase price for the company in 2002 was $1.95 million, the cooperatives members contributed $178,500 in less than 45 days as initial capital, and the Puerto Rico Economic Development Bank (PREDB) approved a $1.85 million loan. The 50% tax credit approved by the Puerto Rico Treasury Department on the purchase of the company (Law 109 of Aug. 17, 2001) was credited directly to the PREDB, reducing the loan amount plus interest to approximately $900,000, or half the original purchase price.
Future plans are joint ventures with companies out of Puerto Rico. Mar-Co Industries has added to its customer base since initiating operations in 2002 and provides contract-manufacturing services for companies such as Pall Corp., Medisearch P.R. Inc., Pfizer Inc., General Electric, Eaton, and Thomas and Betts Caribe Inc. The company also has clients in the mainland U.S., Japan, Jamaica, the United Kingdom, and China.
"We are looking forward to creating joint ventures with companies outside Puerto Rico that provide products to local manufacturing corporations in the areas we serve," said Alsina. "After all, northbound transportation is still less expensive than southbound, and we can be more cost-efficient than suppliers outside the island."
Alsina also hopes Mar-Co Industries becomes an example for other groups to create high technology cooperatives, one of the most sought after sectors today. "Mova Pharmaceuticals proved contract manufacturing could be successful and we are proving cooperatives can be just as successful. The first two years were affected by the operations start up in 2003 and the election period in 2004. But this is now turning around quickly as the first four months of this year have shown a 40% revenue improvement than during the same periods in 2003 and 2004."
This Caribbean Business article appears courtesy of Casiano Communications.