Thogus Products Cos. is as Mom-and-apple-pie as a company gets in the Ohio manufacturing industry.
Begun in 1950 by Jack Thompson and Walter Gus (“Tho” + “Gus” = Thogus), the company started out building molds for the developing plastics industry. Over the years, it became a supplier of injection-molded parts to the Big Three Automakers.
Now, Thogus is getting into the medical device and equipment industries in a big way.
Other traditional manufacturers in the state are making similar moves. Ohio has the second-largest number of Food and Drug Administration-registered companies among Midwestern states — 625 — according to a 2008 recent survey by BioEnterprise, the bioscience company developer in Northeast Ohio.
Thogus doesn’t have an FDA registration, which gives manufacturers the green light to make and assemble parts for certain types of medical devices. But the Avon Lake company doesn’t need the registration to engineer and make plastic parts for companies like Philips Healthcare, Matt Hlavin, its president, said.
The company’s move into the medical industry started with Hlavin’s return to his family’s business. “In 1997, I thought it was time to come back,” said Hlavin, Jack Thompson’s grandson who spent his early career working at investment banks. He started working at Thogus as a salesman.
In July of that year, Thogus was certified as a Tier 1 automotive supplier. “In August, we made the decision that automotive really wasn’t a good space for us to be in, so we fired Ford, Chrysler and GM, thus displacing 56 percent of our business,” Hlavin said. Trouble was, management didn’t have a plan for what to do to replace that business.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
So Hlavin went from cold-calling potential stock brokerage clients to cold-calling manufacturing clients for Thogus. The “dialing and smiling” landed few jobs. “How do I change that? How does Thogus survive?” Hlavin remembers asking himself.
He looked at the supply side of his business and saw “a big disconnect” between the chemical companies and the original equipment manufacturers. The chemical companies didn’t know how to sell or convert their materials to parts the manufacturers could use. The two needed a middle-man: “guys like us that can actually make product,” Hlavin said.
“So I told the materials suppliers, ‘We’ll be your partner. We’ll help develop the materials.'” After a 3-year development process, Thogus was ready to go “hand-in-hand” with the materials suppliers to pitch products to equipment makers. “A big focus was the medical industry,” he said.
Thogus worked with PolyOne Corp., a specialized polymer materials developer and producer in Cleveland, Ohio, to find manufacturing applications for its Gravi-Tech compound, which can substitute for lead in medical devices or equipment. Gravi-Tech has similar radiation-shielding properties as lead but is safe for people and the environment.
“One of our first customers was Philips Healthcare,” Hlavin said. “They tried it and really liked it. We’re close to 40 different parts that we’ve converted for them.”
The medical industry focus has been good for Thogus. “Our business has grown in spite of the economy due to the shift in our business model, ” said Hlavin, who was named president of Thogus last year. “We’ve seen the fastest growth in medical, especially in the last year. This is when Thogus went into hyper-speed.”
When the economy collapsed, Thogus had no debt and strong supplier relationships. “When the economy is going south, it’s a great time to buy capital equipment,” Hlavin said. So a year ago, he bought a Stratasys rapid prototyping machine, which produces functional plastic parts through a process called fused deposition modeling. “It’s the only rapid prototyping process that uses true thermoplastic materials,” he said.
That means Thogus can produce fully functioning parts from a piece of paper or computer-aided design file within 24 hours. Thogus now has four Stratasys machines, “which have helped position the company above the typical processor” and enabled it to win new clients in days rather than years, Hlavin said.
Hlavin also bought a biomedical engineering company and now employs nine engineers who help clients develop parts for medical devices.
“We’re an engineering company, now,” Hlavin said. “Injection molding is the foundation of our business, and it always will be, but there are 10,000 other injection molding companies out there. I wanted to become a speciality company. That way, we separate ourselves from the pack.”
Now Thogus, which has grown to 61 employees, can help formulators and scientists develop plastic materials, engineer and produce parts from those materials, and even write 510(k) submissions to get FDA market clearance for customers’ products.
“The opportunities abound” for companies like Thogus because medical device and equipment makers have consolidated their supply bases and workforces to preserve capital, Hlavin said.
These companies also are outsourcing more of their research and development work, he said. That might become a challenge for Thogus if a recently enacted tax on medical device sales cuts into R&D budgets.
At the moment, however, medical device and equipment work is 35 percent of Thogus’ business and growing. “We’re very excited about it,” Hlavin said. “It’s a fun market to be in because you’re creating value that applies to everyday life.”
