lllayden@naplesnews.com" /> Naples-based Arthrex continues to grow » Marco Eagle

Naples-based Arthrex continues to grow

At 22, Reinhold Schmieding had plans to become a doctor.

It was 1977 and he was getting ready to start medical school.

But then came an offer he couldn't pass up.

Richards Medical, a leading American medical orthopedic device manufacturer, recruited him to manage its European operations in Germany. He took the job and never looked back.

"I was really fortunate to be offered that kind of international experience at an early age," said Schmieding.

In 1981, he took his international experience, combined it with his entrepreneurial spirit and struck out on his own. At 27, he started a medical device development company in Munich called Arthroscopy Excision Instruments Inc., focused on an emerging procedure known as arthroscopic surgery.

His company later became Arthrex Inc. and it has emerged as a leading provider of medical instruments for arthroscopic surgery.

Arthroscopic surgery, now commonplace, involves making small incisions in joints, such as knees, shoulders and wrists, to treat disease and injury, from arthritis to bone fractures and cartilage tears.

After more than 20 years in business, Naples-based Arthrex — with a new and larger headquarters in the North Naples Creekside Commerce Park — has about 200 patents to its name. Today, the company churns out two to three new patents a month and makes 500 to 700 product shipments a day to hospitals throughout the country.

"We're probably the biggest FedEx account in town," said Schmieding, the company's founder and president.

Arthrex distributes its products to more than 90 countries worldwide. It has subsidiaries throughout Europe, including Germany, Austria, Belgium, England and France.

Since moving its headquarters to Naples in 1991, the company has grown from two employees to more than 150 in Collier County.

Arthrex Manufacturing Inc., which makes the devices its sister company develops, has grown just about as fast. Locally, it has 115 employees.

On Dec. 15, the two companies completed a move into their new and larger headquarters, signaling their success and paving the way for future growth. The signature white and blue building — spanning nearly 130,000 square feet — is located behind the U.S. Post Office building at Creekside Commerce Park in North Naples. It's twice as large as the old space the two companies occupied.

The Economic Development Council of Collier County estimates that Arthrex has pumped at least $30.1 million into the local economy, including a $20.3 million capital investment and $9.8 million in direct earnings by employees.

Schmieding attributes Arthrex's success to a commitment to developing quality products and to good old-fashioned teamwork.

Customers are treated well and so are employees, whose benefits include a catered lunch four days a week and use of Schmieding's vacation home in Montana.

"We really want to take care of our employees," he said.

A Helping Hand

From the start, Schmieding says, his mission has been to provide quality products to orthopedic surgeons and their patients. While working for Richards Medical, he got in at the ground floor in the development of medical instruments for arthroscopic surgery. He recognized the potential the orthopedic procedure held and felt he had the ability to help advance the science. That's what pushed him to start Arthrex.

As a physiology major at Michigan State University, Schmieding knew the body well. He tapped other talents to help get the company going.

From an early age, he recognized he had the mind of an engineer.

"I was always able to design products," Schmieding said. "It's a natural ability. One of my electives in college was in engineering design and I did very well at it."

He has a proven knack for visualizing surgical problems and designing products to solve those problems. He is the primary inventor of most of Arthrex's patented products.

Arthrex's goal is "to make technically demanding surgical procedures easier, safer and reproducible." Most of its products are used to treat sports-related injuries, which include tendinitis and carpal tunnel syndrome.

"We're the No. 1 company for developing devices and procedures to treat cartilage injuries," Schmieding said. "Before we started there were really none, other than having a total joint replacement. There are now four procedures that are actively being used by arthroscopic surgeons, most of them developed by Arthrex."

Arthroscopic surgery is most often performed on shoulders and knees. For some patients, it can offer the only alternative to a total knee replacement.

There are many benefits to arthroscopic surgery. There is less scarring, patients don't have to stay in the hospital as long and recovery is generally faster.

Arthroscopy was first invented as a way to look inside a joint. The arthroscope is a probe with a tiny camera on it. When it's inserted in a joint through a small incision, the camera shows a picture of the inside of the joint on a computer monitor.

The development of the fiber optic probe has revolutionized the treatment of sports-related injuries. With tiny instruments like those sold by Arthrex, surgeons are able to correct all sorts of problems through cuts measuring about a half of an inch, or about the size of a drinking straw.

The medical devices used in the surgery measure only 2 to 6 millimeters in diameter. They include screws, pins and plates, which dissolve in the body.

"Orthopedics is basically like carpentry," Schmieding said. "Really you are trying to find ways to hold the bone and ligaments together until the healing process occurs."

A Simple Start

When Schmieding started Arthrex, all he had to invest in the company was his personal savings, which amounted to about $60,000.

"A business start-up is a business start-up," he said. "The chances of survival are usually 10 to 20 percent. No bank wants to deal with you."

After starting the company, Schmieding didn't make a penny for two years. He ran his company from a fold out table in his small apartment in the Olympic Village.

"I lived like a pauper," he said, adding that he had a new wife to support at the time. "There was lot of sacrifice early on — a lot of personal sacrifice."

In the early years, he spent most of his time in the operating room working with prominent orthopedic surgeons. He used what he learned to begin developing a line of products to help them.

Today, he's got a team of highly specialized engineers and surgical technicians behind him to help design products. They include Karen Gallen, who recently helped develop a new patented procedure to surgically fix the acromioclavicular, or AC, joint in the shoulder.

"If you develop a technique that has never been done before you feel like you've made a difference in a small way," she said.

While Schmieding once sought out doctors that he could work with to develop new products, today surgeons seek out Arthrex's help.

More than 700 surgeons visit Collier County every year to meet with Schmieding and other company representatives.

Besides developing medical devices, the company offers training to surgeons so they can learn to use the products.

Arthrex works closely with leading orthopedic surgeons in the country and leading universities to research and test its products.

Ideas for products are generated by surgeons and in house by staff. Company engineers create 3-D models on computers to demonstrate what new products will look like and how they will work. Testing is done to make sure the products are safe and effective, in conjunction with leading orthopedic institutions in Europe and the United States.

It can take up to two years to get approval from the U.S. Food and Drug Administration to use the products once they are developed, Schmieding said.

Ninety-five percent of the manufacturing for Arthrex's products is done in the United States — about half of it in Collier County. With the move to the new headquarters, Schmieding hopes to do more manufacturing locally.

About 99 percent of Arthrex's products are kept in stock so that it can respond to emergencies. Often doctors will call the day before surgery to order the parts and devices they need. Some products are reusable, while others are not.

Arthrex has a quality control department that checks for flaws before any products are sent out.

"Every part is inspected before it's packaged and sterilized," Schmieding said.

Team Player

Schmieding believes in teamwork. He does everything he can to encourage it at Arthrex.

One of the posters he will soon hang on the walls of the new headquarters is titled "Teamwork." It describes the principle as "The ultimate essence of success in our individualized world."

In the new headquarters, he'll also have room to display the fold-out table where it all started. He keeps the table around as a reminder of how far the company has come in the last 20 years.

When Schmieding decided to move his company's world headquarters to Naples, Arthrex had 35 employees in Europe and three in the United States.

In 1985, Schmieding opened an office in Vermont to distribute the company's products in the United States. One of his three employees in that office followed him to Collier County.

Now his two companies combined employ more than 250 people in Collier County and another 125 in Europe.

About 150 people work for Arthrex Inc. By 2005 that number is expected to reach 190 — and it won't stop there.

As part of its expansion, Arthrex plans to create more than 130 new jobs in Collier County paying above average wages ranging from $34,000 to more than $47,000 a year.

"We grow between 20 and 30 percent a year, as we develop new products," Schmieding said.

The company is developing more than 100 new products and 20 new surgical techniques a year.

"It's unending," Schmieding said. "You can always improve things."

He sees plenty of opportunity for growth.

"People want less invasive treatments and surgeons are also very committed to developing less invasive surgery," Schmieding said. "It's a global market that is expanding."

Arthrex is not without competition. More than a half a dozen other companies are focused on the same market. They include Stryker, Linvatec, Smith & Nephew and MiTech.

"It's a very prestigious market," Schmieding said. "It's a very innovative market. We're trying to improve all the time."

A well-kept secret

Even as Arthrex continues to expand, it remains a well-kept secret in Collier County. Many local residents still don't know the company exists.

It took five years for the Economic Development Council of Collier County to discover the company after it relocated its world headquarters here.

"In 1996 we finally got large enough to get on their radar screen," Schmieding said.

Arthrex is the exactly the type of company the EDC looks to attract to Collier County because it offers highly skilled, good-paying jobs. Since 1996, the EDC has worked closely with the company to help it grow in Collier County.

"It pays higher than average wages," said Tammie Nemecek, the council's executive director. "They are not driven by the local economy. They are generating their business outside the local economy. These are knowledge-based jobs, technology-based jobs, providing employment to people graduating from vocational schools on up to the university level."

The EDC has helped Arthrex expand four times in Collier County. The public/private partnership also encouraged the company to start manufacturing its products here about five years ago. The result was the opening of Arthrex Manufacturing.

With its latest expansion, Arthrex Inc. and its manufacturing subsidiary will receive up to $464,000 in tax credits over the coming years under a state effort called the Florida Qualified Target Industry program, which offers incentives to companies that create higher-paying jobs.

Collier County commissioners have agreed to provide the required 20 percent match for the state program, adding up to $92,800 in tax credits. EDC officials helped Arthrex get the state and county incentives, and helped speed the company through the permitting process for its new headquarters.

"What we find working with business is that the existing industry accounts for 80 percent of the jobs you are going to create in your community," Nemecek said. "So making sure we help retain and grow our existing industry is very important."

Helping Arthrex grow also sets a good example for other companies that might consider locating here, she said.

Construction on Arthrex's new headquarters began in October 2002. The new building includes an 80-seat training room, a 10 station lab, a surgeon's lounge, a product exhibit area, state-of-the-art audiovisual equipment and work stations for visitors.

Pictures are still being hung and boxes are still being unpacked. But within a couple weeks, Schmieding expects to have all that behind him. He's looking forward to what he sees as a bright future for the company in its new headquarters.

Since Arthrex is a global company, Schmieding said he could have located it anywhere. He chose Collier County for the quality of life it offered to himself and his employees. He said he fell in love with the area after visiting Naples with family when he was a child. His mother and brother moved here before he relocated the company to Collier County.

While many local residents may not know about Arthrex, it has attracted national recognition from orthopedic surgeons.

In 1998, it received two prestigious awards: the Orthopedic Innovation Award for its hand-held instruments and the Award for Excellence in Arthroscopy and Soft Tissue Repair. Knowledge Enterprises, Inc., a strategic services firm that focuses on the orthopedic market, presented the awards. Arthrex was chosen for the honors based on a survey of orthopedic surgeons in various specialties.

Arthrex's success story may have something to do with how employees are treated. At least Schmieding would like to think so.

At Arthrex, employees can earn annual bonuses of more than 10 percent of their annual salary. That's on top of the catered lunches the company offers them four times a week, and the vacation home in Montana that Schmieding shares with them.

Arthrex also picks up the monthly costs of health and dental insurance for its employees. Employees pay the co-payments when they visit the doctor.

Also, Arthrex matches employees' 401k contributions at 100 percent.

Kathy Sparrow, Arthrex's human resources director and the only employee to follow Schmieding from Vermont, said her boss's dedication and passion toward arthroscopy are definitely reasons the company is so successful. That, she said, and he's a "great guy to work with."

"Without his vision these products and the development of them wouldn't occur," she said. "We certainly have an engineering staff, a marketing staff and a great group of professional people that do a lot together. But he's definitely a visionary when it comes to where the company came from and where it is today."

For Schmieding, where he is today is a lot better than where he thinks he would have been if he had become a doctor.

His mother and father, who immigrated to the United States a year before he was born in 1954, were both physicians. So were his cousins and grandparents as far back as he can remember.

But he feels he's helped patients more by helping orthopedic surgeons treat them better with less invasive procedures.

"I far exceeded what I could have done as a doctor," he said.

© 2004 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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