Petaluma’s Labcon wins North Bay Maker Award
Seeing a need for a local sterilization company to support the growing biotech, medical device and pharmaceutical industry in the North Bay, Labcon President Jim Happ approached Synergy Health in 2013 and encouraged this global provider of outsourced sterilization services to form a partnership that would result in a new Sonoma County plant to serve as a hub for a growing life sciences industry.
“Sterilization is a necessary process for the invention, engineering and commercialization of medical devices, and for changing and enhancing desired material properties,” Happ said. “Having this essential technology close at hand is an incentive for more medical device startups and manufacturers to locate, compete and succeed in our region.”
Labcon, a wholly owned subsidiary of Helena Laboratories of Beaumont, Texas, and a leading manufacturer of disposable laboratory equipment, was founded in 1959 in San Rafael. In 2003, the company relocated to South Petaluma at 3700 Lakeville Highway in a 127,000 square foot manufacturing plant and became the largest consumer of industrial sterilization in Northern California. Today Labcon has 200 employees and revenues of $34 million annually.
The firm makes more than a billion products a year including culture and centrifuge tubes; pipet, aerosol filter and robotic tips, along with microbiology disposables, organization tools and a wide range of OEM/specialty items.
Labcon was shipping some 400,000 cubic feet of its products a year out of the county to sterilization plants in the South Bay, Los Angeles or San Diego for processing.
“This distance not only increased shipping expense, time delays associated with a 170-mile round trip slowed our ability to turn orders around quickly and satisfy customer schedules,” Happ added.
Synergy Health plc, based in Swindon, England, has worldwide operations and revenue of about $650 million a year. It has four U.S. plants, including one in San Diego.
To sweeten the offer to Synergy, Labcon purchased ten acres of land at 3200 Lakeville Highway in Petaluma – half a mile from its own location -- and financed the remodeling of existing buildings with 71,000 square feet of space. It also will break ground for the construction of a 40,000 square foot warehouse later this year.
Labcon and Synergy essentially partnered in the $12 million project with Synergy building the infrastructure and installing the sterilization equipment.
“We’re covering the base load of this facility so it can become established and ramp up over time while mitigating high initial costs typically associated with a new plant,” Happ explained.
Synergy opened its new plant initially using 31,000 square feet of total space in October 2015, with Labcon and Synergy signing a 20-year contract and lease agreements. The starting workforce included 10 employees.
As Synergy Health’s U.S. management team headquartered in Ohio was consummating the Labcon agreement, Synergy officials at its global British home office were negotiating to sell its operations to Mentor, Ohio-based Steris Corporation, a worldwide leader in infection prevention, contamination control, surgical and critical care technologies as well as sterilization products.
On November 2, Steris Corporation completed its acquisition of Synergy Health for $1.9 billion in stock and cash. The new name for the combined entities became Steris AST (Applied Sterilization Technology) listed in the New York Stock Exchange under the symbol STE.
“The technology deployed for sterilization in Petaluma uses an electron beam, instead of water or steam,” according to Happ. “Traditional methods either degrade materials, or leave residue behind, and are not as efficient as high speed E-beam technology.”
E-beam irradiation has been in use since the 1950s. It can deliver the irradiating dose in just a few seconds resulting in shorter processing times and improved supply chain efficiencies. No chemical residuals remain on processed products, making it a clean, safe and environmentally friendly technology.
Mike Clark, area vice president, operations and technology, for Steris AST said: “Our acquisition of Synergy Health is 100% complete. It’s an exciting time for customers and our organization. Petaluma is our fifth facility in California. We’re currently staffing one 12- shift five days a week and are considering moving to a second shift with 24 employees. Eventually we want to go to 24/7 operations as we continue making contacts with existing clients and new ones in the medical device, pharmaceutical, consumer and industrial market sectors in Northern California.”
Jim Happ observed, “The services Steris AST is offering are the key to expanding medical device manufacturing and life sciences in Sonoma County and all of the North Bay.”