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VALLEY BUSINESS | EXPANDING BIOMED'S HORIZONS

ID Bracelets Establish Company's Name in Health-Care Field

Growth: The wrist bands bring success to firm that employs 350 in Pacoima and is ready to market an advanced version containing a microchip.

May 09, 2000|JENNIFER PENDLETON | TIMES STAFF WRITER

PACOIMA — When patients check into Providence Holy Cross Medical Center in Mission Hills, the nurses dispense an identification wrist band, a plastic bracelet containing vital information, such as name, patient ID number, medical record number, birth date and physician.

And when kids get their tickets to Legoland in Carlsbad, they also get plastic ID bands--with different colors that let park operators know instantly who's tall enough to be on what ride.

The venues are wildly different, but the ID bands come from the same source: Precision Dynamics Corp., at 44 years old one of the oldest and largest manufacturing firms in the northeast San Fernando Valley. This maker of ID wrist bands has succeeded in a region that other companies have written off, growing slowly but consistently. Today, Precision has $50 million in annual sales and employs 550 people, 350 at the two-story, 135,000-square-foot headquarters here.

How has Precision done it? By picking its spots.

The company hasn't made a splash with headline-grabbing new products like some biomedical high-fliers. But Precision has built a solid business by going after profitable niches where it's achieved leading market positions. It's adapted to market changes as necessary, and is now boosting its bottom line through acquisition. Through it all, it's built a corporate culture based on employee empowerment and profit-sharing, an approach that's paid off with little turnover among the ranks.

"They are low-tech but they are doing very well," said Ahmed Enany, executive director of the Southern California Biomedical Council. "You don't necessarily have to be high-tech to make money."

The fact that Precision is still standing--and succeeding--after a period of massive consolidation in the health-care business is an accomplishment. From 1985 to 1995, times were tough for purveyors of lower technology items hospitals buy in volume.

Precision's customers--large health-care distributors that sell to hospitals--grew ever-larger, giving them increased leverage in negotiations. Many companies of Precision's size sold out.

Today, the shake-out is over, according to David Cassak, editor of In Vivo, a Connecticut-based health-care industry journal. "If you've survived this long, you're going to survive," he said.

Precision is an unlikely success story given its humble beginnings.

Founder Walter Mosher was 22 years old, living with his parents and focused on his engineering studies at UCLA when he started Precision with three investors in 1956.

At the time, Mosher had no business aspirations, and no money. But an acquaintance, the late Arthur Goldhammer, a hospital supply salesman, saw an opportunity.

Hospital ID bracelets of the time were cumbersome, requiring tools to affix to patients. Come up with a better design and you could build a business, Goldhammer thought.

He turned to Mosher. The engineering student came up with what was then an innovation: a single-piece wrist band, no parts, no tools necessary. It sold immediately.

The partners scraped together $2,000 and called the enterprise Precision Dynamics Corp.. The name signified nothing, but the partners liked its highfalutin sound. "It worked nicely to get people to extend credit," said Mosher, now 66.

In its early years, Precision operated out of a series of low-rent storefronts in Burbank. By the 1970s, Precision needed cash to grow. The founding shareholders sold the business, then at around $2 million in sales, to a division of W.R. Grace.

But Precision's time as an arm of a giant corporation didn't last. By July 1981, Mosher and a childhood friend, Robert Kraemer, now executive vice president, had bought the company back in a leveraged buyout. And so began Precision's current incarnation as a private firm that's grown sevenfold in the past 20 years.

Getting there hasn't been easy.

The hospital ID bracelet business was an attractive niche for a small company. Big players in health-care supplies wouldn't bother with this relatively small, low-tech business with a domestic market estimated at $30 million to $40 million in annual sales.

But then the managed care revolution hit health care. Production and labor costs were rising, but the now large hospital buying groups could assume a take-it-or-leave-it stance in setting terms. Precision's profit margins fell. (In fact, Precision has been unable to raise prices for its basic ID bands for 20 years.)

What to do? Precision streamlined the manufacturing process and started using new materials to achieve acceptable margins. Precision produces a wide variety of plastic bands for different markets. But it also began producing bands using a flexible paper-like material called Tyvek, which helped shore up its bottom line. Precision's plastic ID bands sell to hospitals at around 25 cents each; the Tyvek bands can sell for 8 to 10 cents.

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