Joint venture

QAL’s line of rehab machines caters to an aging population angling to stay active longer

Posted on Feb 1, 2018 :: Cover Story
Jessica Thiel
Posted by , Insight on Business Staff Writer

When Guy and Sara Meyerhofer were contemplating the soundness of purchasing a line of continuous passive motion machines, the couple needed to look no further than Guy’s own father to evaluate the benefits.

0218_CStory_2The senior Meyerhofer, now 92, had both knees and one hip replaced and used a CPM machine as part of the rehabilitation process after his knee surgeries. Guy Meyerhofer, president and co-owner of Quality Assembly & Logistics in Marinette, looked at his dad and saw an entire generation who could benefit from the line.

“As I looked into the product line more, I realized there was going to be a sustained demand for the product,” Guy Meyerhofer says. “Baby boomers want to be active as long as possible, and they have the money to do so.”

The line includes 12 models that cover body parts from the shoulder to the ankle. The machines are designed to aid and speed the recovery process after injuries and surgeries. They move joints continuously and gently within a doctor-determined range of motion, using a mechanical splint.

Members of the baby boomer generation are physically worn out, Guy Meyerhofer says, and there’s worldwide demand for the devices. In fact, exports account for 65 to 75 percent of business for the OrthoAgility line, the majority of that in Europe and Japan.

With more than 600,000 knee replacements and 300,000-plus hip replacements performed in the United States each year, the investment appears sound indeed. A 2006 American Academy of Orthopaedic Surgeons study projected hip replacements would increase 174 percent and knee replacements a whopping 673 percent within 20 years.

In 2011, the company purchased the CPM division of Otto Bock Healthcare Canada in Pickering, Ontario, formed QAL Medical as a division of Quality Assembly & Logistics, rebranded the line under the name OrthoAgility and moved manufacturing operations from Canada to QAL.

The CPM acquisition served as the centerpiece of a growth and diversification plan Guy Meyerhofer set in motion after purchasing Marinette-based ERDA Medical Systems from DeCrane Aerospace Inc. in 2009. With his finance and business management background and more than three decades of experience working in manufacturing, Guy Meyerhofer had always wanted to own his own business.0218_CStory_3

Spouses and co-owners Guy and Sara Meyerhofer renamed the 25-year-old company Quality Assembly & Logistics. They quickly identified the need to diversify its product and service offerings, which included doing contract manufacturing for GE Healthcare. When the Meyerhofers purchased ERDA, GE Healthcare work made up 75 percent of the business, a proportion that made Guy Meyerhofer uneasy.

“You kind of ride their wave,” Guy Meyerhofer says of doing work for GE Healthcare.

With the CPM line acquisition, the Meyerhofers saw an opportunity that fit the company’s core manufacturing competencies while helping even out the balance of offerings. GE Healthcare now makes up 45 percent of QAL’s business.

The line also was a good match for the Meyerhofers’ core competencies.

Guy Meyerhofer’s years of industry and management experience helped QAL transition seamlessly to manufacturing the line, while Sara Meyerhofer had spent the bulk of her career as a registered nurse, a job that prepared her to navigate the strict regulatory compliance requirements of manufacturing medical equipment.

“It really added to it. I had done a lot,” Sara Meyerhofer, CEO of the company, says. “I was used to joint commission and the state coming in. I had a lot of experience in writing policies and procedures. My background has really helped me be able to understand what we need to do and read regulations and know what they’re saying.”

Thanks to the Meyerhofers’ careful planning, the business today boasts a diverse lineup of products and services ranging from manufacturing, restoration and refurbishment of medical equipment for major companies such as GE Healthcare and Siemens AG to manufacturing fire suppression products for National Foam and Kidde Fenwal.

“When one is up, one may be down,” Guy Meyerhofer says. “We’re in so many different markets.”

A woman-owned small business

While the Meyerhofers co-own QAL, Sara Meyerhofer owns 51 percent, and that 1 percent can provide some tangible benefits for the company, which defines itself as a woman-owned small business.

The federal government has created prime contracting goals for small businesses, stipulating at least 23 percent of all federal government contracting dollars should be awarded to small businesses. As part of that, it has established a sub-goal of 5 percent of that money going to woman-owned small businesses.

That advantage matters as QAL competes for government contract work with companies such as Fincantieri Marinette Marine and Oshkosh Corp.

After retiring from her career in health care in 2013, Sara Meyerhofer turned her attention full-time to working for QAL, where she leads human resources, regulatory compliance and IT, while Guy Meyerhofer oversees finance, administration, plant management and operations.

“I say, remember, I’m 51 percent owner, and I get the final say,” Sara Meyerhofer says.

Joking aside, the pair say they work well together, and their complementary skills help the company stay strong. QAL employs about 40 and brings in $10 million in annual revenue.

Part of0218_CStory_4 that strength comes from QAL’s many certifications, including ISO 13485:2016. The certification pertains to producing medical equipment to satisfy worldwide safety standards. The company completed the audit in June of 2017, ahead of the 2019 deadline, as well as completing Food and Drug Administration, Finished Medical Device Contract Manufacturer, and Canadian, European and Japanese certifications.

Sara Meyerhofer’s health care experience lends itself particularly well to keeping up with certifications and regulations. She credits the company’s entire staff for
helping achieve the certifications and says meeting the rigorous standard engenders trust in all the products the company manufactures.

“Being ISO 13485 opens up more doors,” Sara Meyerhofer says. “Somebody said to me once that the 13485 certification is like 9001 on steroids. There are a lot more hoops you have to jump through if you’re producing any kind of medical device.”

Guy Meyerhofer, on the other hand, brings to the company strong management skills and a future-focused vision, says Tim McKeag, a regional banker who worked with Guy Meyerhofer to finance a buyout.

“Guy is very, very methodical and very numbers driven,” McKeag says. “He was on top of his numbers.”

More than just medical

Jim Tress, director of sales and business development for QAL, says the company is shooting for 20 percent growth in 2018. When he joined the company in 2014, Tress was tasked with diversifying the business to become less dependent on its biggest customer, GE Healthcare.

In 2015, Tress brought on Milwaukee-based ambient scenting company Prolitec (think the signature fragrance of an Abercrombie & Fitch store). QAL works with Prolitec’s suppliers, and then Prolitec purchases the finished product from QAL.

“I think really it was QAL’s medical device experience that made us think it might be worth talking to them,” says Matt Ansley, vice president of engineering and technology for Prolitec.

Ansley says the personal attention Tress and Guy Meyerhofer provide makes the company stand out. He praises QAL’s ability to respond to changes and requests quickly and values its honest and thorough communication.

QAL can handle manufacturing, assembly, process development and controls, documentation, engineering, and quality and supply chain management, which proves valuable to clients, Guy Meyerhofer says. “It’s quite an investment for a company to do everything.”

Guy Meyerhofer is particularly proud of the work the company does for Pennsylvania-based National Foam, a manufacturer of foam used in firefighting equipment. QAL builds large skid systems for the company, which blend chemicals with water to produce foam to suffocate fires. The systems can be placed in places such as oil rigs or fuel tank farms and can produce foam at a high volume.

The equipment can be used in remote apartment complexes or aircraft hangars, and they make systems that can flood a hangar with 4 feet of foam within about four minutes.

“It’s pretty neat to know that something that is being built in Marinette has our fire suppression system onboard as well as the big aircraft carriers and destroyers that carry ammunition,” Guy Meyerhofer says.

Tress says he’s proud of QAL’s strong performance record with GE Healthcare, while at the same time the company is willing to take on small players.

“We’re able to cater to that level of customer as well as a startup,” he says.

Marianna DeMyer, founder and CEO of Oconto-based portable water purification system company Roving Blue, turned to QAL to manufacture some of her products as well as handle logistics and shipping. She says entrusting those services to QAL lifted a huge burden for her.

“When you’re a startup and you have an unsure future, most companies (only) want to deal with you when you’re established,” DeMyer says. “QAL was one of those companies that will take you no matter how small you are.”

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“They have been very willing to give a plant tour,” she says. “The plant is what sells the company. It’s what sells me. Their beautiful organization helps me.”

This year, the company is pursuing work with new clients and hopes to begin building fixtures for a lower Michigan company that specializes in LED industrial lighting and working with a company that produces a medical laser.

Also on the horizon: the next phase of life for both Meyerhofers. They’re working on succession plans, with aspirations to retire within the next three to five years, retaining ownership of the company and hiring a general manager.

In the meantime, though, Guy Meyerhofer is proud of what he, Sara and his employees have built — products that ease people’s recovery and may even save lives.

“I always hope employees go home and talk to their family about what they built that day,” he says. “The products that we produce make a difference in people’s lives. Many people throughout the world benefit by our products.”