By Boris Ladwig, The Republic City Editor

WARSAW — With three growing biomedical companies, rising household income and millions of dollars in new investments, Kosciusko County has become the state’s economic development flagship.

Orthopedics maker Zimmer Inc. announced in November that it plans to invest $24 million in a research and development lab and create 275 jobs that will pay about $70,000 a year.

Gov. Mitch Daniels said, “This company is a prime example of a technology-based, high-growth business that will help advance and diversify our economy, while simultaneously raising the average income for hardworking Hoosiers.”

Thanks in part to Zimmer’s presence and expansions, and those of two Warsaw-based competitors, Kosciusko County’s median household income grew by nearly 12 percent between 2000 and 2003, according to the Bureau of Labor Statistics.

Bartholomew County in that span recorded a growth of 1.6 percent.

The county’s biomedical industry was launched in 1895, when Revera DePuy started DePuy Inc., a company that primarily produced wooden splints, according to Joy McCarthy, president at Kosciusko Development Inc., the local economic development group.

DePuy eventually switched to aluminum splints and today, like Zimmer, makes orthopedic devices, such as knee and hip replacements.

The company, bought in 1998 by Johnson & Johnson, employs 1,300. In the most recent quarter, J&J earned a profit of $2.6 billion.

One of DePuy’s salesmen, Justin Zimmer, founded Zimmer Inc. in 1927.

The company was bought by Bristol Myers Squibb in the 1950s, but regained independence in 2001.

The company, in the most recent quarter, recorded earnings of nearly $169 million.

Zimmer employee Payne Miller and three partners used a Small Business Administration loan in 1977 to start Biomet Inc., also an orthopedics maker.

The company made $17,000 in its first year. It was housed in a garage.

In the most recent quarter, Biomet made a profit of $100 million.

Impact

The companies expect their growth to continue, partially because baby boomers’ active lifestyle will mean lots of replacement hips, shoulders and knees will be needed, McCarthy said.

All three have launched sizable expansions and in the past few years. They are among the county’s four largest employers.

Zimmer has refurbished an old downtown theater into 40 suites, mostly for visiting surgeons.

The surgeons typically go to Warsaw to attend Zimmer Institute, a 10,000-square-foot training facility to instruct surgeons from all over the world in less invasive surgical techniques, McCarthy said.

DePuy broke ground in 2000 on a $14-million expansion, according to the Warsaw Times-Union, and dedicated a Research and Innovation Center in 2003.

Biomet has grown in recent years primarily through acquisitions.

The companies’ presence also has lured medical supply companies, McCarthy said.

Danco Anodizing, for example, makes a coating that makes metal stronger and is used for aerospace, industrial and medical applications, according to its Web site.

Warsaw’s biomedical hub also helps nearby counties, McCarthy said. Fort Wayne, for example, recently hired someone to lure orthopedics-related medical suppliers.

McCarthy said the companies’ presence also improves the community through philanthropic and other efforts.

Biomet Chief Executive Officer Payne Miller, for example, has helped restore the historical district of Winona Lake, a small Kosciusko County town with “a beautiful lake for boating and fishing … (and) quaint artisan shops and eateries,” according to its Web site.

Keeping Zimmer

In 2000, however, Warsaw and Kosciusko County worried about losing Zimmer, its biggest employer, or at least its corporate presence.

Bristol Myers Squibb announced in 2000 that it wanted to either sell Zimmer to a competitor, trade the company or spin it off to shareholders, said Brad Bishop, Zimmer’s director of corporate communications.

In case of a sale or a trade, Warsaw likely would have lost Zimmer’s headquarters, the well-paid executives and their leadership in community efforts.

“There was concern in the community that we would be sold and broken up,” Bishop said.

“Obviously, when you lose a headquarters, that’s a concern.”

But in 2001, BMS management decided to spin off Zimmer, which is traded on the New York Stock Exchange.

Local economic-development efforts played, at the most, a negligible role in that decision, according to Bishop.

“That’s one of those situations where the local (economic development board) probably has little ability to influence the larger decision,” Bishop said.

“We (had) absolutely no control over that,” agreed McCarthy.

Bishop said Zimmer’s recent decision to expand in Warsaw was a result primarily of two factors:

l Zimmer already owns the land on which it will expand.

l The company will gain efficiency from being close to manufacturing and already existing research and development efforts.

Incentives at the state and local level “made the decision to expand here that much easier,” Bishop said.

“There are a lot of factors … in the mix.”

Retention

McCarthy said Kosciusko County economic development officials focus on business retention.

However, officials with Zimmer, DePuy and Biomet need little assistance with the pursuit of grants or tax abatements, she said.

She contacts company officials typically to coordinate visits of the governor or other dignitaries and to get their opinion on legislative proposals.

Bishop said that Zimmer and economic development officials are in virtually in constant contact through the Chamber of Commerce and various boards.

Bishop, who serves on the Kosciusko County Inc. board, said the company values the supportive environment that economic development officials have created.

But, he said, some factors cannot be influenced or equalized through local efforts.

“In a global company there are larger factors other than what’s happening on the local basis,” he said.

McCarthy said her organization also has tried to create a more diversified local economy by collecting $300,000 in state and private funds for entrepreneurs and small-business development.

Good relationships with local companies can help job creation in unexpected ways.

Agriculture and energy company Louis Dreyfus is considering Kosciusko County for a $100 million soybean- processing plant that initially would create 65 high-paying jobs. The project’s second phase would involve biodiesel.

KDI learned of the project because of its rapport with freight and railway company Norfolk Southern, which learned of the plan because the project requires proximity to railroads to ship the product.

Sometimes counties lose plants for reasons beyond local officials’ control, McCarthy said, even if they have established the best economic-development program.

Zimmer, for example, recently bought a company in Austin, closed a plant there and moved jobs to Warsaw.

“Those are global decisions,” McCarthy said. “It’s such a tricky situation in so many cases.”

But economic-development efforts must continue, because without them, counties will fall behind.

“You try and you have to keep trying,” she said.
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