What began as a fishing lure company is now Lake Region Medical, one of the world's biggest contract manufacturers in the medical technology industry.
Lake Region Medical is a quiet, privately held company that few Minnesotans have heard of, although half of its 1,600 employees work near Lake Hazeltine in Chaska. The firm recently expanded by acquiring a medical device company in Galway, Ireland.
Not too long ago, Joe and Mark Fleischhacker traveled to Ireland to check out a medical device company they were thinking about buying.
As chief executive officer and president of Chaska-based Lake Region Medical, respectively, the brothers wanted to make sure the companies' businesses would mesh, and that their culture and work ethic would, too.
Not to worry. An e-mail later that day to a colleague exclaimed: "They're just like us!"
Actually, it would be hard to replicate the Lake Region Medical story -- a rags-to-riches, or more precisely, chicken coop-to-Chaska, yarn that is distinctly Minnesotan.
"They're part of the reason for the success of the medical device industry in Minnesota," said David Rhees, executive director of the Bakken Museum in Minneapolis and an industry historian. "They're part of the industry's bedrock.''
The 62-year-old company, based on the shores of Lake Hazeltine southwest of the Twin Cities, is now a global leader as an original equipment manufacturer of medical devices, supplying some of the world's biggest med-tech companies, such as Medtronic Inc. and St. Jude Medical Inc.
The privately held firm, which employs 1,600 worldwide, half of them in Chaska, reports approximately $169 million in annual revenue.
Yet throughout its history, Lake Region has operated quietly - so much so that most Minnesotans have never heard of it. When it bought Brivant Medical in Galway, Ireland, this past July, the company issued a rare press release -- though it characteristically did not release the terms of the deal.
Within the device industry, however, the name is legend.
"Other areas of the country trying to build med-tech or biotech clusters find it really difficult, because they don't have companies like Lake Region to draw upon," Rhees said. "Many of these medical device companies can't be successful without suppliers like Lake Region."
But it took a bit of tinkering to get to its current corporate conception -- literally.
Joe's father -- Joseph Fleischhacker Sr. -- was a Honeywell engineer who decided to start a side business making fishing lures and tackle in the family's backyard chicken coop in Minnetonka.
"He was just the consummate engineer, he was always inventing something," his son Joe says.
Joe Sr. enlisted the help of two engineer buddies at Honeywell. Everyone ponied up $400 to get things going. They named their nascent business Lake Region Manufacturing (later changed to Lake Region Medical).
A tackle and lure business would seem to be a sure-thing in fishing-crazed Minnesota, but it wasn't meant to be. Joe Sr. kept his day job at Honeywell, and the business drifted into water softeners in the early 1950s - until Sears and Culligan entered the space. At one point, the company developed a hot-dog poker to make Pronto Pups, a gadget that can still be found at the State Fair every year.
In 1960, Joe Sr. made a fateful connection with another engineer, a fellow named Earl Bakken. Bakken, a co-founder of Medtronic, was working on a new medical device -- a battery-powered pacemaker -- in his northeast Minneapolis garage at the behest of world-famous heart surgeon C. Walton Lillehei.
Bakken needed someone to manufacture small-diameter coils and wires to connect the pacemaker to a patient's heart. Working in his spare time, Joe Sr. developed a machine using a washing machine motor and an old lathe that produced coils consistently and accurately.
It worked. As Medtronic went on to become the world's largest maker of pacemakers, with $14.6 billion in annual revenue, Lake Region decided to narrow its focus to medical products. By 1974, Joe Sr. retired from Honeywell and signed on to head his growing company, enlisting the support of his four children, and with the continuing support of his wife, Victoria. That same year, the company relocated its operations to Chaska, where it has expanded several times. Today, Lake Region's operations are a hodgepodge of five buildings, with patches of woods and turned-over field set aside for future expansion.
Over the years, the Fleischhacker name has been synonymous with Minnesota's med-tech industry, even after the death of Joe Sr. in 1994. Three children in the family now hold executive positions with Lake Region -- Joe as CEO, Mark as president and chief operating officer, and sister Katherine Roehl as executive vice president.
"I'm told that we're somewhat unusual, that as a family business we all get along," said Joe Fleischhacker. "We don't always agree, but we get along."
Another sibling, John Fleischhacker, went on to found Daig Corp., a heart catheter company that was sold to St. Jude in 1996.
There's every indication of a family continuum: Joe's two sons work for Lake Region, as well as Mark's son.
The future? Joe Fleischhacker says the family isn't interested in selling the business or going public. But they're not averse to growth by acquisition, as evidenced by last summer's deal for Brivant. Although Lake Region has had a presence in Ireland since 1994, the acquisition was a big move into the med-tech-friendly Irish economy. Lake Region also has a business office in China, but no plans to manufacture outside the United States and Ireland.
Both companies see themselves as leaders in the global original equipment market for medical device guidewires and related products for minimally invasive cardiac surgery and other procedures, a key trend in health care that avoids more-expensive surgeries and minimizes hospital stays.
Use of these guidewires has gone from mostly diagnostic procedures, such as angioplasty, to therapeutic uses in fields such as cardiology, neurology, radiology and opthalmology, to name a few.
From a business perspective, more and more med-tech companies are investing in research and development, and sales and marketing, leaving manufacturing to companies like Lake Region, according to Thomas Gunderson, a longtime industry analyst with Piper Jaffray.
"If you trust them, why not give them your business?'' Gunderson said. "Especially if they can do high volume at high quality."
Janet Moore • 612-673-7752