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Entrepreneurs
Business Observer Thursday, Jun. 11, 2009 12 years ago

Homegrown success

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To fuel economic growth, Collier County should help independent entrepreneurs create jobs rather than try to lure large publicly held companies, says Reinhold Schmieding, founder and president of Arthrex. His track record shows why.
by: Jean Gruss Contributing Writer

To fuel economic growth, Collier County should help independent entrepreneurs create jobs rather than try to lure large publicly held companies, says Reinhold Schmieding, founder and president of Arthrex. His track record shows why.


When Reinhold Schmieding moved Arthrex to Naples in August 1991, the company had two employees in Collier County.

Since then, Schmieding built Arthrex into one of the largest manufacturers of arthroscopic surgical devices in the world with $690 million in annual revenues last year and 800 employees. It's an accomplishment that made him the Review's Entrepreneur of the Year for the Lee-Collier region in 2008.

So it's probably a good idea to heed what Schmieding has to say when it comes to economic growth. He told a gathering of executives recently that nurturing entrepreneurial firms like Arthrex will do more to boost the local economy than chasing after large publicly traded companies that economic development groups and politicians often lust over.

In a rare move for the secretive company, Schmieding recently allowed visitors to tour Arthrex' headquarters as part of a program celebrating local companies by the Economic Development Council of Collier County.

But Schmieding warned that Collier is a “growth-averse community” and that fact presents a hurdle for industry recruiters. “We have to be aware of that,” Schmieding says.

Collier County is widely regarded as one of the most anti-growth areas on the Gulf Coast. For example, it imposes the highest taxes on new construction in the state and has a Byzantine permitting process that keeps all but the best-financed investors away.

Other challenges include expensive real estate, a high cost of living, the lack of a trained high-tech workforce and few incentives. These hurdles make it prohibitive for publicly traded companies intensely focused on quarterly profits to move to the Naples area.

“We're almost disqualified from going after these companies,” Schmieding says.

However, Schmieding says industry recruiters may have better luck attracting and retaining privately held firms where the owner can make a decision to expand without profit-obsessed shareholders holding him back. Some companies can do business from any location, especially in the high-tech arena.

At Arthrex, for example, Schmieding says he can make long-term decisions that may not be immediately profitable but helps surgeon customers and the company in the long run. “We don't have analysts or investors who push us to compromise,” he says.

Relocation costs were difficult during the boom because homes were so expensive in Naples, but now it's hard to attract employees from outside the region because they can't sell homes where they currently live. At this moment,
Arthrex has 60 job openings available and will advertise another 60 in the next six months, Schmieding says.

But despite the high costs and challenge recruiting technical labor, it's still less expensive to manufacture surgical equipment in Naples than it is in Europe in large part because of the relatively weak dollar. European firms may gain an advantage by establishing operations in Naples. “There's no reason why we can't do it here,” Schmieding says.

Offsetting high costs is Naples' environment. Arthrex trains thousands of surgeons in its Naples labs, and the location near golf and beaches is a big selling point. “Consider other types of companies that need to entertain customers,” Schmieding says.

Family ties may be one of the biggest draws to Naples, however. “My mother and brother lived here,” Schmieding says.

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