Mikro Systems looks to Germany for sales of medical equipment partsJuly 30, 2012 6:00 AM
by Joan Tupponce
Mike Appleby never uses American cultural phrases such as “comparing apples and oranges” when he does business in Germany. “[The Germans] might not have a basis for what that means,” he says. “Things that are cultural in nature and don’t translate can add confusion to a discussion.”
Appleby travels to Berlin as part of his duties as president and CEO of Mikro Systems Inc., a company he co-founded in 2000 with Jim Atkinson. The Charlottesville-based manufacturing/technology company has a patented manufacturing technology called TOMO. It applies the technology to two different markets: detector components for medical x-ray imaging and ceramic cores used to produce blades for turbine engines.
When he is dealing with German clients, Appleby is direct. “You have to be very clear,” he says. “You also have to be very careful when you interpret what they write. A phrase might look aggressive, but it’s not. It’s their use of English.”
He finds a higher level of business transparency in dealing with German companies than with those in the U.S. “The relationships tend to be very trusting relationships in regard to how technology works,” he says. “In the U.S. [information] is more proprietary. It can be more difficult to get that level of transparency.”
Before starting Mikro Systems, Appleby worked in product development for a division of a Fortune 500 company. The business handled precision machinery and assembly for the aerospace and medical industries. Appleby and Atkinson wanted to apply technology they had used in previous jobs in high-volume manufacturing. “We focused on developing a manufacturing platform to make very complex, high-engineered products,” Appleby says.
The company’s customers include Global 1,000 companies such as Siemens Energy as well as government agencies such as the Department of Energy, Department of Defense and NASA.
Appleby and Atkinson chose Charlottesville as the company’s headquarters because it was their hometown. “We wanted a local company,” Appleby says. “Charlottesville was attractive because of the talent pool associated with the University of Virginia’s School of Engineering and U.Va.’s Medical Center. We knew if we needed to attract people to the company that Charlottesville would be a desirable place to live.”
The company has added 22 employees in the last 18 months, raising the total head count to 40. “We’ve gone through a big growth spurt,” Appleby says, noting that the firm moved from a 4,000-square-foot location to a 25,000-square-foot leased space in a technology park, Seminole Place. “It’s a very convenient location. It’s perfect for companies that don’t want to invest money in real estate but would rather invest in technology.”
Former Gov. Tim Kaine and Sen. Mark Warner toured the facility this spring on separate occasions. “Warner’s visit was to learn more about the technology and our recent business success,” Appleby says. The senator used the occasion to hold a roundtable discussion there with business leaders about proposed legislation to boost the economy. Kaine held a town hall meeting in connection with the November election. Kaine is running against another former governor, George Allen, for the Senate seat now held by Jim Webb.
Appleby says the company’s revenues have increased more than 50 percent annually for the past four years. “Last year we were a significant amount over a 50 percent [increase] because of a commercial licensing deal with Siemens Energy,” he says.
He attributes the company’s growth to its three revenue streams: research and development funding; the manufacture of products used in medical imaging; and license agreements that allow companies to use Mikro System’s technology for manufacturing products.
Currently, 80 percent of the company’s business is domestic. The remaining 20 percent is international. “In the next 12 months it will be 50/50,” Appleby says. “We are negotiating with a manufacturing company to have parts for [medical equipment] shipped directly to Germany. About half of our business will be shipping the parts to Germany.”
Mikro’s newer focus on turbines for jet aircraft and land-based power generation presented a learning curve for the company when it came to understanding the licenses needed in Germany for export-controlled technologies. “When we started interacting with the turbine side [of the business], we realized we needed to do a lot of work to get the licenses in place,” Appleby says, because there are hidden costs in doing business in Germany. “For example, every agreement has to have some dispute resolution language and venue as to where the dispute is resolved. You need to have legal representation to understand international aspects like that. That was a learning experience for us.”
In the United Kingdom and Europe, the company is promoting the jet engine side of the business through grants from the Virginia Leaders in Export Trade (VALET) program. “We have given presentations and a technology pitch to Rolls Royce UK,” Appleby says. “We started first discussions for technology trials with [them]. We are starting to attract international attention.”
Economy in Charlottesville
Charlottesville is targeting companies focused on business/financial services as well as information technology and telecommunications. Other industries on the radar include bioscience and medical devices, health services, defense, security and biotechnology. In 2011 eight biotech firms in the Charlottesville area received a total of $1.8 million in grants from The Center for Innovative Technology. The city’s largest employers include University of Virginia, University of Virginia Medical Center, Martha Jefferson Hospital, State Farm Mutual Automobile Insurance and Northrop Grumman Corp.
Economy in Berlin
The capital city of Germany, Berlin is home to a variety of industries such as biotechnology, electronics, biomedical engineering and renewable energy. Companies headquartered in the city include Siemens, a global company operating in the fields of industry, energy and health care; and Deutsche Bahn, the state-owned railway. Car manufacturer Daimler, Air Berlin airlines and medical products company Bayer Healthcare are among Berlin’s larger employers. Its economy includes a growing creative arts community with companies involved in activities ranging from film and music to publishing and video games.
Travel to Charlottesville
Charlottesville is quickly becoming known for its festivals, which include the Virginia Festival of the Book, Look3Festival of the Photograph and the Virginia Film Festival. The city’s newest event is the Tom Tom Founders Festival, a monthlong festival in April that celebrates original music, public art and entrepreneurial innovation with a variety of panels and speakers. Visitors to Charlottesville can follow the Monticello Artisans Trail with 96 trail destinations featuring art studios, crafts, restaurants and farms. There’s also the Appelation Trail, a wine route highlighting area wineries including White Hall Vineyards, Glass House Winery and Moss Vineyards.
Travel to Berlin
Mike Appleby of Mikro Systems likes to bike in Berlin. “It’s a very green city,” he says. “They have hundreds of miles of bike paths. He also enjoys seeing the older eastern neighborhoods in the city. “They are being gentrified,” he says. “You can see how the neighborhoods are evolving where the city was divided by the Berlin Wall.” Favorite attractions include the Brandenburg Gate, constructed in 1791 as a representation of peace, and the Reichstag building, which houses the German Parliament. The building’s glass dome offers panoramic views of the city.
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