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International business person of the year.

With the benefit of hindsight, Chuck Niemier now can guess what the Iraqis were up to. But when the big order for Biomet orthopedic devices came in some three years ago, it was cause for celebration, not suspicion. Iraq's invasion of Kuwait was still several months in the future; who could have known at the time that the Middle Eastern nation might have been stocking up on Biomet products to treat potential war casualties?

Niemier certainly had no idea. The sale seemed at the time to be another success in international business for the Indiana maker of orthopedic devices. To Niemier's credit, most of Biomet's overseas dealings work out better. As the Warsaw-based company's senior vice president for international operations, he rarely sees a deal go sour. That's one reason the World Trade Club of Indiana named Niemier this year's International Business Person of the Year.

Niemier's international work plays a large part in the success of the entire company, which makes medical products such as reconstructive implants, trauma devices, bone growth stimulators, surgical instruments, operating room supplies and arthroscopy products. International sales in the 1992 fiscal year ending May 31 totaled $70.6 million, up 39 percent from the $50.9 million recorded the previous year. The company's overall sales rose from $209.7 million in 1991 to $274.8 million in 1992, a gain of 31 percent. Net income rose by the same proportion, from $39.5 million to $51.8 million. International sales now make up more than a quarter of Biomet's business, and this year's international sales gains comprise nearly a third of the company's overall sales increase.

Biomet has benefited from Niemier's input for nearly all of its corporate existence. It was founded in 1978, and Niemier signed on in 1980, one of the company's first two dozen "team members," as employees are called. "We were just starting to turn our attention to developing international business. I can remember when Sweden was 10 percent of sales and 20 percent of receivables."

Biomet certainly has come a long way since then. At the time Niemier joined the company, overall sales had just cracked a million dollars. Now, international sales alone are nearly a hundred times what overall sales were then. Biomet's success has had to do with the rapid development of high-demand cutting-edge products. Its international success, says Niemier, is due in part to the fact that the company's international customers get products that are just as advanced as the ones sold here.

"We bring to the international market leading-edge orthopedic products that are similar to the products in the United States," he says. While that may sound simple, he says a lot of companies don't follow that kind of philosophy. It's not uncommon for a company to develop the most advanced products for the U.S. market, while unloading older models overseas. But in the case of Biomet, as long as a particular country has the necessary medical sophistication, it will receive state-of-the-art products. As a result, says Niemier, "we have been able to successfully penetrate foreign markets where we were initially not competitors."

Biomet's success overseas also can be attributed to its global presence. The company and its subsidiaries have additional North American locations in New Jersey and California, a facility in Puerto Rico, two locations in the United Kingdom, two in Germany and one in Italy. Some of this network was developed through expansion, some through acquisition. For example, the Berlin Wall had barely fallen when Biomet acquired a German firm, a move Niemier says has paid off nicely.

"We were able to entrench ourselves within a rather large market, and we now sell not only Biomet's traditional products through the distribution network we acquired but we also continue to sell the orthopedic products that this company had developed," Niemier says. The two companies' product lines turned out to be quite complementary; the German company's offerings were less sophisticated and thus less expensive, giving Biomet market presence at the upper and lower ends.

Biomet's subsidiary in Italy also was added relatively recently. "We made an equity investment in our previous distributor and bought it out," Niemier says. "With that we are able to recognize higher margins and are selling directly to the end user."

With the presence in Germany, Italy and the United Kingdom, it's no surprise that Biomet does strong international business in Europe and Scandinavia. But Canada has been strong as well, along with the Far East and Latin America.

South America in particular has been a big growth area for Biomet in the past year. It's a market Niemier says the company approaches with a bit of caution, because the ability to pay for products can be a question mark. But Niemier feels the company has identified a network of trustworthy and reliable dealers, which has kept payment snafus to a minimum. "I can think of only one instance where we might get a little toasted, but not too badly."

And Japan is a market that holds lots of promise as well. "I look for presence there to grow," Niemier says. "We need to expand our presence outside of Tokyo."

To better tackle the Canadian market, Biomet reorganized its distribution system in fiscal 1991. It set up an independent distributor network in order to boost presence in all of Canada's provinces. Typically, Biomet works through dealer organizations in the countries in which it doesn't have manufacturing operations, while in those foreign countries where Biomet has a plant the company employs a direct sales force.

While the former Soviet Union was looking like a great prospect just a year ago, the breakup of the union has left a lot of chaos that must be worked out before the market can reach its potential. "We were just starting to penetrate that market," Niemier says. "We'd sold a couple of million in the past fiscal year, but now it's all become a mess with the changes."

Then there was the Middle East. "We had pretty good business there, but what was our customer was on the wrong side," Niemier recalls. It was several months before Iraq invaded Kuwait, and an order came in from Iraq for several million dollars worth of trauma products. At the time, Iraq was still considered a friend of the United States, a place where increased business ties were being encouraged by the U.S. government. "We were really excited about the order. It was a great order."

Several months later, Iraq launched the invasion of its neighbor. Then it became easier to speculate about why Iraq might need so many trauma products, which are used to repair injuries. "We put the pieces together after the war broke out," Niemier says.

All of the political changes and challenges aren't the only obstacles a company like Biomet must overcome when trying to enter new foreign markets. Biomet's products are quite high-tech; it takes a lot of know-how to use them. The answer is education.

"We do a lot of training," Niemier explains. "We bring a lot of doctors to Warsaw from overseas to train them. First we'll take them to Mooresville," to the Center for Hip and Knee Surgery, an internationally acclaimed specialty clinic that implants Biomet products in patients from all over the world. "They'll have our visiting surgeons scrub in with them and they'll show them the techniques." Training continues at other locations after the visit to Mooresville, and by the time the visiting doctors return to their home countries, they're ready to become active Biomet customers.

One of the Biomet hats Niemier has worn in the past is that of chief financial officer. Ray Diggle, an Indianapolis stock analyst who specializes in Indiana public companies, offers praise for Niemier's work in that role, as the company was growing from a small private firm into a public company in the Standard & Poor 500. "The company has gone through two or three stages of growth. Chuck has made that transition very well, and it's hard to do. As they move into the big leagues, many companies tend to fumble the ball."

Biomet certainly hasn't fumbled, and Niemier demonstrated early on how well he could call the right plays. In 1980, he was a staff accountant for Coopers & Lybrand in South Bend and was called in to do an audit at the then-private Biomet. He got along well with founder Dane Miller, and by the time he had completed the audit, Miller knew he needed Niemier on the team. Niemier was young (he's only 36 now), and was making only $19,000 a year, and Biomet offered him $26,000. "I think because of my hairline, he thought I was older."

As much as Niemier wanted to accept the offer, he turned it down, telling Miller he would sign on if he were allowed to buy into the company. The problem was that there weren't enough shares available to satisfy Niemier. But about two months later, Miller called back with a new proposal. "He sold me some of his own personal shares in order for me to join the team."

Thus began a long working relationship and friendship. Miller, in fact, is the godparent of one of Niemier's four children. Spending time with the kids, ages 7 to 15, is one of Niemier's favorite pastimes, and he gets exercise playing racquetball. Some of his remaining spare time is spent serving as director or trustee of several educational and civic organizations, including Valparaiso University. He's also on the boards of Acordia School Benefits and the investment firm Raffensperger, Hughes & Co.

Niemier's Biomet career has been an exciting one, and it turned out to be a good personal move as well. The firm's annual sales are 275 times what they were when Niemier joined, and according to the company's latest proxy statement, he's making quite a bit more than that original $26,000 offer.
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Title Annotation:Chuck Niemier, Biomet Inc.'s senior vice president for international operations
Author:Kaelble, Steve
Publication:Indiana Business Magazine
Date:Oct 1, 1992
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