Biomet outperformed Gates, BuffettPublished 9:33am Friday, November 13, 2009
By JOHN EBY
Dowagiac Daily News
Biomet, founded in November 1977 in Warsaw, Ind., is a worldwide leader in human joint replacement devices and related technologies.
A former mayor used to brag the community of 15,000 combined the down-home charm of Andy Griffith’s Mayberry with the foresight of Jules Verne.
Chuck Niemier began his Biomet career in February1980 and retired in 2007.
“I could have retired at 35,” he said, “but I loved it so much I continued on and didn’t retire until I was 51. People who worked there felt like they owned the company. The head of R&D (research and development) was a biomedical engineer. They competed against well-capitalized companies that were all subsidiaries of large pharmaceutical companies.
“We were kind of like David taking on Goliath. We were small and nimble, going into a market that was just exploding. Think back. When did you first hear about someone getting a hip? Late ’60s, early ’70s? Knees? They didn’t really become accepted until moving into the ’80s. How they embraced the concept of family really impressed me. I feel so blessed to be part of that team in accomplishing what we accomplished. These guys were entrepreneurs. It recorded 9-percent growth last quarter.”
“They’d just finished their second full year of operations,” Niemier recalled for Dowagiac Rotary Club Thursday noon at Elks Lodge 889. “Their books were a mess and they thought I was 34 – not 24. There were 30 team members and eight were the four founders and their wives.”
During his tenure, Niemier held numerous senior management positions in operations and finance, including board of directors; chief operating officer, international operations; COO, domestic operations; and senior vice president.
Biomet’s product portfolio encompasses reconstructive products, including orthopedic joint replacement devices, bone cements and accessories, autologous therapies and dental reconstructive devices; fixation products, including electrical bone growth stimulators, internal and external orthopedic devices, craniomaxillofacial implants and bone substitute materials; spinal products, including spinal stimulation devices, spinal hardware and orthobiologics; and other products, such as arthroscopy products and soft goods and bracing products.
Biomet and its subsidiaries, distribute products in more than 100 countries.
Niemier initially came to the company as a staff auditor for Coopers and Lybrand and served in that capacity prior to being offered a position within Biomet.
He recalled that his first auditing client in July 1978 was the Savings and Loan Association in Dowagiac.
He remembers Hal Palmer, who then ran the thrift since acquired by Bank of America.
Niemier’s direct employment with the company began in 1980 as corporate controller.
“I was responsible for cash flow and there wasn’t any,” he said.
He received several promotions within the finance department leading to his 1984 advancement to vice president of finance.
In 1990, Chuck was promoted to senior vice president of Warsaw operations, while retaining the vice president position in finance.
In 1991, Niemier was promoted to senior vice president of international operations. He held that position until 2005, when he was named chief operating officer of international operations.
Niemier, a grandfather of five, recently held the position of president of Biomet Trauma and Biomet Spine prior to his return to Biomet headquarters as senior vice president, Biomet International and corporate relations.
He became a member of Biomet’s board of directors in 1987.
Niemier is a trustee for Valparaiso University and an advisory board member to the Department of Business and Economics, Indiana University.
He is also a board of directors member for Lakeland Financial Corp. and Kosciusko 21st Century Foundation Inc.
He received his bachelor’s degree in accounting from Valparaiso University and his master’s degree in business administration from Indiana University.
He started at center for the Valpo football team. He played prep football at St. Joe High School in South Bend.
Niemier attended Valparaiso on a football scholarship. He started in pre-med. “That lasted about a month,” he said. “Then I went into general business and I wasn’t seeing people getting jobs. Valpo had a very good engineering school and a very good nursing school. (At the end of his sophomore year) was too late to get caught up in calculus and I don’t look good in white pantyhose, so I went into accounting. It’s not that there was love for it, but it turned out to be a good choice. It was wide open. I ended up with three jobs before Christmas my senior year. I ended up at Coopers and Lybrand in South Bend (where he grew up). They had an office in Niles.”
Niemier has lived almost 30 years in Warsaw, named for the Polish Gen. Thaddeus Kosciusko, a Revolutionary War general.
He and his wife moved there with a daughter, 3, and another who was a couple of months old, with two sons arriving later.
“It’s like driving here to Dowagiac,” he said. “A lot of open fields, farms, nice community. Kosciusko County has over 100 lakes. Kosciusko was a mercenary for George Washington. The city was named Warsaw because he was Polish. Warsaw is the county seat.
“Working on an acquisition in Australia, I saw in the paper they have a mountain named for him near Sydney. That’s influence. There’s a bridge named after him in New York City and a nice statue of him by Shedd Aquarium in Chicago.”
Warsaw grew where railroads converged. A carpetbagger who made splints peddled them from there.
Those humble origins grew until four major orthopedic companies in a $30 billion market call Warsaw home.
In a town of 15,000 people, that quartet controls “$12 billion to $14 billion of that market,” he said, though “it’s not all sold out of there because there are subsidiaries throughout the world.”
In the lean early days, Niemier said he handwrote payroll at home Thursday nights and handed out checks on Friday morning. “My wife and I went in on Saturday. She cleaned toilets, I did some accounting. About 11 o’clock we’d run down to the post office and see what checks came in to see if we could cover the payroll I handed out the day before. We lived hand to mouth in 1980 when I joined.”
By 1984, when they acquired the $20 million company where three of the four founders came from, Biomet had $10 million sales. “So now we’re a $30 million company,” he said. Biomet surpassed $2 billion in 2006.
He remembers that period 25 years ago because “we had positive cash flow. First time we ever had it in a month. We never looked back after that. It grew to the point where the company was doing a quarter of a billion dollars in positive cash flow. We go from $30 million in ’84 to when I retired, the company was doing $2.1 billion in sales.
“The point to derive with those kinds of numbers is that it can be done in this country. It was done over a short period of time. It’s a lot of the old American ingenuity, know-how, drive. We had the kind of government that allowed you to do those kinds of things. At the same time, it’s a matter of will and working collectively as a team. We never called our employees anything but team members.”
Niemier passed around a framed 2007 USA Today chart which normally hangs in his office that was given to him as a retirement gift. It gauges the return on a $100 investment in these fast-growing companies made in their infancies. Such a stake in the top 25 would have returned $650,000 to invested shareholders over the 25 years.
“That would have meant being wise enough to recognize the vision of Bill Gates,” said Niemier, noting Biomet, at seven, ranks ahead of Microsoft’s 29,266 percent at eight.
Franklin Resources tops the list of everything from pork and motorcycles to money management.
“You had to be publicly traded,” he said. “We did our first public offer in ’81.”
Warren Buffett, the “Oracle of Omaha,” ranked 20th.
“I was on vacation,” Niemier said, “and I bought a USA Today. I saw where Buffett was investing in The Gap, where my wife likes to shop.” She thought he was talking about Jimmy Buffett, who is an entrepreneur in his own right.
“There are household names on there,” he said. “Biomet is not a household name, but that gives you a sense of how successful the company was.
“When four large private equity companies bought us out, they put out $11.6 billion to buy the company- the second-largest private equity transaction ever consummated in the United States. They couldn’t borrow enough money to cover the $11.6 billion. They had to put $5 billion of their own money in.”