The Speed of Sound

The Speed of Sound

Minnesota's hearing aid industry cluster is innovating fast—despite the fact that few people actually want to buy what it makes.

The Twin Cities region has long held the dubious distinction of being known as the hearing aid capital of the United States.

Why dubious? Because for decades, Twin Cities hearing aid companies have been manufacturing and selling products that few people want. Both the stigma associated with wearing a hearing aid and the denial that often accompanies hearing loss convince many to delay or avoid buying a device that could improve their quality of life.

Eighty percent of all hearing loss occurs with age and results from either hereditary causes or exposure to loud noises over time—listening to heavy metal with headphones, attending too many rock concerts, or operating a jackhammer. According to the Better Hearing Institute, in Washington, D.C., more than 30 million people in the United States have a hearing loss. Roughly 7 million of those people have hearing aids.

That somewhat small percentage hasn’t kept Minnesota hearing aid companies—either headquartered here or the U.S. branches of overseas firms—from innovating at a rapid clip. Hearing aid makers are pushing each other to develop products that are as unnoticeable and have as true-to-life sound capabilities as possible.

After all, all those rock concerts are catching up with the Baby Boom generation.


Pioneers for the Ears

Hearing aid technology dates back several centuries, to the development of the ear trumpet, which would remain in use into the 20th century. The development of carbon transmitters in 1878 allowed the recently invented telephone to amplify sound; these transmitters would soon be adapted to hearing aids. In 1892, Alonzo E. Miltimore received the first U.S. patent for an electric hearing aid, though the device was never produced. Still, hearing aid manufacturers soon sprang up in Europe and across the U.S. By the 1930s, hearing aids were “body-worn” devices consisting of a battery pack that magnified sound and sent it by flexible cord to the ear. (Some hard-of-hearing people use updated versions of such devices.)

The Twin Cities industry had its roots in a New York hearing aid company called Sonotone. Alan Hampel and Leland Watson worked for the Sonotone branch in the Twin Cities; both left to start their own businesses in the mid-1930s. Watson founded Maico Electronics in Minneapolis in 1937, and Hampel and Ralph Allison formed Telex across the river in St. Paul. Two years later, Telex introduced the first wearable vacuum-tube hearing aid. That same year, Maico produced the first diagnostic hearing device to incorporate circuitry that could be positioned on the threshold of the human ear. A year later, Maico produced its first hearing aid.

In 1953, Microtone, a Twin Cities company founded in 1946, revolutionized the industry with the first all-transistor hearing aid. Customers quickly adopted this innovation, and other manufacturers, including Maico, introduced their versions within months. According to American Hearing Aid Association data, of the 335,000 hearing aids sold in the United States in 1954, 325,000 were all-transistor models. But Microtone’s success didn’t last, and the company disappeared that same year.

In 1948, war hero and entrepreneur Ken Dahlberg, who got his start at Maico, founded Dahlberg Electronics in Minneapolis, moving his rapidly growing company to Golden Valley a few years later. In 1955, Dahlberg Electronics introduced the first “all-in-the-ear” hearing aid. Instead of being worn behind the ear, the D-10 Miracle-Ear was worn in the ear (though it was still quite noticeable). Illinois-based electronics giant Motorola purchased Dahlberg Electronics in 1959. (Five years later, Motorola sold the hearing-aid division back to Dahlberg.)

Bill Austin, another rising star in the local industry, was selling hearing aids in the Dakotas during much of this time. By 1967, however, Austin had tired of working for his uncle, who ran a hearing aid dispensing company. He took a job at Associated Hearing Instruments, a retailer with eight offices in the Twin Cities metro. A few weeks later, Austin left to start Professional Hearing Aid Service, a repair shop in St. Louis Park.

Then, in 1971, Austin purchased Starkey Laboratories, an ear mold maker in Long Lake, and merged his two companies, retaining the Starkey name. Two years later, Starkey released its first hearing aid, the CE-1, a customizable in-the-ear device. At that time, if a hearing aid broke, the user would send it to a lab for repair. If it broke again, the user would send it out—and pay for it—again. “The users didn’t think that was fair, and neither did Bill,” says current Starkey President Jerry Ruzicka.

So Austin offered a 90-day trial and one-year warranty on Starkey hearing aids. That consumer policy formed the foundation of the company’s consistent growth and later led to a U.S. Food and Drug Administration regulation making trial periods mandatory. Austin moved his company to Eden Prairie in 1975. It’s now the largest manufacturer of hearing aids in the United States and the fourth or fifth largest in the world, employing 1,700 in Minnesota and more than 3,500 worldwide.

Dahlberg Electronics also was innovating. After introducing several versions of his flagship product, Dahlberg took his company public in 1983 in order to raise funds to create a Miracle-Ear retail franchising system. “The stock flourished—the franchise system grew and flourished,” says Paul D’Amico, vice president for Amplifon USA, the Plymouth company that now owns the Miracle-Ear retail franchise. “No one had ever considered franchising [before].”

Before 1990, a hearing aid remained a relatively simple device—“basically an amplifier, amplifying everything, the good and the bad,” notes Heinz Ruch, Amplifon USA’s president and CEO. That simplicity and a steadily growing demand had convinced many entrepreneurs to start their own companies. “By the early ’90s, there were close to 40 hearing aid companies across the country, with about 20 of them in the Twin Cities,” recalls Brent Edwards, Starkey’s vice president of research.

But not for long.


Beyond the Amplifier

The change began in the late 1980s, with the arrival of the first programmable hearing aids, which allowed wearers to better distinguish incoming sounds by volume and direction. Then came digital technology, introduced in the mid-1990s. “With the digital platforms, you were able to control the sounds and amplification,” Ruch says. “But much more than the amplification, you could ‘shape’ the sounds according to the needs of the hearing impaired to get better control of feedback.” Feedback—the screeching sound associated with early aids—had plagued the industry for years.

Industry innovations soon were coming thick and fast. “From 1996, the product launch cycles were becoming faster and faster and faster,” Ruch notes. “It was a race for technology. If you missed the train on digital platforms, you had a disadvantage in the marketplace.”

Five years earlier, Starkey had helped set the pace by introducing the first completely-in-the-canal hearing instruments. “They’re kind of like contact lenses for your ear,” says Ruzicka, who worked at Telex before joining Starkey in 1977. “They go deep in your ear. They are very discreet.” Other companies—notably Argosy Electronics, a Minnesota company founded in 1978—brought out their own in-the-canal products.

As hearing aid technology became more complex and the speed of innovation faster and faster, many manufacturers put themselves on the auction block. New York–based Bausch and Lomb bought Dahlberg’s company in 1993; three years later, Starkey purchased Qualitone, a Minnesota company founded in 1954.

While start-up costs remain relatively low today, ongoing investment in research and development can be formidable. “Back in the 1970s and ’80s, a new hearing aid would be good for five to seven years in the market,” Ruzicka says. “Right now, if you are not upgrading your technology every 18 months, you are falling behind.”

As a result, Ruzicka notes, “you can’t compete if you are a small company anymore. It takes $10 million to develop a new hearing aid. That’s a big investment. And it takes a lot of talent to do it. We’ve gone from having technicians and junior engineers to having multi-talented, multi-purpose PhDs that have specialties in hearing sciences, DSP [digital signal processing] engineering, software systems.”

With smaller companies the victims of a digital revolution that increased the need for large R&D budgets, Starkey is now the last locally headquartered hearing aid manufacturer. The Twin Cities remains an industry center, however. Four European companies, Siemens (Germany), Unitron (Canada), GN ReSound (Denmark), and Amplifon (Italy), entered the Twin Cities in the ’80s and ’90s. Siemens arrived first, opening a Minneapolis office in 1984. ReSound North America purchased 3M’s Eagan-based hearing division in 1996. ReSound later merged its Los Angeles plant with the 3M facility and moved to Bloomington, where it now employs 240 people. Unitron arrived in 1998 when it purchased Argosy Electronics. Unitron is now owned by Sonova Holding AG, a Swiss company.

Amplifon, the world’s largest hearing aid retailer, arrived in 1999, when Bausch and Lomb decided to focus on eye health. “Many [Bausch and Lomb] divisions were divested, microscopes, dental equipment, hearing aids,” D’Amico says. “Amplifon wanted entrance into the United States, and the timing was very fortunate for Amplifon.” The Italian retailer purchased Dahlberg’s retailing arm, which now comprises 1,300 Miracle-Ear franchise locations. Meanwhile, Siemens—along with Unitron, the world’s biggest manufacturer of hearing aids—purchased Dahlberg’s manufacturing arm in 2000, and continues to produce aids under the Miracle-Ear brand through its MEMSI unit.

Though it may have been a blow to national pride, the entrance of large foreign-owned companies was a relief to some. “A lot of people liked it because it opened up opportunities,” says Ron Perlt, a Minnesota-based consultant who’s been in the industry four decades. In other words: The outsiders came in bearing more jobs.

And, perhaps, even more innovation. Hearing aids became smarter and lighter, and technology solved another issue plaguing the industry. The in-the-ear and in-the-canal aids, invented and manufactured primarily in the Twin Cities, while more discreet than behind-the-ear devices, could distort sound by plugging, or occluding, the ear canal. In 2004, ReSound was one of the first companies to address this problem, through open technology. Hearing aids that employ open technology are made of pliable, mesh-like plastic material inserted into the ear that connects via a clear plastic tube to a small behind-the-ear device.

But while the technology continues to advance, consumer adoption hasn’t quite kept pace. That’s made the market competitive and weeded out companies not truly committed to the product.

Carole Rogin, executive director of the Hearing Industries Association, an industry trade group located in Washington, D.C., notes that only 2.5 million hearing aids are sold each year in the U.S. and that U.S. sales account for one-third of world sales. “The hearing aid industry is a highly specialized and a relatively small marketplace, and it is very competitive,” Rogin says. “The companies compete on technology and service to their customers” that sell hearing aids.

Larger companies like 3M and Motorola have found that the highly specialized nature of hearing aids has not always fit with the type of manufacturing they employ, she says.


A Boomer Boom?

With the problems of occlusion and feedback solved and hearing aids programmed to recognize the direction of sound and differentiate between noise and speech, the industry turned its attention to adding wireless technology. In 2006, Starkey introduced a Bluetooth wireless accessory called ELI. “With our approach, you can take your [Bluetooth-enabled] iPhone or cell phone, or your land line, and you can use it as a remote control to change the volume or memory settings on your hearing aid,” Ruzicka explains.

Starkey also introduced a distinctive new aid last fall that uses sweep technology. Just like an iPod or iPhone, the series of behind-the-ear hearing aids has a sweep pad. The aid is worn behind the ear and the sweep pad is on the back of the aid, the edge facing away from the ear. A user can sweep down the pad to lower the volume or up to raise it.

“Hearing aids have been made the same way for 70 years, using mechanical buttons and switches [on-off and volume controls], and those mechanical components fail,” Ruzicka says. “We asked, ‘What should the modern hearing aid look like, and how should it behave?’ Our answer was, ‘We are going to use technology that you see in the iPhone.’ If you can touch it, you can change it.”

Chaska resident Joseph Janzen participated in the clinical trial for Starkey’s sweep-enabled hearing instruments. “They are awesome, really,” Janzen says. “The solid state electronics technology and storage technology is amazing. Sound was very clear. They were remarkable.”

While Janzen and others can attest that hearing aids are rapidly becoming more consumer friendly, a White Bear Lake company is working to make hearing aids obsolete, at least for some. Designed for people with moderate-to-severe, noise-induced hearing loss, Envoy Medical’s device is surgically implanted into the middle ear bones. Physicians are already implanting the device in Europe, but the U.S. Food and Drug Administration hasn’t yet approved its use.

The Envoy Medical implant differs from cochlear implants, which are positioned in the inner ear. Shelly Amann, who works in business development for Envoy Medical, asserts that the device could help as many as 60 percent of people who suffer from noise-induced hearing loss. “It is to hearing what Lasik is to vision,” Amann says.

Whether health insurance will pay for the implant is uncertain; Amann believes that insurance could potentially pay for a portion of the cost. The implant needs to be replaced every five to nine years. But the cost of hearing correction has always been a consumer concern. According to industry sources, few insurance plans cover hearing correction, but the industry is pushing for a $500 tax credit for consumers who buy a hearing device. Currently, according to Ruch, hearing aids cost anywhere between $1,000 and $3,500, and typically last five to six years.

ReSound North America President Todd Murray believes that the economic downturn hurt industry sales in 2008 and early 2009. “It was clear that our patients were deferring some purchases,” he says. “But it has come back. Industry growth in 2009 will be stronger than in 2008.”

Still, “our overall penetration rate for the industry in the United States is that 23 percent of the people who could use hearing health care and amplification use it,” he adds. “Our biggest challenge as an industry is how to increase the penetration rate in the United States.” Because hearing loss accelerates with age and leading-edge Baby Boomers are becoming seniors, the hearing aid industry is optimistic about future growth.

Boomers just need to realize and accept that decline. People with noise-induced hearing loss “don’t realize how bad their hearing loss is,” Perlt notes. “They can hear low frequencies just fine, a knock on the door, cars passing by, dogs barking. The loss is in the high frequencies. [People] miss the consonant sounds. People who can’t hear higher frequencies often think the problem is that people around them mumble.”

Boomers may never learn to love hearing aids. But as aids get better and better, they may at least make peace with them. Whatever happens, the Twin Cities will likely retain its standing as the hearing aid capital of the United States.