Jobs, Jobs, Jobs

It’s a hot-button issue. During a presidential election year, the topic’s temperature rises. Who has created the most jobs? Who promises to? The job jibes fly back and forth almost faster than today’s 24-hour media cycle can carry the message. The winner of the election (most likely) will be known soon after this issue is mailed. We hope so anyway. (Given the look of the electoral map, a tie at 269 electoral votes —with a 270 majority needed to win—is a very real possibility. But that’s a topic for another time.)

As industrial sectors go, the medical device industry traditionally has been known as a creator of secure, high-paying jobs in a number of locations throughout the United States. Overall, that’s still the case. But a number of factors with which we’re all familiar have conspired to tarnish that highly polished reputation.

The medical device tax, for one, has been labeled by industry as a job killer. It very well may be. Time will tell. But that hasn’t stopped a number of companies from laying off workers in anticipation of the deleterious impact of the tax (which is set to go into effect in 2013). That may be putting the cart before the horse, but some companies say they’re getting ready. For example, Welch Allyn plans to reduce its global workforce by 10 percent, roughly 275 jobs, to compensate for the 2.3 percent tax. Stryker Corp. has made cuts too. Somewhere in the middle, a St. Jude Medical Inc. executive denied, despite recent speculation, that staff reductions of late were tied to the tax. Others call such actions plain ol’ bunk.

The outspoken CEO of speech therapy device maker Glottal Enterprises, Martin Rothenberg, said that using the device tax to justify layoffs is “nonsense” and amounts to companies playing politics. In a letter written to the editor of the Syracuse Post-Standard, he claims the tax would result in marginal increases in product prices and “zero effect on sales,” if the company could successfully market an effective product. “As the owner of a small medical device company in Syracuse, I can say that is nonsense,” he wrote, adding that it “would surely not lead us to lay off employees or shift to overseas production.”

The debate, clearly, rages on.

But layoffs aren’t universal. According to a recent report by Westborough, Mass.-based talent management firm ZRG Partners, hiring in the second quarter of 2012 was up in life sciences, driven by medical devices and diagnostics. Depending on how you look at the results, however, there’s good and bad. Numbers for North America are up, but so are Europe’s. Overall global hiring within the ZRG Life Science Index was up 11 percent from the first quarter, the second highest level in the last nine quarters.

Demand for new employees in Europe drove the index up globally, reporting a 34 percent increase in hiring levels overall. The Americas showed growth of 8 percent. Analysts noted, however, that the United States had the highest percentage of life science workers. Globally, medical device and diagnostics grew more than 1,300 new jobs according to ZRG’s index. The medical device sector showed a 22.8 percent increase in job opportunities around the world. Notably, manufacturing roles jumped 100 percent in the quarter reflecting the trend of geographic shifts in where products are made around the world (another statistic that can be spun in different ways). Regulatory jobs fell 24 percent, and R&D jobs inched down by 11 percent compared with the previous quarter. The “outsourcing and services” sector of the index also dropped slightly by 0.1 percent.

Manufacturing jobs doubled during the quarter, with increases in both the Americas and Europe. According to findings by the Boston Consulting Group cited by ZRG, more than a third of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back some or all production to the United States from China. That remains consistent with anecdotal info shared with Orthopedic Design & Technology by a variety of manufacturers.

“Changed strategy in manufacturing creates new job opportunities,” the firm’s analysts wrote. “Sales roles increased sharply in the quarter, with a 40 percent increase in overall hiring from last quarter. In medical devices and diagnostics, Abbott Labs and Covidien both were aggressive in the quarter. In the outsourcing arena, Quintiles led the charge with substantial hiring on the job boards.”

The takeaway? Close monitoring is called for, certainly. Do not, however, break out the black armbands just yet. Reports of the medical device industry’s demise are greatly exaggerated. Check out this issue’s year-in-review article for expert perspective on the year behind and the one ahead.
Best wishes for a prosperous 2013.