State of the Medtech Industry (9 a.m. - 10 a.m.)
Speakers: Bryan Hughes (BH), Director, P&M Corporate Finance; Randall Sword (RS), principal, RidgeRunner Advisors
BH: Just south of here, Tijuana, Mexico has the largest concentration of medical manufacturing jobs in North America.
Nike partnered with Flex because the company had no previous experience in manufacturing shoes. For Flex, partnering with Nike is a huge bet. Potential payoff could be huge, however, with possibly totaling $2 billion.
Shoes are not medical devices. Key questions for the MPO Summit - Can medtech adopt best practices from other industries? Focus on the process? Make vs. Buy – how will this evolve?; Greenfield vs. M&A; capital investment; partnering relationships.
RS: Speaking on four key topics: Medtech market, key themes impacting healthcare, medical outsourcing market, a role for industrial conglomerate. Worldwide MedTech market approaching $400 billion in sales ($386 billion). Worldwide GDP to grow 3.6 percent through 2022. Four fastest growing – neurology, diabetes care, endoscopy, in-vitro diagnostics. Top 30 companies now control over 2/3 of overall medtech market. Medtronic is now No. 1 or No. 2 in 13 markets; BD and Abbott have added $7.6 and $6.8 billion in revenue, respectively in last 3 years.
Diagnostic imaging expanded – providers have evolved role in care continuum and in chronic care management.
Acquisitions and divestitures are the story from 2010 to 2016, have accounted for major changes to top 10 OEMs. These 10 companies are projecting 3.9 percent compounded growth rate through 2022, while market expected to grow 5.5 percent during that time. Only Stryker is forecasting growth to exceed market average. Higher market growth and greater revenue capture will be with the smaller companies.
$17 billion-plus in deals in 2017, including two over $25 billion.
BH: The value-based healthcare components of the ACA won’t change that much. Value-based healthcare is a relatively straightforward idea. Providers and clinicians are paid based on the care they provide. CMS rewards healthcare providers with incentive payments for the quality of care. Three-part aim: Better care for individuals; better health for populations; lower cost.
CCJR bundle – Provider is paid one bundled amount for the entire episode of care.
Key components: A five-year initiative; bundle all payments; an entire episode of care; risk/reward arrangement. This is an important topic – outcomes over a short demonstration period have proven clinically and economically very valuable.
Care delivery is evolving.
The rise of Consumerism: Consumers have become focused on quality and price of the care they are receiving. That factors into the decisions they make about their health. Want to understand the outcomes of providers and facilities where care is being provided. Willing to engage in conversation with healthcare team about general wellness and population health has led to significant increase in digital health technology.
Changes in Delivery Landscape: Impact Pricing – “GPOs and IDNs have served to concentrate purchasing decisions for some customers, which has led to downward pricing pressure for medical device suppliers.” (BD)
New Product/Service Models:
Medtronic Integrated Health Solutions – Approaching 100 partnerships across Europe and the Middle East. Developing, managing, and optimizing non-clinical operations. Focusing on clinical departments where Medtronic has a strong heritage.
Philips Wellcentive – Offers analytics that simplify complex data from all points of care, advancing comprehensive care management and payer collaboration.
Six transactions this year where device companies have spun out or divested parts of their portfolio. Reason in part is optimization of resources. BD acquired C.R. Bard in a $24B cash-and-stock deal, adding Bard’s devices to its portfolio in the high-growth sectors of oncology and surgery. “Likely to expect further portfolio optimization over the near-term.”
RS: Medtech suppliers have had own wave of consolidation. Eight of the top 20 CMOs have migrated into MedTech from EMS or interconnected providers. In addition to four PE platforms, four of the top 20 have gained scale through the acquisition of PE platforms in the last 24 months. Nordson and TE are just two examples of growing influence of diversified industrial players.
Large industrials have big appetites but have different needs trying to fill via acquisition. Why the interest? Medtech has demographic tailwinds and long-term and "sticky" products translate to MedTech being much less cyclical than other industrial segments.
Medtech has a global supply chain. Medtronic has set a $200M annual reduction in supply chain spending. Not a reduction in volume, only pricing. Larger suppliers are in a better position to absorb a 30% reduction in supply chain cost. “I guess I should say Welcome Multinationals.” High multiples being paid are a testament to the high priority that MedTech is to their corporate strategies. SFS Group (6%); NN (17%), Nordson ((15%), TE Connectivity (2%). “There will be many more acquisitions to come.”
BH: In 2015, I talked about the blurring of lines of traditional EMS. Providers like Flex and Jabil have scaled their medical product businesses to multi-billion franchises with considerable sway.
Private equity influence. Aged portfolio holdings have been sold (Tegra, Vention, Creganna, Seabrook), significant dollars are still sitting on the sidelines. One topic that hasn't played out as we thought is insourcing. The jury is still out. NuVasive for its part has stated that it will eventually sell-manufacture nearly 100% of select spinal products and instruments.”
RS: Key takeaways – consolidation is here. The much-anticipated industry consolidation has finally come to the medical device industry.
Pricing pressure – Facing lower growth, and government-imposed price declines, OEMs will continue to look to their suppliers for price decreases in order to preserve their margins.
Fragmentation – the supply bases remains fragmented with further consolidation certain. However, few attractive ($100M+) acquisition targets remain. PE still has an important role.
Key questions – what happens to innovation? With government and industry focused on cutting cost, what happens to innovation?
Will medtech come to be viewed as just an end-market within industrial portfolios?
With shrinking growth margins, what happens to quality?
Medical Device Supply Chain 2020: How to Prepare (10 a.m. - 10:45 a.m.)
Speaker: Chris Oleksy, Founder & CEO, Oleksy Enterprises and Next Life Medical; CEO, Emergent RespiratoryI designed a supply chain degree 37 years ago before there was a supply chain degree. I’m a career supply chain guy by trade. Great-uncle was a Democratic senator; I was a state youth campaign director for Gov. Bob Orr (R), Indiana. Was also a congressional intern for Bud Hillis, (R-Indiana).
My crystal ball isn’t any better than anybody else’s. Very hard to navigate through what is going on in Washington. I want to get you thinking hard about your organization and whether supply chains need to be configured. I won’t spend time giving you supply chain lessons.
Tip No. 1 for Supply Chain 2020: Don’t let your political Kool-Aid drive the configuration of your supply chains. You have to pay attention to what is going on in Washington. Have to take a neutral view of things. It will drive where our supply chains will be going in the coming years.
Tip No. 2: Our business directions should ALWAYS drive our supply chain configurations. Book – “The Discipline of Market Leaders” is a MUST read. Can’t have tunnel vision. If you get too watered down in product leadership, operational excellence, customer intimacy, then you won’t master any of them. Industries go through cycles around these things.
Tip No. 3: Understand the Chain of Chain lexicon. A supply chain is not a value chain, which is not a care chain. 15,000 companies have implemented the SCOR model. Supply is how you source, make, deliver and return things. Don’t hone in on one thing – that’s a big mistake.
When you think about product leadership, it’s on the development side of the world. Looking at the next therapy, next devices that patient may need. Want to be sure the entire care chain is optimized. If you go after just one part of that entire chain, you are going to make a mistake. So much focus on supply chain and taking cost out and driving it on the backs of the suppliers. I’ve been there. Not an easy thing to do. Consolidation and size have helped that, but that is a tough space.
Let’s talk about cycles: 1950-1975 – there was a tremendous amount around doctor/clinician and how going to treat people. There was tunnel vision back then. Didn’t talk about supply chain – the talk was how are we going to invent something to help this person?
1975-1995 – Now that we invented these things, how are we going to get them out to people. How are we going to scale these inventions? Have to take therapy and figure out how it can be scalable across the world. What happened during that time – didn’t ignore focus on the patient, but it was about leadership. Who is going to be the first one to scale the pacemaker?
1995-2010 – The focus was on operational excellence. That was a fun time for the industry – a tremendous amount of focus on the supply chain. It was a very healthy time. Remember the word partnership. I would have supplier summits while I was at Medtronic and I would say too many of you that you are our partners. Partners are the only way it’s going to work. The I-win-you-lose mentality does not work. Hopefully, maybe a lightbulb will go off if I keep saying this. This period was harmony after 60 years but there was a big asterisk. In 2010, many felt we needed to provide insurance to more people. We know people need to be taken care of, but how do you provide care to people that cannot afford it? The concept of providing more insurance to people – not many people disagreed with that. ACA was the way to provide insurance to more people. We risked the healthcare of 400 million people for 20 million. That is a big risk. Wrong execution of the right idea.
Tip No. 4: The best of intentions can become destructive if not configured properly. Your supply chains can create new problems while they attempt to solve old problems. Be careful.
Here’s what’s happened: The focus has shifted since ACA. Finance groups are making decisions about products/care in a lot of cases. Happening more than people are willing to talk about.
The ACA has started a ball rolling that has created: Payors (I’m not paying that…I can’t afford to…here’s your new price).
Caregivers (You better find 3% per year in price downs or I’ll…)
OEMs (Give me 5% per year in price downs or I’ll…)
Suppliers (OK, I’ve got three years to live…)
Supplier’s supplier (Hmmm… did someone say generics?)
While the downhill rock is squashing many, this trend is starting to pick up momentum. On either end of the bell curve are payers coming out of the system. Millennials – I don’t have the funds, I’m not paying those premiums, I’m not getting insurance, I’ll roll the dice. Baby boomers – I have the funds, I’m not paying those premiums, I’m not getting insurance. I’ll pay cash and self-insure. Everyone else – Why are these premiums skyrocketing?
If this becomes unsustainable, we could see creativity like we’ve never seen before. Anyone remember the creativity of sub-prime mortgages?
Will history repeat itself? This is what scares me.
In 1975, my Dad said banking will never be the same. All about the local banker from 1950-1975. From 1975-2000 – it was about consolidation and operational excellence. Because there was so little creativity, they got creative – via sub-prime mortgages. And the rest is history – We remember how bad the situation became in 2008. I’m trying to wave the flag now and say let’s be careful with our creativity.
What’s my crystal ball look like?
Scenario No. 1 - ACA is repealed and replaced. Could this happen? I would bet on that based on what I’m seeing. Will that restore harmony? Not sure. Hard to do when that ball starts rolling downhill. Could it happen? Maybe.
Scenario No. 2 – ACA stays in place and this continues. “My finance dept. makes the calls on what we use now, not me. And oh, by the way, here’s your excise tax.” Tax is one thing that in many cases can be passed on to customers. That’s trouble.
Scenario No. 3 – ACA stays in place and we end up with a single-payor system driven by Washington.
Scenario No. 4 – Replace/Repeal/Keep ACA… (any combo). Could we get a consolidation of the payor/provider care chain in a competitive manner?
Provider No. 1: Payor+Caregiver+OEM+Supply Chain vs.
Provider No. 2: Payor+Caregiver+OEM+Supply Chain
Is it out or reason to think the payors cannot be integrated with this
Tip No. 5: Oleksy prediction - Scenario No. 4: A new version of the care chain not dictated by the payor, but competitively managed by it in a free enterprise, competitive manner. It’s possible we can have multi, payor managed care chains and one funded by Washington.
Tip No. 6: Focus on talent. Invest in talent that can help you navigate the impending waters ahead.
Panel: Make vs. Buy (11:30 a.m.-12:30 p.m.)Panelists:
- Jessica Lenhardt (JL), Sr. Director, Teleflex Medical OEM
- Patrick Lynch (PL), Supply Chain Director, Sonendo
- Paul Orlando (PO), Vice President of External Operations, Olympus Surgical Technologies America
- Alex Porion (AP), Global Sourcing Senior Manager, Boston Scientific Corporation
- John F. Somers (JS), President & CEO, Harmac Medical Products
Sean Fenske (SF): Make vs. Buy decision is one aspect everyone in the industry is involved with. What are the steps in the process for a Make vs. Buy decision?
JL: Customers would want to be looking for an outsourcing partner, to begin with. Ideally, start at a development stage. We need to have capabilities to what you are producing so it’s a good solid partnership.
PO: Who are you? A product leader or a customer-focused company? What are we? What are our core competencies? We develop criteria – how important is it to have that ability inside? How important is it to have better control of quality? What is the cost in or out of the total value package?
SF: How does the decision-making process differ when it’s a component vs. finished device?
AP: Who owns the IP? Historically, it’s been cost component in make vs. buy. Looking more now at where is the portfolio going to be in the next five years? Looking more at the IP. Want to invest capital in IP or not.
JS: All about a focus on your core competencies. When people go through strategic analysis, keep core competencies internally…when make the acquisition is that an add-on to your current manufacturing base? Another piece is you want to work with CMO or supplier with vertical integration or skill sets already. Do they have PMA approval in sight? Have the ability to manufacture finished device?
PL: Quality system assessment is crucial depending on who owns the regulatory obligations.
PO: There will be more companies providing generic devices.
SF: Is speed a differentiator?
JS: We see it as a differentiator for sure. We do a lot of automation and tool design. Depending on the product you can come up with a prototype in a couple of weeks. Once establish a relationship with a supplier, they become almost an extension of the OEM.
SF: Process for making the decision. What mistakes are made in the decision-making process?
PL: Size can become an issue. Finding that right-sized partner is crucial.
JL: Design for manufacturability. When we can collaborate and develop products with a partner, that is the best solution. Speed to market is important, but also you have to define DFM up front.
PO: More and more, it’s looking at what you can do internally to mitigate risk.
JS: We’ve seen the complexity of supply chain. When customers come to us, we do a risk mitigation analysis for all the sub-suppliers. That is one of the critical pieces. Reliability of supply chain and whole disaster plan – is the product built in multiple locations so if there is a catastrophic issue, there are shipping options.
AP: Medtronic overhauled its decision-making process…in the past, it focused on pricing, single decision at a time. What is of strategic importance vs. what is our strategic competencies? Opportunity to invest more so we can insource more because it is strategic for us. But on the other hand, over time, have built our internal competencies…very simply map out the strategic importance, internal competencies, IP retention, service (speed to market) and stability of that service. Internal competencies – what is our technical expertise in-house? The capital investment required and profitability is important. There’s a lot of competition in the market. Can we take advantage of the competition and leverage that competition?
SF: How do regulatory and quality considerations come into play?
AP: We look at this from a partner point of view as a quality and regulatory agreement. That ticket to the game is a given. When go past quality and regulatory side of it, comes down to a business decision. If you can show a competitive advantage in handling quality and regulatory side faster then that is a very good point. Why use an OEM resources than their own? Way to sell the outsourcing of the product.
PL: Who owns the responsibility of the data presented to the FDA. Trying to integrate your process with your partner’s quality system.
SF: How should partnering companies prepare for the divorce that comes at the close of some of the relationships?
PL: Had situation 3 years ago, hired to mitigate an OEM and CM in Midwest. The relationship had been ignored for years. A lot of what was built in the manufacturing process was unknown to the OEM. Handed off the project to the partner, things went south, CM wouldn’t let OEM on site. Like any relationship, not all relationships last forever. Having prenups in the contracts is important. No one likes going into a relationship thinking it’s not forever, but have to be prepared for that.
JL: Some folks are ultimately going to insource. With OEMs going to outsource, we look at it in terms of a consolidated industry. Transparency and collaboration between the two companies are extremely important. Wouldn’t ever want to make it difficult for one of my customers to in-source. That could be the main strategy and that doesn’t make any sense to me. They have many projects and if you’re a good partner, they will come back to you.
JS: Starts with the contract, have to have a business manager set the contract. You have the relationship, have the technology, have to set up things like KPIs and quarterly reviews. Have to have that ongoing relationship. The question at the start is does the OEM want to do a transaction or build a relationship? The more communication there is between the two sides when there is a problem, the better.
AP: Have to look at the relationship beyond the transaction that is in place today. The curve of continuous innovation has plateaued – that is often a reason for the divorce. Transparency in getting to that point is very important. From OEM point of view, I may be losing an immediate transactional business now (maybe lifecycle product has reached its end), but I’m going to help partner move back in-house or help them in another way because in a year or two they will come back to me. We need to be very conscious of that. If you can switch from an immediate loss to what is the future potential, it really helps.
JL: Sometimes there is not good communication. Maybe you see from suppliers, volume growing. Transparency helps smooth the product development process.
Audience: Should a third party be looking at Make vs. Buy to help in that decision?
PO: There’s no silver bullet to these questions, but it’s the root of the challenge. I struggle with it all the time. Yes, you can get a better price but there’s a reason we are doing it in-house.
PL: I’ve come into this same question. In make vs. buy decision, it’s at the VP of Ops level, that is what you have to get past. Comes down to ego, essentially. Have to be able to convince them.
Audience: If one side is unfair but the project is very important, what advice do you have for CM to push back without causing further problems?
JS: We’ve been in that conversation, it’s more than delicate. There isn’t an easy answer. What we’ve done is talk to customers on the other side because there is more flexibility sometimes. But if you push too far, it creates a very delicate situation. I don’t have a great answer for that either.
PO: Find a new customer?
JL: That’s a tough one.
Audience: How do natural disasters impact make vs. buy?
JS: We continue to modify our footprint. About 15 years ago we felt it was important to be customer-centric rather than product-centric. We have multiple products made in the U.S., Europe, the only cost is shipping product if there is a disaster. Disaster planning is a multi-year process. If people are not managing company or suppliers that way yet, you better start.
AP: It's very important to locate your risk in the supply chain. We like to have redundancy as much as possible. The last thing you want to do is overreact. You don’t want yesterday’s news to dictate what your synergies should be. Have to have risk management, look at supply chain and sourcing, examine disaster recovery planning as much as possible but don’t have the tail wag the dog so to speak. I’m based in Ireland, and last Monday we had a hurricane hit Ireland - that hasn’t happened in 50 years. Are we going to change the way we do things? You shouldn't be solely reactive, it's imperative to locate the sweet spot in finding balance in your disaster recovery plan.
Effective Risk Management of Outsourcing Partnerships (2 p.m.-2:45 p.m.)
Speaker: Brian Weller RAC, Partner, Business Value Group Intl.Regulators want assurance that you can provide products that are safe and effective.
Benefits of outsourcing: More efficient use of resources, more flexible use of resources, and expedite time to market. Ultimately that will yield cost reductions. But there are risks – losing control of costs and processes and increased regulatory exposure.
Effective risk management takes readiness to adapt to new approaches and willingness to think in terms of systems. It also requires the discipline to plan and identify the right people. Must be prepared to commit a dedicated team that has the technical expertise and handles complex relationships with suppliers. Senior management support is always key.
Get started by establishing a common language for describing how your device functions and the risks associated with its use. What you want to work towards is developing a common terminology for describing device characteristics and performance. You also need one set of criteria for risk acceptability (make sure everyone involved in the process understands what that threshold is).
In addition, a standardized approach for ranking risk is imperative. Establish a standard way of ranking risk across your entire supply chain. Lastly, establish roles and responsibilities for managing risk. Won’t be totally on the OEM.
I like the term quality focused risk management. I believe doing an effective job of managing patient risk correlates closely with managing business risk. Your product lifecycle is tethered to what kinds of promises you are making to the customer. The intended use should drive your entire product development lifecycle. Not easy to do that.
Developing functional requirements based on intended use of a device: Assumes we can start at the beginning. In my experience, that is a luxury. Oftentimes, OEMs come to us when they are halfway across the lake. But this idealized model can be helpful even if you are halfway through a project.
Intended use and system – clear definition of system boundaries. Once that is established, identify the inputs to that system (either energy, information, or material). Depending on the project, that will vary widely. Next, identify outputs (combination of energy, material, or information). In addition, every system is going to have some unintended inputs or outputs (shock, moisture, etc., biological waste, electromagnetic radiation) – all should be taken into account when designing a system.
Internal functions – actions that transform inputs to outputs. Internal functional relationships. Gives you a common framework with which you can communicate with everyone in the supply chain.
Establishing traceability – create a functional model based on intended use.
Risk management refresher – Risk= (Severity of harm) X (probability of Occurrence)
Severity is determined by the nature of the harm; the probability of occurrence is determined by the nature of the cause.
For each output identified, determine what hazards can be associated with each of those outputs.
Identify hazardous conditions that can arise from faulty input – this is a very important topic. As products become more consumer-centric, use errors are something that needs a lot of attention.
Simple example: Say you want to design a coffee maker. Intended use statement – provide up to 12 cups of fresh coffee that can be enjoyed for at least 60 minutes after it’s made. (This process is enormously valuable).
Purpose: To create a functional model of the System in order to identify potential hazards and their initiating causes based on intended use and foreseeable misuse. Inputs – water, coffee grounds, electricity, pressing force. Outputs – readiness indication, hot coffee, time. Hazards – too hot, too cold, failure to notify. Harm – burns, annoyance. Risk controls – Thermal protector, sealed container, metal container.
Want to re-emphasize the importance of usability in risk management.
Product realization map – (Example)
- OEM – Risk acceptability/RM file. Contractor A – Risk controls (Design); Contractor B – Risk controls (Manufacturing).
- OEM – User requirements/validation. Contractor A – DHF; Contractor B – DMR.
- OEM – Direct Subcontractors. Contractor B – Suppliers
In summary, engage early and often. Ideally, OEMs should contact partners early in the development process. Develop a framework for risk management that facilitates efficient communication with and among suppliers. Use this framework to inform your planning – when the inevitable problem arises you can sort these issues out much more smoothly. Make roles and responsibilities for risk management an integral part of your quality agreement. Great question to ask supplier – if there is a complaint, how are we going to get our two CAPA systems to link together? Assure that you have a dedicated team in place to manage the process as well as the outsourcing relationship(s). Having a solid model that everyone understands tends to keep things relatively calm when bad things happen. Helps to solve the problem when things go downhill. No plan is perfect, and plans change. But the planning is always where the value is. Things always happen but if you’re on the journey together, you can have a much more effective means of getting to the root cause of a problem and managing a solution.
Global Sourcing for a Worldwide Marketplace (2:45 p.m. - 3:30 p.m.)
Speaker: Bill Ellerkamp, Operating Partner, Inverness Graham InvestmentsThere’s a lot of experts in this room on global sourcing. Whether you’re a manufacturer or supplier, you’re pretty much an expert on global sourcing. Medtech industry has changed a lot since I started in 1983. Back then, the largest OEM in the industry was probably J&J, and they were under $1B. Outsourcing was a very small component of the industry. Have seen a lot of globalization of the industry. In 1983, U.S. represented 60% of total worldwide medtech market, now it’s around 40%. Migrating to services and away from the product. Global sourcing is a critical issue for OEMs as well as for those in the contract manufacturing world.
Global medtech revenue growth is slowing now to around 5%, with Asia experiencing the highest growth rates in the 2015-2022 timeframe.
Innovation in clinical technique, in product/technology, and in service models will drive growth in developed markets. Mastering cultural distance, product localization and convoluted regulatory and distribution partnerships will drive growth in emerging markets.
Generating growth in traditional developed markets, the U.S., Europe, and Japan will be difficult due to growing regulatory and price pressures.
Higher growth pockets of opportunity in developed markets are likely to be driven by innovation in more attractive segments. Today, the largest OEMs are generating about 70% of their global revenue outside the U.S.
The more recently emerging markets of Latin America and Eastern Europe, particularly Brazil and Russia, will also be challenging due to lagging, even negative, growth in these economies, translating to underfunding in healthcare. Multinationals must adapt to the needs of those economies.
Why global sourcing? Waves of global expansion were driven by labor costs and tax and trade policy. Today, global sourcing is much more about strategic deployment and flexibility. Puerto Rico has been in the news recently due to the hurricanes down there. But they got started in pharma back in the 1960s when a tax break was put in place. The pharma industry was making money and it was a great place to go to shield your profits from the tax man. Medical device industry took notice of that, and cardiac device companies were the first to establish manufacturing there. The list of motives for moving into global sourcing has evolved and gotten much longer.
Lower labor costs, tax advantages, favorable trade policies, etc. – those things have faded over time. Now have to consider access to innovation, optimize the supply chain, etc.
Puerto Rico – began as an offshore pharma manufacturing location in the late 1960s. Today it boasts a robust Life Sciences sector, including over 30 multinational medical device firms. Still, have a marginal labor cost advantage.
Ireland – Over 400 medtech companies employ some 27,000 people. Today medtech manufacturing in Ireland is mature, with a strong ecosystem of both multinationals and domestic companies. If there is anyone in this room who hasn’t been to Ireland to do business or is doing business with someone in Ireland, I’d be very surprised. At one time, Boston Scientific was the largest employer in the country. Tremendous success. Ireland built an ecosystem of local suppliers so many suppliers moved to Ireland. Seeing lots of innovation arising out of startups. Ireland has really done it right and is a model for much of the world.
Mexico – Benefitted greatly from the passing of NAFTA in 1993. Today it is the world’s ninth-largest exporter of medical devices, and is the biggest trade partner of medical devices with the U.S., employing over 35,000 people in Baja alone. Seeing more investment in places like Monterey and Mexico City.
Costa Rica – Over 70 medtech companies now located there, employing over 19,000 people. Medical devices were the largest single export category in 2015, representing over 4% of GDP. Like Ireland, has brought to the table a highly educated, motivated, young workforce.
Malaysia – Medtech industry here is made up of more than 190 companies and employs more than 28,000 people. Evolving from a natural advantage in rubber and latex raw materials, which translated into medical gloves and catheters, today the industry manufactures implantable devices, orthopedic devices, dialyzers, diagnostic imaging equipment and minimally invasive surgical equipment. Growth areas being promoted are Electromedical equipment, cardiovascular devices, implantable devices, wound care products, contract manufacturing for medical devices and equipment. The Trans-Pacific Partnership has been overturned, and that may be a setback for Malaysia.
China – Government there estimates that there are over 16,000 domestic medtech manufacturers in China, with over 80% SMEs manufacturing low-to-mid tech products. Less than 13% are estimated to be manufacturing Class III devices. In its most recent 10-year plan “Made in China 2025,” the Chinese government targets biomedical and medical devices as a key industry for development. China certainly is offering a very big market, but local manufacturers now control the stent market (taken over from U.S. manufacturers). More frightening – now they are starting to buy us. Argon Medical acquired in a $785M deal a few weeks ago. Companies in China are focused on global expansion – government has the plan to spend $900B to put transportation infrastructure in from China to Europe, Russia, Middle East – want to get their goods to the rest of the world. This is the world we live in…we have to understand what we need to do to support our contract manufacturers and suppliers.
Strategic “external” manufacturing – Collaborative global outsourcing partnerships and networks can serve to accelerate and bolster an OEM’s expansion into and penetration of new markets.
As value-based healthcare initiatives and mega-mergers consume the focus of the world’s leading OEMs, manufacturing is becoming a lower priority for internal investment $$$.
As connected health, smart devices, combination therapies, robotic surgery, and other technologies become more prevalent, manufacturing ecosystems which support technology convergence and integration are becoming more important.
As consolidation of the supply base within the industry continues, there is growing scale and scope for OEMs to develop truly strategic partnerships with contract manufacturers.
As OEMs’ global footprint grows, increasingly in unfamiliar regions, they may need to use their size and sophistication to provide more “sponsorship” to contract manufacturing partners to ensure expectations are met on both sides.
Collaborative M&A is an area which should also be explored, where gaps in critical capabilities can be identified and met through acquisition and integration into current partner organizations. “Carve-outs” can be another creative way to externalize assets, while maintaining a preferred strategic sourcing relationship and monetizing under-utilized assets.
“Lean” Sourcing – Much like early experiences with lean manufacturing, where COGS savings were elusive, but workflow facilitated cash-to-cash improvements, global sourcing can be viewed in a similar way.
Global supply chain management emphasis is trending from COGS to cash flow.
Think total cost of supply chain –
- Look at the BOM, then look beyond the BOM.
- Upstream availability
- Variable overhead
- Inventory and WIP – where are the kanbans
- Logistics – inbound and outbound
- Hidden costs – changes, communications, transactional, expedites
“Local” vs. “Transplant” Sourcing
Think about developing ecosystems in regions that combine the cultural/country advantages of “local” partners, and the cumulative experience and relationships with “transplant” partners.
Many national industrial development organizations have and are fostering initiatives to accelerate the development of local suppliers, but there is a learning curve.
“Local” suppliers can have advantages in recruiting, navigating government bureaucracies and local customs, and accessing government incentives.
Factory of the Future – Investments in the factory of the future will have significant implications for both OEMs’ own manufacturing, and what/where/how they choose to outsource. Outsourcing partners who have invested in the factory of the future will have more controllable processes to co-locate with their OEMs.
- Highly automated, robotic manufacturing environment, IoT (OEMs expect this)
- Systems integrator, having to handle diverse but integrated technologies
- Sensors and actuators, vision systems
Integrated Risk Management – implications of ISO 13485:2016 are significant for the outsourcing relationship. ISO 13485:2016 strengthens risk management by extending it to the organization that manufactures the product, not only the seller of the product. This shifts more of the burden to outsourcing and critical component partners. Specifically, changes in raw materials and manufacturing processes at suppliers will be much more tightly controlled. OEMs and suppliers are both responsible for the potential risk of a device.
OEMs must ensure effective communication with suppliers about their role in risk management.
Think about current macro trends and issues and their potential influence on medtech outsourcing. How will you respond to it?
Identifying, developing, and managing outsourcing partners to support your global needs is challenging in the evolving medtech landscape, and should be a highly strategic activity. Do your due diligence in terms of vendor selection. And be proactive in your vendor development and management. Figure out different ways to engage – not only a transactional relationship.
Celebrating the Partnership: A Case Study (4:15 p.m. - 5 p.m.)Speakers:
- Linda Braddon (LB), Ph.D., President, Secure BioMed Evaluations
- Bryan Brosseau (BB), Regulatory, Quality & Technical Support, Secure BioMed Evaluations
- George Diamantoni (GD), CEO, Manager, and Chairman of the Board, Hip Innovation Technology
- Nnamdi Njoku (NN), Senior Business Director, Pelvic Health Minimally Invasive Therapies, Medtronic
BB: I help implement and manage quality management system for manufacturers. When you’re designing a quality system for your company there is a spectrum of options available to you. The model we’ve had the most success with is – we are the outsource quality system for the virtual manufacturer, a virtual company. Advantages to outsourcing the quality management system – avoid an HR headache! Another is expert management with current knowledge and experience. What we learn across our clients really ends up benefitting each individual client. With ISO 13485:2016, we’ve had a lot of experience with audits and we apply that to all of our clients. We are a one-stop shop for all referrals and recommendations. Quick access to other “a la carte” quality and regulatory services. Outsourcing allows ultimate flexibility in choosing best-in-class.
GD: We’re really just a virtual company. In this day and age, it would be nice to be a brick and mortar company….Hip Innovation Technology LLC was founded in January 2011, a subsidiary of Joint Innovation Technology LLC. It’s an orthopedic focused medical device company committed to the development of a hip implant system. Lead product technology is the HIT Hip Replacement System. It’s a small company startup. We have a scientific development board. Most hips last about 12 years – that’s why many are not put in until patiently is about 70 years old. But there are lots of younger patients undergoing hip replacements. Our hip – we re-engineered the joint. By reversing the technology, we have a hip system that addresses hip dislocation/stability, component positioning, and edge loading. With our hip system, you’ll be able to move right away. We’ve done testing that goes far beyond the reach and scope of other studies. We feel very good about the product. This is a unique system.
I was raised and trained in large companies. I know what best-in-class is, I know what benchmarking does. My preference has always been to hire very strong people. The biggest challenge in a company like mine is finding people that are truly partners with you. I despise the word vendor. When I look for people to work with, I want someone I can develop a relationship with, someone that is as invested as I am in the product. We’re in this together. By doing that, we get good quality people as part of the team. You find the right partners and you stay with them and move forward.
NN: Question I want to start off with is who doesn’t work with Medtronic here? We’re having a conversation that started about five years ago in value-based healthcare. We’re also spending a lot of time talking about access. How can we get a technology to the point of addressing the needs of people around the world? The Nuro System – addresses incontinence. Attempt to get to a platform that we can scale globally. The product we purchased from Advanced Uro Solutions (AUS). Wanted to get to market quickly… also wanted to get more experience with a Class II device.
LB: What has been the biggest hurdle with outsourcing your quality system?
NN: Getting the Medtronic side comfortable with a different model. Hard to get a big ship to do something different. Secondly, working out what responsibilities would be taken care of by outsourcing partner and what would be kept in-house.
GD: Being a small company – having come from a large company, I was used to having teams in-house doing it for you. Didn’t realize or appreciate the work that went into it. Took time, but trusting another team. Not just Linda, because when Linda is gone, it’s the rest of the team that has to pick up the slack. I’m in the weeds on everything, so on the quality system, it’s letting go of something like that. Needed to have someone who knew what they were doing.
BB: How do you feel about the audits your organizations have undergone that were managed by a dedicated QMS management organization?
NN: Feel very good about it. The partnership that we had it’s been one seamless team. Having a team on the Secure Biomed side has been very beneficial – allowing us to keep what we do very well at Medtronic.
GD: I get best in class service with the audits that take place with our company. Linda’s team has taken over the ISO certification paperwork. I knew they were doing something right when we got our ISO certification in three months.
LB: Both of your projects have gone through extensive design and development processes. What has been your experience with the design and development process with outsourced staff?
GD: It’s been painful. It’s been a learning curve for me. I’ve had teams to do all that for me in the past, so I haven’t been involved. Now I have a better appreciation of it. From an engineering standpoint, it’s been challenging. Had to get a second engineer to get it right and Linda has helped us find that engineer. Not an easy walk in the park. Key to have an organization that knows what they’re doing and has been to the rodeo before.
NN: For me, it was like night and day. Working through a process like this felt a lot easier. More flexibility in terms of getting things done faster.
BB: How has your outsourced team worked with your internal team?
NN: Generally, it’s been very positive. When I think about all the work we’re getting done with this model here, it feels very right-sized for what we’re trying to do. The team dynamic is very good. Hiccups happen on the Medtronic side…a lot of delays that I see are on my team’s side. Having patience for that has been helpful.
GD: For a partnership, that’s what I look for and strive for. Biggest concern as a small company, the timing is different than it most likely is with big firms like Medtronic. Linda makes you feel like you’re the only customer and the only account that is in their building. When she’s not around, there are other people I can talk to. Given me the flexibility to perform other parts of my job.
LB: Has your company’s knowledge and experience increased by working with outsourced QMS staff:
NN: Thinking about some of the conversations around our regulatory submissions – having somebody else with experience with Class II products, helpful from a learning standpoint to make sure we were applying the right amount of effort.
GD: You take care of all the QMS for my company. Have a deeper appreciation for all that is involved. The integrity and detail of the work the team does are tremendous.
BB: Has outsourcing your quality system allowed your staff to focus on other critical business needs?
NN: Allowed us to free up resources to go after some other things that are priorities.
GD: When you have a company there are a lot of moving parts. Bringing a product to market. For me to run the business, I need to have someone I can trust to handle the quality systems for me. Nice having someone to take care of that side of the business. When audits come back clean, that tells me things are being done correctly.
Start with the end in mind…Typical Quality Misconceptions:
- Regulatory approval is the end goal; QMS health and clean DHF are equally important.
- “I am a small company, the quality system rules do not apply to me.”
- Minimize testing to control cost; statistical significance and support of claims are critical.
- Not designing for manufacturability.
Day Two: Thursday, Oct. 19
Connecting with Strategies for Emerging Technology Companies (8:45 a.m. - 9:30 p.m.)
Speaker: David Sheppard, Chief Operating Officer & Principal, MedWorld AdvisorsSuccessfully connecting emerging technologies with strategies: Strategic fit+timing=value. Stages of business development – The MedTech industry delivered strong results even as it continued to adapt to rapid technological change, rising reimbursement, regulatory and legislative uncertainty, and increasing customer expectations.
One hospital CEO pointed out – healthcare is the only industry where the person ordering the service likely doesn’t get the service. The person receiving the service likely doesn’t pay for the service. The provider of the service likely doesn’t determine what it gets paid for the service. That is the dynamic environment we are all operating in and working with.
Top strategics – always interesting dynamics going on with them. J&J has a new leader in medical devices group, coming in doing a complete portfolio review. Interesting to see what happens in 2018 – whether they stay in or do something in the middle. GE is interesting as well – will they spin something off?
Smaller companies are struggling a little bit with growth. The big companies are asking for cuts and continue putting pressure on margins. Tougher when you are lower in the ecosystem. Europe is in the same ecosystem.
Percentage composition of worldwide medtech market in 2016 –
Top 10 companies - $145B, 37%; 11-30 ranked companies - $99B, 26%; Rest of Market - $142B, 37%.
Big companies (strategics) and smaller disruptive innovators need each other. In the life sciences, pharma industry they have a nice ecosystem around it. The large companies are actively looking to place bets in the early stage companies – biotech industry is doing the same. I think we’ll see more of that going forward in MedTech. Some of the bigger companies (J&J, Philips) are setting up capital arms to ensure that void is filled a bit.
How do you get strategic attention on your innovation? Working for a big company can get complacent and you may not realize what you really need. Sometimes what that takes is to go out and do a clinical and find out if it works the way it should.
Medtech financing enjoyed a banner year in the 12 months ending June 30, with capital raised across all categories besting the 2015-16 totals – in some cases by multiples. Venture financing, especially capital for early-stage deals, remained buoyant, rising for the fourth consecutive year and beating the record total set in 2016-17. Though the year’s record financing totals are cause for celebration, they didn’t benefit all medtechs equally, with a small handful of companies responsible for the bulk of public capital raised.
Types of early-stage funding: friends and family; early seed “angel” investors; venture financing (debt and equity); family office (watch for passionate mandates that fit your business); access to other financing sources (used of inventory or receivables, if you have them); strategics (venture, business group, corporate M&A); anyone who will listen. Tip: Don’t give up easily – may take repeated tries before you catch someone’s eye. Be creative in terms of information sources and stay passionate.
Early-stage negotiation with VCs – be prepared sometimes to take a haircut.
Commercialization – focus on the channel. If you’re thinking about building your company, then a strategic may not be the best fit for you. Be careful what you’re asking for and think about what your objectives are.
Growth partnerships in the channel: Short-term and long-term considerations.
Marketing activities – minimum expectations.
Selling time – minimum expectations.
Pricing – volume or margin-based.
Measuring results – Minimum volumes, sales call reports, lead generation, pipeline development, scorecard accountability.
Growth partnership with a large company is the right choice if you are building a channel with a future exit in mind.
Using distributors – manage them for success. Over time, developing your own sales force will give you better margins and growth but it takes time.
Exit – selling to large companies: It’s who you know. Be sure to know what you want. Don’t do it alone and be patient. Use networking to get to know people and make connections. Remember that every deal is unique and learn how to create value. Every deal is unique. No need for a pre-determined stage to exit a company. Data show exits are happening at all stages.
Stepping out to create value – it is who you know. Talk to everyone you can.
Value drivers are IP, addressing the unmet clinical need, and market size.
Value impactors – minimize risk through your team, the clinical, the regulatory, time to market, ease of market adoption, and freedom to operate.
Value creators – Strategic fit and timing.
Designing the Perfect Instrument (9:30 a.m. - 10:15 a.m.)
Speaker: Bryce G. Rutter, Ph.D., Founder & CEO, Metaphase Design Group Inc.I want to swim upstream from where everyone else was talking about sourcing, quality control, supplier management, and talk about design.
There are five critical success factors in designing products.
Watch and listenWhat people say they do and how they really behave is different. Involve industrial designers and human factors experts. Be a user – be empathetic. Document everything – video and photos. Video can be your best friend – can allow you to see things you may have missed as you take notes. When you do any research, make sure you use multiple techniques – make sure you triangulate.
Human FactorsUnderstand habits and behaviors. Study the ecosystem of the product. Optimize human performance – physical, cognitive, etc. Can be an inch and three-quarters difference in length between female surgeon’s hand and large male surgeon’s hand. A range of motion – 31 degrees of freedom in the hand. Thumb has 3 degrees of freedom; each finger has 7 degrees of freedom. Ergonomic and design audit – power grip allow the hand to exert large forces; precision grip uses small muscles in the fingers. Force applied to a surgical instrument, think about muscle groups that need to be recruited while minimizing strain on the body.
Finding simpleAsk “what if?” Seems I spend half my job taming the technology so a surgeon can realize the full potential of the innovation. Dissect on video analysis what you saw, how long did it take, etc. Grip architecture – ideally – should be natural otherwise it can tire out the hand. One question that always arises – how many surgeons or nurses do you talk to? My answer is one is better than none, two is better than one and so forth. Look for repetitive motions because you want to eliminate them as much as possible.
Build to learnGet iterative designs in hands of people that will use them. Be willing to compromise. What benefits can we retain and what modifications can we make to move the design forward? Better learning occurs in teaching hospitals that are training surgeons on various techniques. Various iterations don’t have to be perfect.
Every detail mattersDesign Sherpas. Make intelligent tradeoffs throughout commercialization. Sweating the details is essential – can drive a huge amount of potential for the product. Emotional design… doctors are used to having nice stuff. Many times in talking to surgeons about the emotional impact of the things they use on a daily basis, they’ll say “why can’t the instruments I use be cool?” Every detail matters.
When you truly nail a design, it can have a tremendous impact on the bottom line.
User-centered innovation. The best technology in the world is no good if the user cannot access it. Think about the product across all sensory channels we have – how does it sound, how does it feel, how does it look? Synesthesia – combination of multiple senses. Design the product so it’s a seamless extension of your hand, body, and mind – that is crucial for success.
Can’t talk about medical product design without talking about dignity. I thought I was empathetic until I was the slab of meat on the table in the hospital. Whoever designed a hospital gown has never worn it – you can never tie it (in the back). The fabric is like sleeping in sandpaper. We have a lot of work to do to design dignity back into the healthcare system. Your dignities erode on a daily basis as you get older. Everything we do in the room we should think about – are we helping people live better longer? Everyone talks about dying with dignity – what about living with dignity?
Products don’t have to be expensive, they just have to be well thought out.
The most overriding thing about user-centered design is simplicity. Look at your cell phone and ask yourself how many features you really use.
It’s imperative you go global. Meat and potatoes are in the tribal stuff – where you go into a surgical room and see tape over an alarm setting. All those tribal ticks and behaviors are signs the design has failed in some way.
Focus groups don’t work because it’s an odd social dynamic. They are not expert at looking at themselves through a critical eye. A user-centered design does work, regardless of whether it’s disposable, or goes in your ear or up your nose, or who interfaces with it. User-centered design is where the juice is. An emotional connection can bring people back to your brand time and again.
There are more opportunities now to have ergonomic features wrapped into products. Huge competitive advantage.
Innovation killers: We tried that already; we’ve never done that before; we don’t do it that way here; that never works; it’s not in our budget; it’s not an interesting problem; we don’t have time; executives will never go for it; it’s out of scope; our customers won’t like it; our customers won’t get it; how stupid are you?
Panel: Preparing the Next Generation of Medtech Manufacturing Professionals (11 a.m. - 12 p.m.)Panelists:
- Scott Covert (SC), Full-Time Instructor/Journeyman Precision Grinder, Penn United Technologies
- William Pratt (WP), Vice President of Operations and Director of Creative Design, Kinamed Inc.
- Thomas F. Taylor (TT), President and CEO, Foxx Life Sciences
- Michael White (MW), CTO, Fusion Biotec
- Christopher M. Yakacki (CY), Ph.D., Associate Professor, The University of Colorado-Denver
WP: Serve on workforce development board of Ventura County. Didn’t have a next-generation replacement for shop floor workforce. Young people’s awareness of manufacturing is pretty low. Felt we needed to get youth into manufacturing so they can see what is going on. We developed a blueprint for tackling this. Our office of education hired staff to look at all career tech programs in all county high schools to realign them for the current economy and get youth into manufacturing facilities. Goals of a program between middle school and senior year are to get youth connected with reps from industry. Seeing a decline in the dropout rate. As an industry person, this is one of the most rewarding aspects of my career. Talk to young people, bring them into your factories, they have no idea what manufacturing looks like.
TT: Reach out to young folks, it’s important to help them get an idea of what manufacturing is. Hire people as young as 15 at Foxx – have a reach out program. We are a huge believer in internships – we hire 6-12 interns at Foxx each year – great screening for us to get an idea of the talent out there. Worked out well for us.
MW: Important to generate awareness. I ended up getting a mechanical engineering degree. In high school, I thought engineers were the guys that drive the train. Knew what they were, but didn’t know what they did. We’ve sponsored a robotics team with one of the high schools we worked with – got about 30 kids involved. Can help spark interest in the industry as a career. Internships are a great first step. Maintain a constant presence in your company – target one or two colleges and make sure you maintain a presence with them. When I worked at Beckman Coulter, they had a really good internship program…interns provided good work for us and gained a lot of useful knowledge.
CY: Growing up I didn’t know what an engineer was. Lack of awareness. Not only high schoolers not know what jobs are available but I didn’t know as well. Internships and having a presence is great, you can see who has that passion and you can direct some of that passion in the students.
SC: Ditto. Everything these gentlemen said is true. We have a manufacturing school on our campus – for us, it’s about partnering. We have the ability to go out and partner with our high schools. We partner with our own employees, give them the best training there is – we built a school to train our own people. We have partnerships with high schools where they send students to us and we teach them manufacturing skills – reading a blueprint, running basic manufacturing equipment. We want to take it one step further and teach them skills. We help customers train in their communities – giving them the opportunity to recruit manufacturing and send to us for training. We do a lot of work with veterans – apprenticeship programs (8 weeks) for manufacturing careers. Try to reach people that normally may not be contacted.
SF: How can interns effectively be used:
TT: We try to give them some real project or activity. We throw them into some pretty difficult projects and engineering. It’s a good recruiting tool – can see who has passion and drive. We’ve had a lot of success. We got people I don’t think we would otherwise have obtained if they didn’t come through our internship program.
CY: 3D systems hire 30 interns every summer. Having a direct line of who is motivated and a good idea of their skill sets is helpful. We try to reach out to companies to have meetings and talk about internships. University should act as a hub. Students go to a university to get a job – it’s our responsibility to help partner them and guide them into interesting, varied professions.
With Denver, we don’t have traditional four-year students. The co-op program is pretty interesting. Continual work has its advantages over internships, where you only have students for a short time and you are constantly retraining.
MW: One of my master’s advisors I still stay in touch with. When we recruit at Stanford, I’ll give him a call and say we are looking to hire a few interns this year, you have anyone that would be a good fit? He knows me, what I’m looking for, and we get some pretty good candidates that way.
WP: CalPoly is a golden resource in CA. Community college system – you have to know who’s teaching shop. Get to try people out and if they’re the right fit, we keep them.
SC: We’ve had college interns, but do most of our interns through local vo-tech schools. At end of junior year, we let them work for us over the summer. Normally, they work out very well, so during senior year we let them co-op with us, where they work half a day and go to school half a day.
SF: Should companies implement a minimum term of service?
SC: Our apprenticeship program works differently – our apprentices are our employees for day one. Want to train them well enough so all our competitors want them, but treat them well enough where they don’t want to leave. We invest a lot of time and training to make them the best they can be. We ask a lot of them but give them a lot in return. We rarely lose an apprentice to a competitor.
TT: Ever since I was in high school I was in junior achievement. We designed, manufactured and sold door to door – door hangers. I got into the corporate world, worked my way up through corporate ladder, dealt with silos, etc. Motivated me more to have my own company. In 2008 I bought out a partner in a joint venture and created Foxx. You never learn cash flow until you have your own business and a big part of that is people. With Foxx, 70% of the workforce is 30 or younger. Comments are always the same – wow you got a lot of young people working here. You can only spread those salaries across so many high-level individuals. Some stats I’d like everyone to think about – millennials are different. I didn’t know what I set myself up for when I started hiring these individuals. Baby Boomers – 70M of them – most had 3-5 jobs. Gen Xers – 49M – had 5-10 jobs. Millennials – 81-2000 – they are set up to do 10 to 30 jobs in their career. Very different dynamic. 50% of the marketplace by 2020 is millennials. 75% of the marketplace by 2025 is millennials. The takeaway is it’s time to get prepared and figure out what their interests are. It’s a very different culture for those of us working for traditionalists. I often feel that millennials get a bad rap but once you start to understand their culture and implement programs around that they become effective employees and perform well. Your credibility with millennials when you start with them is zero. They want to know how much you know, what time you show up, etc. I learned a lot and I’m still learning. Most management books in my view are outdated – don’t relate to this group. You have to have them really engaged and part of the big picture. They have to be really into the projects they are working on. It can’t be a normal job – they have to be intrigued.
CY: I have a lot of students that turn down job offers from companies because they don’t like the culture or how they treat employees. If you can show that you have their best interests in mind they will be loyal. I’ve had students that worked for me for free because we’ve taken care of them. Super important with that attitude. If they don’t feel they are part of the big picture, even if you throw money at them, they won’t do it.
SC: Get out into the community – we visit as many high schools as we can. Offer tours. If you have a plan – put a program together and offer it to them – every school has budget cuts. Don’t have the finances to continue with some of the manufacturing programs. Some of the first things cut is shop class, so if we can come in and offer it to them, that can help re-educate and expose students to the industry. And word will spread. I go to school board meetings and talk about our program and offer up my information. Can’t think of it as an education problem…don’t be reactive, be proactive.
WP: One model used by a TN company – show and tell program – go into high school during lunch hour and put out a table of parts to garner interest in what they do. Think about how many hours you are willing to dedicate yourself to raising awareness. Have to look for where the hooks are and reach out. You don’t get if you don’t ask. The government does respond when you ask – they just don’t have an idea of what to do, so we need to give it to them. Government is slow – there needs to be discussions about it and takes time to move something along the process. But things can change.
SF: Is there a way industry can get involved in the classrooms for a STEM program?
CY: Universities are good because we have classrooms, computers and have space to host people. If you can offer certificate courses that you were going to send your employees to anyway, do it at a local university. That’s something to consider. Partner with a university for certificate training so students can benefit from the training before they get to your company.
MW: Many schools have STEM program and I think something we can all do is reach out to a school with a STEM program and see what they need and how we can help. Very open to that and hungry for people to come in and do that.
WP: During high school tours, I have them speak with shop leads and department heads. Our four-year schools don’t give a lot of hands-on training so you may have mechanical engineers that don’t know how to use hand tools. Experiential learning happens (hopefully) in younger years, so when high school students come through I encourage them to work on cars, get tools and start working with them. I especially encourage girls to do that – put the tools in their hands so they will be empowered. Kids are so focused on digital media that they are losing the kinesthetic sense of working with tools.
SC: We get requests from companies to send their engineers in so they can get some training. Proof that a lot of engineers are not getting the training they need.
SF: Speak to the importance of taking an advisory role with governments, schools, etc.
WP: There are not many that are willing to go out there and do this. Doesn’t matter if you are a small or large company. Great relationship-building.
CY: From our department, we are always looking to see who we can get in from industry to share insights. Getting involved is important. Call a school and see if there is an industry review board, express interest in serving as an advisor. Most department chairs will take you up on it. Biggest institutions are not always the best partners – research-oriented schools are only going to be focused on and interested in research. Biggest and best names are not always the biggest and best partners.
WP: Community colleges are good as is Cal State Northridge. Community college level – looking for people to come together for an advisory board discussion. If you want to have influence, you have to keep plugging away.