Innovation Adds to Compensation

Amid outsourcing and consolidation fears, packaging professionals find that advancing their companies' operations may also advance their careers.
 
By Daphne Allen, Editor
 

According to Wikipedia, outsourcing “is often defined as the delegation of noncore operations or jobs from internal production within a business to an external entity which specializes in that operation.”

Outsourcing has respondents to PMP News’s 2006 salary survey a bit concerned. “Trending of outsourcing labor to Far East and Mideast countries is reducing the number of local U.S. companies,” writes one respondent. “This will negatively impact the amount of job opportunities as well as the potential of salary increases due to the lack of competition for professionals.” Several other respondents specifically identify outsourcing as a trend that will affect their personal compensation in the next year.

Respondents are also concerned about downsizing and cost constraints, rising costs of raw materials and energy, generic competitors, and patent losses.

For now, though, salaries aren’t suffering. On average, respondents to our survey earn $90,400 annually. Half make $88,000 or more. The average raise was 5.2%. Only 9% state that they did not receive a raise from their employer. Last year’s average annual salary, which was based on a different group of respondents, was $89,200.

More than three-fourths (76%) of key respondents are satisfied with their current position, and only one-third are either actively looking (8%) or strongly considering (25%) a new job search.

Some respondents even speak of a shrinking workforce. “I think a shortage of experienced professionals in pharmaceutical manufacturing contract outsourcing will keep salaries high.”

Despite their worries, many respondents speak enthusiastically about the products they are packaging and the emerging technologies they are employing. For instance, one respondent describes healthcare products that use “different areas of body access.” Such projects have led the respondent to “create new business models with a new product platform that is not as mainstream to ease body entrance.”

OUTSOURCING, CONSOLIDATION FEARS

A significant number of respondents are worried about outsourcing. One is “concerned about outsourcing engineering to China and India,” but doesn’t “know how that might affect medical device engineers over the short term” in terms of job stability and pay. Another respondent paints an even bleaker picture: “I see the single most (sic) event that will affect domestic (USA) employees will be the continued outsourcing to China, and soon to be on the same level will be India.”

“Products moving offshore into India, China, [and the] Far East will reduce opportunities in the United States,” predicts a respondent.

One respondent links “lean” operations with outsourcing. Another offers an explanation: When “outsourcing to low-cost countries . . . cost is not a function of labor cost but of total cost, including tax rates on revenue.”

Also concerning respondents are consolidation and mergers between companies. “Consolidation/sale of division will remove potential for any promotions,” laments one survey respondent.

“Downsizing is encouraging me to retire,” writes another.

The merger with Boston Scientific and Abbott, for instance, is affecting at least one respondent’s compensation.

MONEY, MONEY, MONEY

As their employers seek to control expenses through outsourcing and other transactions, packaging professionals, too, are keeping an eye on costs. They may be rewarded for driving costs down, or they simply may be losing opportunities for compensation increases.

“Scale-up of batch sizes will lower conversion costs,” explains one respondent. “If this is achieved, all marketing receives a 10% bonus.”

Another respondent speaks of trends toward “automation and [the] ability to apply and save packaging costs.”

Virtually all (96%) respondents have some influence on packaging decisions: 37% authorize or approve purchases, 28% recommend purchases, and 20% are part of decision-making committees. Eighty-six percent use the Internet to research suppliers, and 56% have used the Internet to purchase materials or equipment.

The state of the U.S. economy is influencing these purchasers’ compensation, and therefore may be influencing their decisions. “Fuel costs [are] impacting our prices, sales, and ultimately compensation (e.g., raises and bonuses).” Writes another: “Cost of materials (inflation) eats up margin.”

Other respondents report that the loss of patents as well as increased competition from generics will affect compensation. “BMS products coming off patent protection” will affect at least one respondent.

BRIGHT SPOTS

These economic woes haven’t dampened hopes, however. Respondents speak of advancing technologies and products influencing compensation. “Automation and process history impacts quality,” writes a respondent. “Scientific understanding and engineering know-how should help,” says another.

The implementation of “lean and Six Sigma” and “new technology” and “robotics” as well as improvements in “technical skills” and “increased efficiencies” will also affect compensation.

Packaging professionals are looking for the latest innovations. “Diverse packaging involves more testing,” writes one respondent. Another points to “medical moisture-barrier packaging. Five new packaging projects all need this.”

Demand for healthcare-related products may also add to salaries. “Baby boomers are starting to retire,” notes a respondent. Another points to “the general aging of the population.”

Perhaps resulting from such aging, many trends pointed out by respondents are emerging: “Growth of the orthopedics segment;” “Diabetes treatment, such as insulin pumps and smaller, more precise devices;” “Increased positive indications for the use of implantable devices to treat heart conditions;” “New products and combination products (drugs and devices);” “New medical devices for therapy and diagnosis.” Many respondents are awaiting the completion of clinical trials or the launch of new products to see a change in market demand—as well as in their salaries.

METHODOLOGY

The data for this year’s survey were obtained during a mail survey of PMP News subscribers. The survey was designed jointly by PMP News and Readex Research (St.Paul, MN) and conducted June through July of this year. Surveys were mailed to 1200 domestic subscribers, representing 11,313 packaging professionals who work for manufacturers of medical devices, pharmaceuticals, in vitro diagnostics, and nutritional supplements.

The sample was limited to only those with one of these job functions: engineering, packaging design, production/manufacturing, QA/QC, and research and development. Known suppliers to the industry and those with job titles of administrative assistant, attorney, buyer, CEO, CFO, consultant, owner, president, purchaser, or secretary were manually omitted from the sample by the editors before the surveys were mailed.

Of the 1200 mailed surveys, 416 usable responses were returned, representing a 35% response rate. Because usable responses were received from less than half the survey sample, the possibility exists that those who did not respond might have answered differently than those who did. Survey results should be interpreted with this in mind.

The results in this article are based on the responses of 317 respondents who indicated that they are involved with healthcare product packaging and work full time for a medical device manufacturer, in vitro diagnostic manufacturer, pharmaceutical manufacturer, and/or nutritional supplement manufacturer. Statistically speaking, these 317 individuals represent an estimated 8600 industry professionals. The margin of error for percentages based on 317 usable responses is ±5.4% at the 95% confidence level. The margin of error for percentages based on smaller sample sizes—males or females, for example—will be larger.

The survey was conducted by Readex Research in accordance with accepted research standards and practices.

 

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