1. Medical Technologies in the West Midlands Skills and the prospects for growing new medical technology businesses in the Objective 2 region

2. Medical Technologies in the West Midlands A study carried out by: Institute for Employment Research, University of Warwick Warwick Manufacturing Group, University of Warwick Medilink West Midlands Funded by: the European Social Fund & the Learning and Skills Council: Coventry and Warwickshire

3. Aims and Objectives To identify: Characteristics of companies that have diversified into medical technologies The skills needs that arise out of diversification Characteristics of potential diversifiers The skill needs that potential diversifiers will need to succeed A comparison of the situation in the Objective 2 region compared to the rest of the WM

4. Sources of Evidence A review of the literature (international/national/regional) A questionnaire survey of companies that have diversified or have the potential to diversify A survey of Medilink West Midlands members A series of company case studies to identify further skill needs related to diversification

5. Why Diversify? The West Midlands economy is facing a number of challenges Highly uncertain future of the manufacturing base that has served the economy well in the past – especially so in the Objective 2 areas Need to identify new high value, high skill, high wage employment for the future ► Medical technologies fits the bill

6. How to identify diversifiers The Kompass database identifies a variety of outputs produced by businesses If medical technologies mentioned along with outputs = a diversifier Where companies otherwise have the same characteristics as diversifiers but do not produce medical technologies = potential diversifier

7. Schematic representation of the medical technologies cluster Producers of Medical Technologies (services and manufacture) Supply of professional services (e.g. accountancy, marketing) Final consumer Supply of scientific services (e.g. laboratory testing) Other services (e.g. training, design) Suppliers of intermediate products Distributors

8. Findings from the study The percentage of companies that had diversified into medical technologies was the same in Objective 2 areas as the rest of the region Where employers had diversified, the decline of traditional markets was more commonly cited in Objective 2 areas Sales growth was less commonly cited in Objective 2 areas – in this sense they were performing less well

9. Findings from the study II Objective 2 area medical technology employers were more likely to: supply local and regional markets supply the NHS report that medical products will become their main product in the future

10. Findings from the study III In objective 2 areas: -recruitment problems were more common -shortages of people with skills and relevant experience were the main cause of problems -medical products are reported to become the main products in the future -skill shortages hamper the process of diversification more

11. Findings from the study IV In objective 2 areas: - employers not currently engaged in medical technologies were just as likely to report that their products had a potential medical application (around 10 per cent) - a lack of capital and skills was more commonly cited as a reason for not diversifying in Objective 2 areas

12. Conclusions I The potential to diversify in Objective 2 areas is as great as in non-Objective 2 areas The research demonstrates that across the WM there are significant barriers to diversification… But these are of a greater order of magnitude in Objective 2 areas, because of capital and skill shortages Yet the need to diversify is potentially greater because current business performance is weaker

13. Conclusions II Diversification relies upon a level of creativity in the business at a senior level But once the decision to diversify is made, then skill problems will arise… …and these will limit business development Encouragement to diversify needs to be simultaneous with skills development

14. Conclusions III At a strategic, regional level there is a need to broadly identify where the region has potential This is not about picking winners… …but about identifying where scarce resources can be optimally expended At the moment the cluster is inchoate and possibly lacks a clear identity given the various activities in which current medical producers are engaged