Share this article

print logo

New tax could cripple our growing 'medtech' economy

Western New York is home to one of the most dynamic and vibrant industries in the world: medical device manufacturing. It is the perfect combination of a highly skilled work force with innovative technologies and products that improve the lives of everyone. The medical device industry is responsible for more than 400,000 American jobs and is indirectly responsible for almost 2 million jobs that supply and support this highly skilled work force.

A study just released showed there are more than 81,000 "medtech" jobs in New York, with more than 25,000 who work directly in this innovative industry, and 55,000 who provide supplies, support and other functions. More than $13.2 billion of revenues is generated in the state by medical device manufacturing companies.

While the study noted that the average salary for American workers in 2009 was $45,320, medtech jobs paid $84,156. These are the very jobs our region needs to fill the ever-increasing requirements of companies in this region and especially those in the Buffalo Niagara Medical Campus.

This is why it is so unfortunate that, as a part of the health care reform legislation, elected officials passed a 2.3 percent excise tax on medical devices. Our region has already seen some of the impact of this bad policy when it was announced that 160 jobs at Gaymar Industries' Orchard Park and West Seneca plants will be eliminated.

Perhaps worst of all, the tax is applied to the sales, not profits, of a medical device manufacture. We know of local companies that, while still growing and creating jobs, are not yet profitable. Under this tax, they would actually still owe a hefty tax bill, despite not having a penny in profits. If this isn't changed, they will be forced to lay off employees, cut back on research and development, or both.

The United States is the global leader in medical device manufacturing, though a recent report shows that we are in danger of losing this position, in part due to policies that are hurting innovation. More than 80 percent of all medical device companies have 50 or less employees, and almost 98 percent have less than 500 people.

These vibrant innovators represent the very small and mid-sized businesses we are relying on to turn this economy around, and deliver on the promise of a better tomorrow. This industry is at a crossroads today, and if we allow the potential of foreign competition to seize the innovation lead, my fear is that it could be lost forever.

It's clear that future advancements in the life sciences will be a leader in the growth of the 21st century economy for the Empire State. The huge investment made in our medical campus holds true promise for additional high-paying employment. Medtech companies can help lead the way, driving down health care costs and improving the quality of life for patients. Buffalo's entrepreneurs are ready to deliver on these challenges.

***

Martin J. Berardi is president of Moog Medical Devices Group.