Last modified: Wednesday, April 27, 2011
Study of orthopedic industry in northern Indiana pegs annual impact at $3.7 billion
FOR IMMEDIATE RELEASE
April 27, 2011
Editors: Electronic copies of the study are available from George Vlahakis, 812-855-0846 or email@example.com.
BLOOMINGTON, Ind. -- A new report produced by the Indiana Business Research Center at Indiana University says the orthopedic industry cluster in Kosciusko County, in north central Indiana, had a total economic impact of $3.7 billion in 2009.
OrthoWorx, a community-based group focused on leveraging the strengths represented by the orthopedic industry cluster, engaged the IBRC, part of IU's Kelley School of Business, to conduct the study.
The combined effects of the orthopedic industry generated 13,000 jobs in Kosciusko County, which accounts for 43 percent of the county's employment. Statewide, the industry's total employment footprint is 16,700 jobs.
Orthopedic devices include hip, knee and shoulder replacement joints, fracture fixation products, spinal implants, and a broad range of instruments, cases and trays used in surgical procedures.
The study found that the county's orthopedics industry in 2009 generated an estimated $2.4 billion in direct output -- the economic concept for the value of local production only. The total value of orthopedic industry sales generated from Warsaw-based companies was approximately $11 billion in 2009.
Additionally, every dollar of orthopedic manufacturing output generates an additional 31 cents of economic activity in Kosciusko County. Statewide, the knock-on effects jump to 55 cents. In other words, the ripple effects of this output supported an additional $742 million in economic activity to bring the total "footprint" of this industry to nearly $3.1 billion, 44 percent of Kosciusko County's total output. The ripple effects throughout the state of Indiana spurred an additional $581 million in economic activity.
The companies also generate $114 million in state and local government tax revenues. The orthopedics industry accounts for nearly 1 percent of Indiana's total economic output.
"OrthoWorx was created to help preserve and expand the economic opportunity represented by the region's orthopedic industry cluster," said Brad Bishop, OrthoWorx's executive director. "This study quantifies exactly what is at stake, and why it is so important that our community has a dedicated effort focused on improving the environment in which the cluster operates."
Matt Kinghorn, an IBRC economic analyst and co-author of the report, noted that between 2003 and 2009, the county's employment in medical devices jumped by 37 percent, or 1,800 jobs.
"This was an explosion compared to employment growth in the medical device industry nationally," Kinghorn observed. "For every 10 new jobs in the orthopedics industry, another nine jobs are created elsewhere in Kosciusko County and, statewide, an additional 15 jobs."
The average annual wage for the county's medical device workers was more than $70,000, and is more than $11,000 greater than the state average and $12,000 above the national average.
"Wages in the county are no doubt buoyed by the presence of headquarters for companies such as Zimmer, DePuy and Biomet," Kinghorn said in the report. "This means that in addition to the production positions created by this industry, Kosciusko County has the full range of professional jobs that accompany headquarters operations."
Kosciusko County has perhaps the largest concentration of orthopedic firms in the nation. While Biomet, DePuy and Zimmer are the largest employers, the county also is home to 14 other orthodepic device manufacturers. It is one of only four counties in the country with medical device industry employment of more than 6,000.
A 2009 BioCrossroads study dubbed the Warsaw region as the "Orthopedic Capital of the World," and reported that device manufacturers, supply and technical service companies there generated $11 billion in annual reserves, representing about 50 percent of the U.S. market and 33 percent worldwide.
"Perhaps the best news for Kosciusko County and for the state is that this industry continues to grow," Kinghorn noted in his conclusion. "The county's orthopedic establishments have added nearly 1,900 jobs since 2003. As we've seen, any expansion in this industry has significant positive ripple effects throughout the local and state economy.
"The continued health of this industry and growth within the state will be an important indicator to watch in the coming years."
OrthoWorx (www.orthoworxindiana.com) is a Warsaw-based industry, community and education initiative established to advance and support growth and innovation within the region's uniquely concentrated, globally significant orthopedics device sector. Funded in part by the Lilly Endowment, OrthoWorx was founded in 2009 out of a comprehensive study conducted by BioCrossroads. The initiative engages and enhances the broader community interests that both serve and depend upon the sector's continued growth by targeting an integrated set of educational, workforce, cultural, communication, branding, logistical and entrepreneurial efforts.