February 15, 2002

Administration’s Budget Would Cut Support For
New Jersey’s Small Manufacturers

The Bush Administration’s FY03 budget would slash funding for the New Jersey Manufacturing Extension program, Inc. (NJMEP). NJMEP is an affiliate of the Manufacturing Extension Partnership (MEP), a network of non-profit organizations in every state that provides technical assistance and business support services to America’s small manufacturers.

The President’s request would effectively eliminate the program, reducing its federal funding 88 percent – from $106.5 million to just $12.9 million. The request contends that the private sector should fund these activities. Analysis has shown, however, that it is not cost effective for the private sector to provide these services to small manufacturers and that absent the MEP program, many of these companies would not be served.

The MEP program has been an extremely effective federal, state and private partnership. In surveys completed during a recent four-quarter period (October 2000-September 2001), MEP customers in New Jersey reported the following economic benefits:

• retained sales of $25 million and increased sales of $36 million
• cost savings of $6 million
• new investment in modernization of $37 million
• 944 net jobs benefit

A recent study by the Center for Economic Studies at the US Census Bureau found that MEP clients experience productivity gains more than four times greater than comparable firms that did not use MEP.

A conservative estimate of the return on federal investment is that the MEP program returns at least $4 to the federal government in the form of tax revenue for every $1 of federal funds invested in the program.

Elimination of MEP services to small manufacturers would reduce tax revenues, slow the economic recovery, curtail modernization and training in manufacturing, and further disrupt the supply chain for national defense and other key manufacturing sectors.

Supporters of MEP from both political parties are organizing an effort to fund the program at $110 million. “In these tough economic times, manufacturers in New Jersey need our help now more than ever. Small manufacturers are key to achieving President Bush’s objectives of strengthening national security, homeland defense and economic recovery,” said Bob Loderstedt, president of New Jersey Manufacturing Extension Program, Inc.

The MEP program – which was authorized in the Omnibus Trade Act of 1988 and signed into law by President Reagan – has earned strong bipartisan support at the state and federal levels. Its principal objective is to help US manufacturers, especially the 355,500 small manufacturers, adopt new technologies, processes and business practices and improve the productivity and competitiveness of American manufacturing. The MEP network now consists of over 2,000 professionals, working out of more than 60 centers with over 400 locations in all 50 states, providing direct advice and assistance to manufacturers.

Small manufacturers (fewer than 500 employees) produce 55 percent of the value of all manufactured goods in the U.S. and employ 11.3 million American workers.

New Jersey Manufacturing Extension Program, Inc. (NJMEP) has assisted more than 760 manufacturers with 1,300 projects in over six years! NJMEP, a not-for-profit organization, provides the 12,500 small and medium-sized New Jersey manufacturers with access to technology and business management tools. The program, which was modeled on the Agriculture Extension Program, utilizes Field Agents, assigned by county, to enhance a manufacturer’s ability to take advantage of NJMEP’s network of academic and private sector resources. While New Jersey’s MEP has been in existence for over 6 years, the program has been in place nationally since 1988 and boasts a total of over 65 centers across the country with at least one in every state. NJMEP has provided over 760 New Jersey manufacturers with industrial modernization or business management assistance since its inception. Services include: Strategic Planning; Lean Manufacturing; Developing Product Prototypes; and Sales and Marketing Programs. For more information call 800.MEP.4MFG or visit us on the web at www.njmep.org.

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