| |
Press Room
October 2, 2002
Massive Cuts in MEP Could Have Big Impact
Programs offer consulting services to small manufacturers, a service many consider crucial to success.
A budget cut recommended by the U.S. Office of Management and Budget could collapse a competitiveness program for small manufacturers that has proved invaluable to many New Jersey businesses. The Manufacturing Extension Partnership (MEP) program, which the U.S. Department of Commerce's National Institute of Standards and Technology (NIST) calls "exceptionally effective," has a time-tested reputation for providing solid results at low cost. The program faces the federal budget ax amid a growing commitment to re-allocate funds to fight terrorism.
The 88 percent cut, which would reduce national funding for MEPs from $106.5 million this year to $12.9 million in fiscal 2003, would essentially gut the program and is a level that also could encourage dramatic reductions in state funding, observers say. The action was surprising in its breadth and lobbying to save the program has moved up to full throttle as the nation's more than 400 MEP delivery organizations seek a way to keep their organizations alive.
"We are facing a number of challenges since Office of Management and Budget (OMB) recommended that the Bush Administration eliminate the national MEP program," says Bob Loderstedt, President and CEO of the New Jersey Manufacturing Extension Program, Inc. (NJMEP) located in Newark. "A complete loss of federal funding, about $1.7 million in New Jersey, would put us in a precarious situation because we have no assets."
While he recognizes the nation's need to protect itself from terrorism, Loderstedt hopes funding can be found from other sources to continue NJMEP's efforts. Manufacturing extension programs offer expert consulting services to small manufacturers, which are defined as companies with 500 or fewer workers. Nationwide there are about 355,500 small manufacturing firms, many of which need to adopt advanced technology and streamlined manufacturing processes to deal with an economic slowdown and increasing foreign competition. Small manufacturers are critical to the national defense supply chain and provide valuable resources contributing to strengthening of homeland security programs.
Loderstedt says. "We offer new techniques and methods to help small manufacturers who are so busy with daily work and survival that they are not current on some of the things that can improve their manufacturing processes. Our focus is on the implementation of improvements. We provide clients with project managers that have significant manufacturing experience and that helps them feel comfortable from the beginning."
NJMEP's funding comes in about equal thirds from the U.S. government, the state and from client fees. Few government programs have such dramatic positive returns for federal dollars spent. Loderstedt says research done by an independent third party indicates that $8 million spent in New Jersey by the federal government returned $169 million in increased and retained sales for the period of 1997 to Quarter 1 2001. Other measures described by the research suggest that the program has an impact far beyond the obvious: $102 million in investments in people, plants and equipment, costs savings of $59 million, $10 million in capital avoidance, and 1250 jobs created or retained. "It would be a shame to lose a program with this kind of productivity," Loderstedt says.
"The MEP program in New Jersey has resulted in significant program accomplishments and performance as a model within the MEP network," Loderstedt says. "The bottom-line client impact is 100 percent higher than the national median. Investment leverage ratio is more than three times that of the national median and twice the national average." The ratio is the sum of new investments divided by the federal investment.
NJMEP and its delivery organizations also provide a lot of bang for the buck. "The New Jersey MEP operations function on significantly less costs than programs across the nation, operating at 30 percent of the costs of the MEP system average," Loderstedt says.
The purse strings to MEP funding are controlled by a single piece of legislation, the discretionary spending portion of the proposed U.S. Government budget for FY 2003-04. At the Congressional committee level, Rep. Frank Wolf (R-Va. 10th) and Senator Ernest Hollings (D-South Carolina) are the powers behind the Commerce, Justice, State and the Judiciary Committee, commonly known as CJS, which oversees MEP funding.
Hollings, a longtime champion of small manufacturers and MEP, has expressed his concerns that economic revitalization and job creation - both ultimate objectives of MEP — are among the top priorities stated in the federal budget.
A number of congressional legislators are starting to ask hard questions about OMB's recommendation. During hearings before the Senate Commerce Committee in mid-April, Sen. George Allen (R-Va.) said the country is "losing thousands of jobs to foreign markets. Maybe now is not the time to make changes in the MEP program."
Sen. John McCain (R-Arizona) was even more to the point in confronting Samuel Bodman, a deputy secretary in the U.S. Department of Commerce: "What criteria were used in recommending this cut? How is it in the best interests of this country to take money away from a program benefiting small manufacturers? I hope we can reach a resolution on this matter."
The original MEP legislation intended to phase out federal assistance after six years and most MEP centers in the U.S. are older than that. The Bush Administration response to the budget recommendation says that because MEP-assisted companies "are more productive and competitive, firms should be able to pay for the services that help increase their profits."
Not everyone agrees with that view. For many small manufacturers, the loss of MEP's low-priced services would mean the loss of any significant consulting assistance at all.
John Rowley, Vice President of Operations of Henry Troemner, LLC stated, “Without NJMEP input we wouldn’t be where we are today… Our biggest gain has been from the training investment we made in our employees. It is hard to keep up with them now. Raising the bar on them has caused their expectation of management to go up….It has been a pleasure to work with NJMEP to identify opportunities within our organization for improvement. We have introduced and recommended them to our supply chain.”
According to Albert Deemer of Captive Plastics, Inc. “Without NJMEP, it would have been hard to identify experts and implement projects of this caliber. NJMEP’s quick response was very important in meeting an aggressive goal.”
“We have grown dramatically in all aspects of our business over the past few years, including the doubling or our facility in December 2000. Without these processes and documentation, we would have imploded. The process served us well and our customers well.” Says Adam Meyers, President of Bio-Chem Valve.
When John Watson, President of Premium Color Graphics Company, was asked about working with NJMEP, he stated, “They are a very important asset to us in organizing the infrastructure of our fast growing company. NJMEP has been extremely helpful in defining the vision and direction of the company.
"During the first two quarters of 2002 NJMEP has provided MEP assistance to more than 91 companies with engineering assistance in lean manufacturing, process development and improvement, plant layout design, ISO Quality System certification and other business management programs," Loderstedt says. "MEP assistance gives these companies the productivity tools they require in a world market which is always changing. Incorporating these tools adds new jobs and retains existing jobs by improving competitiveness."
Top of page. Previous Page. |
|
