February 18, 2002

New Jersey Manufacturing Extension Program, Inc.
Executive Overview in 30 Seconds

NJMEP works with New Jersey’s manufacturers and manufacturing workers to build a strong industrial future for our state. NJMEP supports modern, aggressive firms that provide secure, family-wage jobs to skilled workers. During our five years of service, NJMEP has worked in every single county in New Jersey, with over 760 companies on 1300 projects, generating economic impact of $511 million as assessed by independent agencies. We invest federal, state and customer support to develop and manage projects that help New Jersey manufacturers, mostly small- to medium-sized firms, understand their markets, adopt modern management methods, train their workers, and assess and adopt new technologies. NJMEP is a non-partisan, not-for-profit corporation headquartered at the New Jersey Institute of Technology (NJIT) with locally based field agents in all regions of the state. NJMEP is the most direct and extensive way in which New Jersey state government serves manufacturers in our state.

Manufacturing is Fundamental to
New Jersey and to America

Manufacturing has long been and remains today a pillar of the New Jersey economy. Nearly 11% of all our jobs are in manufacturing – and they are the best jobs we have. The average manufacturing wage for our 445,000 manufacturing workers is 26% higher than the statewide average and 67% higher than wages in services. Manufacturing has driven New Jersey’s surge in exports during the 1990s. All of our top ten exporting industries are in manufacturing. Manufacturing accounts for 12% of our entire Gross State Product and a comparable share of all state revenues. As New Jersey manufacturing becomes more efficient through the deployment of advanced technologies and modern management methods, the total number of manufacturing jobs has declined in our state, while productivity and output have increased. Manufacturing remains central to our economic success. Creating wealth comes from Making Things, Mining Things or Growing Things. New Jersey is 14th in the nation in the number of manufacturers. We certainly Make Things.

Manufacturing is dynamic. The specific challenges that compelled Congress to create the national MEP system twelve years ago were different than those we address today. From 1977 to 1987, the United States lost more than one million manufacturing jobs. Major plants that anchored regional economies for decades closed. Smaller supplier firms struggled to find new customers. Many failed. The small suppliers that did maintain relations with their large customers faced tough new demands for performance and price as Fortune 500 companies struggled in the new competitive environment. The 1980s also brought early waves of disruptive transformation as manufacturers applied new computer technologies in design, production, management, and communications.

The first MEP Centers entered this turbulent marketplace, engaged clients, read needs, and developed services to help small firms deploy technology, assure quality, train employees, and adopt new management disciplines. The centers worked with hundreds and then thousands of small manufacturers – more than 77,000 - to reassert the proud American tradition of making quality products at competitive prices.

While we are proud of MEP’s past contribution, the world is very different in 2002. Today, in New Jersey and elsewhere, MEP clients face unprecedented opportunities and dangers as manufacturing enters a new epoch. The transformation of industry by the microprocessor constitutes a tumultuous advance comparable in magnitude but far more compact in time than the great divides of steam and electrical power. At the dawn of the last century commerce rolled the continent on iron rails and crawled the seas in steam ships. Today, commerce vaults the heavens in a nano-second. The digital revolution drives a new economy not by superseding the old but by infusing the transforming power of inexpensive information management into all elements of established enterprise. Time and distance shrink. Raw scale matters less, agile scope more. Clever small firms once confined to regional markets can now compete globally. The markets of all small firms are now vulnerable to global competition.

Manufacturing is both the creator of and a huge market for the new technologies of information management and communication that are the heart of what many call the “new economy.” Some still imagine brick smokestacks when they think of manufacturing but the modern industrial base of New Jersey includes our pharmaceutical powerhouses, producers of advanced electronic equipment and machine tools, and firms in the vanguard of highly engineered plastics and special alloys. These modern, world-class firms are supported by a growing infrastructure of research and development and sophisticated service firms whose presence in New Jersey is tightly linked to our manufacturing endowment. Manufacturing matters to New Jersey.

Our 12,500 manufacturing firms in New Jersey, like their competitors in other states, will face tough challenges and rewarding opportunities during the next four years. In the current downturn of U.S. manufacturing some firms will lose markets and shed jobs. Rapid increases in national defense and homeland security spending, however, will bring new orders to those firms that are capable and prepared. The current lull in manufacturers’ investment in information technologies will become a surge that hastens the arrival of electronic commerce in manufacturing.

New Jersey must have an economic development program that helps New Jersey manufacturers succeed in this dynamic environment. Over the next four years, New Jersey will gain or lose thousands of family-wage manufacturing jobs depending on the performance of our firms – and the ability of state government to be an informed and pro-active partner that can help companies succeed here in the historic cradle of American industry.

New Jersey Manufacturers in the Early 21st Century

We respectfully offer the following perspective on what New Jersey manufacturers must do – and what New Jersey must do for its manufacturers -- especially through the NJMEP.

To serve manufacturers in the early 21st century, the NJMEP must work on several fronts. We have begun to do so. We will help all firms sustain lean processes and enhance flexibility by eliminating time and effort that add no value. Typical results include: productivity increases of up to 30% annually; on-time delivery improved to almost 100%; and inventory reduction of more than 75%. All NJMEP clients will “make things right.” Building on this foundation, every NJMEP client will make information management a core competence because, with our help, they drive digital technology deep into all disciplines of their enterprise. NJMEP will be a strategic resource for our clients, providing them with professional business advice, including robust market analysis and counsel to position each as a distinctive supplier that “makes the right things for the right customers.” Increasingly, our advanced NJMEP clients will reach their most rewarding markets through Internet-enabled eBusiness channels.

In the early 21st century, NJMEP will focus on the consortial capabilities of manufacturers in our regions, making full use of the new tools of the electronic economy. Because manufacturing now moves globally at lightning speed, great multinational corporations are less linked to regional and even national interests. Their global sourcing spurs competition among regions as well as individual suppliers. Our NJMEP will work with New Jersey manufacturers to quickly form agile consortia that claim rewarding new markets. We will make speed to market a regional capability. We will also help our clients build and sustain the State’s optimal share of the links in stable supply chains, assuring broad deployment of the advanced tools and techniques that support inter-firm concurrent design and engineering and electronic procurement.

Continuous product development must become a distinctive capability of New Jersey manufacturing in the new epoch. The State will prosper if we quickly move discoveries to development, design, and the marketplace. The NJMEP will support New Jersey’s most advanced small manufacturers as both a market for and source of such innovations, linking the industrial base of the State more closely to our science endowment.

In the new decade, no less than in the past, the performance of New Jersey’s small- and medium-sized manufacturers will depend directly on the skills and knowledge of the workers and managers who carry commerce forward each day. NJMEP will clarify and expand our contribution to continuous development of the New Jersey manufacturing workforce and strong human resource practices at our client firms.

Finally, at the dawn of the electronic economy, NJMEP understands and embraces our duty to innovate. We accept responsibility for assuring that New Jersey’s small- and medium-sized manufacturers find and fully exploit the potential of e-business faster and more effectively than the comparable firms of any other region in the world.

NJMEP looks forward to pursuing these responsibilities as we work with and for the next Administration.

The New Jersey Manufacturing Extension Program:
Mission, Vision and Operation

The NJMEP mission is to assist small- and medium-sized manufacturers in New Jersey to become more productive, profitable, and globally competitive. Our vision is to ally with key organizations to provide knowledge, resources, and advocacy for New Jersey manufacturers.

NJMEP has pursued this mission and vision since the fall of 1996, when we were established in our current form following several months of planning and preparation. NJMEP is headquartered at and draws on the resources of the New Jersey Institute of Technology (NJIT) but we are an independent 501-C-3 not-for-profit organization governed by our own Board of Trustees.

The New Jersey Manufacturing Extension Program, Inc. is sponsored by the federal government through the Manufacturing Extension Partnership Program of the National Institute of Standards and Technology (U.S. DoC) and by the State of New Jersey. We currently receive $1,666,000 annually from our federal investor and $1,000,000 from the State. We realized $1,590,000 in earned revenue from customer payments for our services. Our future is in increasing earned revenue/fees from clients. Our federal and state investment allows us to deploy a critical mass of experienced manufacturing experts to assist our small and medium-sized manufacturers grow, add jobs and contribute to the overall economy. NJMEP is thus a unique blend of public and private. Our President, Bob Loderstedt captures it best when he says “We are implementing a Public Sector manufacturing Mission with a Private Sector mind set.” Our frontline troops are based throughout the state. These twelve manufacturing professionals structure our projects with firms, making sure that we link them with the right public and private sector resources at the right price. They then manage the client’s Profit Improvement Projects. Our public sector resources include organizations such as NJIT, other State universities and the 19 New Jersey community colleges. NJMEP is mission-driven and market-disciplined.

The New Jersey Manufacturing Extension Program: Performance

NJMEP does good work. We now conduct over 300 projects per year and work with manufacturers in every county of the state. During our five years of service, NJMEP has generated over $511 million of economic impact as assessed by independent agencies and the State of New Jersey economic input/output model. This constitutes a return of 155:1 on the state investment, a 55:1 return on the federal investment and a 40:1 return on the combined state and federal investment in NJMEP. The national NIST MEP program administration has often turned to NJMEP for models and tools to use nationwide.

We believe the voice of our customers can best convey the quality of our work. Chris Stone of Kason Corporation said, “I found the NJMEP representatives to be experienced, professional and able to connect us with excellent external resources.” Mr. Sienkiewicz of Reckitt Benckiser, Inc., said “The information from this project was used on our Lysol packaging line and we have already reduced our changeover time from 35 minutes to 16 minutes.” 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 welcome the opportunity for you to visit other manufacturers who have benefited from the work of NJMEP to hear for yourself their story.

Closing

NJMEP was requested to participate in this field hearing to present ways to stimulate New Jersey’s manufacturing base and to provide information as you investigate the impact NJMEP has on New Jersey’s small and medium-sized manufacturers. We believe you have seen the return on your investment and the results. There is a clear plan to continue and expand our work with New Jersey’s small and medium-sized manufacturers. The continued investment by the federal government in support of the national program will help these manufacturers grow and become more competitive. The State of New Jersey also needs to continue, like the federal government, their investment in the NJMEP program.

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