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October 10, 2003
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Popular Program for Manufacturers May Get Reprieve
By TIMOTHY AEPPEL
Staff Reporter of THE WALL STREET JOURNAL
Capitalizing on the political heat over job losses and erosion in their
sector, smaller manufacturers are expected to win a reprieve for a
federally supported program designed to help them become more
At issue is the Manufacturing Extension Partnership, which runs a network
of centers dedicated to aiding manufacturers with everything from making
factory floor layouts more efficient to finding parts suppliers. The
program is highly visible and politically popular, operating 65 centers
nationwide, with 400 offices, many in states considered crucial to next
year's presidential election. Moreover, the greatest potential for
immediate job creation rests in small to midsize companies.
Although the program is relatively small in terms of funding, many
manufacturers feel it represents a litmus test of the administration's
resolve to help bolster the sector.
For the past two years, the administration has sought to cut most federal
dollars for the program, arguing that funds are more urgently needed for
defense and homeland security. After the program received about $106
million from the federal government in 2002, the administration's budget
requested only $12.9 million for the program in 2003, an 88% cut. Full
funding was later restored by Congress in the wake of a letter-writing
campaign by small manufacturers. But the administration has asked for
$12.6 million in its 2004 budget.
"The 2004 budget was considered a wartime budget that reflected our
national security concerns at the time," says a senior administration
official. Congress is still discussing what to do for next year, but is
expected to at least partially restore the funding.
Michael Wojcicki, president of the Modernization Forum, a trade group
representing the centers, says he thinks the administration is going to
voice general support for the centers when it releases its long-awaited
report on manufacturing this fall. "There's been such a clamor across the
country about the troubles of manufacturing, I think the administration
feels it needs to do something," says Mr. Wojcicki.
Some critics contend the centers should support themselves, since they
are providing a service that manufacturers should be willing to pay for.
Indeed, the original design for the program, which was created by the
National Competitiveness Act of 1988, called for federal funding to be
phased out eventually. Companies do pay for the program's services, but
at a sharply lower rate than those charged by most consulting firms. A
third of the program's funding comes from the federal government. Another
third comes from state and local government, with the balance from fees
charged for services.
Garrett Metal Detectors in Garland, Texas, used consultants from one of
the program's centers to streamline operations on its factory floor,
which allowed it to triple output after the terrorist attacks of Sept.
11, 2001, when demand for its security equipment exploded. Similarly,
Tacony Corp., a vacuum manufacturer in St. James, Mo., got help locating
parts from U.S. suppliers, allowing it to move vacuum production to the
U.S. from a factory in Taiwan in 1998.
Mindful of the need to quantify the value of their work, the centers hire
a third party to do regular surveys of clients. For the first three
quarters of last year -- the latest period available -- the survey showed
the program helped manufacturers create or retain 32,000 jobs and
increase sales by $750 million.
"I'm rather stunned that this program was attacked," says Lawrence
Rhoades, president and chief executive officer of Extrude Hone Corp. in
Pittsburgh, who also serves on a panel studying the program at the
National Academy of Public Administration. "It offers a good return on
taxpayer investment." The first phase of the academy's study, released
last month, concluded that small firms -- which employ seven million
people and account for about 7% of gross domestic product -- need the
help of such a program more than ever, particularly in the face of rising
Write to Timothy Aeppel at email@example.com