More About Manufacturing Extension Partnerships

Why is Manufacturing Success So Important?

What has been the Federal Funding of the Program?

What is the funding structure for MEPs?

What are the Activities of a Manufacturing Extension Partnership?

What are the characteristics of MEP Operations?

What are the economic arguments associated with MEPs?

What are some of the future initiatives of the National Institute of Standards and Technology?

What are the challenges of evaluating the effectiveness of the partnerships?

What is North Carolina doing with manufacturing extension partnerships?

Are the MEP Programs linked to any other technology diffusion programs?

Why is Manufacturing Success So Important?

A number of reasons are often cited as to why manufacturing success is so important, but the following three are the most often mentioned:

• Manufacturing success leads to well paying jobs in manufacturing and linked services.

• Manufacturing success in the United States can help to reduce the trade defecit.

• Success breeds succcess - in other words it helps to generate the resources necessary to fund future phases of research and development.

The Federal Support for MEPs has been increased each year under President Clinton.  It is interesting to note, however, that theoretically the amount of support for MEPs could begin to decline as is witnessed in the change from FY 98 to FY 97.  This is because many of the MEPs centers have been up and running for some time now and those that are in their later years are receiving less federal money each year.  The next slide shows the funding mechanism from the federal government to the regional MEP centers.  Up until the passage of the Technology Administration Act, there had been a sunset provision on the federal funding to the MEP centers.  It was recognized, however, that states could (or would) not fully fund these initiatives. (Source: Weekly Compilation of Presdiential Documents)

FY 99- 106.8 million
FY 98- 113.5 million
FY 97- 95.0 million
FY 96- 80 million
FY 95- 74.3 million

First Three Years
One for one match - state to federal

Fourth Year:
Federal - 40%, State - 60%

Fifth and Sixth Year: (and onward)
Federal - 33%, State - 67%

• Management Training Programs
• Plant Layout Reconfigurations
• Quality Improvements
• New Product Development
• New Equipment Needs
• Marketing and Sales Support
• Capital Investments

Typical MEP Operations include an emphasis upon quality staff.  Staff are typically distributed in the following manner:

1) Full time staff specialists
2) Faculty
3) Consultants
4) Regional field agents

While faculty can provide necessary support to projects, the downside of faculty includes the following:
- one of many priorities, ranking below research and teaching
- may have little or no industrial knowledge

• Private consulting firms charge unit costs to small firms that exceed fees that can be charged, thus creating market failure for these small firms, necessitating MEPs.
• MEPs displaces private consulting firms (argument against MEPs)
• Number of foreign countries support smaller manufacturers, thus creating disadvantage to U.S. firms.
• Asymmetric Information between smaller and larger manufacturers.
• Help avoid zero sum game - some states and regions concentrate their economic development efforts on recruiting successful companies to relocate from another area - a tactic that provides local benefits but makes no net addition to the country's productive capacity.  Having the national government at the policy table focuses attention on the need for positive sum strategies (MIT Technology Review, July 1995)
• Govt. picks winners and losers through MEP centers; creating an anti-free market approach
• Capital gains and Investment Tax Credits - some argue that these would be better incentives than MEP centers.

NIST and the Manufacturing Extension Partnership Program are seeking to become more effective as a national system of resources and referrals for the local partnership offices.  NIST would like to see more coordination of efforts from the national office, particularly efforts to share information about "best practices" of the many different partnerships.  They currently use a system called technet, in which field engineers from across the country write in to this national computer system with their questions.  Field engineers from around the country can then share their related experiences.  NIST would like to see this system expanded and others developed for more effective information sharing.

Numerous challenges exist in trying to trying to evalute the success of technology transfer.  These challenges include the following:

• traditional economic development criteria such as jobs saved or created or tax revenues generated are not very appropriate.
• Successful results can include improved quality, more efficient plant layout, wiser choice of equipment, or reduced waste - none of which necessarily affects jobs or taxes (at least in the short run).
• Sometimes higher productivity may result in fewer jobs, especially for production workers.
• Even when firms expand employment, it can be difficult to quantitatively isolate the contribution made by a technology assistance program vis-a-vis the effects of management strategy or overall market conditions.

North Carolina has a NIST-affiliated manufacturing extension partnership that began in 1995.  The parternship brings together universities, community colleges, and government to help the state's 12,000+ small and mid-sized manufacturers identify and implement new technology and improve management practices and productivity.

Characteristics of North Carolina and its Manufacturing Extension Partnership

• In 1955, the North Carolina General Assembly established the first Industrial Extension Service in the nation, at NC State University's College of Engineering.

• North Carolina ranks eighth in the US both in total manufacturing employment and in value of manufactured products, but 48th in the percentage of engineers emplyed in the state's workforce.

• There is a manufacturing extension specialist within an hour's drive of 90% of the state's manfuacturers.

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Are the MEP Programs linked to any other technology diffusion programs?

Yes.  The Advanced Technology Program (ATP) is looking to partner with MEP.  The broad objective of the ATP is to promote rapid commercialization of high-risk technologies.  ATP relies on industry to suggest, define, and implement R&D programs having potential substantial long-term economic impacts.  (Science magazine, May 20, 1994 v264 n5162 p1063)  A pilot project is seeking to evaluate ways that technologies resulting from NIST's Advanced Technology Program can be diffused through the Manufacturing Extension Partnership program. (Federal Technology Report, December 17, 1998)