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11/2/2003

MEP program in danger — again

By Tony Kindelspire
The Daily Times-Call

LONGMONT — It’s a pebble in the pond of the United States budget and you probably have never heard of it.

That is, unless you’ve used it to help save your business.

The Manufacturing Extension Partnership, administered by the National Institute of Standards and Technology, is a network of 400 centers across the country that provide assistance to manufacturers.

MEP provides consulting and training on issues like processes, engineering, management and marketing, and hosts seminars and roundtables of interest to manufacturers.

According to industry statistics, MEP members reported more than $636 million in new sales, $680 million in new investment and more than 25,000 jobs created or retained during 2001.

In what it calls a conservative estimate, the organization also contends that for every $1 dollar invested in the program by the federal government, $4 are returned in the form of tax revenues.

President Reagan first signed MEP into law, the first President Bush supported the program’s funding, and the Clinton administration took the program national.

But for the second year in a row, Congress is deciding whether to preserve MEP’s federal funding or to follow the White House’s recommendation and essentially gut the program.

President Bush’s budget for fiscal year 2004, which began October 1, has recommended $12.6 million for MEP, which had a budget last year of approximately $106 million.

The same thing happened the previous fiscal year: the White House proposed a budget of about $13 million and Congress had to act later to restore the funding to its original level.

MEP used to have a sunset provision on federal funding, but Congress — impressed by the program’s success — passed a law in 1998 to repeal that provision. Since then, however, the program’s funding is in question every year.

According to Mike Wojcicki, president of the Modernization Forum, the trade association for MEP, the centers in all but two states would likely close if the president’s proposed budget cut were to stand.

“Congress has heard all year long from thousands of manufacturers across the country, including Colorado,” Wojcicki said. “We’re hoping that Congress is listening.”

Currently, both the House of Representatives and the Senate are in the process of finalizing the budget for this fiscal year. Wojcicki said the House is recommending $39.6 million for MEP — a two-thirds reduction — while the Senate Appropriations Committee has recommended restoring full funding.

“Ironically, what the administration has said in explaining their recommendation of $12.6 million for MEP is kind of a back-handed compliment,” Wojcicki said. “What they’ve said is this program — MEP — is so successful that we believe it can survive without federal funding.”

That would not be the case for the MEP center serving Colorado — the Mid-America Manufacturing Technology Center. Based in Kansas City and with 19 offices serving three states, MAMTC would likely shut down if MEP’s federal funds disappear.

Nationally, MEP centers receive about a third of their funding from the federal government, a third from states and a third from membership dues.

MAMTC, though, receives no state funds and 50 percent of its budget is federal money, according to Elaine Thorndike, director of MAMTC’s Boulder office.

If the White House’s recommendation makes it into the final budget, Thorndike said, “What would happen is the money that’s left would basically be an amount to close down the program.

“Their logic is that the other centers could survive on their own, but here in Colorado, we don’t receive any state funding.”

Thorndike said the services MEP provides are especially valuable to smaller manufacturers.

“It is a lower cost than they would have to pay a private consultant,” Thorndike said. “And we go a lot of places nobody else will go. These are places where these jobs are absolutely critical to the life of these communities.”

As for Colorado’s congressional delegation, “Half of the Colorado legislators have been supportive, and the other half have not,” Thorndike said.

MEP charges companies for its services, such as providing advice on adopting “lean” manufacturing methods or showing a company how to automate its accounting methods, but at a lesser fee than a company would have to pay to a regular consultant. For smaller companies, and those in rural areas, the cost savings can be significant.

It’s possible that even if MEP’s federal money is cut, some centers would still remain open, Wojcicki said. But the focus of the public-private partnership would have to change.

“It’ll vary from state to state,” he said. “Right now, MEP serves every state in the country and Puerto Rico. I’d guess if MEP loses their federal funding, about half of the states would lose their funding. The other half would focus on high-end projects.

“The MEP centers would have to be focused more on revenue generation.”

For a MEP field engineer that’s trying to sell a project to a manufacturing firm, Wojcicki said, “It takes the same amount of time to sell a $5,000 project as it does to sell a $250,000 project.”

Wojcicki said MEP is more important than ever, given the exodus of manufacturing jobs overseas.

“Once something becomes just a commodity item that just anybody can produce, it’s going to go offshore because the wages are lower,” said Wojcicki. “Our competitive edge in the U.S. comes from higher productivity growth and faster technological innovation, and that’s exactly what MEP helps these companies do.”

Despite its recommendation to gut the MEP budget, the administration — particularly Grant Aldonas, the U.S. Department of Commerce Under Secretary for International Trade — has said it wants to help U.S. manufacturers with a “manufacturing initiative” it will soon announce. Wojcicki said he has no idea what’s going to be in that program, but he’s “hopeful.”

He said he expects to see the administration’s manufacturing initiative and the final decision by Congress on funding for
MEP within the next several weeks.

With nearly 3 million manufacturing jobs having been lost in the United States in the past 21/2 years, and the proven success of MEP, you might think more attention would be being paid to the program’s future. But in the massive morass of the federal budget, a $106 million program can slip under the radar pretty easily.

“We’ve been trying desperately to get press, and I think it’s only recently that people have started to pay attention because of the jobs lost,” said Thorndike.

“The truth is that there are going to be a lot of jobs that are going offshore. But the other part of that reality is there is still a lot of opportunity for American manufacturing.”