GUEST OPINION: Manufacturing partnership deserves our support

New Hampshire’s Manufacturing Extension Partnership has demonstrated value in job creation and profitability for manufacturers, yet remains in danger of failing because of insufficient funding.

The program is part of the national MEP network, which operates in all of the six New England states. The MEP has created jobs and increased profits for small manufacturers in the region since its inception in 1995. The budget for this largely federally supported program was cut 60 percent for FY 2004 and remains at that level for FY 2005. It remains unclear what lies in the future for MEP, and a new budget proposal is not expected before January 2005.

The New Hampshire MEP, supported by the National Institute of Standards and Technology of the U.S. Department of Commerce, helps small and medium-sized manufacturers identify and implement manufacturing and management technologies that will improve efficiency and competitiveness.

Jack Healy, director of operations for the New Hampshire MEP, notes that in surveys conducted with New Hampshire MEP clients from 2001 to 2004, the responding companies created or retained 298 net jobs that otherwise would not have existed; experienced increased and retained sales of $43.1 million; and spent $26.3 million on new investments.

The companies surveyed also reported $8.9 million in cost savings, including saving $6.7 million on direct costs. It is estimated that $8.9 million in cost savings is equivalent to $178 million in increased output. And 77 percent reported that they had become more competitive as a result of their relationship with the MEP.

The economic impact extends beyond client firms. In order to grow, these firms increased their purchases of goods and services from many companies located in New Hampshire. The total of these direct, indirect and induced effects suggests that these companies are responsible for: creating or retaining 995 jobs; paying a total of $44.4 million in wages and benefits, including 551 jobs outside of manufacturing; increasing or retaining economic output of $154.8 million; contributing or retaining $73.2 million of gross state product; and generating or retaining $17 million in additional tax and non-tax revenues at the federal, state and local levels.

Small manufacturers represent 98.5 percent of all the manufacturing enterprises nationally and account for nearly 80 percent of the employment. They also are a significant part of the supply chain and create parts for the larger original equipment manufacturers.

In New Hampshire, the fate of the MEP is particularly important because manufacturing is the largest sector of the gross state product. In the recent recession, the New Hampshire manufacturing sector lost more than 20,000 jobs.

MEP programs offer services that largely focus on education and training. The MEP also offers a technical skills training program which can help a company transition to new businesses. Another area involves helping small manufacturers connect with the U.S. Department of Defense.

The MEP programs also are looking to the future and beyond the production floor to address enterprise-wide issues with an impact on the small manufacturing community.

One of the issues facing the future of manufacturing includes a shortage of skilled workers. Manufacturing nationwide lost one in five jobs in the recession. Today’s mature workforce is facing retirement. There is a need for new skilled workers to replace them.

Facing this challenge, the MEP system is developing partnerships with area educational institutions to help train students with the technical skills that these jobs require. Their goal is to promote connections between manufacturers and schools. The MEP also has developed a certificate program focusing on lean manufacturing and other management principles with a target audience of managers, engineers and supervisors. The New Hampshire MEP hopes to launch some of these training programs next year with such institutions as the New Hampshire Technical Colleges.

Small businesses are responsible for the majority of new job creation nationwide. They are particularly important to the New England economy, where small businesses employ 52 percent of the region’s workforce. We need to strengthen the resources and programs that support them, such as the MEP. We also need to encourage new directions in education and training to prepare the workforce for the future. Building a foundation early on to meet the needs of the business community will be key to the region’s ability to grow.

James T. Brett is president and CEO of the New England Council, the nation’s oldest regional business organization.