Manufacturers decry deep cuts in MEP program

It is called the Omnibus Spending Bill, the annual appropriation by Congress that covers several departments, a multitude of programs, and several hundred billion dollars. But it also might be called the “ominous” spending bill for the legendary barrels of pork it provides and the reservoirs of waste replenished at the taxpayers’ expense.

Yet amid all the wasteful spending, there are also examples of what critics call wasteful savings. Among the latter is the cut made in the recently approved bill to the network of Manufacturing Extension Partnerships, including New Hampshire’s.

The spending bill of more than $800 billion will reduce the annual federal spending on MEP from $106 million to $39 million in the new fiscal year, beginning Oct 1. MEPs throughout the 50 states, making plans and commitments for the months ahead, are already beginning to feel the pinch.

“We have laid off one person,” said Muriel Mosher, vice president of communications and marketing for Manufacturing Services Inc., the agency that manages the program for Maine, New Hampshire and Massachusetts. She said, “We’re going to do some creative work” to continue delivering the services.

But in New Hampshire, the budget for MEP will be slashed from $420,000 to $122,000. The cuts have greater impact in New Hampshire than in Maine and many other states, Mosher said, because there is no state source of funding to supplement the federal grants. The state has kicked in some money at various times in the past, said Mark Godfrey, president of Felton Brush in Londonderry and chairman of the New Hampshire MEP board of directors.

“One year I think there was $150,000 through the Economic Development Fund,” said Godfrey. The state has helped the MEP with contracts and in locating other funding sources. But it is “not a consistent source of cash,” Godfrey said. The MEP provides expert help to manufacturers on everything from relocation options to streamlining manufacturing processes.

Godfrey’s firm is among those aided by the program.

“Way back when we were looking for land in ‘96 or ‘97, they helped sort of point us in the right direction,” said Godfrey. “And they did some lean manufacturing training for us. It was really getting the departments together and looking at workflow and trying to reduce some of the steps and make it more efficient. We’re just starting to see some of the benefits,” he said.

But other companies have already seen substantial savings or increased sales — or both — through MEP-inspired efficiencies and improvements said Godfrey, who claims New Hampshire manufacturers have realized more than $36 million in increased and retained sales since 1999 as a result of the program.

More than 300 manufacturing jobs have been created or retained through MEP programs, he said.

Bang for the buck

“What’s really sad about (cutting) the program in New Hampshire is that it’s been one of the top-producing programs in the country,” said Mosher. Ironically, the cut comes at a time when a growing number of manufacturers and workers are alarmed over the number of manufacturing jobs that have been lost in the state, region and nation in recent years.

“From January 1998 to June 2003, we lost 2.9 million manufacturing jobs,” said Mosher, citing the nationwide job loss. And the losses accelerated in the final two years of that period, she said. Between January 2001 and June 2003, the downward line on the jobs graph “looks like an Olympic ski slope.”

The New England region alone lost 214,000 manufacturing jobs from January 1993 to June 2003, according to Mosher, with that “ski slope” effect appearing in the months beginning in January 2001. New Hampshire lost 22,400 manufacturing jobs between January 1998 and June 2003, said Mosher; 21,000 of them were lost between January 2001 and January 2003.

George W. Bush, who became president in January, 2001, is probably not the best friend the MEP ever had, said Mosher.

While governor of Texas, he succeeded in eliminating state funding for the program there, and his brother, Gov. Jeb Bush, has done the same thing in Florida.

Yet MEP officials and companies benefiting from the program had reason to hope it would be “held harmless” during budget deliberations in Washington. Mosher said that at a recent press conference in Cleveland, Secretary of Commerce Daniel Evans said President Bush supports the program and favors “level funding” from this year to next. A drop from $106 to $39 million has Mosher wondering what “level” means.

“That $106 million in the whole federal budget is such a little speck in someone’s eye,” she said. “Yet it’s had such an impact for small manufacturers.”

The Manufacturing Extension Program is run out of the U.S. Department of Commerce and is part of a larger program called the National Institute of Standards and Technology. Created in the 1980s, the MEP modeled after the agricultural co-op extension, the federal, state, county and university program started in 1913. The goal of MEP is to help small to medium, primarily family-owned, businesses be more competitive in global markets, said Stuart Arnett, director of the state Division of Economic Development in the Department of Resources and Economic Development and member of the NHMEP board of directors. The administration’s policy has actually been to hold NIST at level spending, while reducing funding for MEPs, Arnett said.

“There are some other programs in NIST that have also been controversial,” said Arnett. “There’s another program that gives large grants to larger companies. That has been seen as corporate welfare. We have not used it.”

New Hampshire does not have a line-item appropriation for the MEP program, Arnett said, though DRED has tried twice to get one, once during Governor Shaheen’s time in office and again under Governor Benson. What the state has done is “missionary work,” he said, making “soft contributions” of time, effort and expertise.

End of an era?

At first glance, Arnett conceded, the MEP may appear to be duplicating the work of other public-private partnership programs in the state. The Industrial Research Center, for example, calls on the expertise of engineers at Dartmouth and the University of New Hampshire to help start-up firms. And the Small Business Development Center, a federal-state program, also serves many New Hampshire businesses.

“Actually, they’re dealing with very different clientele,” Arnett said. “The Small Business Development Center helps small businesses at the very early stage of start-up. MEP deals with more mature companies, and it’s just manufacturing.”

The IRC program is even more specific, directing its pool of talent to helping small companies in the “high tech” sector, he said.

On the other hand, he said, there is nothing wrong with having more than one source or program of assistance available for New Hampshire’s mix of manufacturing firms. “We often bring any one of several services to a client, as applicable,” he said. “It’s not unusual for us to bring two or four or five different services to a particular company.”

But if the MEP appears to be getting short shrift now, it may be because the program is not as well run in every state as it is in New Hampshire, Arnett said. In fact, it was not always as well run in New Hampshire as it is now, he added.

“We were one vote on the board of directors from ending it ourselves,” Arnett said, recalling that vote came about five or six years ago. “We were able to rescue it. It was considered under-performing. Now it’s considered over-performing.”

Over-performing, perhaps, but now seriously under-funded. “At this point, there’s no way, the MEPs in the country can exist,” said Jack Metzmaekers, president of Scott Electronics in Salem and vice chairman of the NHMEP board of directors.

Even if the program can survive under the dramatically reduced funding, he said, the ability to help companies increase their efficiencies, along with their profits and employment, will be seriously diminished.

Metzmaekers is another executive whose business was helped by the program.

He said the MEP taught his firm about lean manufacturing techniques, allowing the firm to increase from 40 employees in the mid-1990s to some 90 today.

“We’re doing what we can to maintain our presence and deliver services,” said Martin Vincent, MEP director in Concord. He is determined to deliver on commitments already made, but planning for the future is difficult to impossible. “We’re going into a holding pattern,” he said.

There is the hope that more money will be earmarked for MEP in the supplemental budget to be passed this fall. But the ensuing eight or nine months will be a long wait to see if the program will survive.

Metzmaekers said U.S. Sen. Judd Gregg and other members of the New Hampshire congressional delegation support the program, but it may not be equally valued by other members from other parts of the country.

“Senator Gregg’s been with us from Day One, but it’s a political thing,” the electronics manufacturer said. But with the state facing a budget crisis and Gov. Craig Benson holding firmly to his pledge to veto new taxes, it’s not likely any significant funding help will come from state coffers.