The National Academies Evaluation of the Manufacturing Extension Partnership

Philip Shapira
University of Manchester and Georgia Institute of Technology

Dr. Shapira began by recalling that he first came to Washington in 1986 as a congressional fellow in the Office of Technology Assessment. “That was exactly the time when Washington and the country were discussing what was happening in the manufacturing sector,” he said. The competition from Japan was so daunting that he and other congressional staff began taking lessons in Japanese—“an interesting sign of the times.” That was the period when the Omnibus Foreign Trade and Competitiveness Act of 1988 was being prepared and the major features of the MEP were being developed. Now, in 2011, he added, “it’s very interesting for me to have the opportunity to revisit the program.”

He said that there are more than 300,000 SMMs in the United States, and “they are a crucial part of our nation’s economic foundation.” Given their importance, he said, it is imperative to better understand how best to stimulate and support their development. “There are many innovative small manufacturing companies,” he said. “There are also many which seem to lag in terms of performance, productivity, innovation capabilities, training, sustainability, and export performance.”

SUPPORT FOR MANUFACTURERS MUST BE SUSTAINED

The challenge at the MEP, he said, is to work with all kinds of companies, in all regions of the country, and to link those companies with larger supply chains and value chains. Broadly, the task of the MEP is to stimulate those individual firms in sustained fashion. “You can’t force firms to change, but you can encourage them, point them toward resources, mentor them, and



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34 STRENGTHENING AMERICAN MANUFACTURING The National Academies Evaluation of the Manufacturing Extension Partnership Philip Shapira University of Manchester and Georgia Institute of Technology Dr. Shapira began by recalling that he first came to Washington in 1986 as a congressional fellow in the Office of Technology Assessment. “That was exactly the time when Washington and the country were discussing what was happening in the manufacturing sector,” he said. The competition from Japan was so daunting that he and other congressional staff began taking lessons in Japanese—“an interesting sign of the times.” That was the period when the Omnibus Foreign Trade and Competitiveness Act of 1988 was being prepared and the major features of the MEP were being developed. Now, in 2011, he added, “it’s very interesting for me to have the opportunity to revisit the program.” He said that there are more than 300,000 SMMs in the United States, and “they are a crucial part of our nation’s economic foundation.” Given their importance, he said, it is imperative to better understand how best to stimulate and support their development. “There are many innovative small manufacturing companies,” he said. “There are also many which seem to lag in terms of performance, productivity, innovation capabilities, training, sustainability, and export performance.” SUPPORT FOR MANUFACTURERS MUST BE SUSTAINED The challenge at the MEP, he said, is to work with all kinds of companies, in all regions of the country, and to link those companies with larger supply chains and value chains. Broadly, the task of the MEP is to stimulate those individual firms in sustained fashion. “You can’t force firms to change, but you can encourage them, point them toward resources, mentor them, and

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PROCEEDINGS 35 stick with them. Change is not a one-time event.” It was important to note, he said, that the MEP works with the states in partnership, not as a federal program generated from Washington. “That adds opportunity and complexity into the mix,” he said, “because every state does its partnership a bit differently, and in this review we want to understand how.” By federal standards, the MEP is a small program, budgeted at about $128 million and matched by roughly similar amounts of state and industry funds. “It’s significant, not huge, but it’s very strategic and very important.” Dr. Shapira said that his committee had been requested to undertake a study of the MEP to understand its functions and strategies. The committee would look not only at past performance, but try to understand how the program could best address future challenges. It would also examine similar programs in other countries, particularly in Europe and Asia. “We think that international standards and insights are crucial to understand and to benchmark the MEP approach.” Finally, the committee would look at how the MEP is connected to the broader set of challenges and opportunities as the country seeks to build and retain manufacturing resources. A PARTICULAR FOCUS ON SMALL AND MEDIUM-SIZED MANUFACTURERS Dr. Shapira said that the study would not attempt an overview of all aspects of manufacturing, a perspective being addressed by others. The committee’s particular charge is the needs of small and mid-sized enterprises (SMEs)—“the regular companies that pay taxes, hire people, and produce things. They are often overlooked, particularly in Washington.” He emphasized that the study would be evidence-based and analytical. “I think our job is not to micro-manage this program, but to review where it’s been, where it is now, and where it could go, given our assessment of what’s happening in manufacturing in this country and internationally.” He described several lines of inquiry: the performance of the MEP program, the ways in which states use it, the diversity of the users, and issues of funding and co- funding. The committee would also investigate how the program is used by manufacturers and how it relates to their needs; how it relates to the general array of assistance opportunities available at federal and state levels; and how it compares with programs of U.S. trading partners. Dr. Shapira praised the breadth of the panel itself, whose members had gained broad experienced in small and large firms, the policy world, federal and state agencies, and academia. He thanked the members of the committee for volunteering their time to the study and expressed his appreciation for the work of the National Research Council staff.

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36 STRENGTHENING AMERICAN MANUFACTURING THE IMPORTANCE OF THE STUDY He concluded with some thoughts about the importance of the study. During an era of tight resources, he said, it was important to assure people that the public money going into the program, even though not large, was well leveraged by private resources. It is appropriate to ask how those resources are being invested, what the return is, and how to maximize that return. The study also had an opportunity to shed new light on the “deeper” questions suggested by Dr. Wessner in his opening remarks, he said. “We are in an era of global competition. Our companies are competing with companies around the world. The MEP is one of the major ways in which we’re trying to stimulate our SMEs to be productive, to export, and to train productive workers. In this era of global competition, we need to ensure that the MEP is configured in such a way that it can meet not only these CURRENT challenges, but future challenges.” Dr. Shapira reflected on the formation of the MEP in the 1980s, a program “that we’ve inherited and which we are now asked to address amid the much broader challenges of the 2010s. I think it’s appropriate to ask, how should it be configured as we go forward? Is it the right size? Should it operate differently? How should it be integrated with other programs? I think these are the questions that we need to think about if we’re going to be serious about global competition.” Finally, he said, a general concern has spread through the country that the United States is less able to make things than it is to finance and sell them. “We need to ensure that the MEP is contributing to our national objectives,” he said, including the reversal of the current economic imbalance. “The MEP is a very concrete activity, and it can be a significant part of national strategy in the years ahead.” Dr. Shapira then introduced Sridhar Kota of the White House Office of Science and Technology Policy (OSTP).