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Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers (1993)

Chapter: 4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS

« Previous: 3 IMPROVING MANUFACTURING: SOURCES OF ASSISTANCE FOR SMALLER COMPANIES
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

4
Effectiveness of Manufacturing Technology Centers

Although the federal government has many programs to assist manufacturers (see Chapter 3), the Manufacturing Technology Centers (MTCs) program managed by the National Institute of Standards and Technology (NIST) is the primary federal activity in industrial extension targeted at smaller manufacturers. The MTC program provides matching grants creating centers to enhance ''productivity and technological performance in U.S. manufacturing through the transfer of manufacturing technology and techniques . . .'' (U.S. Congress, 1988). Since 1989, seven MTCs have been established in Cleveland, Ohio; Troy, New York: Columbia, South Carolina; Ann Arbor, Michigan; Kansas City, Kansas; Los Angeles, California; and Minneapolis-St. Paul, Minnesota. Federal funding for the MTC program in 1992 was $17.6 million.

The current MTCs have been established through three rounds of proposal evaluations and awards, in 1988, 1990, and 1992, with the number of proposals falling from 36 to 20 to 16 (National Research Council, 1988, 1990, 1992). Proposals are solicited from qualified nonprofit organizations. NIST provides funding for six years, with maximum funding of $1.5 million, $3 million, $3 million, $2.4 million, $1.8 million, and $1.2 million in each respective year. No NIST money is provided after six years. Applicants are required to contribute 50 percent or more of the proposed MTC's capital and annual operating and maintenance costs for the first three years, and an increasing share up to 80 percent in the sixth year. At least 55 percent of the applicant's share must consist of cash or in-kind contributions of full-time personnel.

NIST evaluates proposals based on: 1) regional need, 2) technology resources, 3) technology delivery mechanisms, and 4) management and

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

financial plan. (Appendix C is a copy of the 1992 Federal Register notice requesting MTC proposals.) Proposers must demonstrate that they understand the needs of their local manufacturing base and are qualified to meet those needs effectively and consistently. Innovative approaches to meeting the needs of the local industrial community are encouraged; NIST offers no predetermined solutions or expectations regarding modes of operation or specific program offerings.

This approach to the proposal process and conditions for funding are reflected in the current MTCs. Each MTC has a unique combination of services targeted at local industrial conditions (see Table 3). Each has a different relationship with its local cosponsor, typically state government, and has a different combination of financial and in-kind matching funds. Each has a relatively unique relationship with other service providers, such as consultants, community colleges, universities, and other state assistance efforts. Each MTC, therefore, can be viewed as an experiment or prototype in how to integrate federal efforts in manufacturing assistance with existing private and public assistance resources to meet the demands of very diverse local manufacturing communities.

The NIST and the Manufacturing Technology Centers fund the Modernization Forum to capture the lessons gained from these MTC experiments, to accelerate the learning process across them, and to identify areas for joint ventures among the MTCs. The activities of the Forum include national conferences on issues such as technology transfer to smaller manufacturers, an annual conference of MTC staff, joint MTC projects, and initiatives to link the MTCs with state extension programs, universities, and other public sources of industrial assistance. The MTC directors comprise the board of directors of the Modernization Forum, which meets monthly.

OBSERVATIONS REGARDING THE MTCS

Of the eight workshops held by the committee, six were collocated at MTCs. In addition to the workshops, half-day sessions were spent with MTC staff learning about their programs and experiences in working with the local manufacturing communities. (The remaining workshops were held in Los Angeles prior to that MTC becoming operational and in Georgia.) Based on these discussions, as well as conversations with company representatives who had had some experience working with the MTCs, the committee made the following observations:

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

TABLE 3 National Institute of Standards and Technology Manufacturing Technology Centers Program summary (February 1993)

Manufacturing Technology Center

Date Established

Host Organization

NIST Support ($ millions) 1993 Cum.

Matching Funds ($ millions) 1993 Cum.

Industries Served

Service Focus

Clients Served

Field Agents

Economic Impact** ($ millions)

California MTC

Hawthorne, CA

Aug. 1992

California Community Colleges

1.5

1.5

1.5

1.5

Aerospace Suppliers

Assessments, improvement planning, TQM, training and technical seminars

Under 30

20 by April 15

N/A

Great Lakes MTC Cleveland, OH

Jan. 1989

Cleveland Advanced Manufacturing Program

1.8

11.6

4.2

15.2

Industrial machinery and equipment, fabricated metal products, electronic and other electrical equipment, instruments and related products, primary metal industries

Networking, direct assistance, manufacturing equipment demonstration and facilities, luncheon forums, workshops, technology transfer events

2096

24

123

Mid-America MTC Overland Park, KS

Apr. 1991

Kansas Technology Enterprise Corp.

3.0

7.5

3.0

7.5

Industrial and Agricultural machinery and equipment, fabricated metal products, aircraft, food processing, wood products, and plastics

CAD/CAM, EDI, TQM, process planning. Services include one-on-one consultation, seminars and customized training, industrial networking, and equipment and software demonstration

376

38

17.6

Midwest MTC

Ann Harbor, MI

Apr. 1991

Industrial Technology Institute

3.0

7.5

3.0

7.5

Automotive and office furniture. Key supplier sectors include metalforming, and machine tools, tooling and machining, plastic processing, energy/environs.

Assessment, improvement planning, technology implementation, quality programs and information exchange

254

28

15.3

Northeast MTC Albany, NY

Jan. 1989

NY State Science and Technology Foundation

1.8

11.6

4.2

15.2

Metalworking, auto parts, plastics industries, and general manufacturing

Technical assistance including CAD/CAM, quality control, training, demonstrations, and seminars. Operates a Manufacturing Technology Vehicle training van for factory-site demonstrations, a Manufacturing Resource Facility, and two Manufacturing Service Centers

2318

29

42

Southeast MTC Columbia, SC

Jan. 1989

Enterprise Development Inc.

1.8

11.7

4.2

15.3

Metal fabrication, textile industry, all manufacturing industries

Business and manufacturing operation assessments, customized technical training, work force training, technology demonstrations

650

33

61

Upper Midwest MTC Minneapolis, MN

Aug. 1992

Minnesota Technology Inc.

1.5

1.5

1.5

1.5

Computers and non-electrical machinery, fabricated metal products, electrical machinery, plastics and composites

Change agent to encourage manufacturing companies to identify process and technology improvements and increase global competitiveness. Provide information and access to resources; identify barriers and possible solutions, manage projects; work force, supplier, and network development

638

35

3.6

 

 

Totals

14.4

52.8

21.6

63.7

 

 

6977

207

251.9

** Economic Impact is based on estimates by each Manufacturing Technology Center. When this information was collected, the metrics used to measure economic impact were not consistent across MTCs.

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

The chief characteristic shared by the MTCs is their funding relationship with NIST.

The MTCs differ primarily in the emphasis each places on the roles of technical center and field service assistance. The local infrastructure and industrial economy determine to a great degree the characteristics of the MTC organization and its chosen position in the spectrum of support needed by manufacturers in its region.

Despite the diversity of their management structures, relationships with other organizations, and sources of matching funds, MTC managers and staff seem to agree on what they are and are not about. They are not about doing academic research, doing traditional economic development in the sense of attracting new firms, transferring technology from federal laboratories, or creating Silicon Valleys.

Rather, they are about helping firms to adopt the disciplines required for globally competitive manufacturing and the design capacities needed for collaborative production. Reflective of this orientation is the emphasis placed by field engineers on working with firms to acquire the capabilities to evaluate individual projects rather than on conducting the evaluation themselves. Good projects build such capacities and, above all, increase the likelihood that firms will learn how to adopt other relevant capacities without further assistance.

The expectations and missions for the MTCs appear to have evolved towards a much broader set of initiatives than was originally perceived.

In addition to upgrading the technological competence of smaller manufacturing firms, MTCs are expected to support broader modernization efforts, provide business management assistance, participate in defense conversion and worker retraining, and so on. A well-articulated vision and coherent set of missions, understood and shared by all of the MTCs, was not readily evident.

This ambiguity is natural and reflects the experimental nature of the program and the tremendous amount of organizational experience, knowledge, and innovation to be examined. It also reflects responses to the diversity of the manufacturing economies surrounding each of the MTCs and the likelihood that strategies and missions should differ for each, based upon local circumstances, resources, and needs.

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

Organizational stability, local commitment, and proper institutional structures are critical underpinnings of a successful program to improve manufacturing competitiveness.

The success of the MTCs depends on well-established communication lines with the various communities they serve and appropriate mechanisms for sufficiently considering customer needs. Based on the performance of the current MTCs, university management is not likely to be as effective as other forms of organization and governance. Likewise, the availability of local organization and support, reflecting grassroots political commitment and accompanied by service and resources in the private sector, appear to be important elements of successful programs.

Recruitment and training of talented, dedicated, skilled, and experienced staff are essential for program success.

The reputation of the MTC and its ability to influence the regional industrial base depends on the trust and credibility established by the field agents with manufacturers in their regions of responsibility. The experience and expertise of senior MTC managers determine the strategies and establish the guidelines to accommodate local constraints and to leverage most effectively the available strengths and resources of each community. Employees of MTCs must understand business fundamentals and appreciate the unique circumstances of smaller manufacturing firms. They should be capable of both assessing areas for improvement and helping firms develop viable solutions.

MTCs in some instances devote a substantial portion of their resources to marketing services and "acquiring projects"; these activities limit the number of companies they can help.

Projects with individual companies are an important part of the MTCs' activities because they build credibility in the community by demonstrating technical competence and ability to deliver promised services. However, this type of one-on-one assistance severely limits the number of companies that can be helped with available resources, even when the amount of time allotted for specific projects with companies is limited, a common practice. To increase the breadth of the customer base, the network of field engineers associated with each MTC should be encouraged to identify problems common to manufacturers in their region that would be amenable to efficient means of assistance, such as

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

classes and workshops. Changing the instructional focus and content to meet local needs can produce a large impact on many more manufacturers than is possible on a one-to-one basis. For instance, one means of insuring that the assistance provided meets the needs of the smaller manufacturer is for the MTCs to encourage and facilitate participation by smaller firms in establishing the curriculum for local community colleges and technical schools. Furthermore, increasing general awareness of available assistance services with consistent and coordinated outreach efforts at regional and national levels could reduce the need for marketing efforts by individual centers.

Legislative requirements eliminating NIST funding after six years ("sunset provisions") adversely dominate the missions, attitudes, and behaviors of the MTCs.

Although, arguably, state government support would still be forthcoming after six years, the elimination of NIST funding forces MTC managers to devise long-term strategies to fill this funding gap. Typically, these strategies place an increasing emphasis on fee-for-service activities. On the one hand, focusing on services for which customers will pay ensures responsiveness to the client base and provides an easy metric for identifying valuable services and eliminating others. On the other hand, the need to raise funds from paying customers tends to encourage MTCs to focus on the needs of larger companies. These firms often are more willing to pay for services and require less marketing effort for the resulting income than smaller firms. Though still too early in the overall MTC program to tell what will happen after NIST funding ends, the committee can easily foresee a situation emerging in which MTCs fail to provide services that would be useful and effective to smaller firms because the fee income is insufficient, while at the same time competing more with private sector service providers for the business of larger firms.

It is difficult to collect quantitative return-on-effort data on "soft" services.

An extensive range of services can be provided by MTCs, but the present performance metrics (e.g., cash flow, number of clients, length of engagements, attendance at manufacturing meetings) become a strong impetus for them to concentrate on the assistance services for which the clients are willing to pay a fee or for which there are matching funds.

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

For instance, all of the MTCs place a great deal of emphasis on assessing the current conditions in client firms and determining productive areas for modernization efforts. Clients are charged for this assessment, which often leads to follow-on projects, either with the MTC or another assistance provider. The assessments, therefore, serve as a marketing tool, a source of income, and an easy measure of the number of company interactions.

However, during each of the committee's workshops, less project-oriented kinds of assistance were repeatedly noted by the company representatives as very useful and important to the manufacturers that participated. Examples of MTC services that workshop attendees noted as potentially very useful include activities to facilitate better networking among companies, such as forums, workshops, and company introductions, and activities to provide needed expertise, such as project management services and brokering or matching appropriate private sector providers with smaller clients. Although all of the MTCs provide these kinds of services to a greater or lesser degree, they should receive more emphasis despite the lack of clear metrics on which to judge their value.

There are not currently enough MTCs to have a substantial influence on the performance of the American industrial sector.

The sphere of influence for some MTCs is nowhere near what has been suggested as their domain of regional accountability. Consider the extremes in the number of smaller manufacturing firms in three regions of the country, each of which has a single MTC. California has nearly 45,000 smaller manufacturing firms with fewer than 100 employees. Kansas has about 3,000 firms with 100 or fewer employees. In South Carolina, the Southeast Manufacturing Technology Center has implicit responsibility for all 13 southeastern states.

This range in size of the customer base has important implications for several aspects of the MTC program. First, with 45,000 potential customers, the California MTC cannot reasonably be expected to provide the same level of service or range of activities for the same budget as does the Kansas MTC. Either expectations need to reflect the constraints of available resources, or funding levels should reflect the size of the customer base. Based on the number of customers to be supported and the level of assistance to be provided, multiple MTCs may be required in high-density areas.

Second, selection of MTCs and expectations of their service areas should reflect the difficulty of cooperating across state lines when state

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

governments are the source of matching funds. Although some MTCs have been successful in arranging cooperation across state boundaries, Cleveland and Minnesota in particular, these efforts are still small. This issue will need to be confronted more directly in the future as the MTC program is expanded.

CONCLUSIONS

Based on the discussions at the workshops with MTC personnel and manufacturers, a majority of the committee has concluded that the MTCs are well placed to provide many of the services needed to improve the performance of smaller manufacturers. (See Chapter 6 for a minority opinion.) Many of the needs and opportunities identified by the manufacturers relate to improving access to information and building stronger networks among companies, suppliers, technology developers, regulators, and financiers. Many of the activities of the MTCs already address these needs, but, for a variety of reasons, these activities are not given the emphasis they deserve.

Some manufacturers perceive the MTCs as just another government program and therefore are reluctant to work with MTC staff; these firms are probably in the minority, however, and can be expected to change their minds over time. Most manufacturers seem to perceive the MTCs as neutral parties without a vested interest in any particular vendor, equipment type, or software package, and as government bodies with access to other government bodies such as state regulatory agencies. The MTCs should capitalize on this perception by playing a far more forceful role in mobilizing networks within local manufacturing communities. Such networks would improve sharing of information, experience, and problems; they could also serve as an effective mechanism for aggregating the concerns of smaller manufacturers to provide a voice in national policy commensurate with their numbers.

Each of the MTCs continues to learn how best to serve its customer base and is flexible enough to adapt. All are learning what they should do in the context of their customer base and their resources and capabilities. They are learning how to serve as a hub of information and facilitator of cooperation in their local industrial communities, and how to amalgamate a range of programs into a core set of useful services. More progress is needed, particularly in building methodologies for effective group learning among companies, but the learning process seems strong.

Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
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Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 74
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 75
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 76
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 77
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 78
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 79
Suggested Citation:"4 EFFECTIVENESS OF MANUFACTURING TECHNOLOGY CENTERS." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×
Page 80
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Manufacturing firms—large and small—face massive change and adjustment as they move from a stable, fault-tolerant environment of long production runs to a volatile world in which production runs are short; product characteristics are changing constantly; and defect-free, on-time production at decreasing prices is a condition for survival. The necessary changes in the production organization include everything from the layout of the shop floor to the distribution of authority between managers and workers. The magnitude of these changes threatens to overwhelm the managerial capacities of firms, regardless of their size.

This study examines the particularly vulnerable situation of small and mid-size manufacturers and considers ways in which to help them undertake the many changes and adjustments necessary. These include assimilating the new tools, disciplines, and philosophy of lean manufacturing; embracing new ways of delegating responsibilities; and developing new kinds of partnerships among customers, suppliers, and employees.

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