An SSTI Analysis: Administration's Manufacturing Strategy Indicates Changes Ahead for MEP

Following 41 straight months of job losses in the manufacturing sector, the Bush Administration released its long-awaited strategy to help revive manufacturing. Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers makes 31 recommendations designed to address challenges identified through 23 roundtable discussions that were held across the country.

Included in the recommendations is support for "a newly coordinated Manufacturing Extension Partnership (MEP)." While much of the press attention across the country has indicated that this is a major reversal on the Administration's part, the picture is not as simple as that. The Administration's fiscal year 2004 budget request of $12.6 million for MEP would have cut funding to all but two of the MEP centers. The budget approved by Congress on Thursday contains $39.6 million for MEP, down from the FY 2003 level of $106 million.

Yet, in terms of funding, it is not clear from the report what "support" means. Commerce Secretary Evans has indicated in some press reports that MEP would receive "flat funding," which has led to speculation on the level of "flat funding" — $39.6 million approved for FY 2004 or the FY 2003 level of $106 million.

Perhaps the best clue is offered by Grant Aldonas, the Under Secretary for International Trade, who was quoted in a Dec. 28, 2003 Los Angeles Times article, "There's a commitment to make sure we keep it alive. But there's also a commitment to make sure we reform it. We have to do a better job of delivering those services at a lower cost, because the budget constraints are still there." Exactly what needs to be reformed is not spelled out in the article or the report.

The strategy calls for a "recompetition for all MEP centers, with a focus on effectiveness and cost-efficiency." If the 63 percent budget cut becomes the "flat funding" level and a recompetition is held, it leads to questions of how many centers will be funded, whether the centers will serve the whole country, and what role the states may have or want to have with the centers.  Perhaps answers to these questions will be forthcoming when the Administration releases its FY 2005 budget request.

The report suggests the Commerce Department can "more closely link the technical and business employed staff by the MEP centers located around the country with trade promotion specialists in the Commerce Department's International Trade Administration... With a direct teaming of MEP field agents and these sector experts, the program can be a more effective national resource to help small manufacturers compete and succeed in the global marketplace."

Other recommendations include:

• Establishing a President's Manufacturing Council;
• Fostering coordination and cooperation among federal, state and local governments;
  • "Not all of the steps needed to foster an economic environment helpful to manufacturing reside in the jurisdiction of the federal government. However, the federal government could serve as a coordinator... The states have traditionally served as laboratories for a wide variety of initiatives that have shaped economic policy throughout the country. The administration should create an intergovernmental coordinating committee on manufacturing....to ensure that sound ideas on regulatory reform or economic development strategies are widely available to all state and local governments."
• Identifying priorities for future federal support for advanced manufacturing technology through a new interagency working group established within the National Science and Technology Council;
• Encouraging the SBIR and STTR Programs to focus on manufacturing; and,
• Exploring new avenues for leveraging federal laboratories and universities for the benefit of small and medium-sized manufacturers.

The full report can be viewed at http://www.export.gov/manufacturing/news/evans_manu_repo.html