Economic development effort faces funding cut

BYLINE: Robert Gavin, The Boston Globe

Nov. 23--Governor Mitt Romney's recent move to slice $425 million from state spending will hamper the efforts of a program that has helped hundreds of small manufacturers compete, survive, and save thousands of jobs.

The program, the Massachusetts Manufacturing Extension Partnership, or MassMEP, is jointly funded by state and federal governments and considered by business officials to be a particularly effective economic development effort. Romney's spending cuts, accomplished by invoking the governor's emergency powers to withhold funds, eliminates the state's $1.6 million contribution to the effort, about one-fifth of its $7.5 million budget.

As a result, the program will lay off a still undetermined number of staff, cancel consultant contracts, and drop at least 50 firms from the program, which helps manufacturers become more efficient and competitive by revamping operations and training workers. Over the past five years, MassMEP has helped small manufacturers create or retain some 3,000 jobs, generate sales of more than $300 million, and undertake nearly $100 million in new investments, according to annual client surveys.

At Chace Leather Products of Fall River, for example, MassMEP taught the nearly century-old firm the principles of so-called lean manufacturing, in which manufacturers make and deliver products to customers as needed, instead of building inventories.

The re-engineering allowed Chace to win a multimillion-dollar contract for leather cases for hand-held radios that Motorola, Inc. had earlier sent to India, said Larry Walsh, the company president. Revenue, meanwhile, has grown by some $2 million, and the firm recently hired 15 more workers, boosting its payroll to about 70, said Walsh.

"Without MassMEP," Walsh said, "there's a very, very high probability that we wouldn't be here today."

The Massachusetts Manufacturing Extension Partnership is among a wide variety of programs affected by Romney's decision earlier this month to withhold $425 million to avoid a projected deficit. Democrats decried the move, charging that Romney is motivated more by presidential ambition than fiscal responsibility.

Romney, who leaves office in January, is considering a White House bid.

The elimination of funding for the manufacturing program also renewed criticisms by business officials that Romney's economic policies favor style over substance. In particular, business officials have criticized the administration for seeking big scores that generate headlines, rather than doing the nitty-gritty work that helps small, home-grown firms to grow.

Brian Gilmore, spokesman for Associated Industries of Massachusetts, the state's biggest employer group, said the manufacturing program does the firm-by-firm work that helps companies become "innovative, lean, and competitive in the international marketplace."

"It's very important, but it's not sexy stuff," Gilmore said. "And that's why the administration isn't interested."

Eric Fehrnstrom, Romney's spokesman, said the governor believes MassMEP does good work but it should "be a self-sustaining organization based on the revenues and fees it charges for its services."

"Every line item in the budget has a constituency that is very fierce about defending its spending," Fehrnstrom added in an e-mail. "But Governor Romney has an obligation to the taxpayers to make sure that revenues equal expenditures."

Governor-elect Deval Patrick, who could restore funding after taking office in January, is reviewing Romney's cuts, said Richard Chacon, Patrick's spokesman.

"The governor-elect is determined to have a balanced budget," Chacon said, "but also to make sure the spending that takes place fulfills the essential needs of the people and businesses of Massachusetts."

Manufacturing has been shedding jobs for decades, but it still employs more than 300,000 in Massachusetts, about 10 percent of total employment. Romney is eliminating state funding for the program as the sector stages a modest rebound.

Massachusetts manufacturers have added 1,300 jobs in the past year, compared to job losses of 15,000 nationally. In addition, exports of Massachusetts products are running at a record pace -- nearly $18 billion in the first nine months of 2006, 9 percent higher than the same period in 2005, a record year.

Exports are important because they bring wealth into an economy, according to analysts. And since manufacturing tends to pay high wages, just holding its employment steady can provide an economic boost.

Jack Healy, director of MassMEP, added that manufacturing generates as much as two-thirds of the wealth of local economies outside Greater Boston.

"Without manufacturing," Healy said, "we're Vermont without the cows."

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