November 4, 2003    Volume 10, No. 20

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Battle Over Manufacturing Extension Partnership Budget Unleashes Pent-Up Fury

Supporters of the Manufacturing Extension Partnership program were in a frenzy on Capitol Hill during last-minute negotiations between the House and Senate over the future funding level for the program. At press time late Wednesday evening, Nov. 19, sources on Capitol Hill confirmed that House and Senate conferees working on the Commerce, Justice & State appropriations bill have approved a 60 percent cut in the MEP budget for 2004. At such a late stage in negotiations, MEP supporters were bracing for the worst.

MEP is the only federal spending program aimed specifically at helping small- and medium-sized manufacturers. It receives one-third of its funding from the National Institute of Standards and Technology, one-third from state and local governments and another third from companies utilizing the services of approximately 70 centers scattered throughout the country. A budget cut of 60 percent from the federal government would require a fundamental rethinking of how the program is structured. Most of the national network would likely be disbanded.

Sources in Congress tell Manufacturing & Technology News that the conferees have decided on the $39.6 million House budget mark for next year, down from the $106 million approved in 2003. The Senate mark was $106 million.

"We lost, what can I tell you. We can't win on everything," said one Senate aide. "We did the best we can, but we lost. The Republicans control the House. What else can I tell you."

There was still a remote chance that the program would come out of conference at the $106 million level. During a walk-by on the floor of the House of Representatives, Rep. Jack Quinn (R-N.Y.), chairman of the House Manufacturing Task Force, asked Rep. Frank Wolf (R-Va.), chairman of the Appropriations Subcommittee that allocates the MEP budget, to see what he could do to transfer money from perhaps the Advanced Technology Program into MEP. (The word in Congress is ATP is funded at $250 million, or about $70 million more than in 2003.) Other lawmakers were trying to engage conferees as well, but sources close to the negotiations said the game is over.

But even if MEP is fully funded, a lot of people are hopping mad about the effort required to save a program that is widely popular at a time when manufacturing has shed almost three million jobs over 39 consecutive months of decline. The blame, said one program supporter in Congress, "goes directly on the ideologues in the House and on President Bush," who submitted a 90 percent funding reduction for MEP in his 2004 budget request. "It's incredible given that everyone is saying how important manufacturing is, yelling, manufacturing, manufacturing, manufacturing, and then to see this happen," says one staffer close to program.

MEP supporters working the halls of Congress have continuously run into mid-level White House science and technology officials working against the full $106 million appropriation. Some of these aides were formerly employed by House Science Committee chairman Robert Walker (R-Penn.), a fervent ideologue who took an active dislike of the program and was unable to dislodge it. These White House officials are continuing to make a quiet yet effective assault on MEP behind the scenes, say sources. There is also pent-up frustration with the political team at the Commerce Department, which oversees the MEP.

The much-anticipated "Manufacturing Strategy" study that was to be released in September still hasn't seen the light of day. That policy document, now scheduled for a mid-December release, was expected to have requested full funding for MEP of $106 million. Had it done so, chances are the Republican Congress might have felt more compelled to followed the President's lead on the program, say observers. However, if the $39.6-million mark is approved in conference, the Bush team might be more likely to embrace that smaller number in its report and its fiscal year 2005 budget request early next year.

"The crux of the issue is plain: manufacturing is not a priority of this administration or of this Congress," says one lobbyist working the issue. "There is something fundamentally wrong in the country when we can't find $70 million to help one of the most important segments of our economy with a proven program, yet can find $87 billion to assist Iraq."

Another participant in the lobbying fight says it's become a political issue that could favor the Democrats. "If the Republicans dismantle the only program in the government aimed at assisting small industry at a time when the mom-and-pop shops are up in arms, it could haunt them next November," he says. "But the real story might be that it won't make a bit of difference because it's becoming obvious that nobody really cares about manufacturing."

The final decision is expected late Nov. 20 and will be contained in an omnibus appropriation covering half a dozen agencies.

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