February 23, 2007    Volume 14, No. 4

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Nationwide System Of Manufacturing Extension Centers Receive Unexpected Surprise: Centers Will Compete With Each Other For Limited Funds


The director of the National Institute of Science and Technology dropped a bombshell on the network of Manufacturing Extension Partnership (MEP) centers during a Feb. 15 House subcommittee hearing on the agency's budget. William Jeffrey disclosed that, along with a 58 percent cut in the program's budget for next year, NIST intends to re-compete every center as a means to provide funding to the survivors.

Re-competing the centers starting early this year is necessary because the process would take between five and six months and by then the program might have already received its appropriation at the level requested by the Bush administration, Jeffrey told the House Science and Technology Committee's subcommittee on technology and innovation.

"If the budget reduction did occur and we were to start after the final appropriations, by the time we completed that competition, we'd be out of money if we had all the centers at the same spend rate," he said. "What the new competition allows is a more efficient way of trying to get through to extract where there may be some savings in the program, where there might be slightly different business models to attract additional fee extractions and where there may be efficiencies in consolidation that would allow for the maximum amount of service. If the budget cut were to occur and we waited until the end to try to address that, we would actually have to be in a position of cutting every single center by the same percentage which would probably create much more disruption and a more weaker system at that point."

Members of the subcommittee, which oversees NIST programs, expressed outrage at the plan, which had not been vetted with Congress, the centers or the state partners that provide most centers with about one-third of their funding. "Dr. Jeffrey, we've had eloquent, effective testimony about the need for MEP," said subcommittee chairman David Wu (D-Ore.) after listening to two manufacturing company executives testify about the need for and effectiveness of the MEP program. "Let's just declare the 50-odd percent cut for MEP dead on arrival."

Congress is opposed to the MEP re-competition, said Wu. "In fact, in fiscal year '05, NIST was specifically prohibited from doing the re-competition." Congress might "put that prohibition back into the appropriations bill," Wu added.

Revamping the MEP program based on an ideology within the Bush administration that the federal government should not be supporting industry "is absolutely idiotic," said Rep. Vernon Ehlers (R-Mich.). There is no "pragmatic" reason to cripple a program "that is helping industry, helping our nation and helping our economy," he told Jeffrey. "If you want to review MEP and modify it just on the basis of making a good program better, God bless you and we'll be happy to work with you and help you, but I would resist any impetus to do it on the basis of the belief of some people in the administration that somehow this is something the government should not be doing and we have to restructure because of some ideological beliefs."

A re-competition along with the funding cut "would be disastrous," added Peter Murray, vice president of Welch Allyn Inc. of Beaverton, Ore., when asked by Wu directly after Jeffrey described the re-competition plan. "I'm speaking as a board member of the [MEP] affiliate in Oregon. The organization as it is now is extremely lean. I've been to their office -- it's anything but plush. The staff is very efficient and lean. I don't know where they would find additional savings. I think it would be a distraction for that business to take away already limited resources, look for a new business and market to other clients. I really think it would be a disaster. I can't say it strongly enough."

Michael Ryan, president and CEO of TUG Technologies Corp. of Marietta, Ga., who has worked for a variety of well known, successful manufacturing companies that have used the services of MEP centers in five states, says the strength of the program is the common philosophy of business improvement based on lean principles that exists within the nation-wide network of centers. "If we take that down a notch or two or three or in half as the proposal says, we'll lose what we've built up over 18 years, unfortunately, and that would be a travesty."

Did NIST notify the MEP state partners of its plan to re-compete the centers, Rep. Jim Matheson (D-Utah) asked Jeffrey. "It is my understanding that at least in my state of Utah, the MEP has not been consulted on this budget proposal, and I think many state agencies would reduce their share of matching funds if the federal share is cut," he said. Jeffrey told Matheson that NIST could not discuss the budget before it was submitted to Congress, but since the request has been made, the director of the MEP program has been talking to the centers and "having them understand what the implications would be and having them start thinking about what the right approach is moving forward," Jeffrey said. "I wouldn't say they're in complete shock, but we are working with them now before any kind of re-competition would occur to make sure that everyone understands what the ground rules are and what we're looking for and how to maintain the most effective process for the small manufacturer out there."

Mike Coast, president of the highly regarded Michigan Manufacturing Technology Center, said most center directors feel a re-competition would be a waste of time and effort. "It's unbelievable, it really is. They're talking about a re-competition starting in April and we don't even know what the 2008 budget number is going to be," he said. "In all likelihood, the program is going to be fully funded again. We've restored the funding every year for the past five years. Why go through this exercise if we don't have to? It's another year of fighting to get the money to go out and help small manufacturers."

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