Larry Rhoades, president of Extrude Hone Corp. in Irwin, Pa., has thought a lot about the relationship he thinks the U.S. government should have with manufacturers. Trouble is, he doesn't like what he sees.
Rhoades, whose company sells technology for polishing and finishing molds, spent more than a year on a government task force to review the Manufacturing Extension Partnership, the government's only program targeted at helping small manufacturers, through a network of 65 centers in all 50 states.
Rhoades heads the board of a Pennsylvania MEP center, he's testified before Congress about the program and he makes it clear he's got a pro-MEP bias. But he's frustrated by attempts to slash MEP funding at a time when the panel he served on, as part of the National Academy of Public Administration, thinks it needs more resources.
The NAPA panel, which MEP commissioned, released its report June 7, saying MEP works well but needs to change to help small manufacturers with their biggest challenges: keeping up with technology and remaining competitive with low-cost countries.
MEP's federal funding this year is about $40 million, compared with about $106 million traditionally. The Bush administration is proposing $40 million next year, a level that MEP advocates say will cut staffing in half.
“I think the funding reduction jeopardizes the system,” Rhoades said by telephone. “I think that manufacturing, and particularly smaller manufacturers, have a very, very low position in this administration. It's a pretty clear message.” Rhoades, who says he's a registered Republican and Bush administration supporter, said the program shouldn't be seen as corporate welfare or something the market can do on its own. Rather, it should be seen like roads or schools, as public investment necessary for economic health.
NAPA recommended that MEP develop better ways to integrate its semi-autonomous centers, and said it should expand services to include technology diffusion, product development and supply- chain integration. Rhoades said some of that already is happening. A Wisconsin MEP center signed a deal last month with Deere & Co., Harley-Davidson Motor Co. and Oshkosh Truck Corp. to work with their supply chains to improve quality, cost and speed to market. That's critical, Rhoades said, because small companies don't have many resources to stay current on those things.
The Bush administration's point person on MEP, Under Secretary of Commerce Phillip Bond, could not be reached, but a Commerce Department official said privately that the White House is not unhappy with MEP. Rather, it wants to return to the original MEP model of the late 1980s, which saw federal funding as seed money.
Other MEP advocates question the funding. Franklin Reeder, head of the NAPA panel, said pointedly that “a $40 million program could not sustain the kind of initiatives” NAPA talked about.
It's fair to ask what the government's role in the market should be, and few people want government picking winners and losers with industrial policy. But given the struggles manufacturers face, it's difficult to understand why MEP doesn't get more support.