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Advocates to Senators: Fund the Programs that Support SMEs

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The CHIPS Act included new opportunities to allocate funding to the Manufacturing Extension Partnership and the Manufacturing USA initiative.

It’s the middle of December. The holidays are looming. I’m not done shopping, so I’m scouring the 2022 Made In America Gift Guide.

But the work goes on. Which is why a panel of witnesses told a Senate Commerce subcommittee that the opportunity to make new investments in programs designed to supported small- and medium-sized manufacturing enterprises (SMEs) – authorized by the CHIPS and Science Act that became law this summer – shouldn’t be wasted.

Why? Because these programs are effective, said the witnesses, and the country needs them if it really wants a manufacturing sector that can keep pace with its international competition.   

“As Marv Levy, a Hall of Fame coach of the Buffalo Bills is attributed to have said: ‘If you don’t change with the times, the times are going to change you,’” quoted Dr. Kelvin Lee, who directs the National Institute for Innovation in Manufacturing Biopharmaceuticals, a Department of Commerce-sponsored manufacturing innovation institute and one of 16 such industry-specific manufacturing incubators in the Manufacturing USA network. “With more technologically advanced competitors, we need a strategic set of policies that ensure our national security, economic, health and energy security.”

Today, however, Dr. Lee and the other witnesses essentially argued that building up resiliency – so that there’s a wider ecosystem of manufacturing activity taking place and breeding innovation by iterative practice –  is the key to maintaining and improving U.S. manufacturing performance. And that in turn will improve economic security. And building resiliency is most obviously accomplished by funding existing programs, like the Manufacturing Extension Partnership (MEP), a public-private partnership that works to enhance the productivity and technological performance of domestic manufacturers, and the aforementioned Manufacturing USA initiative. Both were tapped for expansion in the CHIPS Act.

Do more of their work in both of these programs, and expand workforce training and outreach efforts so that more Americans consider working in the manufacturing sector, the witnesses said.

“The United States has an innovation system made of public networks, related to manufacturers, related to research and educational organizations. All of these work together to support a broader innovation system,” said Dr. Sujai Shivakumar of the Center for Strategic & International Studies. “That system has been the basis of our strong lead in technology and that in turn has been the basis of our military leadership and our national security advantages since the Second World War.”

He continued:   

That system was predicated on a world where the United States was already in a far leadership in terms of research and science. But the world has changed. We now have a number of near-peer competitors, including countries that have deliberate strategies to work off the investments we make in research and development and focus more on the second half of the equation, which is manufacturing and commercialization of products.

We can no longer continue to prosper in a world where we do the front end, and the fruits of that effort are then capitalized in other countries. We need to build our SMEs and connect them to large manufacturers and connect them to the education and research systems, so that collectively we have a strong innovation system that adapts us to the 21st century and allows us to compete effectively and maintain our national security advantages.

Okay. That’s a big quote. So how do we establish and maintain a culture of industrial innovation? We beef up MEP and Manufacturing USA, two existing programs that the CHIPS Act targeted for improvement. They’ve got years of experience working with manufacturers of all sizes to improve business strategy and function, and they’re already helping precisely at the part of the sectors the witnesses argued should be improved: SMEs.

Carrie Hines leads the American Small Manufacturers Coalition, the trade group that represents MEP centers from around the country. She told the subcommittee that nearly 80 percent of the more than 34,000 SMEs work with annually have fewer than 100 employees. And in the most recent surveyed year, MEP helped its clients create and retain more than $14 billion in sales and more than 125,000 jobs.

“The MEP national network has made an indelible impact on the small manufacturing community over its 35 year history, Hines said. “Thanks to the CHIPS and Science Act, MEP is position to take the manufacturing industry to the next level given its reach connectivity and impact.”

“But,” she warned, “this cannot be done without federal funding to implement the new expansion award authority.”

Watch the hearing and find the witnesses’ written testimony right here. And we’ll be watching what the appropriators do when it comes time to fund these important programs.

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