A great article about how the Manufacturing Extension Partnership (MEP) and the MBDA have similar goals.
The MEP National Network™ Connects with Minority Owned Manufacturers
November 19, 2019By: Nico Thomas
Earlier this year, the Minority Business Development Agency (MBDA), a part of the U.S. Department of Commerce, celebrated its 50th anniversary. The recognition is much deserved for an agency that has worked hard to strengthen minority owned businesses for over a half-century. Through a network of centers and partners not unlike our own Manufacturing Extension Partnership (MEP) National Network™, the MBDA works with minority owned businesses to create and retain jobs, build scale and capacity, and increase revenues. The drive to increase the competitiveness of underserved businesses by leveraging a network is something that connects the MBDA and the MEP Program.
In 1969, when President Nixon established the Office of Minority Business Enterprise (which became the MBDA in 1979), he stated that assisting minority businesses was a social and economic necessity. Today, as much as ever, President Nixon was right. Roughly 19% of U.S. firms with paid employees are minority owned firms and employ over 9 million Americans. But while minority owned businesses play a big role in U.S. industry, they are underrepresented in the U.S. manufacturing industry. Minority owned manufacturing firms represent only 12.8% of all U.S. manufacturing firms. Beyond the lower representation, minority owned manufacturing firms are also smaller compared to non-minority firms: 84% of minority owned manufacturing firms have fewer than 20 employees compared with 74% for non-minority owned manufacturers. This is an area where the MEP National Network can play a role.
The MEP Advisory Board recently released a Performance Framework report to support the MEP National Network through its Performance and Research Development Working Group. As part of the Performance Framework report, the Working Group made several recommendations for how NIST MEP can improve its portfolio of data analysis and services for MEP Centers in the Network. One of the Working Group’s recommendations was to bolster the Network’s research on underserved segments of the manufacturing marketplace, which includes minority owned manufacturing companies. By better understanding what minority owned manufacturers need and how the MEP National Network has engaged these companies in the past, MEP Centers can increase the impact they have on this underserved segment of the manufacturing marketplace.
Over the last 3 years, the Network completed over 2,400 projects (accounting for about 6% of total projects) with just over 1,200 minority owned manufacturers (representing 7% of all manufacturing clients served). Over the same period, work with minority owned manufacturing clients produced significant economic impacts:
- Generated just over $2B in new and retained sales,
- Created and retained just under 21,000 jobs,
- Helped these companies save just under $148M, and
- Sparked nearly $485M in new investments.
Although the MEP National Network has done a commendable job generating economic impact for minority owned manufacturing clients, there is still room to do more. In contrast to their representation in the U.S. manufacturing industry, Minority owned manufacturing clients are underrepresented in the MEP National Network. This presents an opportunity for the Network.
Understanding why minority owned manufacturers engage with the MEP National Network and what challenges they anticipate facing soon can inform our interactions, increase the number of clients the Network serves, and increase economic impact generated. Over the past 3 years, the top two reasons that minority owned manufacturers chose to work with a MEP Center were the Center and staff’s expertise, and the cost or price of services offered.
The strategic challenges of minority owned manufacturers largely mirror those that we see from all the manufacturing clients the Network serves. The top challenge for minority owned manufacturing clients was the category “ongoing continuous improvement and/or cost reduction strategies.” Other findings include:
- Identifying growth opportunities (54.9%) was the second most reported challenge faced by minority owned manufacturers.
- Employee recruitment and retention (54.8%) was the second most reported challenge faced by all MEP Center manufacturing clients. This challenge was the third highest reported challenge faced by minority-owned manufacturing clients (46.4%).
- Product innovation and/or development is the fourth most reported challenge by both minority owned manufacturing clients (41.5%) and all MEP Center manufacturing clients (42.0%).
- Financing was reported by minority owned manufacturing clients as a challenge 16.2% of the time, while it was only reported by all MEP Center manufacturing clients 9.9% of the time.
- Exporting and/or global engagement was reported by minority owned manufacturing clients as a challenge 9.2% of the time, while all MEP Center manufacturing clients reported the challenge 6.4% of the time.
Being able to collect client and project details from the MEP National Network along with feedback on our services from clients is a competitive advantage for the MEP Program. Data is valuable and can be powerful when trying to fulfill a mission as critical as the MBDA’s or the MEP’s. The more effectively we can piece together data to understand the needs of our communities, the better chance we have at effectively serving those communities.
ABOUT THE AUTHOR
Nico Thomas is a Performance Analyst at NIST MEP, working with the Program Evaluation and Economic Research group to help provide tools and information to maximize U.S. manufacturing competitiveness.