Learning to Change Opportunities to Improve the Performance of Smaller Manufacturers (1993) / Chapter Skim
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Pages 1-14
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Many of these smaller Finns, however, are operating far below their potential. Their use of modern manufacturing equipment, methodologies, and management practices is inadequate to ensure that American manufacturing will be globally competitive.
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In addition to discussing barriers facing smaller manufacturers, both company representatives and assistance providers discussed opportunities to help firms overcome these barriers and to improve significantly their production costs, quality, and market responsiveness. The conclusions and recommendations of the committee are based on a review of relevant literature and He testimony of experts, practitioners, assistance agents, private sector service providers, and the many manufacturing owners and executives that participated in eight workshops held throughout the United States.
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The means for helping firms adequately deal with the problems include a combination of approaches undertaken by MTCs, various state assistance programs, and several private sector service providers. A comprehensive response to most of the barriers will require a combination of the approaches discussed.
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With less relevant experience and expertise, Weir expectations for successfully selecting and effectively assimilating new technology are not high, and so they are less likely to risk investment in new ways of doing things or in major changes to the management structure and relationships within He business. Opportunities for increasing the awareness of manufacturers to new technologies and best manufacturing practices include providing: .
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workshops, meetings, site visits, focus groups, forums, and roundtable discussions; television and video programs to expose manufacturers to specific problems and the solutions adopted by other firms; · construction and operation of networks of companies with similar interests and needs to share costs; . encouraging professional and trade associations to be more active in determining needs and developing appropriate programs for their membership; and · electronic networks Cat provide bulletin boards for direct exchange of information and sharing of approaches to common problems.
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The financial community does not readily understand manufacturing and often perceives loans for new equipment as unattractively high risks. Smaller firms are unlikely to have the capabilities needed to put together proposals for funds in the format familiar to lending officers.
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The availability of public assistance, which is usually dependent on funding by state and local government, tends to vary with the perceived contribution of smaller manufacturing firms to He wellbeing of the local economy, and the best state programs are unable to help more than a few hundred firms per year. Until 1989, the federal role in providing assistance to small manufacturers was primarily through the Small Business Administration and various defense programs.
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All of the MTCs provide these kinds of "soft" services to a greater or lesser degree, but they should receive more emphasis despite the lack of clear metrics on which to judge their value. The committee can foresee a situation emerging in which MTCs fail to provide services that would be most useful and effective to smaller firms because the fee income is insuff~cient, while at the same time competing more with private sector service providers for the business of larger firms.
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Majority Opinion Based on the committee's discussions with smaller manufacturers and win staff at the MTCs and other industrial assistance programs, a majority of the committee has concluded that a national industrial assistance system is justified. The committee majority has concluded that barriers to manufacturing performance improvement in smaller firms and the opportunities to overcome those barriers, as described by manufacturers in the committee's workshops, define roles for public sector assistance programs.
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2. Expansion should be governed by "quality, not quantity." Too rapid expansion of the MTC program or other forms of industrial assistance programs risks compromising service quality for three reasons: 1)
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The combination of rapid changes taking place in manufacturing and major differences across industries and localities calls for a system wig centralized coordination and decentralized, distributed management and control. National goals and objectives must be tempered by He environment of each locale, and regional efforts should respond as appropriate for Heir predominant industrial sectors, private and public resource base, and real potential for matching funds.
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Current MTC funding policies requiring local matching funds and elimination of federal funding after six years can be counterproductive to the goals of a national system of industrial assistance. Self-suff~ciency of the MTC organizations, while not competing with the private sector, has a low probability of success.
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Because He MTC program is, and will continue to be, a federal-state partnership, and because state governments have been leaders in establishing industrial assistance programs, the need to maintain state political support cannot be understated. By helping to provide the regional and local input essential to effective assistance programs, states play a critical role.
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