"Perfect Storm" Combination of State and Federal Budget Cuts Reduces Technical Assistance to Georgia Manufacturers

The cumulative effect of the cuts is being felt a time of heightened need as the state's manufacturers compete with foreign companies that often have significant cost advantages.

In addition to the 18.5 percent budget reductions imposed over the past four years by declining state revenues, Georgia Tech's Economic Development Institute (EDI) was recently hit by a 75 percent cut in funding from the federal Manufacturing Extension Partnership (MEP), a national program designed to help manufacturers become more productive and competitive. Since 2001, the state and federal cuts together have cost 38 positions in EDI's statewide network of regional offices and its Atlanta headquarters.

The combined effect of the cuts will be to significantly reduce the number of manufacturers that EDI can serve. Compared to its service capacity in 2001, EDI today is able to serve an estimated 300 fewer companies per year. The cuts will also force EDI to suspend operations in at least three regional offices: Carrollton, Newnan and Rome.

For the federal 2005 budget, the White House had proposed the total elimination of the MEP program, but Congress restored partial funding for it. Nationally, that has meant the total closure of some programs and substantial reductions in others.

"The Manufacturing Extension Partnership has been tremendously successful at meeting the needs of manufacturers, enjoys strong bipartisan support in the U.S. Congress, has been widely praised by manufacturers - and is needed more now than ever before," said Rick Duke, EDI's director. "We don't understand why funding was cut for a program that has been successfully helping to keep manufacturing jobs in the United States."

In Georgia, the Economic Development Institute provides technology-driven solutions to help the state's manufacturers in such areas as information technology, quality and international standards, lean manufacturing, energy and environmental management and new product development. The assistance helps companies reduce costs, improve efficiency, boost productivity and increase sales. Those services will continue to be provided, but at a reduced capacity that will hurt manufacturers when they need help the most.

"Through our reduced state funding, we will continue to provide services to manufacturers throughout Georgia, but these cuts put us even farther behind in meeting the needs of our state's small- and mid-sized companies," Duke added. "These firms need technical assistance to help them become more efficient and able to compete in the world economy."

Of the 38 positions lost in the budget cuts, 18 were engineers, scientists and research associates who provided direct services to companies through the statewide network of regional offices. Another nine positions were support staff in the regional offices. The remainder included service providers and support staff in the Atlanta headquarters.

The 38 positions lost include both staff vacancies that could not be filled over the past four years due to declining budgets, as well as cuts made in two rounds of layoffs this spring.

"These cuts will significantly reduce our ability to help manufacturers adopt the technology-based solutions they need to keep jobs in Georgia," said Larry Alford, manager of EDI's Manufacturing Services. "With our reduced support, we will continue to do all we can to help companies. But we know this will mean that more critical needs will go unmet, particularly in rural areas of the state where there are few economic development alternatives."

In Georgia during 2002, MEP assistance helped companies create or retain more than 1,300 jobs, invest more than $33 million, cut $13 million in unnecessary costs - and increase or retain $61 million in sales. Nationally, MEP assistance helped manufacturers create or retain nearly 42,000 jobs.

The Manufacturing Extension Partnership has enjoyed strong Congressional support, nationally and within Georgia. Both Senators Saxby Chambliss and Zell Miller supported the program's continued funding, and six of Georgia's 13 representatives signed the "Dear Colleague" letter circulated to members of Congress in support of the program. Nationally, 58 senators and 203 representatives signed the letter, with an additional 43 representatives signing individual letters of support.

EDI's budget comes from state appropriations, the federal government, and fees paid by manufacturers for the services they receive. EDI is part of Georgia Tech's Office of Economic Development and Technology Ventures.

About EDI: Georgia Tech's Economic Development Institute (EDI) offers an array of services with a common objective: to grow Georgia's economy by providing technology-driven solutions to the state's businesses and communities. Whether the goal is attracting new companies to Georgia, expanding existing enterprises, providing technical expertise to help Georgia business and industry become more competitive, or helping communities plan for growth, EDI helps keep the state's economy moving forward. For more information about EDI, visit www.edi.gatech.edu.