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President Obama will be in Ohio today to talk about his administration's "Supply Chain Innovation." "Strengthening America's supply chains and the small manufacturers at their core is essential to the long-term competitiveness of U.S. manufacturers both large and small," according to new strategy by the Department of Commerce entitled "Supply Chain Innovation: Strengthening America's Small Manufacturers."
Manufacturers spend on average 60% of the price of their final product on purchased inputs, so "differences in the quality and nimbleness of their supply chains can make or break a manufacturer's ability to compete," the report explains.
The concern with regard to the supply chain is that the networks of the country's 230,000 small manufacturers, which have added a majority of the new manufacturing jobs, is under pressure due to lack of investment stemming from companies offshoring production.
To help remedy this the adminstration is offering a $320 million public-private MEP competition to expand services to small manufacturers.
The competition will award nearly $32 million annually for five years across twelve states -- an expected total of $158 million matched dollar-for-dollar by $158 million or more of non-federal funding.
Non-profits working with manufacturers in each of the twelve states will have the opportunity for cooperative agreements to operate MEP centers and expand the range of services offered.
New MEP competitions are being launched in 12 states: Alaska, Idaho, Illinois, Minnesota, New Jersey, New York, Ohio, Oklahoma, Utah, Washington, West Virginia and Wisconsin.
The reason for these new investments in highlighted in the report which discusses the issues the industry is facing.
Small manufacturers face steep barriers to innovation - from invention, to commercialization, to the diffusion of new technology. For example, small manufacturers contribute less than one-third of all manufacturing R&D, despite making up 98% of manufacturing firms and as a general rule, small firms are one-seventh as likely as large firms to conduct R&D. As a result, small manufacturers are often in the positon of having to adopt technologies invented by others. Small manufacturers also face unique barriers in accessing the capital and expertise to take on the risk of new technologies. In part...