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Nico Thomas

Innovation

The MEP National Network Connects With Minority-Owned Manufacturers

These businesses play a big role in U.S. industry but are underrepresented in U.S. manufacturing

Published: Monday, December 16, 2019 - 12:02

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. 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 percent of U.S. firms with paid employees are minority-owned and employ more than 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 percent of all U.S. manufacturing firms. Beyond the lower representation, minority-owned manufacturing firms are also smaller compared to nonminority firms: 84 percent of minority-owned manufacturing firms have fewer than 20 employees, compared with 74 percent for nonminority-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 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.

During the last three years, the network completed more than 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). During the same period, work with minority-owned manufacturing clients produced significant economic impacts:
• Generated just over $2 billion in new and retained sales
• Created and retained just under 21,000 jobs
• Helped these companies save just under $148 million
• Sparked nearly $485 million in new investments.

Although the MEP National Network has done a commendable job generating economic impact for minority-owned manufacturing clients, there is still opportunity 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 can inform our interactions, increase the number of clients the network serves, and increase economic impact generated. During the past three 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 the services offered.

reasons for working with the MEP National Network chart

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 percent of the time, while it was only reported by all MEP center manufacturing clients 9.9 percent of the time.
• Exporting and/or global engagement was reported by minority-owned manufacturing clients as a challenge 9.2 percent of the time, while all MEP center manufacturing clients reported the challenge 6.4 percent of the time.

client strategic challenges chart

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 are 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.

First published Nov. 19, 2019, on the Manufacturing Innovation Blog.

 

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About The Author

Nico Thomas’s picture

Nico Thomas

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