Government making the private sector more efficient?

[sMiLeYz]

A little sector of The Commerce department called Hollings Manufacturing Extension Partnership was created in 1988 to assist companies with fewer than 500 workers tap a nationwide network of public and private resources attuned to growth, cost cutting and innovation. It boasting an 3,200 percent return on investment for existing small companies.

http://www.bnet.com/blog/business-n...nt-the-commerce-department/4264?tag=fd-river3

The results sound stunning. On average, Commerce claims, every dollar the federal government earmarks for MEP generates $32 in new sales growth - a 3,200 percent return, or $3.6 billion in new sales annually. What’s more, a miniscule investment of $1,570 creates or retains a job.
...
If MEP is big government at work, maybe small business needs more of it.

 

[shortylickens]

Thats like me telling Daniel Craig how to be fit.

 

[Craig234]

Thats like me telling Daniel Craig how to be fit.

Ideology without - in fact, ignoring and contradicted by - facts. Shocking!

 

[nonlnear]

Attributing sales growth to federal MEP earmark dollars is some seriously creative journalism. First, MEP collects fees as well. Granted they aren't huge, but if you aren't putting them into the ROI calculation, you're flawed from the start. Second, Many of MEP's services consist of helping companies find government grants. Now given that those grants are out there, that could be a useful thing to do. However if MEP spends $5000 to help a company get a $30000 grant that leads to a $350000 revenue bump, that's getting a 10:1 ROI, not 70:1. This kind of activity is mentioned in the article itself:

Under price pressure from global rivals, Accurate Screw Machine Products (ASM) in Fairfield, New Jersey has attributed $250,000 in cost savings and $500,000 in retained sales to NJMEP in 2010, allowing it to remain open with 90 employees. How? By educating frontline employees on the merits of a lean manufacturing operation with state money that MEP helped ASM obtain.

Read that last sentence very carefully. That state money does not go into the ROI calculation that MEP puts into their puff press releases. The money didn't fall from the sky, despite the author's best efforts to convince us that it did.

There's the further problem of how employment results are represented in this article. Just because an employer reports that a particular job was saved or created does not mean that a net job was saved or created for the economy as a whole. It is one thing to say that MEP helps the companies that they work with. It is another thing entirely to say that 100 jobs saved or created for MEP clients is equivalent to 100 jobs saved or created economy-wide. This is most pronounced for those jobs that MEP "saves or creates" by helping companies become more competitive domestically. Doubtless the economy-wide employment impact is much better for MEP projects focused on exports. Helping companies domestically is still a valuable service, by passing savings on to the economy at large, but it is dangerous to conflate the micro- and macroeconomic concepts of employment.

 

[Dr. Zaus]

^as usual you've brought a level of discourse to the board that shuts the ignorant clap-trap down on both sides^

Just because an employer reports that a particular job was saved or created does not mean that a net job was saved or created for the economy as a whole.

Further not all employment is created equally. It may well be that government grants are actually causing less efficiency in the market by propping up businesses that are less efficient at serving the need of those that demand the good/service from the business.

This sort of intervention into the market place for those that cow tow properly for government grants is just the sort of thing that allows those companies that should otherwise die, or at very least not grow, live and expand.

Good to know that corporatist fascism doesn't start at a billion in revenue.

 

[nonlnear]

The thing is I'm not saying that MEP is a bad or wasteful program. Only that this article presents an "ROI" figure that has meaning only to a public sector bureaucrat. The fact is that in a country where there aree complicated regulations, it might make sense for there to be a public office that helps small companies navigate the intricacies of regulations. That's really what MEP is mostly about. It can make sense to provide these services at a subsidized price because onerous regulations create a subsidy for larger companies that can afford a large legal staff. Granted it's almost always better to remove the original implicit subsidy in the first place, but we all know that isn't happening...

 

[Dr. Zaus]

The thing is I'm not saying that MEP is a bad or wasteful program.

right, I'm saying that giving grants to small, medium, large or extra large companies is a bad idea as it's putting the government in charge of deciding who wins at the market. I'm against the grants, totally for help in cutting through red-tape.

Granted it's almost always better to remove the original implicit subsidy in the first place, but we all know that isn't happening...

I like to imagine big and then make it reality.

That's why I support the peaceful overthrow of the US government and installation of a totalitarian regime of open source computer dictators.

http://www.thezeitgeistmovement.com

 

[PeshakJang]

Ideology without - in fact, ignoring and contradicted by - facts. Shocking!

You've gotten good at recognizing your own handiwork.

 

[sunzt]

right, I'm saying that giving grants to small, medium, large or extra large companies is a bad idea as it's putting the government in charge of deciding who wins at the market. I'm against the grants, totally for help in cutting through red-tape.

I like to imagine big and then make it reality.

That's why I support the peaceful overthrow of the US government and installation of a totalitarian regime of open source computer dictators.

http://www.thezeitgeistmovement.com

MEP is not just about connecting people with grants. It's about connecting companies to the right people to grow where previously growth wasn't thought possible

At Ossagian Canoes in Lebanon, Missouri, the prohibitive cost of shipping finished aluminum canoes once ruled out exports. MEP opened a door to foreign partnerships. Ossagian linked up with a Danish manufacturer that assembles and sells the canoes in Europe, an arrangement that now rings up 15 percent of the canoe-maker’s sales.

MEP essentially acts as a subsidized management consulting service (like a Deloitte or Accenture) for small businesses.

For companies too small to leverage economies of scale or hire blue-chip consulting services, MEP furnishes a low-cost “human and digital portal” to resources in every department of the federal government

MEP's clients also seem to be pretty satisfied with the service

Not every outing chalks up stellar returns. But, according to the latest survey, two of every three MEP protégés would recommend MEP to other companies.