Independent Study: MEP Program Yields Dynamic Return on Federal Investment

March 24, 2017

Washington D.C.) March 22, 2017 – The W.E. Upjohn Institute, a private, bipartisan independent research firm, recently issued a comprehensive report concluding that the Manufacturing Extension Partnership (MEP) Program, an initiative of the U.S. Department of Commerce, generates a multiplicative treasury return on its federal funding.
The U.S. Department of Commerce currently invests $130 million in the MEP Program, which provides operational support for a national network of organizations that deliver technical and consultative services to small and mid-sized manufacturing firms ordinarily overlooked by private sector consultants. Revenue from private industry and foundations supplement that investment, as do the fees MEP affiliates charge for their services.

Using employment, sales, profit and expansion data obtained directly and independently from MEP clients and the most widely-accepted economic modeling software available, W.E. Upjohn Institute researchers concluded that even under very conservative models the MEP Program was demonstrated to have generated 142,381 new jobs over the past year. Those jobs, in turn, generated $8.44 billion in additional personal income and $1.13 billion in additional revenue to the treasury from personal income taxes. The report did not calculate the treasury impacts of incremental property taxes, business taxes or the additional $29.9 of domestic manufacturing output produced by MEP clients, although they are believed to be substantial.

“The results of this study are impressive, but were somewhat expected,” said Eric Joseph Esoda, the President & CEO of NEPIRC, the MEP Program affiliate that serves northeastern and the northern tier of Pennsylvania. “An annual return of nearly 9:1 on our federal support from personal income taxes alone validates several of our long-standing assertions – that manufacturing drives our economy, that smaller firms are essential to their communities, that domestic manufacturing competitiveness is achievable and that the MEP Program works in accelerating manufacturer growth and job creation.”
One distinctive characteristic of the Institute’s report is that it determined the level of MEP Program impact needed in order for the Program to economically justify its federal support, essentially working backwards to a break-even treasury effect. According to that approach, the MEP Program would achieve budget-neutral performance even if only 11.5% of its current client outcomes were realized.

The Upjohn report is the latest of a multitude of objective studies that have verified and validated the positive returns of the MEP Program since its launch in 1988. Those reports have contributed to the Program’s history of strong bipartisan support. Early indicators from the Trump administration, however, suggest that the Program may not appear in early versions of 2017-2018 federal budget, despite the nation’s emphasis on manufacturing and robust domestic manufacturing agenda.
“The possibility that the MEP Program, which provided technical assistance to more than 25,000 small and mid-sized manufacturing firms last year alone, will not receive federal support going forward is ironic,” said Mr. Esoda, “but perhaps attributable to the lack of understanding the Program’s focus and results as new leaders work fervently to evaluate a vast number of initiatives in a short amount of time. We’re hopeful to have the opportunity to introduce new policy-makers to the merits of this pro-manufacturing initiative and are confident that our Congressional champions and clients will raise their awareness of the MEP Program, which we believe should become the cornerstone of our nation’s manufacturing resurgence strategy.”

To view the study in its entirety, please visit http://research.upjohn.org/reports/226/