April 29, 2014

State's manufacturers get $1.4M federal boost

Gov. Deval Patrick on Tuesday announced that his administration is funneling $1.4 million in federal funding to help manufacturers and other companies impacted by sequestration and cuts to the nation's defense budget.

The money will help the commonwealth's defense contractors sell their goods and services in other markets, Patrick said.

He also announced the launch of two initiatives designed to strengthen the Bay State's manufacturing sector by providing free life sciences training to manufacturers and combining the energy usage of many companies into one buying group, giving companies more control over their energy costs.

The governor made his announcement during the second annual Advanced Manufacturing Summit, held at the DCU Center in Worcester.

Massachusetts has experienced a "great renaissance" in manufacturing, the governor told about 300 conference attendees during a lunch-time address.
"Let's keep this industry thriving and the job growth coming," he said."

Patrick emphasized the state's gains in advanced fields, saying manufacturers in the commonwealth have an opportunity to make it an "epicenter" for advanced manufacturing.

The federal funding was awarded to MassDevelopment, the state's economic development arm, by the U.S. Department of Defense. MassDevelopment applied for the money as part of its defense sector initiatives with the Military Asset and Security Strategy Task Force.

The task force aims to support the people associated with the commonwealth's military installations. The grant will help organizations that rely on Defense and Homeland Security funding - regardless of a local connection to a military installation - expand their reach to new markets, and map a strategy that will capitalize on the state's competitive advantage within the defense industry.

One of the two initiatives tied to life sciences training, sponsored by the Massachusetts Life Sciences Center, will provide free training for manufacturers that are not yet in the industry, but want to introduce offerings in the growing sector.

A two-day course will introduce Massachusetts' advanced manufacturing companies to the life sciences industry and outline a path for them to become vendors to the medical device sector, according to a statement from the governor's office. The free courses will begin in June, and will be held in the central, northeast, Pioneer Valley and southeast regions of the state.

The energy initiative announced by the governor, which will be funded by MassDevelopment, will help manufacturers across the state decrease energy costs by creating a bulk power-purchasing group. The group hopes to negotiate favorable rates with electricity and natural gas supplies, and manufacturers will be able to access free evaluations of energy efficiency measures and onsite renewable opportunities.

Patrick's address preceded another by Harry Moser, a manufacturing industry executive who founded The Reshoring Initiative, an industry-led effort to bring manufacturing jobs back to the United States after years of outsourcing them to countries with lower-cost labor.

When manufacturers move to outsource, Moser said, they're often focused solely on the differences in labor costs. But now that labor costs have begun to rise, especially in China, he said U.S. manufacturers are seeing that, based on all direct and indirect costs, or "total cost of ownership (TCO)," it's now making more sense to bring many jobs back to the U.S.

"A lot of the companies didn't do the math," Moser said, noting they didn't take into account factors such as transportation, travel to a supplier's operations and keeping inventory. He urged manufacturers in the ballroom to gain access to U.S. import data, specifically the names of the companies buying products from foreign suppliers, and ask them about their total costs as a way of nudging them to buy domestically.

He predicted that in two to three years, TCO will be higher for importing goods from China than producing them within the U.S.

But while many of those jobs being "reshored" to the U.S. are going to companies in the Southeast and Midwest, manufacturers in Massachusetts should focus on building and maintaining a "skilled workforce," something he said the Patrick administration, the industry and the state's educational institutions are focusing on together.

"If Massachusetts can be the state that has a sufficient supply of those skills," Moser said, "you will succeed."


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