Monday, August 28, 2006
Manufactured Results
The latest industry on the Governor’s job “hit parade” was the manufacturing sector, when the administration used the conference of the Industrial Resource Centers (IRCs), which are regional non-profit organizations that tailor their efforts to manufacturers with 500 employees or less, to unveil a study of their effectiveness. The IRCs are budgeted to receive $15 million for the current fiscal year.
Just how valuable are they to the manufacturing sector? It is hard to tell since the survey company contacted over 4,000 firms but only received competed surveys from 357, or 8 percent.
The administration is touting two findings. First, that 71 percent of the respondents (253 firms) reported that they had increased sales over the past two years and, second, that 88 percent (314 firms) stated that they had a profit in 2005. Taking a massive leap, a connection between these two findings and the state’s investment in the IRCs was drawn. “With the state’s support, Pennsylvania’s [IRCs] have played a vital role in this effort”.
“Vital” is an overstatement and is at odds with plenty of the supporting data contained in the report. For instance, the report notes that “many respondents have not heard of the IRC in their region”. Not high praise for a program that goes back almost two decades. Statistically, 32 percent “never heard of” their IRC and another 13 percent had only “heard of” the IRC. A scant percentage higher—16 percent—reported “knowing very well” of their regional IRC. Of those having some familiarity with the regional IRC, less than half held a view “very favorable” of the organization. Perhaps familiarity does breed contempt as the old saying goes.
The IRCs offer a tier of strategies for strategy, sales, marketing, and new product development, charging up to $50,000 for these services. 53 percent of the respondents indicated that they would have “no interest” in the services offered by the IRCs. That leaves less than half interested in at least one of the services, indicating that, industry-wide, the state’s allocation to the IRCs is likely going to benefit less than half of the manufacturing sector. Of those that indicated an interest in IRC services, the majority was willing to pay at a rate well under the top rate charged for the service.
So here is the situation in a nutshell: the state-funded IRCs are, by and large, not known by their constituency and there is not a lot of interest in using their services. But that’s not to say that they have not had some effects. For instance, who knows if any private-sector consulting firms have been put out of business as a result of the state’s creation and funding of this program? That’s an effect that is not going to show up in the press releases on job activity.
Just how valuable are they to the manufacturing sector? It is hard to tell since the survey company contacted over 4,000 firms but only received competed surveys from 357, or 8 percent.
The administration is touting two findings. First, that 71 percent of the respondents (253 firms) reported that they had increased sales over the past two years and, second, that 88 percent (314 firms) stated that they had a profit in 2005. Taking a massive leap, a connection between these two findings and the state’s investment in the IRCs was drawn. “With the state’s support, Pennsylvania’s [IRCs] have played a vital role in this effort”.
“Vital” is an overstatement and is at odds with plenty of the supporting data contained in the report. For instance, the report notes that “many respondents have not heard of the IRC in their region”. Not high praise for a program that goes back almost two decades. Statistically, 32 percent “never heard of” their IRC and another 13 percent had only “heard of” the IRC. A scant percentage higher—16 percent—reported “knowing very well” of their regional IRC. Of those having some familiarity with the regional IRC, less than half held a view “very favorable” of the organization. Perhaps familiarity does breed contempt as the old saying goes.
The IRCs offer a tier of strategies for strategy, sales, marketing, and new product development, charging up to $50,000 for these services. 53 percent of the respondents indicated that they would have “no interest” in the services offered by the IRCs. That leaves less than half interested in at least one of the services, indicating that, industry-wide, the state’s allocation to the IRCs is likely going to benefit less than half of the manufacturing sector. Of those that indicated an interest in IRC services, the majority was willing to pay at a rate well under the top rate charged for the service.
So here is the situation in a nutshell: the state-funded IRCs are, by and large, not known by their constituency and there is not a lot of interest in using their services. But that’s not to say that they have not had some effects. For instance, who knows if any private-sector consulting firms have been put out of business as a result of the state’s creation and funding of this program? That’s an effect that is not going to show up in the press releases on job activity.
