Much of the campaign rhetoric in the recent presidential election focused on the importance of manufacturing to the nation’s economy. Meanwhile, here in Massachusetts, state officials, academics and business leaders have been quietly working together to develop an advanced manufacturing sector that could serve as an economic model for the rest of the country.
Advanced manufacturing involves using technology to make and improve products, reduce costs and quicken turnaround times to meet customer demands. With its concentration in biomedical and high-tech industries, Massachusetts is ideally suited to adopt advanced manufacturing techniques.
Gov. Deval Patrick’s Advanced Manufacturing Collaborative is aimed at organizing and executing an advanced manufacturing strategy for the state. Education, technical assistance and providing access to capital are all critical components of the program.
Banks have an opportunity to play a major role in supporting the development and expansion of an advanced manufacturing base in Massachusetts.
A recent in-depth report commissioned by The Boston Foundation and led by Barry Bluestone, dean of The Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University, found that the manufacturing sector in Massachusetts – given up by many for dead when the last remnants of textile manufacturing fled for low-wage countries in the 1980s – is alive and well, employing 250,000 workers and growing.
While the manufacturing sector in Massachusetts did lose jobs during the recession, the number was not as dire as expected. And the jobs that survived pay well, with an average annual wage of $75,000. In addition, the number of manufacturing firms, which had declined every year since 2002, actually increased in 2011.
State programs – including workforce training grants and R&D and investment tax credits – have supported the growth of many manufacturers in Massachusetts.
But small manufacturers are at a disadvantage, both when it comes to taking advantage of state training grants and tax incentives, and in accessing private capital.
While the report found – somewhat surprisingly – that half of almost 700 manufacturers surveyed reported no problems in the past in accessing capital, more than two-thirds of all firms said they are concerned about their ability in the future to finance day-to-day operations and growth.
That concern is greatest among small manufacturing firms. These firms often have a harder time obtaining financing because of their lack of collateral. And many owners of small manufacturing companies are reluctant to take out sizable loans that could jeopardize their families’ financial health. Only half of the smallest firms rely on commercial banks as their primary source of capital. Instead, the vast majority of very small firms rely on owners’ personal funds to finance at least part of their operations.
The first in a series of regional workshops that will provide manufacturers with one-on-one access to lending agencies and financial counselors is being held Tuesday at the Salem Enterprise Center. The workshop, sponsored by Citizens Bank, offers private lenders the opportunity to meet with owners of small, as well as large manufacturing firms, and play a key role in Massachusetts’ manufacturing resurgence.
Smaller companies with fewer than 20 employees are the lifeblood of manufacturing in Massachusetts, making up more than half of all manufacturers in the state.
With easier access to capital, more small manufacturers can expand their operations, creating more manufacturing jobs in the commonwealth.
