The primary mission of MEP is to give “hands-on” technical assistance to small- and medium-sized manufacturers trying to improve their operations through the use of appropriate technologies. MEP engage in a variety of activities to assist small- and medium-sized manufacturers, often in partnership with other business assistance providers such as Small Business Development Centers, community colleges, and federal laboratories. MEP offer a wide range of business services, including helping companies (1) solve individual manufacturing problems, (2) obtain training for their workers, (3) create marketing plans, and (4) upgrade their equipment and computers. MEP assistance focuses on small- and medium-sized manufacturers because research by the National Research Council and others has indicated that these companies lack the resources necessary to improve their manufacturing performance. MEP funding typically comes from a variety of sources, which may include federal and state government agencies, universities, private industry, and fees. Between fiscal years 1988 and 1994 Congress appropriated a total of $141.7 million (in 1994 dollars) to MEP through NIST. Fiscal year 1995 appropriations were $104 million. State or local agencies are to provide matching funds for NIST grants to individual MEP. A 1995 Battelle Memorial Institute report estimated that states collectively spent about $57.7 million specifically on MEP in fiscal year 1994. That same fiscal year, federal MEP spending was $66 million. We were not able to determine the amount of MEP funding from other sources of support, including universities, private industry, and users’ fees. This report analyzes data from questionnaires we sent to 766 manufacturers that had completed at least 40 hours of MEP assistance in 1993 in one or more of four service categories. We obtained the names of these manufacturers from the directors of 57 MEP in 34 states. A total of 551 manufacturers (72 percent) completed and returned the questionnaire. We also interviewed eight manufacturers who had received MEP services and were given tours of their manufacturing facilities in Maryland, Georgia, North Carolina, and South Carolina. Appendix II provides more details on our scope and methodology. In assessing the impact of MEP services on their companies’ overall business performance, 13 percent of survey respondents reported an extremely positive impact, 59 percent reported a generally positive impact, and 15 percent reported no impact. (Less than 1 percent of respondents (0.2 percent) said the assistance had had a negative impact.) We analyzed the likelihood of the companies reporting that the impact of MEP assistance on their overall business performance was extremely positive, somewhat positive, or not positive, depending on various company and program characteristics identified through the survey. We analyzed how the reported impact of MEP assistance related to the companies’ reported age, 1994 gross sales, and number of permanent employees. Also, we analyzed the reported impact of MEP assistance in relation to the companies’ activities associated with the assistance—whether they made financial investments, spent staff time, implemented recommendations, and paid for the assistance. In addition, we analyzed how the reported impact of MEP assistance varied according to whether programs received NIST funds. We used logistic regression techniques to determine which factors were statistically significant in predicting the reported impact of MEP assistance on companies’ overall business performance. The strength of these particular statistical techniques is that they allowed us to estimate the individual influence of each factor on the reported impact, both before and after the influences of all other relevant factors identified in the survey were controlled. Appendix III provides more detailed information on our methodology, the models tested, and the results obtained. We used simple frequency distributions to determine whether the companies’ expectations were met regarding the impact of MEP assistance on specific business performance indicators and to analyze whether MEP demonstrated the attributes most valued by the companies. Results from our work cannot be generalized to all companies that used MEP because our questionnaire covered only companies that had completed at least 40 hours of MEP assistance. In addition, our results do not apply to all MEP services because we limited our analysis to four MEP service categories. Since we did not evaluate the operations or management of specific federal programs, we did not obtain agency comments on this report. However, on February 12, 1996, we discussed a draft of this report with NIST officials, including the Director of the NIST Manufacturing Extension Partnership Program. He agreed with the technical accuracy of the report and offered minor clarifications, which we incorporated into the report where appropriate. We did our work primarily in Los Angeles, New York, San Francisco, and Washington, D.C., from February 1995 to January 1996 in accordance with generally accepted government auditing standards. We analyzed several factors related to company and program funding characteristics to determine whether they influenced the companies’ assessment of the impact of MEP assistance on their overall business performance. We found that several company characteristics—relating to company level of involvement with MEP assistance, and company size and age—influenced the companies’ assessment of the impact of MEP assistance on their overall business performance. However, the program funding characteristic we examined—whether the program received NIST funds—did not influence the companies’ assessment of the impact of MEP assistance. We found that the level of companies’ involvement played an important role in determining the outcome of MEP assistance. The manufacturers that had made financial investments in their company as a result of MEP assistance were 2.5 times more likely than those that did not to report an “extremely positive” impact on their overall business performance, as opposed to a “generally positive” impact. They also were 5.6 times as likely to report a generally positive impact as opposed to a “neutral” or “negative” impact. Companies whose staff spent relatively more time in activities related to MEP assistance were 1.7 times more likely to report an extremely positive impact of MEP assistance on their overall business performance, as opposed to a generally positive impact. Furthermore, the relatively small companies, which research has indicated are most in need of modernization assistance, were most likely to report that their overall business performance was improved by MEP assistance. According to the National Research Council, small- and medium-sized manufacturers generally lack the expertise, time, money, and information necessary to improve their manufacturing performance. We found through our survey that the companies whose fiscal year 1994 gross sales were less than $1 million were 3.1 times more likely to assess the impact of MEP assistance as extremely positive, as opposed to generally positive. Likewise, the companies started since 1985 were 2.0 times as likely as the older companies to report an extremely positive effect of MEP assistance on their overall business performance, as opposed to a generally positive effect. Our visits to manufacturers provided examples of how MEP assistance benefited growing companies. A furniture manufacturer said his company needed MEP assistance to make fewer mistakes in the growth process. This manufacturer said he used MEP experts to help identify and correct environmental and worker safety hazards, so the facility would comply with federal workplace standards. At a company that makes molded plastics, the company president said that the company needed MEP assistance to guide its rapid growth. MEP helped this company with strategic management, planning, worker training, and quality improvement. Our survey revealed no significant differences in how the companies viewed the impact on their overall business performance of MEP that did and did not receive NIST funds. MEP funding typically comes from a variety of sources, which may include federal and state government agencies, universities, industries, and fees. The combination of funding sources varies across programs, but our analysis revealed no significant distinction in how the companies assessed the impact of MEP that did and did not receive NIST funds. Specifically, MEP that received NIST funds were equally as likely as other MEP to have their impact on business performance rated positively by the companies. In commenting on our analysis, NIST officials said that, given the manufacturers’ positive responses to our survey, they expected no difference in how the manufacturers viewed the impact of MEP that did and did not receive NIST funds. Moreover, they said that the function of NIST funding is to help MEP serve more clients, with a wider variety of services. Also, they said that they believed NIST support improves programs’ efficiency and effectiveness, which are dimensions of MEP that our survey did not address. As part of our analysis, we compared what the companies said they expected from MEP assistance to the results they reported. We found that most of the companies (between 61 and 77 percent) reported that MEP assistance met or exceeded their expectations for improvements to specific business performance indicators, such as manufacturing time frames, the quality of market research, and sales to new and repeat customers. However, between 23 and 39 percent of the companies reported that their expectations were not met for improvements to these indicators. Our survey results indicate that equipment modernization and plant layout assistance improved manufacturing time frames for most of the companies expecting these improvements (see fig. 1). In particular, the survey results indicate that equipment modernization and plant layout assistance met or exceeded the expectations of a substantial number of the companies for reducing cycle times—the times required by machines or work stations to fully complete their sequence of operations (77 percent)—and setup time—the time it takes to prepare equipment for changes to production (76 percent). In addition, the assistance met a large number of the companies’ expectations for improvements to worker output (76 percent). However, about 30 percent of companies we surveyed that received equipment modernization and plant layout assistance reported that they did not have their expectations met for reductions to manufacturing lead time, the time it took them to process an order, from start to finish, after design approval. Several companies commented on how MEP assistance affected their efforts to improve plant layout and modernize equipment. One manufacturer that we visited said the company was able to solve problems with congestion and redundant product movement on the plant floor after implementing MEP plant layout recommendations. The company was rewarded with faster production and lower costs.