Washington—A program that aids small- to medium-sized manufacturers is facing budget cuts in Congress that could impact some businesses as early as June 1.

The Manufacturing Extension Partnership is a public-private partnership that provides technical assistance and business support services to small- and medium-sized manufacturers. Supporters of the MEP say it has helped manufacturers save jobs, protected the balance of trade, and contributed to productivity gains.

MEP is a network of more than 60 centers with 400 locations in all 50 states. The federal, state and private sectors fund it by about one-third each. These not-for-profit centers work with small- and medium-sized manufacturers to help them adopt and use the latest and most efficient technologies, processes and business practices.

The Bush administration has proposed cuts of more than 60 percent for the fiscal years 2004 and 2005. This would reduce funding from the nearly $106 million the MEP has received in each of the past six years to about $39.6 million per year.

The administration argues that when Congress created the MEP program in the late '80s, it originally intended for the centers to be self-supporting. In 1998, however, Congress modified the original MEP statute to allow for continuing the support of MEP centers in each state, but not to exceed one-third of a center's total funding.

Jeff Noah is director of the Small to Medium Manufacturers Group for the National Assn. of Manufacturers in Washington. While he and NAM are disappointed with any cutbacks, he said they are taken aback at the severity of those proposed. He and NAM are eyeing with concern the June 1 deadline.

"We are concentrating on that June 1 deadline and trying to get some 2004 money reprogrammed," he said. "We're also working with appropriations committees on [Capitol Hill] for it."

A member of the House appropriations committee, Rep. Joe Knollenberg (R-MI), recently testified in favor of restoring the proposed cuts. He told the committee that his district in Michigan has more than 1,500 manufacturers, and that more than 90 percent of them have 100 or fewer employees.

"In fiscal year 2002 alone," Knollenberg testified, "MEP served approximately 18,000 manufacturers nationwide. Those manufacturers reported an additional $2.8 billion in sales, $681 million more in cost savings, $940 million of additional investment in plant modernization, and 35,000 more jobs just as a result of their projects with MEP that year."

David Braunstein is president and CEO of California Manufacturing Technology Consulting, the MEP center for Central and Southern California. He said he's disappointed with the proposed cuts and has already had to lay off employees at CMTC.

Some have criticized part of the 12- year-old MEP program as corporate welfare, and something the private sector should be taking up. Braunstein admits that those criticisms were true in the early days, but says the program has been much better run in recent years.

"In the last five years, that has changed dramatically," he said, emphasizing that the corporate welfare charge is outdated and an "artifact of the old program."