Small Business' Technology Gap: How Uncle Sam Could Help

One reason for the decline in U.S. industrial competitiveness is the sorry performance of many of the nation's 355,000 small manufacturers. These companies represent nearly 99% of American manufacturers and employ 40% of the country's manufacturing workers. Yet many studies have found that they lag far behind their Japanese counterparts in using computer-controlled machine tools and other key technologies, as well as in implementing quality programs.

But the companies aren't solely to blame. A new report from Georgia Institute of Technology's School of Public Policy points out that federal and state aid to small manufacturers totals only $80 million a year--and reaches less than 3% of companies. By contrast, Japan spends $500 million annually to fund a network of 170 technology extension centers--and billions more to transfer technology to companies. So it's no surprise that the Georgia Tech study recommends a big boost in similar U.S. efforts. One possible approach, suggests study leader Philip Shapira, would be to create a technology version of the U.S. agricultural-extension service. Says Shapira: "An effective industrial-extension system is critical to help companies modernize their operations and products."

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