The One-Percenters of Manufacturing

“$325M (being awarded) to upgrade Indiana plants for EV components production,” proclaimed the headline of a recent “breaking” news article from the Indianapolis Business Journal.??? Apart from the hundreds of millions going to Indiana companies, those in other states were also earmarked to receive large sums of Federal funds from the CHIPS and Science Act.????

At first glance, this seems fantastic. I am always thrilled to see the Federal, State, local, or whatever government support manufacturing companies. However, my excitement waned as I read further. Who were the recipients? Companies such as Cummins, Stellantis, GM, Harley-Davidson, Volvo, Blue Bird Body Co., etc.?

But where are the names of smaller Indiana companies, such as Connecta Manufacturing,? Konrady Plastics, Lafayette Instrument, Structural Components Fabrication, Rathburn Tool & Manufacturing, Cork Medical? These smaller manufacturing companies were honored as a “Best-Place-to-Work-Company in Indiana in 2024”, among other peers. (Indiana Chamber). While treating employees well shouldn’t be the only criterion for government aid, companies of this size could undoubtedly benefit from government funds to upgrade their facilities. Without question, they could! Don’t these companies need all the help they can get to survive the automation and technology tsunami hitting the manufacturing sector? Without a doubt, they do! If taxpayer money is being allocated to manufacturing companies, then these are the more deserving candidates for government support, more so than the juggernauts of the one-percenters!?

Why did they not make the list of companies getting a piece of this $1.7B federal funds pie?

Because these companies do not belong to the elite group of 3,183(*) private manufacturing companies in the US with more than 500 employees, the club of manufacturing one-percenters! That’s right. Ninety-nine percent of private manufacturing companies in the US have fewer than 500 employees. The graphic below shows the distribution of US manufacturing companies by employment size.

Seeking clarity, I turned to ChatGPT, which confirmed that “the majority of the funding from the CHIPS and Science Act is directed towards large-scale projects by major companies.” To soften the blow, ChatGPT added diplomatically, “there are opportunities and grants available for smaller companies….” Thank you, ChatGPT, for reinforcing that the trickle-down mindset is alive and well! If this trickle-down mentality for manufacturing works as well as it did for the broader US economy, then we are in deep trouble. That is not to state that we aren’t already in a multi-faceted, severe US manufacturing crisis.

The 99-percenters (companies with less than 500 employees) have had the odds heavily stacked against them for decades. For example, the one-percenter companies make massive donations to party coffers in amounts that would make powerful drug cartels blush. The 99-percenters lack the resources to pay millions to lobbyists to roam the power corridors in Washington, DC, grease the palms of lawmakers, and fund PACs to secure legislative clout in their favor. Do the lobbyists of manufacturing trade associations, who claim to advocate for all manufacturing companies, genuinely represent the interests of the 99-percenters? No, they primarily advocate for the one-percenters while ostentatiously “supporting” smaller companies. After all, who wouldn’t work for the deeper pockets?

Is your manufacturing company a part of the 99-Percenters???

Apart from the Covid-era relief programs (which ended up becoming a petri dish for scheming fraudsters, hucksters, and scam artists while truly needy 99-percenter companies never asked for nor saw a dime. Don’t get me started!), what support in cash or kind have you received from any level of government? Your feedback will be highly insightful and beneficial.?

#Manufacturing #SmallBusiness #GovernmentFunding #IndustryEquity #CHIPSAct #ManufacturingUSA

*Footnote: The data

In 2023, the US Bureau of Labor Statistics Data stated that 388,753 private establishments in the US were involved in manufacturing (NAICS Code 31-33). Of these, 182,985 establishments have fewer than five employees, 57,729 establishments with 5 to 9 employees, 50,179 establishments with 10-19 employees, 48,296 establishments with 20-49 employees, 23,217 establishments with 50-99 employees, 17,484 establishments with 100-249 employees, and 5,680 establishments with 250-499 employees. In other words, around 99% (385,570 establishments) of the manufacturing companies have fewer than 500 employees. Around 93% (362,406 establishments) of the manufacturing companies have fewer than 100 employees, the small manufacturing companies of the US that have been struggling for over a half-century.?

This article was first published on the Clarity Manufacturing Consulting blog on July 18, 2024. https://clarity-manufacturing.com/the-one-percenters-of-manufacturing/