About this Program
Small and mid-sized manufacturers (about 3,000 in Oklahoma) frequently suffer from a lack of engineering expertise related to manufacturing processes. The Application Engineering (AE) program was established in 1997 in collaboration with the Oklahoma Manufacturing Alliance to provide direct engineering services to those manufacturers, similar to other engineering specialists connected to the Oklahoma Cooperative Extension Service. In 2020, the AE program impacted those manufacturers positively to about $51 million dollars, helped create 53 new jobs and assisted in the retention of an additional 48 jobs. This data is based on independent surveys of the manufacturers that received AE services.
Manufacturing is Vital
Of the nearly 3,000 small and mid-sized manufacturers in Oklahoma, over one-third are located in rural areas and are extremely important to their local economies. The loss or downsizing of even one of these companies, especially in rural areas, can yield devastating consequences. With agriculture and energy industries fluctuating in their labor force needs, rural manufacturers supply much needed jobs in their communities.
These manufacturers face particular difficulty in getting relevant and usable information and technical assistance that will keep them abreast of the rapid changes in manufacturing technology. Engineering design expertise is invariably lacking for these companies.
What has been done
To address the difficulties faced by our small- to mid-sized manufacturers, the Division of Agricultural Sciences and Natural Resources (DASNR) and especially the Oklahoma Cooperative Extension Service and the Vice President for Research at OSU (via re-investment of indirect costs into the program) have been outstanding partners in supporting the Applications Engineering Program.
Since 1997, Applications Engineers (AEs) have been deployed across the state to provide on-site engineering assistance to manufacturers where such expertise is lacking. OSU as a subcontractor to the Oklahoma Manufacturing Alliance (OMA) and partnered with the CareerTech schools across Oklahoma created this multi-faceted, engineering service, which is relatively unique among the MEP programs across the United States. This program is funded by NIST (National Institute for Standards and Technology) through the Manufacturing Extension Partnership (MEP), and OCAST (Oklahoma Center for the Advancement of Science and Technology).
The year 2020 saw negative impact due to COVID and global energy market flucuations on workforce and supply chain issues associated with energy industry along as well non-essential product manufacturers. With three current Application Engineers, we also experienced significant turnover with the Manufacturing Extension Agents (MEA) this last year (about a 70% readjustment of the MEA staff) and hiring of new staff Regional Business Consultants (RBC) to deliver business assessment related services.
The year 2020 also continued the evolution of the “pay-for-service” model which is coordinated completely through the OMA. The Manufacturing Extension Agents are essential to the contact and relationship development with manufacturers and advancement of project opportunities with the AEs. We recognize that relatively new personnel within the MEA, RBC and AE ranks creates greater need for establishing relationships with existing manufacturers. Dr. John Veenstra has served as the primary PI for the AE subcontract this last year with Dr. Dan Thomas continuing his coordination responsibilities until his retirement in September 2020. Dr. Paul Weckler was involved with Dr. Thomas and has taken over coordination responsibilities as of October 2020.
Results and Impact
Clients receiving engineering assistance must agree to a post-project impact assessment. This survey uses procedures developed by NIST for the MEP network. Impact is measured through the economic value of the service to the company as reported by the client. Another measure is the number of jobs created or retained. Both impacts are measured by an independent survey agency. Number of jobs created or retained is translated into economic impact using an income multiplier to compute the direct, indirect, and induced effects due to a change in the number of jobs in the manufacturing sector.
The income multiplier was developed from data collected from two different sources. First, the average salary for manufacturing in Oklahoma ($39,850) can be taken from the U.S. Bureau of Labor Statistics published information for 2018. Secondly, the labor income multiplier of 1.48 can be used from IMPLAN data for regional manufacturing (based on the most recent survey values of 2020). The total economic impact can be computed by multiplying the average annual salary times the income multiplier to arrive at $58,978 for each new or retained job in the manufacturing sector.
Conversations with Dr. Brian Whitacre, Sarkeys Distinguished Professor and Neustadt Chair of Rural economic Development in the Ag Economics department at OSU indicated the OK aggregate labor income multiplier (2019 data) from IMPLAN for the entire manufacturing sector the multiplier is 2.227. This makes sense because we are looking across the entire state and not just a single county (which is more typical in most economic impact studies). Therefore the labor income multiplier used in the assessment are reasonable and somewhat conservative.
The pay-for-service implementation (including at least one retainer-based engineering project activity), along with relatively new personnel, has significantly affected the number of total projects and the resulting impacts when compared to many of the previous years. Also, the project and sales information below reflects only those projects which were “closed-out” in 2020. A number of projects started in the past year will continue into the new year until closed out.
The year 2020 also included a significant activity tied to robotics for a grant obtained from NIST in collaboration with TMAC (Texas MEP Center) and OMA. The demonstration of robotic technology for precision repetitive tasks and creation of Digital Twin of a factory using simulation were the key goals of this grant. As part of this grant two Cobots from Universal Robots (Robotic arms, UR3e and UR5e) manufacturing demonstration units were brought to Oklahoma. Training on the use of the robots, development of demonstrations, and actual performance of those training activities to MEAs and manufacturers was fully implemented by our team of Application Engineers.
The number of hours devoted to the Robot project in 2020 by Application Engineers is well above 750, with Ben Alexander devoting at least 450 hours to this particular program. The grant extends into 2020 with additional training events and the potential for placing these robotic arms into existing manufacturing operations for a selected period of time.
In 2020, the Applications Engineers client projects had the following economic impacts, which include 48 jobs created and 53 jobs retained, and a total around 1000 hours directly logged for the pay-for-service program with the OMA for projects closed in 2020.
Bottom Line Impact was reported to NIST by the OMA as $15,000,494 which includes a calculation of 15% of Retained sales + 15% change in sales + cost savings+ unnecessary investment avoided.
Table 1. Bottom Line Data
|Retention of sales||$6,079,000|
|Change in Sales||$33,148,160|
|Unneccesary Investment Avoided||$4,572,420|
|Jobs Created and Retained (101) x $58,978||$5,956,778|
Source of Funding
The direct funding for the AE program is through a contract with the Oklahoma Manufacturing Alliance, which is funded by a combination of NIST (National Institute for Standards and Technology), OCAST (Oklahoma Center for the Advancement of Science and Technology), the department (salaries & reinvestment of indirect costs), the Oklahoma Cooperative Extension Service (coordinator/PI salaries & reinvestment of indirect costs), and the Vice Pres. for Research at OSU (re-investment of indirect costs).