Op-Ed: Legislators Take Note- Manufacturers Are Small Businesses Too

Mr. Richard W. Dennis – Director, Die-Tech, Inc. (York Haven, PA)

Mr. Jim Weaver – President, Weaver Industries (Denver, PA)

As American Rescue Plan funding begins to be distributed to Pennsylvania and its counties, our federal, state, and local representatives are responsible for ensuring that those critical resources benefit a broad range of constituents in appropriate priority and proportion. To fulfill that obligation, they need to carefully consider the needs of a multitude of stakeholders – including small businesses and their workforce. Lately, many political speeches, business reports, and media stories have shed pertinent light on the plight of Pennsylvania-based small businesses throughout the pandemic. All too often, however, they limit their consideration to restaurants, salons, gyms, retail shops, and other “Main Street” businesses and completely overlook small manufacturers.

Manufacturers are a critical component of our small business landscape. According to the Bureau of Economic Analysis, 82% of the Commonwealth’s manufacturers, or 11,050 firms, have fewer than 50 employees and 90% (or 12,121 firms) have fewer than 100 workers. Those 11,050 small manufacturing enterprises provide 140,078 full-time jobs while the 12,121 firms with fewer than 100 employees provide 223,990 jobs to Pennsylvanians. According to the U.S. Small Business Administration’s data, Pennsylvania’s small manufacturers account for 48.1% of total manufacturing employment across the Commonwealth and 34.2% of Pennsylvania’s total exports.

Pennsylvania’s small manufacturers were hit particularly hard by the COVID-19 pandemic. According to Penn State’s Institute of State & Regional Affairs, over 43% of Pennsylvania’s manufacturing firms remained classified as non-essential throughout the pandemic. That put 38% of Pennsylvania’s total manufacturing workforce on the sidelines. Consequently, the Bureau of Labor Statistics noted that 33.6% of Pennsylvania’s pre-pandemic manufacturing workforce filed for unemployment benefits between mid-March 2020 and mid-April 2021. By comparison, only 26% of Pennsylvania’s retail establishments and 8.1% of its accommodation and foodservice businesses were classified as non-essential throughout the crisis.

According to a study by ANR Market Research Consultants (Richmond, VA), more than 60% of the small manufacturing firms that remained operational in Pennsylvania due to either an essential business classification or successful waiver request experienced a significant decrease in revenue. Similarly, 64% of Pennsylvania-based manufacturers surveyed by the U.S. Census Bureau in January 2021 suffered from constrained cash flow and cash reserves of two (2) months or less. Nearly one-third of the manufacturers that participated in that survey believed it would take longer than six months for their businesses to rebound.

Given the importance of small manufacturing firms to our overall economy and employment base, and in light of the immense negative impacts the pandemic inflicted upon their businesses, our state, county, and city officials should ensure that an appropriate level of American Rescue Plan resources are directed to organizations that can accelerate manufacturer recovery and rebound. As industry leaders, we recommend that the statewide Pennsylvania Industrial Resource Center Network be entrusted with those resources and the related responsibilities. Each of our companies, and hundreds more like us throughout Pennsylvania, utilized the services of the Industrial Resource Centers (IRCs) throughout the pandemic and found them to be an effective resource for our COVID-19 recovery efforts. As the state’s flagship manufacturing assistance program, the IRCs are best-positioned to leverage their existing manufacturer relationships, local partnerships, statewide reach, and national network through the U.S. Department of Commerce to utilize American Rescue Plan dollars for maximum job-creation and business-recovery impact.

Prioritizing the needs of multiple constituent and stakeholder groups in the current environment will prove challenging to our elected officials. Fortunately, the data, economics, and common sense behind making an investment in accelerating small manufacturer recovery, coupled with the readiness of a proven program like the Industrial Resource Centers to deploy that investment, makes that particular decision an easy one to make.