The state of Georgia has a relatively long history of providing services to its 10,000+ small and mid-sized manufacturers, particularly those in rural parts of the state. Industrial extension services have been provided through the Georgia Institute of Technology (Georgia Tech) for more than 35 years. Since 1994, the state program, restructured as the Georgia Manufacturing Extension Alliance (GMEA), has been part of the 70+-center NIST Manufacturing Extension Partnership. GMEA’s service delivery focuses mostly on one-on-one services and workshops and seminars, but the program does operate 11 network groups involved mostly with ISO 9000 certification. Of the more than 2,100 companies that GMEA served from February 1994 to December 1996, 257 manufacturers participated in network groups. Besides the manufacturing extension program, the state has no formal policy for encouraging inter-firm collaboration among Georgia industry, although attention is paid to important clusters of traditional industries such as pulp and paper, textiles and apparel, and food processing. At the local level, certain chambers of commerce have existing industry programs at varying levels of activity.

GMEA has an explicit evaluation element centering on a statewide survey of all Georgia manufacturers with 10 or more employees. The survey examines manufacturing needs, practices, and performance for the period 1994 to 1998. Among the practices examined in the survey was participation in cooperative activities with other manufacturers. The 1996 Georgia Manufacturing Survey went to all Georgia manufacturing firms with 10 or more employees. Responses from more than 1,000 plants were received and weighted to reflect the actual distribution of manufacturers by industry and employment size. The 1996 survey refines and repeats an earlier statewide survey conducted in 1994 to which 1,180 Georgia manufacturers responded.

More than half of Georgia manufacturers surveyed reported participation in some type of cooperative activity with other manufacturers. Identification of shared industry problems and needs was the most common inter-firm activity, undertaken by 42 percent of manufacturers. (See Table 1.) Next most frequently reported, by 20 percent of manufacturers, were cooperative manufacturing, and cooperative product design and development, followed by cooperative marketing (14 percent), cooperative training (13 percent), and quality assurance/ISO 9000 user groups (10 percent). Nonparticipant interest levels were highest for cooperative training activities (40 percent), followed by quality assurance /ISO 9000 user groups (33 percent). Cooperative marketing activities garnered the lowest interest levels (22 percent).

Inter-firm activity participation levels did not change much in aggregate from 1994 to 1996. Likewise, interest in network group activities has remained relatively stable over the past two years, with the exception of interest in quality assurance/ISO 9000 user group activities which declined from 41 percent in 1992 to 33 percent in 1994. The stability of these participation levels from 1994 to 1996 suggests that despite the relatively strong interest in inter-firm activities manufacturers demonstrated in 1994, they did not, in aggregate, make good on their interest. Even though manufacturers say they are interested in participating in inter-firm activities, they may experience difficulties in following through with their plans, suggesting a potential role for GMEA.

Overall, GMEA customers were somewhat more likely to be engaged in inter-firm activities than were non-customers (59 percent vs. 53 percent, respectively). GMEA customers had higher participation rates than noncustomers in activities involving identification of shared industry problems and in quality assurance/ISO 9000 user groups. However, there was no difference between GMEA customers and noncustomers in rates of participating in cooperative product design and development, cooperative manufacturing, cooperative training, and cooperative marketing.

Participants in inter-firm activities in Georgia tend to be larger, rural facilities. By facility employment size, large firms with 500 or more employees have twice the rates of participation than small firms with 10 to 49 employees in activities involving identification of shared problems, and cooperative manufacturing. Large manufacturers are one and a half times more likely than small firms to engage in cooperative manufacturing. In the training and quality assurance areas, large firms have four times the participation rates that small firms have. Cooperative marketing is an exception—participation rates in cooperative marketing activities are similar regardless of employment size. Manufacturers in rural South Georgia (which tend to be larger manufacturing facilities) are more likely to participate in inter-firm activities than are manufacturers in metropolitan Atlanta or the northern part of the state.

Several manufacturing performance accomplishments were reported by participants in inter-firm activities, based on an analysis of the Georgia Manufacturing survey responses. Manufacturers engaged in cooperative operating activities (e.g., product design and development, manufacturing training, marketing, quality assurance) rather than just sharing problems, are more likely to use modern manufacturing technologies and techniques than those not so engaged. Out of a list of 22 modern manufacturing technologies and techniques, manufacturers participating in cooperative operating activities used an average of two more technologies and techniques than did nonparticipants, even controlling for facility employment size and industry. Likewise, manufacturers engaged in cooperative operating activities had five percent more employees using a computer or programmable machine control on a weekly basis as part of their jobs than did nonparticipants, again accounting for employment size and industry. Participants involved in cooperative operating activities were also more likely to charge a price premium over their competitors based on distinctive characteristics of their product or specialized processing capabilities.

We also investigated the impact of inter-firm collaborative activities on manufacturing productivity (value added per employee). We examined the growth rate in the standard value-added production function from 1994 to 1996 (logged), as a function of participating in various types of inter-firm collaborative activities. In addition, we controlled for facility employment growth rate, the growth rate in the percentage of employees using computers or programmable machine control, whether this was the only facility in the company, whether the manufacturer had received industrial extension services in the past two years, location in a metropolitan statistical area, and industry. This model was estimated using ordinary least squares. The results indicate that inter-firm collaboration overall was not significantly associated with productivity growth. However, two types of inter-firm collaborative activity were found to be positively associated with productivity growth—cooperative design or new product development, and cooperative marketing.

For more information about the survey, the full report "Manufacturing Needs, Practices, and Performance in Georgia, 1994 to 1998" can be obtained at http://www.cherry.gatech.edu/mod.