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TechTrends e-Newsletter 1 February 2004 Page 1 of 5
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<br /> Volume 5, Issue 2 February 2004
<br /> J(giver Story
<br /> Technology Pays
<br /> A new MTI study reveals that investments in technology reap substantial benefits.
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<br /> The last few years have not been kind to small and medium-sized manufacturers
<br /> (SME) in Minnesota, or around the United States, for that matter. Despite some
<br /> recent bursts of growth in the sector, a number of factors, including the lingering
<br /> economic downturn and ferocious offshore competition continue to make times for
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<br /> challenging for most SME companies.
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<br /> With that in mind, MTI recently conducted a comprehensive plant-level survey of
<br /> • nearly 200 Greater Minnesota SME firms, collecting data on a number of
<br /> characteristics, including technology use and related company and workforce
<br /> impacts and outcomes, for manufacturers employing between 10 and 250 people. It
<br /> also asked respondents to rank six factors (low price, high quality, quick delivery,
<br /> innovation/new technology, adapting to customer needs, and value-added customer
<br /> services) on which they compete for sales. The result: By a wide margin, SME
<br /> manufacturers considered high quality to be their most important competitive
<br /> factor-more than 80 percent of respondents ranked it first or second among the six
<br /> factors. By contrast, innovation/new technology was rated lowest, with only 18
<br /> percent ranking it first or second. The other four factors ranked somewhere in-
<br /> between.
<br /> That said, SME manufacturers differ with respect to how they compete. Smaller,
<br /> lower-paying, and less technology-intensive companies are more likely to compete
<br /> , on lower price, and less likely on innovation and value-added services, than larger,
<br /> high-paying, and more technology-intensive companies.
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<br /> Now, the big question: Is there a relationship between an SME's competitive
<br /> strategy and its level of success (as measured by sales and employment totals)? In
<br /> a word, yes. Companies competing on price were far less likely to have experienced
<br /> job and sales growth from 2000 to 2002. Only 46 percent of companies competing
<br /> on the basis of low price outperformed their industry in job growth during that time,
<br /> compared with 58 percent of those considering low price less important, and 55
<br /> percent within the survey population overall. By contrast, companies competing on
<br /> quick delivery, innovation, and value-added services were more likely to have
<br /> . shown positive outcomes.
<br /> The survey also found that technology use and higher wages are closely related.
<br /> http://www.minnesotatechnology.org/publications/techtrends/2004/February/printVersion.... 2/23/2004
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