- February 21, 2024
- Posted by: David Marshall
- Category: Business, Manufacturing
Many private companies and governmental agencies tout the benefits of public-private partnerships, but I’m a little leery of engaging in them. One thing experience has taught me is that developing a public-private partnership is a very expensive business. The public funding you receive is certainly not without its challenges and a lot of compliance requirement hoops to jump through.
The funding agency in question wants to make sure they get their money back, plus some extra. And, to develop those relationships, you will probably need a team of lawyers, which could end up costing you more than what you can get from the original partnership.
I haven’t worked in the automotive industry where I can hide those costs. In smaller businesses, an expenditure of that size is on open display, and it’s harder to absorb.
For example, when I was looking to update our Duoline factory, I went to our local and state governments for assistance. They said they had incentive programs and tax abatements to help us with all of our costs, but in the final analysis, we were not going to come out ahead on the deal.
After that, I said, “This is too hard. Let’s just keep doing what we’ve been doing. We don’t need their funding.” (As it was, it only took us eight years to see the ROI on our investment.)
These public-private partnerships really only help the really big companies like Ford or Amazon because they have a far bigger tax base than smaller companies like ours.
What About Public-Private Partnerships With Academic Institutions?
When it comes to partnerships with institutions, you still have to work harder to help the academic institutions achieve their objectives than you would if you just got on with it yourself.
They have a hierarchy and requirements all of their own. They consistently have to take into account things like tenure, successions, research grants, turnover, and so on. You could have a team of people who change four or five times over the life of a project, which means you have to start over in training and explaining your project to a new team, and there’s no guarantee they want to continue it from person to person, administrator to administrator.
So we didn’t have much luck with educational partnerships either. We tried them, but they didn’t go well.
There’s a lot of “If we didn’t think of it, then it must not be good” thinking when dealing with the universities.
For example, many universities have corrosion courses and a pretty active engineering course as well. We came up with our own Corrosion College, but we couldn’t get many of the local universities on board with it. They wanted to create their own courses and house it on their own campuses.
Ultimately, an academic organization doesn’t have the same motivation you do. Time is money in the private sector, and you can’t keep spending money without actually achieving anything. But researchers will go down academic rabbit holes to try to develop something, but it could take a few years. You don’t have that luxury unless you have an unlimited budget, so you can’t spend that time throwing money down a dark hole in the hopes that you’ll fill it up in the next few years.
In the end, if you want a partnership, you’re better off collaborating with another company in your industry, but — maybe — not your competitors. In those cases, you both know what’s at stake, you understand the money situation, and you both speak the same language. It’s a lot easier to partner up in a private partnership in the first place.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business, including pivoting within their industry. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.
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