Abrupt funding freeze leaves Ohio manufacturing programs with uncertain future

CLEVELAND — On Friday, Ohio’s Manufacturing Advocacy and Growth Network, known as MAGNET, learned that its public funding had been frozen, effective immediately.

“I was initially shocked. Immediately after it, it was action mode: how do we get to all the people that understand how important it is and what’s at stake?” said Ethan Karp, President and CEO of MAGNET. 

“We help small and medium manufacturers, as a nonprofit, grow,” Karp explained. 

The Cleveland-based nonprofit has assisted local manufacturers for over 40 years. This includes helping them implement new technology to stay competitive, providing workforce training to help fill positions in manufacturing, and helping companies create prototypes. 

“That’s a start-up who has an idea on the back of their napkin that makes changing air filters easier,” Karp said. “This space we would actually prototype for those companies.”

They get state and federal funding through Ohio’s Manufacturing Extension Partnership Program, or MEP program, which funds six similar organizations throughout the state that aim to assist local manufacturers. 

The funding freeze was announced in a letter from the National Institute of Standards and Technology, the federal agency that funds Ohio’s Department of Development. The Ohio Department of Development is the department that runs the MEP program.  

In the letter, the NIST cites an ongoing audit as the reason for the freeze.

“Preliminary findings in connection with an active financial assistance audit being performed by the DOC Office of Inspector General (OIG) which identifies various instances of material noncompliance by the Recipient and/or its Subrecipients, several of which were confirmed by the Recipient or the applicable Subrecipient.” – Letter from NIST to Ohio’s Department of Development announces funding freeze

The audit of Ohio’s MEP program started over a year ago, and the results aren’t set to be published until Spring 2026. 

The letter specifically cites three MEP programs for misreporting income. MAGNET is not one of the programs mentioned specifically in the letter. 

One program that is mentioned is the Center for Innovative Food Technology (CIFT). In the letter announcing the freeze, CIFT states:

“CIFT did not report 2.3 million in unreported program income on the earlier five-year award. CIFT has acknowledged at least 1.8 million is unreported program income.” 

CIFT President and CEO Rebecca Singer denies any wrongdoing and says the discrepancy is because of unclear guidelines about what a program should report as income.

“CIFT has fully cooperated with the audit and the statements are misleading and inaccurate,” Singer said in a statement. “Any issues that occurred were administrative in nature and we are prepared to address them once a drafted report is provided. There is consistency in the findings among the organizations further demonstrating lack of clarity and understanding on administrative reporting. Several OIG audits of other state programs have noted under-reporting of program income but they have been given the opportunity to counter findings.”

Singer said that the typical process of an audit has not been followed, and CIFT did not see a draft of the audit and respond, which she said is the standard process for a financial audit. 

According to Singer, because of the freeze CIFT lost $1.6 million in public funding and, as a result, they are suspending operations on Monday, Dec. 15. Singer said 13 employees will be affected as well as 22 businesses that rely on CIFT’s mini food processing kitchen, which allows them to make their products to sell at retail outlets. 

With the freeze of federal funds, the state of Ohio has also frozen its portion of funding to the MEP program. 

In a statement, Mason Waldvogel, the Deputy Chief of Media Relations for Ohio’s Department of Development, explains that the state funding is tied to federal funding. 

“The majority of state funding provided to Ohio MEP partner organizations consists of matching dollars, which cannot be spent without corresponding federal funds. Therefore, the Department of Development has suspended the program at the state level.”

The freeze affects roughly $14 million in funds to Ohio manufacturing nonprofits over the next year, with MAGNET receiving $5.9 million of those funds. 

Karp said MAGNET has been complying with the audit and is frustrated the freeze was started before there had been communication with the MEP programs about the findings. 

“If there is an issue, then you need to tell somebody there is an issue and give somebody a chance to fix it. In this case, there’s nothing for us to fix because we don’t know what, or if, there are findings and a report. That lack of transparency, that lack of process makes no sense,” Karp said. 

Karp said the funding cut-off will change how MAGNET functions, prompting decisions to be made about potential lay-offs of their staff of roughly 75 people. 

“We’re going to have to structurally make huge changes at MAGNET to continue at a much smaller scale,” Karp said. 

According to Karp, approximately 35% of their budget comes from state and federal funding. The rest is from a private industry that pays for MAGNET’s services. However, Karp said they can only provide many of those services because of their public funding. 

“Helping people understand that the investment that the state and federal governments have been making for 40 years, this is a 40-year partnership — shouldn’t be turned off at a moment’s notice, depriving all these people and companies of necessary support.”

This funding freeze could impact the manufacturing sector in Ohio. 

“We’re saying we want to restore manufacturing? Well this is not how you restore manufacturing. This is not how you bring jobs back from overseas; we are actually going to be cutting Ohio jobs as a result of this decision,” said Jack Schron, President of Jergens Incorporated, a Cleveland-based manufacturer.

Schron sits on MAGENT’s board and has used its resources to test out Jergens products. 

Micheal Canty, president and CEO of Alloy Precision Technologies, said the freeze will impact small and medium-size companies the most. 

“I think it will be devastating to manufacturing,” Canty said. “If MAGNET and all the MEP’s are gone, then a lot of those projects to develop and promote smart manufacturing and manufacturing in general go away.”

Karp said the irony is that MAGNET’s goals align with the current administration’s efforts to make U. S manufacturing more competitive. 

“I desperately want tariffs to help companies. Every single day I am out there talking about how we need to compete against international sources and how our companies need to be the most technologically advanced in the world. It is the same thing the Trump administration says, and we are totally aligned. So it is ironic that this is happening to us now,” Karp said.