Counterpunch with manufacturing to sell the virtues of California’s economy

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The story of California’s economic success nearly always comes with a asterisk. Push past the United Kingdom as the fifth largest economy in the world? Suffer the editorial writers at the Orange County Register, who opined, “High-flying California economy faces a hard fall“:

“Despite ushering in revolutionary global change, California’s leading tech companies have concentrated wealth and power in a tiny circle — pushing more and more out of cities and into traffic, and doing little to stop stagnation and social rot below the upper tiers of the economic pyramid.”

Stagnation and social rot?

I get the point, but at the same time, a quiet revolution is shaping the state’s economic fortunes, in a sector that promises growth and progress below the “upper tiers.” California manufacturing is the change agent. Consider:

  • In its annual ranking of largest public manufacturing companies released last week, the IW500, IndustryWeek ranked the top 10 manufacturing states, states with the highest number of companies in the top 100. California ranked second to Texas.
  • Texas and California are America’s top exporting states as well, no surprise in that manufacturers make exports possible. California exports increased to $171.9 billion in 2018, up 7.3 percent year-over-year and 11.5 percent of the U.S. total in 2018.
  • It’s not only the size of the manufacturing sector that sets California apart, it’s the makeup. California’s list of top 10 exports is arguably the most industry-diverse in the lead group, thus more resilient to slowdowns than any state in the top five, led by:
    • Aircraft including engines, parts: $6.5 billion (3.9% of California’s exports)
    • Modems, similar reception/transmission devices: $6.3 billion (3.8%)
    • Diamonds (unmounted): $4.6 billion (2.8%)
    • Shelled almonds: $3.7 billion (2.3%)
    • Machinery for making semiconductors: $3.3 billion (2%)
    • Miscellaneous petroleum oils: $3.1 billion (1.9%)
    • Blood fractions (including antisera): $2.8 billion (1.7%)
    • Cell phones: $2.5 billion (1.5%)
    • Computer parts and accessories: $2.1 billion (1.3%)
    • Spacecraft, satellites, launch vehicles: $2 billion (1.2%)
  • California is also riding a wave of reshoring from Asia. The reason is straightforward: Increasingly, it makes economic sense for American companies and consumer brands to bring production back home. And with its nation-leading manufacturing and supply-chain ecosystem, California will be a popular destination. Harry Moser, founder and CEO of Reshoring Initiative, is a leader in measuring and comparing the cost of manufacturing offshore and in the U.S., and the numbers continue to trend in the favor of domestic production. “20 to 25 percent of the roughly $2.2 trillion in goods imported to the U.S. have a higher U.S. FOB price, but a lower total cost of ownership (price plus all logistics, risks and opportunity costs),” Moser says. “Just getting companies to do the total cost of ownership math correctly would result in a 20 percent increase in domestic manufacturing. Call it $400 billion in new goods produced here and two to three million new manufacturing jobs.” It’s a business development bonanza.
  • Much of this reshoring will be in industries that favor California manufacturing. But reshoring aside, California’s enjoying organic growth in manufacturing’s high-flying U.S. industries like food and beverage, outdoor industry, aerospace, bioscience, and ag-tech, where high-tech fabricating and advanced manufacturing inform operations. California’s R&D ecosystem is a catalyst.
  • SF Made and others are working with early-stage manufacturers to reshape urban areas and incubate and accelerate promising makers and small manufacturing businesses. As with other high-growth regions in the U.S., the seeds of a long-term manufacturing comeback are being planted in California, seeds taking root as we write.

Escaping the negative press seems a challenge for California’s otherwise well-intentioned business leaders. Those charged with managing the Golden State’s economic narrative would do well to rally around manufacturing to redirect the dialogue.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

CompanyWeek at five years: one takeaway above all others

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CompanyWeek turns five this week. The question on my mind after five years and 1,014 company stories: What’s the one takeaway above all others? What have we learned?

In the context of challenges, we’ve learned that workforce is the defining issue in manufacturing today. Convene manufacturers from across different industries, as we do often, and workforce is always a ready topic, a constant irritant. The worse news is that for some industries, there doesn’t seem to be an end in sight to the workforce conundrum.

—

But manufacturers aren’t alone. Workforce is a challenge across the economy. Manufacturing’s challenge may be unique — tech companies don’t have to sell the virtues of a career in software or IT, for example. But neither do manufacturers in every one of the industries that comprise the sector.

Rather, workforce is such a pressing issue because manufacturing is a growth sector. Today it makes business sense to manufacture more products in America. Products that before now have been cheaper to produce offshore. Products that will reimagine manufacturing’s image and help solve the workforce challenge by attracting entrepreneurs and new skilled workers.

That’s the story.

It won’t happen quickly in every industry. And other countries won’t give up U.S. brands without a fight. Many will invest to improve the production ecosystems that meet the needs of thousands of U.S. companies. The struggles and demise of proud manufacturing brands will continue to capture headlines.

But the push to make more stuff in the U.S. is inexorable. As Harry Moser, founder of Reshoring Inititiative, and other research analysts are documenting, it now makes business sense to locate production in the U.S. when it didn’t before. Brands are acting in their self-interest by investing in the U.S. communities where design, engineering, and customers are located. Workers are watching factories automate — manufacturing is a path to cool learning. Educators, developers, elected officials, all see a path to prosperity that includes manufacturing jobs and exports.

Today the story of manufacturing is the opportunity to repatriate production of a sizable portion of $2.2 trillion in imports, much of it the products of U.S. brands, brands that will make more things here if possible. It’s not only possible, it’s probable. Moser does the math:

“20 to 25 percent of the roughly $2.2 trillion in goods imported to the U.S. have a higher U.S. FOB price, but a lower total cost of ownership (price plus all logistics, risks and opportunity costs),” Moser says. “Just getting companies to do the total cost of ownership math correctly would result in a 20 percent increase in domestic manufacturing. Call it $400 billion in new goods produced here and two to three million new manufacturing jobs.”

It’s a business development bonanza.

—

Our path is telling the story of innovative manufacturers and connecting the community with information and ideas, with resources and people. We’re on a mission to help brands manufacture more in the U.S., to travel the “last mile” to domestic production.

It’s not an easy road. The last mile is a minefield of disconnected industries, of supply-chain gaps, of ambivalence, of territoriality, of institutional memory that’s faded and very difficult to reprise.

Stories are often better told in person, so we’re convening business leaders more often. Our Connected Industry CEO series continues September 12 in Ft. Collins, and in Colorado Springs later in the month.

And October 18 in Denver, we’re excited to again bring the apparel and outdoor industry together at the the fifth annual Apparel & Outdoor Industry Manufacturing Summit, co-presented by Colorado State University and Manufacturer’s Edge. We’ll look more closely at projects and plans in the works that give companies and brands a place to go to learn, to innovate, to prototype and manufacture, and to cluster in pursuit of growth.

Send me a note for information about either.

Let’s travel the last mile together.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

How’s your Industry 4.0 strategy shaping up? Why most manufacturers are stuck on 3.0

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As promising the future is for manufacturing, company executives today bemoan the uncertainty that grips the sector. Today, it’s tariffs. Yesterday, a lack of skilled workers. Tomorrow, a slow and uneven integration of technology that leaves manufacturers vulnerable to global competition.

Jeff St. Clair touched on the latter theme this week in a smart story, “Industry 4.0 and the Race to Save Small Manufacturing in America.” St. Clair describes the industrial chronology as “The introduction of robots and automation marked Industry 3.0, and making them smart and integrated, well, that’s Industry 4.0“.

But if Industry 4.0 is the savior for small manufacturers, and the race is on, many companies remain stuck at the starting line. For small to middle-market firms, the move to Industry 3.0 can be messy and uneven. And few would say that the equipment on their shop floors is part of a full-on integrated digital network, though most would acknowledge the need, as shop owner Dan Collins notes in the story, “to make parts faster, quicker, more repeatable, less scrap, those types of things have forced our hand.”

Collins operates equipment for a spring manufacturer in Cleveland, Ohio, but his story is no different than a thousand job shops and small industrial firms in California. Across the supply chains of a thousand more OEMs, contract manufacturers are being asked to innovate processes and products, to digitally transform – and do more. For some it’s an opportunity. Investments that Timo Lunceford’s Ventura-based Swiss Productions have made are compelling OEMs to direct more work his way.

For others the path is less clear. Is 3D printing an answer? IoT? AI or Blockchain? Search “manufacturing news” on Google this week and find references to all the above — and speculation as to their pivotal role in the future of manufacturing.

It’s a challenge not lost on educators, especially those charged with fielding manufacturing’s next skilled workforce. Matthew Sweeney is director of the Advanced Manufacturing Center at the Community College of Denver. Sweeney’s curriculum is a bit of a moving target. Today he’s hungry for instructors with expertise in topics that align with leading-edge technologies that so many believe will make or break the sector.

“For example, in machining we’re moving away from the manual machining skillset in favor of operating advanced machinery like 5-axis and Wire EDM,” Sweeney says. “This doesn’t even account for all of the disruption that big data and IoT is having in the modern manufacturing environment.”

So Industry 4.0 is here, if also a ways off. “Just like industry, we struggle to find talented instructors with expertise in these areas,” Sweeney explains. “Those few experts who understand the scope and impact of technologies like IoT, AI, 3D printing, blockchain, and augmented reality are highly sought after. If we only have the resources to hire retirees with expertise in Industry 2.0 or 3.0, then our programs will continue to train in this context. That’s why partnering with industry for professional development, part-time talent, and leading-edge technology is important to the long-term success our training programs. If we can learn alongside industry, then that would be the tide that lifts all boats in our community.”

The challenge for manufacturers is that time waits for no one. In the aerospace supply chain alone, Boeing, Lockheed Martin, SpaceX, and Airbus, among others, demand that contract manufacturers make parts faster and quicker, to lower tolerances, with new materials. Meaning that every supplier must be evolving, upgrading, digitizing — and learning.

It’s no easy task. Cost, complexity, the impact on employees and business processes, and other factors combine to make even Industry 3.0 an ambitious undertaking. For many companies — and educators — it’s akin to changing the tires on a moving vehicle.

A fast-moving vehicle. The race is on.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

Tariffs spur short-term export boom—cause for celebration or concern?

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Under normal circumstances, an 11 percent year-to-year increase in Colorado’s exports would be cause for great celebration. However, these are not normal circumstances.

The Trump administration’s tough stance on trade policy has incentivized manufacturers to stockpile import inputs and expedite export sales to beat the tariffs now imposed by the U.S. and reciprocated by our strongest trading partners. President Trump is already taking a bow for export increases as well as a strong U.S. economy. Some think that the numbers justify this, but many others think we should hold off to see next quarter’s numbers as a truer representation of our economy. Some levers meant to boost our economy, such as tax reform, seem to now be countered by the latest tariff increases. Now we must see if the once-settled precedent that tariffs make for a weaker economy will play out like it has in trade wars past.

I, like most, thought that the tough talk on trade was going to be more rhetoric, and I had the attitude, “This too shall pass.” When the tariffs were discussed early this year and came into play in March on aluminum and steel, and soon levied on our strongest allies, we still saw a 33 percent increase in aluminum imports and a 57 percent increase in aluminum exports out of the state. Disruptions to the market often have such unintended consequences. Yet other impacts can be as predictable as the tides, such as foreign and local investments starting to wither in Colorado.

For example, we recently learned of a Canadian manufacturer who invested in a plant and staff in Colorado but is no longer competitive in the U.S. due to the steel and aluminum tariffs. Additionally, with the on-again, off-again threat to pull out of the world’s largest trading bloc, NAFTA, U.S. policy is no longer stable enough to entice investment. Since the aforementioned company’s largest customer is PEMEX in Mexico, the operations will most certainly move south due to uncertainty about NAFTA.

Whether manufacturers stitch together a coalition of domestic producers or continue to source internationally, the tariff hike will now raise the components costs, making U.S.-made goods less competitive on the world stage and more expensive for consumers here.

Let’s take a closer look at more recent tariffs impacting Colorado goods sold in China, such as whiskey, yogurt, and cheese. Colorado companies making these products are at a disadvantage to exporters from countries enjoying more favorable trade deals with China. For example, many of the Trans-Pacific Partnership countries export to China under some form of free trade agreement. Colorado manufacturers, like the agriculture industry that recently pushed back on the $12 billion subsidy offered by the administration after the Chinese tariff retaliation, would rather have access to China’s 1.4 billion consumers and competitive manufacturing inputs.

It may seem like our booming economy can withstand compounding tariffs with our biggest trading partners, but the reverberations have yet to be recognized in the numbers. Trade is the foundation of prosperity for all sides. It is not a win-lose, zero-sum game. Instability that is caused by trade wars trickles down to investments, operational decisions, and even buying practices. For a country that touts innovation and products that are the envy of the world, let us truly evaluate the message we are sending by continuing to raise tariffs to protect our industries.

It would be a mistake to allow this short-term boost in our economy to translate into a license to move forward on auto tariffs on our allies, $200 billion of additional tariffs with China, and a sunset of NAFTA.

I ask, who are we protecting?

Karen Gerwitz is the president and CEO of the World Trade Center Denver, a trade association supporting Colorado manufacturers for more than 30 years in expanding their businesses globally. The World Trade Center Denver is an advocate for open market access. If you have questions about how trade policy may affect your business, contact their Help Desk at 833/ASK-WTCD.

Also read, Taxing imports is a stopgap. Where’s the plan? Bart Taylor, CompanyWeek.

Taxing imports is a stopgap. Where’s the plan?

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On one hand, it seems reasonable for President Trump to use America’s vast consumer and commercial markets as leverage in trade negotiations. China, especially, has used open and relatively unfettered access to American consumers and intellectual property to great effect, even as it protects its own. Access to American markets should come with a price.

But will tariffs change the balance of power in global trade? That’s the point, isn’t it?

It’s a hot debate, but the consensus is that no, tariffs won’t diminish China’s industrial capabilities or enhance ours. China, Canada, and Germany will work around cost increases, pass them on to consumers or find other buyers. That’s the point — manufacturing products that are in demand around the globe. If protecting American IP is the goal, limiting the export of key technologies and processes seems a better approach than taxing imports. And if Trump thought tariffs would encourage Harley-Davidson to make more motorcycles here to sell in newly opened markets in Europe, Harley had different ideas.

They’re not alone. Brands are still motivated to go offshore to make products designed and engineered in America. American brands have helped elevate China and much of Asia by investing in labor, infrastructure, and equipment in offshore destinations from Taipei to Ho Chi Minh City.

Instead, the more permanent way to fix America’s trade imbalance is to make more products here, by providing incentives and tools to empower domestic manufacturing and homegrown industries. Products that compete as exports in a global market and slake the thirst of of American consumers and OEMs.

Trump thinks tariffs will help, tweeting:

Tariffs are working big time. Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come,Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth…..

Unfortunalately for the President, support for tariffs may not sustain, even among his own party. We may not see whether tariffs are a catalyst for more domestic production.

But we do have a blueprint for developing a more robust domestic manufacturing capacity. It’s there for all to see, courtesy MForesight, a pro-manufacturing think tank. It’s a renewed commitment to America’s “industrial commons” by way of four initiatives:

  1. Invest in translational research and manufacturing innovation. Including funding needed to develop operational prototypes and demonstrate manufacturability.
  2. Encourage pilot production and scale-up, to restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

American brands want a fair playing field, with equal and open access to markets of the same exporters that compete with them in the U.S. Farmers and manufacturers want to be able to compete on value and quality, without host countries manipulating markets and pricing.

But until a domestic manufacturing strategy replaces tactics like tariffs, others may shape the fight for global trade supremacy. And American manufacturers will continue to seek out labor and infrastructure offshore. And the tools and expertise that China seeks to power its ambitious Made in China 2025 manifesto may emanate here.

Investing in a more capable domestic supply chain — rebuilding our “industrial commons” — is the first priority in avoiding this eventuality.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Why we’ve developed a CompanyWeek paywall, part II

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Last week in introducing CompanyWeek‘s paywall (see below), I mentioned a new data service, a value-add to content access for subscribers.

It’s important to note what the data set is, and isn’t. We think the value of the company profiles is the story executives tell of challenges, needs, and opportunities, based on their industry and the products they make. It’s a unique window into manufacturing and to the companies, and we’ve collected and organized this information in a searchable database.

It’s also intelligence that can help savvy business partners shape services and processes that help these companies grow.

We’re not sharing contact information through this data service, but we’re confident our data can help connect the community and juice its development.

Sample more of the data here.

Part I

After nearly five years of publishing, CompanyWeek is taking the important step of charging fees for the products we make. Beginning this week we’ll ask readers to subscribe after reading three company features each month.

Important for who, you might ask? It’s a fair question.

For us, of course, and for our customers, who we think will support this new phase of our business. Asking a fair price for quality work is something our readers understand, and our commitment is to invest in product development to get even better.

It should also send a message that we’re bullish on community building. The manufacturing and supply-chain executives that read and use CompanyWeek want more — more connections, more storytelling, more data, more ideas that lead to success. Companies we write about strive to solve a problem or fill a need in the market. We do as well, and as manufacturing expands into new frontiers, we think CompanyWeek can be an even more important resource.

We’ve also waited to establish a paywall until we can also offer an important value-add service to our subscribers. As we push past 1000 total company profiles, we now have an aggregate data set that provides a important window into regional manufacturing. Companies can use the information to better understand macro trends, track industry and product activity, or identify potential business partners or local industry innovators.

We’re not the first publisher to establish a paywall. But we’re confident that even as we’re late to the game, our trade-specific information is more valuable than scores of sites that trade in news, the Internet’s content commodity. We also believe our content and data is already on par with other fee-based services that promise new contacts or connections. We connect the modern manufacturing community every week.

Casual readers will still be able to read three profiles a month for free. And our content packages are priced to provide affordable access to all of our content — manufacturing content you will find nowhere else.

Subscribers who also choose the data option will receive a monthly data set summarizing new profiles, as well as original surveys, invites to special events, discounts on services from participating underwriters, and more. As it was five years ago when we debuted, our mission is to be at the center of manufacturing community in the West.

Please contact me with questions or comments. Or subscribe to ensure access to the full sweep of CompanyWeek content and services. And in doing so, contribute to elevating the regional dialogue about U.S. manufacturing. It’s a worthy cause, and we’re champions for the sector.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Colorado avoids flunking Conexus’ national manufacturing scorecard, but not by much. Where to now?

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For the 10th consecutive year, Colorado was given a D for manufacturing sector health in the Conexus Indiana 2018 Manufacturing and Logistics National Report. It lands Colorado much closer to neighbor New Mexico and Alaska — both Fs — than annual favorites Indiana, Kentucky, Iowa, and Michigan, who again led a Midwest sweep of the top scores, all As.

Colorado actually slid from a D+ in 2014 to a D in 2018. Here’s how the report scored the state in the sub-categories that make up the aggregate score:

So what’s it mean?

I still think the Conexus methodology favors labor and industry statistics that underreport the reach of manufacturing’s value chain in industries like aerospace, food and beverage, and cannabis. The disconnect is obvious in the C grade Colorado gets for productivity and innovation. The state bleeds innovation. Its food sector alone has helped reimagine the national industry.

But my full-throated defense from past years seems, well, out of date. Colorado manufacturing is healthy, but it could be so much better.

If the Conexus methodology is a bit stale, others are providing more modern and relevant benchmarks that demonstrate why.

Sridhar Kota and Thomas Mahoney’s brilliant but worrisome new report, Manufacturing Prosperity, A Bold Strategy for National Wealth and Security, is one.

The report’s a must-read and pointed to three grand challenges of American manufacturing:

  1. Rebuild the “Industrial Commons,” the set of knowledge and practical skills, supply chains and production capacity, materials and equipment, and overall industrial ecosystems that enable manufacturing across multiple industries.
  2. Convert national R&D to national wealth and security. The study concluded that technologies invented here are being licensed, sold, or given away to manufacture overseas, which, in effect, is subsidizing R&D for other countries.
  3. Lead emerging industries. The United States must have a leadership position in emerging industries such as autonomous vehicles, robotics, multi-material additive manufacturing, bio-manufacturing, energy storage, advanced materials, and quantum computing, to name a few.

It’s an assessment that will resonate with manufacturers here, as do the ‘critical next steps’ cited by the report to address the challenges:

  1. Invest in transitional research and manufacturing innovation, including funding needed to develop operational prototypes, demonstrate manufacturability, and identify viable markets
  2. Encourage pilot production and scale-up. To restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

Are Kota and Mahoney’s prescriptions a better roadmap, a new benchmark, for success?

Weighed against the report’s grand challenges, certainly Colorado’s sector is still a work in progress. Colorado’s Industrial Commons — its companies, supply chains, regions, universities and colleges, production facilities, and talent — are unconnected and want for a unifying voice and vision. Financing and funding for early-stage companies, to fund pilot production and scaled operations, is difficult to secure. SMMs operate without the resources of tech and service counterparts.

But I wrote last year “the centers of modern U.S. manufacturing will tilt toward R&D-inspired, entrepreneurial economies also benefiting from an influx of talent and money.” It seems an apt description of Colorado’s economy. It’s a harder case to make for Kentucky and other perennial Conexus favorites that struggle to attract a highly educated workforce and lag in rankings of state economies, like here and here.

So what’s a fair grade?

Innovation, and an economy and lifestyle that’s a magnet for talent, should weigh more heavily in the state’s favor. Colorado is a destination for leading brands in dynamic manufacturing industries. Manufacturing is simply better here today than in 2009.

Let’s call it a C+. And next year, with progress on the steps outlined above, an end to Colorado’s Conexus conundrum.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.

3 companies, 3 trends: This week’s mix of profiles tells a larger story of trends shaping California manufacturing

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Last week I was fortunate to attend the California Network of Manufacturing Innovation’s conference, “Automation: The Next Generation of Lean,” at The University of California, Irvine. Among the messages from industry professionals speaking at the event: Automation is coming, get ready or get left behind; the implementation “gap” between large and small-to-midsize companies is Grand Canyon-like, but cobots and other entry-level robots provide a short-path to automation; and robots are not displacing workers, but enabling companies to reallocate labor to value-added roles.

It’s a key point, one echoed by owner Dave Kush in this week’s Axis Robotics profile. “I’ve seen people in manufacturing making the same part for 30 years,” he says. “When that repetitive task is automated, that same employee ends up learning how to program, run the robot, and oversee the process. In the end, they become more valuable to the company because they know what to do if there’s a breakdown. If they leave, they also take with them experience that makes them more valuable in the job market.”

As one conference panelist said, “We don’t see a lot of jobs being lost to automation. We see a repurposing of labor into areas that are value-added to the company.”

Even so, Axis’ Kush also sees a challenge for him and for other technology “integrators.” As ease of use improves and as the “interface” between robots and their human programmers becomes easier, integration firms will suffer. It was another theme at the CNMI event: When robots can program themselves, well, where does it end?

In Ventura, Swiss Productions GM Timo Lunceford is chasing opportunity by also investing in equipment — in this case new machines to more precisely fabricate the parts and pieces for bioscience and medical device manufacturers. Lunceford is driving growth by being more precise in what he currently does, innovation that’s enabling him to expand what he makes and assembles for key OEMs. “They’re realizing that getting five components from us, then having to assemble it themselves, is costing more than having us just ship them the completed part,” he explains.

It’s a trend we see in California manufacturing: Technology, processes, and OEM interest in retooling a domestic supply-chain are leading to a heightened competitive capability in the sector.

Finally, the seismic California cannabis manufacturing sector is transforming at a rate that will be viewed as no less than astonishing when we look back. Those who are not paying attention to the entrepreneurship and science now informing the sector may wish they had.

Dr. Jeffrey Raber’s The Werc Shop has already pivoted from testing lab into contract manufacturing, and the move has transformed the company. The staff has grown 30-fold in four years as revenue has been “doubling and doubling,” says Raber. “It’s hard to predict how big we can grow.”

It’s just another reminder that cannabis industry shares in the upside of manufacturing’s incredible resurgence, and at the same time benefits from its first-moving counterparts in the natural food and craft beverage industries. The pieces are all there: refined science and product testing, advanced production and quality control, and fast-changing product distribution and customer strategies. (Also read Eric Peterson’s important summary of challenges in California’s cannabis supply chain.)

What a time to be involved in California manufacturing.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

California gets a C in Conexus’ annual manufacturing scorecard. Here’s a better measuring stick.

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For the 10th consecutive year the Conexus Indiana 2018 Manufacturing and Logistics National Report graded California’s manufacturing economy a C. It’s cause for less concern than states like Colorado, where a 10th straight D leaves that state closer to Conexus flunkies in New Mexico and Alaska.

At the same time, it leaves America’s largest manufacturing economy stuck in average, looking up at Conexus’ annual favorites like Indiana, Kentucky, Iowa, and Michigan, who again led a Midwest sweep of the top scores, all As.

Here’s the grid:

I’ve taken issue with Conexus before. I think the methodology favors labor and industry statistics that underreport the reach of manufacturing’s value chain in industries like aerospace, food and beverage, and, in a modern twist, cannabis. How a state like California scores a D in Sector Diversification is also confounding.

Other studies have also emerged that seem a better benchmark to evaluate the health of manufacturing economies. Much has changed since Conexus began ranking states. Sridhar Kota and Thomas Mahoney’s brilliant but worrisome new report, Manufacturing Prosperity, A Bold Strategy for National Wealth and Security, is one.

The report’s a must-read, but it pointed to three grand challenges of American manufacturing:

  1. Rebuild the “Industrial Commons,” the set of knowledge and practical skills, supply chains and production capacity, materials and equipment, and overall industrial ecosystems that enable manufacturing across multiple industries.
  2. Convert national R&D to national wealth and security. The study concluded that technologies invented here are being licensed, sold, or given away to manufacture overseas, which, in effect, is subsidizing R&D for other countries.
  3. Lead emerging industries. The United States must have a leadership position in emerging industries such as autonomous vehicles, robotics, multi-material additive manufacturing, bio-manufacturing, energy storage, advanced materials, and quantum computing, to name a few.

The report cites these critical next steps to address the challenges.

  1. Invest in translational research and manufacturing innovation. Including, funding for the translational research needed to develop operational prototypes, demonstrate manufacturability, and identify viable markets is frequently unavailable.
  2. Encourage pilot production and scale-up, to restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

Are Kota and Mahoney’s challenges and prescriptions a better benchmark for success? I’ll say yes. California manufacturers are focused on these issues.

At minimum, a new scale provides room to move up the ranking system if progress can be made, something the Conexus model seems unable to provide.

We’ll track that progress throughout the year.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.

Two ways robotics and automation are transforming manufacturing in our backyard

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Manufacturing automation is in the news and in our profiles. Here are two or three takeaways.

Two weeks ago, I attended the California Network of Manufacturing Innovation’s excellent conference, “Automation: The Next Generation of Lean,” at UC Irvine. Among the messages from industry professionals speaking at the event: Automation is coming, get ready or get left behind; the implementation “gap” between large companies and the small to midsized majority of manufacturers is Grand Canyon-like — but cobots and other entry-level robots provide a short-path to automation; and robots are less displacing workers than enabling companies to reallocate labor to more value-added roles.

It’s a key point, one echoed by owner Dave Kush in the Axis Robotics profile in this week’s Colorado newsletter. Contrary to the popular narrative, many robotics deployments are enabling companies to free up employees to focus on more value-add work. As one panelists said, “We don’t see a lot of jobs being lost to automation. We see a repurposing of labor into areas that are value-added to the company.”

For one, the trend is changing what a Quality Control room looks like. Today in job shops throughout manufacturing, people are inspecting hundreds and thousands of the same part, nobly searching for minor imperfections. In five years, QC will be a fully automated function for many of these same companies.

(As a cautionary tale, a slower embrace of robotics and automation challenges the notion that collectively, U.S. companies are leading a global tech surge in manufacturing. For a more sobering assessment of productivity gains in the US compared to other advanced manufacturing countries, read this eye-opening feature in Quartz.)

I wrote last week that Swiss Productions‘ Timo Lunceford is chasing opportunity by investing in equipment at the Ventura-based company — in this case new machines to more precisely fabricate the parts and pieces of bioscience and medical device manufacturing. Lunceford is driving growth by being more precise in what he currently does, innovation that’s enabling him to expand what he makes and assembles for key OEMs.

It’s a trend we see more in California manufacturing: technology, processes, and OEM interest in reimaging a domestic supply-chain — all leading to a heightened competitive capability in the sector, in contract manufacturing in particular.

I couldn’t have written a better description for what’s happening at Colorado Manufacturing Award-winning Manes Machine in Fort Collins. I stopped in to visit CEO Bruce Page last week.

Page is also investing — on a larger scale. Manes is a best-in-class aerospace manufacturer whose calling card has been large, fabricated components in aircraft like Boeing’s 787 Dreamliner.

Page is increasing Manes’ competitiveness with robotics that connect multiple machining platforms, as state-of-the-art data management tools provide constant information to operators and managers. It’s a technology and automation play that is truly transformative. Page’s advanced machines are fabricating the same parts for Boeing’s fleet of airplanes, but with increased efficiency and access to data that’s improving company profitability and competitiveness.

But there’s more: The technology is fundamentally changing Manes’ workforce equation by attracting talent that a decade ago would have bypassed heavy contract manufacturing altogether. It’s also lessening the burden of training and retaining a workforce that’s become nearly impossible to replace. It’s the new face of manufacturing. We’ll profile Manes Machine later this summer.

As I also said last week, it’s an incredible time to be involved with manufacturing.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.