Manufacturing Day, RIP

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This column originally appeared in October, 2017.

On one hand, Manufacturing Day, an event dreamed up by the National Association of Manufacturers in 2012, serves a useful purpose. Americans are in need of a reawakening to the potential of manufacturing employment, for the benefit of their families and our communities. The Day has become a showcase of manufacturing jobs, with companies throughout the nation opening their doors to high-school kids and undergraduates. As today’s factories are certainly a far cry from several generations ago, it’s useful for kids to see the modern technology and clean rooms of today’s manufacturing and by all accounts, the Day was a rousing showcase of modern manufacturing.

On the other hand, we’ve moved on. Manufacturing is more relevant than Manufacturing Day imagines, even though we continue to conjure up the image of a Pittsburgh steel plant to contrast the new manufacturing economy and use the day to bemoan a negative perception of the sector. It’s more likely these dated images reside mostly in the minds of business columnists who’ve never made or bent or cut or shaped anything without an eraser on one end and a ballpoint on the other. (An official objective is to “change public perceptions of manufacturing.”)

Instead, Manufacturing Day should also be reimagined. Where activities and pronouncements earlier this month worked to reinforce negative stereotypes, a new Manufacturing Day would embrace a national mission to overcome shortcomings that continue to weigh on growth, in addition to workforce.

Let’s keep it simple and focus on two outcomes:

Provide direct support for early-stage and middle-market manufacturing. We could count the ways, but tax cuts masquerading as tax reform are one example of economic policy that helps large corporations and National Association of Manufacturing members, but does little to tip over decades of paltry investment in early-stage manufacturing companies and workforce.

The notion that U.S. corporations are suffering because of punitive tax rates is folly. The opposite is true. They’re killing it. The price-earnings ratio of the stock market the past 20 years has been 70 percent higher than the previous 100. The profit margins of U.S. corporations have been 30 percent higher.

But these extraordinary profits aren’t translating into jobs, into a middle-class employment rally. Again, the opposite. Companies aren’t using these dividends to build new plants in the US. They’re buying back stock, in part to drive stock prices higher. Great for stockholders, bad for growth. It’s a mindset that also diminishes the creation of new companies. The number of people working for companies one to two years old is half of what it was 20 years ago.

Tax reform would direct proceeds from any tax-cut windfall to investments in new companies and factories, capital equipment, and infrastructure. Germany and other industrial powers set a GDP target for manufacturing investment. A meaningful tax reform outcome for manufacturers would be reinvestment to drive U.S. manufacturing GDP back over 15 percent — an outcome that requires a new commitment to early-stage and middle-market companies.

A national effort to reconstitute the domestic supply chain. I’ve said it before: manufacturers need, well, everything, and much if it has been offshored or remains out of mind in our stilted view of what a ‘global’ economy should look like.

A supply-chain transformation begins with a forceful argument for what manufacturing is. For the first time in four years, since launching CompanyWeek, I heard a National Public Radio journalist refer to a distiller as a manufacturer. Progress! Manufacturing today is an eclectic mix of industries and companies.

Communities that embrace a new industrial future will develop resources, real estate, financing, talent and contract manufacturing for food startups, high-tech fabricators, brewers and distillers, outdoor industry, and bioscience and aerospace companies. And invest in services and technology that better connect manufacturers with each other and the supply chain.

This is a ground-up call to arms. It doesn’t begin in Washington D.C. It’s not a NAM-inspired marketing program. The National Association of Manufacturing is a phantom to 95 percent of manufacturers, most of whom are small businesses.

Let’s instead turn Manufacturing Day into a week or even a monthlong effort to connect entrepreneurs and middle-market companies with domestic resources that help them keep business investments in everything, including talent, local.

In other words, Manufacturing Day has runs its course. More connecting, and less caterwauling, is the true north for sector development. Let’s get on with it.

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

Five reasons why manufacturing jobs are coming back to stay

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Last month after taking a shot at Forbes columnist Tim Worstall for his snarky column, “Manufacturing Isn’t Important But Factory Goods Orders Are Rising — That’s Nice,” I heard back from Worstall in a cordial if combative response.

Among other things, I’d argued that his habit of diminishing manufacturing simply because companies move it offshore undermines the sector by undervaluing it. Worstall wouldn’t have it. He responded, “I am not saying that manufacturing shouldn’t happen. I am saying that it’s entirely unimportant that it happens in the U.S. or not.”

I invited Worstall to Colorado to debate the proposition, as I disagree with his premise and his clarification. But our friendly, in-person spat will have to wait, as Worstall’s ensconced in Portugal.

Perhaps his colleague at Forbes, John Tammy, will accept in his stead. Tammy is also anti-manufacturing, as evidenced by his shortsighted missive published a few weeks later, “When They Promise To Bring Back Manufacturing Jobs, They’re Promising Stagnation.” Tammy chides that manufacturing jobs are a vestige of the Civil War era, when “New York was a city of factories.” He adds, “Lest we forget, it’s where the talented migrate, and the talented disdain low-wage, back-breaking manufacturing work. So have American workers of all stripes left manufacturing employment behind.”

This surprisingly common theme in the business press, that manufacturing and a modern U.S. economy don’t mix, runs headlong into a different reality on the ground. Manufacturing jobs are coming back, reshored or contemplated in the U.S. first, despite the protests.

Here are five reasons why:

  1. Consumers want more stuff made here. More than ever, we now care about where products are made, for reasons involving health and wellness, convenience, product quality, social and economic accountability, and other issues.
  2. Brands want to make more stuff here. In response to consumers, and for other compelling reasons including cost, access to technology, brand integrity, and social responsibility, the trend in product management is for companies to shorten supply chains in support of domestic manufacturing.
  3. Rise of the new tradesman. Today’s high-tech, entrepreneurial, manufacturing sector will continue to get traction with families and undergrads, and a new and viable career path is emerging. Elon Musk and others are providing inspiration by rewriting the rulebook, seeking out a generation of new U.S. tradesman, many armed with advanced degrees. This from Ashlee Vance’s Musk biography, on the hiring process at SpaceX: “Most attention goes toward spotting engineers who have exhibited type A personalities traits . . . who excel at robot-building or haves built unusual vehicles. The object is to find individuals who ooze passion . . . and have real world experience bending metal.” Experience bending metal. How great is that?
  4. Domestic manufacturing is now a national security issue. There’s widespread acknowledgment that along with our collective manufacturing acumen, we’ve also offshored technology and advanced processes to places like China, countries that use this knowledge to compete against American companies and employees. We’ll manufacture more products domestically as a result. The move last week by the U.S. to block the Chinese government’s attempt to buy Lattice Semiconductor is a trend, not an isolated incident.
  5. The economics of global manufacturing are changing — to the benefit of the U.S. The cost of production is rising sharply in places that today are production destinations for American brands. The purely economic rationale to offshore manufacturing is fading.

The straightforward means to accelerate the trend and establish a new manufacturing labor class is to focus on the domestic supply chain. Companies that want to make more products in the U.S. need more of, well, everything.

Support of the domestic supply chain is a clear litmus test for any trade association, economic development entity, elected official, or academic leader that claims to support manufacturing.

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

Bold steps needed to advance a national manufacturing blueprint

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Somewhere, on a Forbes magazine list of most-hated professions, manufacturer must appear just above lawyer and journalist.

It’s one explanation for the manufacturing-related musings of columnist Tim Worstall who, in a snarky column last month entitled Manufacturing Isn’t Important But Factory Goods Orders Are Rising — That’s Nice, proclaimed of manufacturing:

“It just doesn’t have all that much relevance in a modern economy. I mean, sure, it’s nice, manly men have been doing more manly things with machines and all that, but in terms of how it affects the rest of the economy we’re down at a level of significance where, well, it doesn’t. Affect the rest of the economy in any manner we’ll notice that is.”

In working up a response, I instead fell upon Fast Company’s saving feature, 25 Brands that Matter. Of the 25 “companies whose products you love to love because they stand for something more than merely what they sell,” eight were manufacturers, and two of the top five. It’s a beautiful repudiation:

By Fast Company’s reckoning, technology and manufacturing companies are the pin-ups of the U.S. economy.

It’s unlikely that FC’s editors or readers will draw the same conclusion, let alone Worstall. Today, Apple is known as technology company, Patagonia an outdoor industry brand, and Nike a sporting goods giant.

We’ve been okay with these labels because manufacturing’s been something companies just do offshore, out of sight and out of our globalized view of what should constitute a “modern” economy. But until manufacturing is considered the full extension of a brand’s identity, America’s sector will continue to be marginalized.

It’s ironic that voices emerging to challenge conventional wisdom are often not mainstream business media but instead entertainment-and-culture rags like The New Yorker, who last week explored manufacturing’s conundrum in Joshua Rothman’s smart column, “Should We Subsidize Manufacturing?”

He does all of us a favor by collating the thoughts of economists, industrialists and sociologists like Louis Uchitelle, author of Making It: Why Manufacturing Still Matters. For this group, America’s relationship with manufacturing is cultural as well as economic. As a result, a retreating sector tears at the social fabric of the country.

Uchitelle’s ideas are especially thought provoking. For one, he argues that Americans “are in denial about the importance and prevalence of subsidies.”

From Rothman’s New Yorker piece: “Our factories have always been ‘semipublic institutions’ funded, to a surprising degree, by taxpayer dollars. ‘The false premise that manufacturing is a free-market activity — that subsidies don’t exist or are inconsequential — should finally be put to rest,’ Uchitelle writes. ‘No one anywhere in the world makes steel or autos or shoes or virtually anything else in a factory without subsidies.’ Uchitelle thinks we ought to subsidize manufacturing more, and more rationally. We should also recognize that, when we decide not to subsidize manufacturing, we are deciding to kill it.'”

Uchitelle’s prescriptions are bold: “Subsidies should be increased, and their role emphasized. The dollar should be devalued to encourage exports and slow the financialization of the economy. Import tariffs should be raised and trade agreements renegotiated. Taxpayers should have more say in where factories are located: similar factories should be built near one another, ideally in or near densely populated cities, to strengthen the industrial base and force companies to compete for workers. ‘Buy American’ clauses should be extended: Uchitelle notes that the glass in the new World Trade Center was made in China, as was the steel in the new Verrazano-Narrows Bridge.”

And the coup de grace: “A G.D.P. percentage target for manufacturing. In the nineteen-fifties, twenty-eight per cent of G.D.P. came from manufacturing; today, it’s twelve, and only Britain and Canada lag behind the United States in manufacturing output. Uchitelle argues that a figure of seventeen per cent would put us in line with other industrialized nations. In Germany, he points out, ‘manufacturing output has generated a steady 22 percent of the national income year after year for at least seventeen years, and the government is quite open about its participation.'”

With the the current dialogue stuck at ‘how important is manufacturing?’, bold steps like a G.D.P. target can seem a bridge too far. On the other hand, a new, disruptive agenda may be exactly what’s needed to reorient policy makers, and reticent business columnists, to a new manufacturing reality.

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

Outdoor Retailer’s a coup, but outdoor industry brands need more than a trade show to thrive

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We often beat the drum about the outdoor industry’s promise for manufacturing growth. Last week’s news of Denver’s successful bid to land Outdoor Retailer (OR), the industry’s most important trade show fumbled away by Utah, again highlights prospects for a new industrial play.

Here’s the opportunity in a nutshell: Of the thousand or so brands traveling to Denver in January 2018 to exhibit and take orders from retailers across the globe, most manufacture offshore. Yet more and more want to shorten supply chains and make more things in the U.S. Manufacturing economics increasingly favor local production, and importantly, so do millennial buyers.

The measure of how successful any city, or state, or region will be in developing the outdoor industry will depend not only on who reaps the tourism and service-sector windfall from convention business, but on who will develop supply chains for companies poised to create jobs to manufacture the toys of this multibillion dollar industry.

Is Colorado a better location than Utah (or California for that matter) as industry expands? The irony of OR’s move is that Utah has been better at recruiting outdoor brands than Colorado. Development of Ogden’s outdoor industry (OI) cluster has been deliberate — and successful.

But the industry’s power players bluntly demonstrated that OI’s progressive bent is a better fit in Colorado than in more conservative Utah, a reality that lays bare the stark choice forced on OR’s constituents. In Utah’s misguided zero-sum game, it was either oil and gas development or the outdoor industry. OI lost.

Utah’s outdoor industry will rebound and thrive. So will communities that develop innovative new tactics, a new toolbox, to recruit OI companies.

Here’s a short list:

Consider industry-tailored business centers and accelerators. OI manufacturers require specialized supply chains. Communities that integrate the disparate components into new centers of innovation, a common practice in technology and other growth industries, will become magnets for companies and talent.

In an editorial celebrating Colorado’s OR ‘coup,’ the Grand Junction Sentinel cites city plans to develop “a business park that will cater to outdoor industry manufacturers” as an important next step. It’s a game changer if the initiative also includes: an education partner to provide workforce training, ideally advanced curriculum and degreed programs (Utah State today offers a degree in Outdoor Product Design and Development); advanced manufacturing technology and equipment; mentorship and coaching; and bankers and investors, legal experts, and other business service providers.

Techstars in Boulder finds emerging technology companies, funds them, coaches and trains their leaders, and connects them with national and global opportunities. Who will develop the first OI accelerator in the region? (See Oregon’s Bend Outdoor Worx.)

Develop warehousing and fulfillment services. As Bill Gamber, Honey Stinger and Big Agnes CEO, said last week, Colorado lags in important infrastructure for manufacturing companies. Warehousing space for inventory is a challenge, especially for smaller companies in Denver, where costs have skyrocketed the past few years; rail access and other transportation issues like I-70 make other markets like Odgen look very attractive. Communities able to navigate these challenges on behalf of OI companies will have a leg up.

Embrace new marketing tactics. States with exceptional outdoor tourism assets understand how to attract visitors, but efforts to recruit and retain manufacturing companies often lag. It’s easy to market a location as a destination for skiers. There’s less understanding on how to promote a place as a destination for companies that manufacture skis.

Invite all manufacturers to the party. In the fast-growing food sector, manufacturers are benefitting from advanced manufacturing solutions developed in other industries, like energy and aerospace. NFT Automation is providing technology that helps co-packers and single brands alike automate production. It’s a huge development, the expertise for which was developed in other industries.

The reservoir of industrial talent here outside of the outdoor industry is deep. Companies needing to fabricate products in metal and other advanced materials can find resources here, but the resources must be brought to the discussion. Local economic development leaders know the companies that can help. Rally established manufacturers to new opportunity.

Develop regional strategies and partnerships. The outdoor industry is a regional and national opportunity. State’s that work to connect companies with regional supply-chains are certain to benefit most. Today it’s common to meet OI companies born and headquartered in Colorado, Utah, and Wyoming, with manufacturing in California.

Locating relevant and qualified supply-chain resources throughout the region will be a valuable service to OI companies.

Luis Benitez, director of Colorado’s Outdoor Recreation Industry Office, seems the right person to bring the industry together, across state lines. He’s been a collegial voice throughout a difficult time for the industry. “I think the most important aspect of this process,” he told me, “is to understand that whether it is Utah or Colorado or anyplace else in the country, the outdoor recreation industry has the opportunity to rise above politics, and show that the things we support and cherish know no borders or boundaries.”

Two years or so after Colorado copied Utah to establish a state-level office and appointed Benitez as its leader, Utah officials lost their minds and a billion-dollar OR windfall to Colorado. Last week’s high fives aside, Benitez’ comments are welcome salve. But if Colorado is to copy Utah industry’s success, the hard work’s just beginning.

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

Rust Belt bias flunks the 2017 Manufacturing and Logistics National Report Card

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Last year, the 2016 Manufacturing and Logistics National Report Card from Ball State University in Indiana raised eyebrows in Colorado’s manufacturing community when we reported the state was given a D. The bad grade provoked well-intentioned efforts to assess the state’s manufacturing shortcomings.

This year, our footprint has expanded west to include California and makes for an even larger data set to parse. Here’s the 2017 Manufacturing and Logistics National Report Card grades for California, Colorado, and Utah, the states where CompanyWeek now publishes.

There’s a lot to unpack here.

By the looks of things, the only subsector grade saving California from Colorado’s ignominious D in overall Industry Health is a A in Productivity and Innovation.

But in other states, including many in the Rust Belt, it doesn’t appear the overall grade correlates at all with subsector scores.

Consider Michigan:

Michigan’s A grade in overall ealth, without an A in the other categories, is a headscratcher. Likewise, Utah would appear to have earned a high overall grade.

The explanation seems to be that per-capita employment is weighted more heavily. According to the Report, Michigan’s manufacturing employment is 11.7 percent of the state economy, a high number compared with most states. The Report Card notes that 5 percent of Colorado employment, and 8 percent in California and Utah, is in manufacturing.

Is Michigan’s sector — or that of Indiana, Kentucky, Iowa, and South Carolina, other states with A grades for industry health — in better shape than California or Colorado’s because it has more jobs?

Maybe, but here’s why that’s a tough argument to make.

Manufacturing jobs have steadily decreased as a percentage of overall U.S. employment. Per-capita employment seems a dated metric; it’s yesterday’s measure of industry health.

That’s not to say workforce doesn’t matter. The opposite. Human Capital is the study’s most important metric. The lack of skilled labor is manufacturing’s biggest challenge — nationwide.

Today’s healthiest manufacturing economies are focused on developing the right workforce. What’s appealing to manufacturing companies is a future workforce flashing STEM skills. States experiencing a net in-migration of young talent, in economies with a rich R&D backdrop, is also a plus. Michigan’s D in Human Capital is telling, as is Kentucky’s D and South Carolina’s F.

Other criteria in the Report Card are important in the future. Sector diversification is manufacturing’s new calling card. Want to begin to solve manufacturing’s labor problem? Showcase its growth industries — beer and distilling, natural and organic good, technology-fueled fabrication in aerospace, and the outdoor industry — that appeal to a new generation. They’re the growth industries of the manufacturing economies in the West.

Global Reach is today a two-way street. Exports are only one side of the global manufacturing coin. Reshoring — shortening supply chains — is the flip side, and states developing manufacturing infrastructure to accommodate brands wanting domestic manufacturing will thrive.

Michigan’s recovery, with automotive manufacturing at the center, has been startling. It’s a testament to the power of industry innovation and deliberate economic development efforts to reimagine manufacturing in a key industry. Other states, like Tennessee (overall health: B+), are led by energetic and capable manufacturing leaders intent on bring new ideas to their communities.

But today manufacturing health will follow economies where talent enables innovation and communities understand the value of manufacturing jobs. If Michigan and other Rust Belt states leverage their manufacturing legacy to recruit a new generation of STEM-inspired employees to manufacture a widening portfolio of industry products, an A will be well-earned.

Otherwise, the centers of modern U.S. manufacturing will tilt toward R&D-inspired, entrepreneurial economies also benefitting from an influx of talent and money.

The race is on, and more than good grades are in the balance.

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

Defending Ivanka, Inc.: Trump can silence her critics by investing in U.S. apparel production

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U.S. apparel brands are working hard to improve working conditions in overseas factories that manufacture their products. But when should a brand invest in U.S. jobs instead?

If only the The Washington Post would have explored this question in last month’s takedown of Ivanka, Inc. We’d of learned more about Ivanka Trump’s operation and the apparel industry at large.

Instead, the paper settles for a political hit on Ivanka Trump that largely falls flat. Under the simple headline, Ivanka, Inc., the story trumpets,

“The first daughter talks about improving the lives of working women. Her father urges companies to “buy American.” But her fashion line’s practices collide with those principles – and are out of step with industry trends.”

The author’s real objection is that Ivanka, Inc. manufacturers offshore, at all. In related video content entitled ‘Here’s what Ivanka Trump has been doing in the White House’, the paper boasts,

“A Washington Post investigation revealed that Trump’s clothing line relies exclusively on foreign factories in Asian countries. That’s despite the administration’s call to “buy American.”

But most apparel companies rely on foreign factories in Asian countries and couldn’t manufacture here even if they’d like (many would like). Some investigation.

Kelly and Will Waters of Telluride’s homegrown brand Western Rise are navigating a global supply chain to build an apparel brand. I asked Kelly about her operations — Western Rise manufacturers offshore — the Post‘s story, and the challenges of manufacturing onshore.

“It’s a complicated, multifaceted issue,” Waters begins, “in that a lot of manufacturing jobs can’t come back because we don’t have the factories available, we don’t have the fabric suppliers here, we don’t have the workforce available, to sustain that level of manufacturing — and also to sustain it at the price the American consumer has come to expect as reasonable for their apparel. I think that’s one part of it.”

She continues, “One of the other things that can be difficult for apparel manufacturers, and I know this was mentioned in the article, is that very few manufacturers own their supply chain, and because of that, it can very difficult to regulate that supply chain, and the ethical practices in the mills and factories doing work for you. It becomes even more difficult when you use a third person, as was mentioned in the article, a ‘middleman’ you hire to negotiate rates with all these mills and factories. It’s another degree of separation between you and your supply chain, which makes it that much more difficult to check in on things like labor, and environment, and work hours, and the sustainability of the fabrics, or water consumption and environmental footprint of the factories you use, and all of the things that get looked at. It’s very difficult when you have that degree of separation.”

Waters has eliminated the middleman. “We source all of our fabrics directly with our mills,” she says, “and we contract work directly with our four different fabric and apparel factories.”

But bringing production to the U.S. is no simple task. “Short of billions of dollars in investments and state of the art facilities,” she adds, “it’s going to be hard.”

Who better than Ivanka Trump to invest in apparel infrastructure? If only the Post would have asked.

Where Ms. Trump shouldn’t be held to a different standard despite her high-profile father’s exhortations, Ivanka Trump, the company, can reasonably be expected to invest in U.S. manufacturing infrastructure, in keeping with President Trump’s message. The company has resources, influence, and a bully pulpit to effect change.

Waters has an idea where to begin. “I think the place you start is workforce training, but I would hesitate to say workforce training in the traditional cut-and-sew manufacturing process. I think we’ll see manufacturing come back to the U.S. is in the areas we excel, which is creative problem solving and technology, and things like 3D knitting, which we could house here in the United States, and what we need to run them is people who are familiar with code, versus people that are familiar with flat lock stitching. You’re talking about building an infrastructure from the ground up. And to be honest, we’re not going to be able to compete with Bangladesh and Africa on cut-and-sew prices and hourly wages for employees. We need to compete in areas where we have strength.”

Can Ivanka, Inc. evolve to where it’s a change agent in fashion apparel production? Trump’s low-cost, mass-merchandising product strategy also feeds the very offshore production system that U.S. brands view as unsustainable. It’s a brand strategy that Hap Klopp, founder of The North Face, calls the ‘race to the bottom’ — high volume, cheap products for the consumer and low margins for the manufacturer. Up and coming U.S. brands embrace the opposite.

If not Ivanka Trump’s company, Colorado and the region are home to a cadre of brands and entrepreneuers reimagining the global apparel supply chain. More are on the way. Of the thousand or so brands coming to Denver this January for the city’s first Outdoor Retailer, most manufacture overseas. As a regional blueprint for apparel production evolves, the possibilities for growth are intriguing. We’ll dig deeper into the concepts and people leading the discussion next time.

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

Why we write about manufacturers—and what we’ve learned since 2013

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As we expand into California this week after telling the story of 700 or so manufacturing companies in Colorado, Utah, and across the region, it’s a great opportunity for us to revisit why we launched CompanyWeek, and assess what we got right and wrong.

Reason #1: There’s a renewed passion for making things, and companies are transforming entire industries.

What we saw: In Colorado and much of the West, a wave of companies is breaking all the rules about manufacturing. Natural and organic food brands, craft brewers and distillers, entrepreneurs in outdoor industry, engineers and designers in aerospace and bioscience, industrial upstarts rediscovering technology — all, and at once, are transforming America’s manufacturing brand.

What we got right: The wave shows no signs of cresting. Trends favor a continued renewal of domestic manufacturing.

What we got wrong: The Boston Consulting Group noted that, “The U.S. manufactures $3.4 trillion worth of goods annually, nearly three-quarters of what it consumes.” Like everyone else, we called America’s new focus on manufacturing a renaissance. It’s more like an awakening, to new possibilities.

What we learned: For communities having success with manufacturing, industry clusters typically fuel supply-chain development that begets manufacturing. A lesson for developers: Decide what industries are a fit, and develop ecosystems to support and recruit companies. Boulder, Colorado, Ogden, Utah, and San Francisco are thriving manufacturing towns today because of cohesive industry strategies, around food, outdoor industry, and a thriving maker movement.

Reason #2: Powerful trends make the economics of American manufacturing increasingly competitive on the global stage.

What we saw: Companies are weary of managing global supply chains, especially with costs for overseas production on the rise. Today it’s often as expensive to manage factories overseas as manufacture domestically.

What we got right: A new cost equilibrium will keep more manufacturing jobs here, or nearer-shored.

What we got wrong: The domestic supply chain continues to limit growth. Ready to scale an apparel brand and want to keep cut-and-make local? You’ll search far and wide, and may near-shore, to Mexico, in lieu of a domestic manufacturer. We’ve not trained a new generation of apparel technicians, using the latest technology, in decades. We simply can’t reshore or develop some manufacturing jobs.

What we learned: Today, early-stage brands favor local inspiration and production. Shorter supply chains are now brand objectives. Millennials don’t want their food grown and shipped across entire oceans, or their favorite garment made for dollars-a-day labor.

Reason #3: Media have lost interest in manufacturing.

What we saw: Manufacturers lament the public’s perception of their sector. They call it the “Four Ds”: dirty, dumb, dying, and dangerous. It’s far from that, but as companies turned overseas to make things, media tuned out.

What we got right: Business media still can’t agree on the importance or significance of manufacturing — whether it’s a single industry or a service sector; whether a technology company that makes things (think Apple) is a tech brand or a manufacturing company; or if a thriving manufacturing economy alongside technology and service is integral to prosperity or not. Today, manufacturing bewilders business media.

What we got wrong: Media’s important, but industry and other business stakeholders are the arbiters of manufacturing’s success.

What we learned: It’s manufacturing’s responsibility to reimagine how the sector is perceived — and where investments in the manufacturing brand must be made or reconsidered. Media’s complicit in under-reporting the sector’s far-reaching impact, but it’s time for industry to make different decisions to promote its interests.

On that note, the best way to understand manufacturing is through its compelling companies and leaders. We’ll publish a standalone California edition of CompanyWeek, and in every issue, we’ll profile three of four of California’s finest manufacturers. Their stories are the real narrative of a modern, transformative sector.

We’ll do so monthly until the fall, when we’ll publish every week. Here’s why manufacturers in Colorado and Utah have come to value CompanyWeek.

Our journey in California begins this week.

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

Pittsburgh not Paris: Who will benefit as manufacturing’s growth industries surge?

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The notion that U.S. manufacturing is “coming back” has always been a misnomer. Most of the goods that feed America’s consumer-driven economy are still made here.

As Harold L. Sirkin of the Boston Consulting Group pointed out in 2012, “The U.S. manufactures $3.4 trillion worth of goods annually, nearly three-quarters of what it consumes.” It’s a staggering number.

But the story of modern manufacturing is also very much about the half-trillion-plus dollars of products U.S. companies make offshore, products often fabricated with less expensive labor sourced in overseas economies eager to accommodate cost-minded companies. In some cases, entire industries — like apparel — left the U.S.

What goes around comes around, and five years ago Sirkin identified seven industries at tipping points, industries poised to reshore manufacturing jobs as the economics of making overseas, especially in China, were becoming less attractive and brands were reawakening to the the benefits of domestic production. In 2010, these industries accounted for $200 billion in imports from China alone, or two-thirds of all Chinese exports to the U.S.

Sirkin’s forecast in 2012 of a new emerging price equilibrium that would have U.S. companies “reassessing their global manufacturing footprint” has generally materialized and, in some industries, accelerated. For example, Harry Moser’s excellent research at the Reshoring Initiative finds that U.S. companies are now reshoring as many jobs as they offshore.

The rising cost of labor in China and elsewhere is the main driver, but brand imperatives are also accelerating the fresh look at U.S. production. In emerging powerhouse sectors like the outdoor industry, companies view domestic production as key to brand authenticity and value. Today it’s counterculture for many companies to sell Millennial buyers products made with dollars-a-day labor. And that’s not to mention the tangible benefits of shortening supply chains to bring production closer to where products are designed, prototyped, and sold.

The trillion-dollar question: Where, or who, will land the jobs and business spend as industries and companies reimagine domestic manufacturing? Not only for the $200 billion-plus of product imported from China today, but for thousands of new companies that value “Made in the USA.”

Not Pittsburgh, Pennsylvania, according to some economic voices in the Steel City who were quick to run away from President Trump’s alliteration and from manufacturing. It was probably a knee-jerk reaction. The city’s R&D ecosystem is leading-edge and already instrumental in helping transform manufacturing to the high-tech, opportunistic sector reinventing itself across the U.S. Pittsburgh’s industrial future actually looks bright. How ironic.

So too are the prospects of Anytown, USA that values a new wave of brands that define success by quality, innovation, and responsiveness. Cities and communities who see a future in hosting brands that build great products, increasingly with robotics and automation, and, in so doing, are creating new middle-class wealth. Cities and communities around Denver, Salt Lake, Los Angeles, and San Francisco?

Time, and a trillion dollars, will tell.

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

Apparel and outdoor industry brands want production closer to home. Is Colorado a destination?

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Two regional developments promise to infuse much-needed expertise into the manufacturing supply chain. Last week, we reported on the Mountain West Advanced Manufacturing Network. This week: We look at Colorado State University’s National Science Foundation grant to study supply-chain dynamics in emerging clusters of small manufacturers.

The growing number of apparel brands looking to manufacture domestically face two big hurdles. One, there are simply too few qualified patternmakers and sewers. If there’s a poster child for a U.S. industry workforce devastated by the offshoring, it’s apparel. Today, about 5 percent of apparel purchased by U.S. consumers is made here. In 1960, that number was closer to 90 percent.

As we offshored jobs, we also stopped training the next generation of production specialists. In the process, we’ve lost much of our institutional memory on how to train new employees. Today there’s no blueprint, and no uniformity in methods, equipment, and leadership. We’re essentially starting over.

Carol Engel-Enright, Kelly Alford, and other local architects of a new apparel manufacturing infrastructure in Colorado have experienced this firsthand the past several years. Demand for a well-trained apparel and sewn-product production workforce is surprising strong. Has it outstripped the available talent? Maybe. Alford’s enterprise, The Whole Works, closed it doors late last year after a promising, highly publicized run ended with too few production specialists.

But setbacks have also proved helpful. Engel-Enright’s efforts, in particular, have garnered national attention. We chronicled the journey of the Rural Colorado Apparel Manufacturing initiative in previous columns, including an invitation from Walmart to apply for its Walmart’s U.S. Manufacturing Innovation Fund. RCAM lost out in the end.

Engel-Enright is also an internship coordinator and instructor in CSU’s Department of Design and Merchandising, and her persistent work to reconstitute apparel industry paid off in the form of a $385,000 National Science Foundation grant to the university, to study “the interactions and organizational development among emerging small manufacturing businesses, clusters, and a formal network, as supply chain partners.” If it sounds like an academic exercise, it is. But Colorado’s rural communities — RCAM communities — are a worthy testing ground to study supply-chain dynamics, including the “reported shift from vertical integration to dense networks of specialized suppliers that amplifies the contribution of small manufacturers to overall U.S. manufacturing growth and employment.”

Engel-Enright’s CSU grant is coup for the region. One possible outcome? The CSU Department of Design and Merchandising offers degrees in Apparel Merchandising with a concentration in Apparel Design and Production. The graduates of the program may be positioned to assume leadership roles in regional apparel manufacturing. It’s also an important step in developing a training blueprint for the industry.

One challenge that apparel manufacturers and close cousins in outdoor industry won’t have is a lack of demand. A wave of new companies now prefers to make things domestically, where brand values like quality, value, and responsiveness are more easily achieved.

It’s why brands are highly motivated to shorten supply chains and make products closer to where they’re designed and sold. Hap Klopp, founder of The North Face, outlined his reasons last month. Under Armour’s Kevin Plank told CNBC, “We should be bringing jobs back, not just to America, but tightening supply chains all over the world. We have the ability to do it better. It’s time for all of us to make an investment.” It’s why manufacturing will get its jobs back here in the U.S.

Can Colorado and the Rocky Mountain region be home to a 21st-century, cut-and-make infrastructure to accommodate the wave of new brands seeking domestic manufacturing? We’ll see. One one hand, the NSF grant already feels late to the party. Today, more than 300 outdoor industry brands call Colorado home, many that have overcome the talent crunch to build viable production capabilities, however small or geographically diverse. And entrepreneurs are streaming the West to launch new brands.

But RCAM’s already generated national interest. Colorado’s disparate eco-devo community would do well to help sustain the network as it finds its legs.

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

Why Utah and Colorado are collaborating to accelerate defense-industry diversification

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Two regional developments promise to infuse much-needed expertise into the manufacturing supply chain. This week we report on the Mountain West Advanced Manufacturing Network. Next week, we’ll review Colorado State University’s National Science Foundation grant to study supply-chain dynamics in emerging clusters of small manufacturers.

For the first time, higher education and industry from Utah and Colorado will collaborate in support of a regional advanced manufacturing supply chain, with Department of Defense dollars making it happen.

The Mountain West Advanced Manufacturing Network (MWAMN) will bring together the University of Utah and its new manufacturing extension partnership (MEP) center with Colorado School of Mines, Manufacturer’s Edge (Colorado’s MEP), and ADAPT, the Alliance for the Development of Additive Processing Technologies, created a year or so ago with an infrastructure grant from Colorado’s Office of Economic Development and International Trade. ADAPT is located at the School of Mines.

It’s a $3 million award, divided equally between Utah and Colorado, that will expand on the additive manufacturing work already coming out of the ADAPT center, connect Utah’s fledgling MEP to the research and data, and expand on the offerings by developing cloud-based repositories of information resulting from the MWAMN’s ongoing work. The approach is to develop advanced capabilities, in part through defense-related contracts, then use the expertise and knowledge gained to upskill and retool manufacturers to better compete in commercial markets.

According to ADAPT Technical Director Aaron Stebner, “This program creates a new manufacturing platform to advance economic and workforce resilience in response to changes in defense spending.” He adds, “Enabling manufacturers to deploy additive manufacturing processes helps diversify their product offerings, expand into non-defense markets, and provide resilient employment and value to their communities and the economy independent of defense spending.”

Tom Bugnitz, CEO of Manufacturer’s Edge, views the grant as a means to empower the next wave of commercially viable, high-tech manufacturers. “As these companies are especially hurt by the up-and-down cycles in defense spending, this project will help these companies use additive manufacturing methods to change from defense products to commercial products and back again quickly and profitably,” he says.

The University of Utah’s Bart Raeymaekers emphasizes the benefits of the data effort. “The data will be added to the cloud, and artificial intelligence will be employed to help establish links among process parameters and part performance. Ultimately, the cloud database will enable defense-related businesses to innovate new products, promote economic diversification, and accelerate product development cycles.”

The possibilities are intriguing. For starters, intra-state collaboration is a welcome development. States compete more than they cooperate.

Additive manufacturing, a.k.a. 3D printing, is at the center of much of the work. The parts and processes forthcoming from ADAPT’s work have already pushed the technology deeper into front-line production environments. Heidi Hostetter, vice president at Colorado machine shop Faustson and ADAPT’s industry board chair, notes the upside. “Today, building new parts or switching materials with this technology takes too long. Additive manufacturing holds the promise of enabling manufacturers to quickly adapt to changing market needs compared to traditional manufacturing methods.” She points to a case study involving Reaction Systems and its successful certification of a 3D printed prototype.

The Department of Defense and its Office of Economic Adjustment (OEA) is also sending a message that efforts to retool defense-manufacturers for commercial work will persist, despite growing pains with earlier programs, including SMART, the $6.6 million “defense-industry adjustment program” awarded to Colorado’s Office of Economic Development and International Trade (OEDIT) in 2014. The SMART (now FourFront) investment has paid some dividends, but defense diversification isn’t one of them.

OEA — and OEDIT — seem intent on getting it right. The public-private partnership model envisioned with MWAMN builds on work already underway. An OEDIT infrastructure grant funded advanced equipment that’s today available for members of ADAPT (and now Utah’s network) to utilize machines that, to be fair, might have benefitted the FourFront effort. Industry players like Ball Aerospace and Lockheed Martin are also more deeply embedded in this program.

In the end, the initiative will be evaluated on its ability to engage more companies, to spread the impact of taxpayer-funded programs and other investments. ADAPT’s off to a good start. Utah’s advanced manufacturers are world-class as are Colorado’s. But nothing resembling a functioning network connects the community. One that does so with expertise and information would be a fair payback, and if widely supported, provide a supply chain boost for regional manufacturing.

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