2023 Manufacturing Forecast – 5 sure bets

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By Bart Taylor | Dec 13, 2022

By most any measure, 2022 was a transformational year for manufacturing. Here’s an early look at storylines shaping the coming year.

1. 2023 is the year of the semiconductor supply chain – who builds a roadmap that wins?

Arizona and Texas were among big winners in the semiconductor factory sweepstakes. But manufacturing communities across the U.S. anticipate a lift from the semiconductor surge. Who best navigates the opportunity?

We know a pile of money is about to be spent through the CHIPS & Science Act — it’s worth reviewing the scale of the plans. And we know the basics — money for community colleges and universities to train machinists and engineers, incentives to develop expertise and support for companies operating in a new semiconductor supply chain.

But what types of companies? In what roles? And where? How will semiconductor factories transform local manufacturing ecosystems in AZ, TX, NY, and OH? How should Colorado, Utah, California, or Washington position for growth? Should new coalitions or clusters be formed to support regional prosperity? Who does that? What companies participate, and how?

We don’t seem to know a lot about how semiconductor supply chains will evolve to sustain an industry of this size. 2023 will provide the roadmap.

2. More engineers will be hired in manufacturing than ever before (who’s counting?)

Manufacturing has long been seen as the “dirty end” of engineering. In 2023 that officially changes.

Tech jobs in manufacturing are about to become the big thing. Fueled by the semiconductor boom and uncertainty in the tech economy, more engineers will be hired in manufacturing than ever before.

3. 2023 will be a rough year for outdoor industry superpowers.

The retirement of VF Corp.’s CEO Steve Rendle portends a year of change in the outdoor industry.

Analysts have sloughed-off the Rendle retirement talk and have instead pointed to “worsening fundamentals” at VF as the reason for the change. In other words, the business is in trouble.

But it’s arguable that the entire industry is in trouble — and at a crossroads. The lofty ambitions and brand promises of its leading companies are running headlong into the messy realities of global operations — like decoupling with China.

If demand continues to weaken, companies may in fact seize the moment to make fundamental changes to better align operations with the professed mission of its leaders. 2023 could be a wild ride.

4. EV infrastructure and the Great Leap forward.

As heady an opportunity the semiconductor supply chain seems to be, don’t sleep on EV’s value chain. The electric vehicle market is forecast to grow about 20 percent year-over-year, and by 2028 to be a half-trillion dollar global market.

The West is already home to superstar brands in vehicle, component, and EV infrastructure manufacturing, and the latter may be the top growth opportunity. California’s Beam Global is only one innovator helping nervous drivers overcome “charging anxiety” as they take to the road.

Celebrate Tesla, but invest in the companies and visionaries transforming the transportation ecosystem into an EV-compatible network.

5. Musk’s distractions will diminish his manufacturing influence. Sadly.

In 2016, I was driving the Musk bandwagon.

At the time, Musk was waging pitched battles against the likes of Ford, GM, and NASA to overcome decades of entrenched resistance. The outcomes were as spectacular as the fury of the early standoffs.

Musk’s adversaries today are journalists and politicians. Get in line, brother.

There will be no equivalent payoff at Twitter. Taking sides in the public square poses risks for his car business, for one. More, the distraction will limit Elon Musk’s ability to lead the manufacturing revolution.

Bart Taylor, btaylor.media@gmail.com

Free trade is dead. For manufacturing, good riddance

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By Bart Taylor | Nov 29, 2022

I’ve argued, along with Harry Moser and others, for a new industrial policy that picks U.S. manufacturing “to win.” As contrarian a view this was a decade ago, there’s consensus today that we should do just that.

The list of desired outcomes reads like an economic manifesto:

  • Protecting key domestic manufacturing industries and nurturing new or reimagined sectors — like semiconductors
  • Providing incentives to localize manufacturing supply chains from offshore outposts, via new investments in domestic supply chains, or both
  • Accelerating the pace of automation in small manufacturers to overcome workforce shortages but more, to improve their global competitiveness
  • Aligning underutilized economic zones — including rural economies — with high-potential manufacturing opportunities

There’s more, but the big takeaway is that “free trade” is dead. The staggering loss of middle-class jobs, the transfer of wealth and expertise and infrastructure to offshore outposts, today underscores the hard lesson that nothing was free about free trade. Time to complete the policy scaffolding to protect and subsidize U.S. manufacturing.

Here are suggestions to update the protectionist playbook in light of recent events:

Work to roll back the value of the dollar

As tariffs or BATs (border adjusted tax) are used to level the domestic playing field, we should also work to improve the competitiveness of U.S. companies manufacturing at offshore locations in support of local consumers. America’s stalwart dollar is a problem. As the Wall Street Journal’s Bob Tita notes, “For U.S. manufacturers operating overseas factories, their sales in foreign currencies are worth less in dollars now because of the unfavorable exchange rates caused by the strengthening dollar.”

The fix is straightforward: jettison “market-based” thinking and intervene to manage the value of the dollar. Robert Blecker of the Economic Policy Institute outlines the path forward: “The dollar has not fallen compared to the currencies of the developing nations that now account for more than half of the U.S. trade deficit. Some of these nations, especially China, maintain fixed exchange rates and intervene heavily to prevent the type of market-driven adjustment that is now occurring between the dollar and the euro. As a result, relying on financial markets to bring the dollar down is not enough. More active management of the dollar’s decline including cooperation with major U.S. trading partners and action to end foreign manipulation of currency value is vital to ensure that the dollar falls in a comprehensive and sustainable fashion.”

Focus grants and loan programs on uptooling small manufacturers

Economic development can be a miasma of local and regional assistance for business that lacks focus or operates at cross-purposes. Whatever the case, well intentioned efforts often fall flat.

There should be no confusion today about what U.S. manufacturers need from development funding: targeted manufacturing-related grants, awards, and loan programs that facilitate automation and tech-fueled upgrades. Full stop. Uptooling U.S. manufacturers today achieves a rare trifecta of outcomes: improved processes that result in better products, relief from a tight labor market, but also workforce development, as technology attracts a new generation of employees.

Tap in to manufacturing’s nerd appeal

As the “tech wreck” leaves STEM grads uncertain about a career in tech, manufacturing is today poised to fill the career void for this wave of nerdy talent. The timing couldn’t be better. Investments in technology provide manufacturers with a calling card for talent that’s long eluded them.

But the latest wave of technology layoffs this fall has been met by a tepid response from manufacturing brands and associations who otherwise should be coordinating a full-blown recruiting campaign to attract this generation of STEM talent.

At its core, the dissonance between what should be done and what is being done can be chalked up to what Glenn Plagens, CEO of Colorado MEP Manufacturer’s Edge, called the need for “community players coming together again to determine what the next steps are.” In other words, the ongoing challenge of developing a more connected manufacturing community.

Nevertheless, developments today are trending toward alignment. If a concerted national campaign that emanates from Washington D.C. is a bridge too far, coordinated local efforts that highlight manufacturing’s tech stars is an important next step.

It’s a straightforward tactic that, in addition to the others, will work to protect U.S. manufacturing at this important time.

Manufacturing is turning the corner on its workforce challenge, with technology as the catalyst

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By Bart Taylor | Jun 26, 2022

Jon Emont’s Wall Street Journal story, “How Singapore Got Its Manufacturing Mojo Back,” is required reading for city and state planners intent on developing more local manufacturing. If we read closely, Singapore’s experience is a road map for how manufacturing will likely develop in communities across America – and the news is good.

Emont first notes that Singapore’s manufacturing employment has declined as a percentage of the whole. For those who follow manufacturing, it’s a symphony of numbers we’re all familiar with. “The manufacturing sector’s share of Singapore’s employment declined to 12.3 percent last year from 15.5 percent in 2013,” Emont writes. “The number of manufacturing workers has shrunk for eight years straight.”

More: “The city-state had faced industrial decline, with World Bank figures showing manufacturing falling to 18 percent of gross domestic product in 2013, from 27 percent in 2005.”

Then manufacturing made a comeback, Emont says, “rising to 21 percent of GDP in 2020, according to the World Bank’s latest figures. Singapore government data shows manufacturing made up 22 percent of its GDP in 2021.”

The most telling number is how Singapore’s new manufacturing economy has fundamentally changed, to where today, “the share of manufacturing jobs held by resident workers classified as high-skill — professionals, managers, executives, and technicians — has risen by 8 percentage points to 74 percent last year.”

This is a huge number. As Emont concludes, “Manufacturing is becoming a white-collar profession in Singapore.”

One barrier to a full-on manufacturing comeback in the U.S. has been the perception of a dumb and dirty sector. If the global trend is similar, and we know it is, then American communities, many who flash significant assets fueled by R&D and technology, are poised to play host to more manufacturing.

On one hand, it’s counterintuitive: We equate tech economies with everything but manufacturing. But what’s evident is that technology will be the catalyst for more advanced manufacturing — and more jobs.

To be sure, America’s manufacturing workforce hasn’t reached “white collar” status; and it’s unclear what an ideal mix looks like in the U.S., home to an infinitely more complex and diverse economy. Yet Jim Watson, CEO of California Manufacturing Technology Consulting, told me earlier this year that “36.9 percent of manufacturing employment is in high technology” in the Golden State. (Watson has since revised that number up.) It may not be a precise equivalent, and we lag considerably behind advanced manufacturing outposts like Singapore. But the gist is the same: Manufacturing’s future workforce is trending high-tech. California, for one, will benefit.

Yes, companies must get on the automation bandwagon. Investments in new equipment and processes are the cost of entry to compete for employees. And as always, it’s our collective responsibility to upskill American labor. We owe it to manufacturing’s workforce.

But for communities intent on building a more robust and diverse manufacturing sector, today the intersection between high-tech jobs and growth in manufacturing bodes well. It’s no longer a stark choice: high-tech or low-skilled manufacturing jobs — but not both.

Tomorrow, advanced economies will be manufacturing economies.

CAMA must seize the moment and alter course to advance Colorado manufacturing

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By Bart Taylor | Nov 01, 2021

COLORADO

You could argue that CAMA – the Colorado Advanced Manufacturing Association – was kneecapped before it got started.

The association was formed just before I launched CompanyWeek in 2013. I said this in an August, 2014 column, “Change at Colorado’s OEDIT an opportunity to upgrade Hick’s Blueprint”:

“OEDIT prioritized manufacturing by establishing CAMA — the Colorado Advanced Manufacturing Alliance — at a time when confidence in the Colorado Association for Manufacturing and Technology, then CAMT and now Manufacturer’s Edge, had waned. CAMA’s now an important advocate for regional manufacturing. Manufacturer’s Edge has also benefited, free from obligations of a trade association to operate true to its federal charter as a service provider to industry.”

I also thought the new association held promise to cut through the confusion around the Blueprint’s 14 Key Industries. “Advanced Manufacturing” — CAMA’s namesake — was labeled a Key Industry, even though it’s not an industry, and most Colorado manufacturers weren’t “advanced” at all, as much they aspired to be. For me, the upgrade to the Blueprint was that CAMA would build a true statewide, industry-wide, coalition of manufacturers — including low-tech producers in Colorado’s high-growth industries.

The model that made most sense to me was one in place across the U.S., then and now. CAMA would represent a cross-section of manufacturing interests as the state lobbyist for manufacturing, and from this clear mission grow and develop, much like CMTA in Sacramento, UMA in Salt Lake City, and TMA in Austin.

That didn’t happen. I’m sure that CAMA architects Ken Lund and Noel Ginsburg had good reason.

One explanation is that Chuck Berry, the influential CEO of the Colorado Chamber of Commerce, was already doing it. Berry had assembled a powerful but small group of manufacturers — blue chippers like Reynolds Aluminum and Ball Corporation — in a manufacturer’s council. Whatever the reason, the model prevailed.

In my opinion, it’s not the best approach. CACI lobbies for multiple industries and sectors, on issues important to business. They do great work. But the most effective way to strengthen Colorado manufacturing and compete on a national level is to have the industry trade association working the statehouse, in a coordinated manner, around issues important to manufacturing. More, CAMA and Colorado are at a disadvantage without the alignment.

Timing may be on CAMA’s side. Chuck Berry is retiring. CACI will have a new CEO.

CAMA and OEDIT must seize the moment and work with CACI’s new leadership to effect a change that benefits both entities.

The Polis administration can also leave its mark on Colorado manufacturing with a sector “blueprint” of its own. I’m rooting for the following:

  • Relaunch CAMA along with the clear and exclusive mission of lobbyist for Colorado manufacturing. Require more transparency and accountability.
  • Establish a new Advanced Industries grant program for consumer brands including the outdoor industry. This was articulated clearly by local manufacturers to leaders of the Colorado Outdoor Recreation Industry Office in a meeting I hosted in August. In a manufacturing ecosystem of small businesses, companies are desperate for new technology and need help in acquiring it. Rama Harris’ AI grant program is so important. It should be expanded.
  • Update the current blueprint: Colorado’s spectacular food and food manufacturing sector is a Key Industry, fully independent of Agriculture. Outdoor Recreation is more — it’s Outdoor Industry. And what of manufacturing’s Enabling Technologies?
  • Embrace the cannabis sector to create a new manufacturing workforce. I’ve heard manufacturing leaders say they don’t “support marijuana.” Wishing cannabis would go away isn’t a responsible policy position. Hundreds of Colorado young people are today cannabis manufacturing employees. Let’s keep these kids in manufacturing by providing alternative industry career paths, if they choose, that leverage their experience. Manufacturing is desperate for their services. Celebrating, not vilifying, their chosen industry, is a first step.

Other ideas? Send them to me. We’ll provide the platform to showcase a wave of modern thinking around the sector.