Five Colorado manufacturing predictions for 2021

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Here was my forecast a year ago of five Colorado manufacturing storylines for 2020:

  1. Food’s undersized brand gets a lift
  2. Technology’s oversized reputation gets an overhaul
  3. Will Colorado’s global manufacturing brands engage more locally?
  4. Industrial cannabis is here. Like, right here.
  5. It won’t always be this easy

I was partly right: 2020 certainly wasn’t easy! Let’s dispense with last year and forecast the promising year ahead.

Here are five Colorado manufacturing predictions for 2021, with a percentage guess as to the likelihood of each coming true:

1. Manufacturing’s beachhead expands as more companies evaluate domestic production options

The local and regional manufacturing comeback we chronicle every week is now a national story. In Five Predictions For The Manufacturing Industry In 2021, Forbes columnist Amar Hanspa belatedly forecasts:

We’ll see a shift to localized production. In 2021, the industrial manufacturing sector will take a page from the consumer-driven “farm to table” trend that has taken hold in the agriculture industry over the last decade, with a shift to localized production. This will primarily be driven by the threat of ongoing trade war/tariffs threatening global supply chains, encouraging manufacturers to move production activity closer to the customer. In the future, manufacturers will want to build where they sell for several reasons, including faster time to market, lower working capital, government policies, and increased resiliency. This won’t be an easy or overnight shift.

The “shift” is already underway. In Colorado, that spells growth. The state is on fire with companies in established industries like food, beverage, aerospace, and energy. Expect growth in new industries and sectors that have been more resistant to onshore production, like consumer and medical products, outdoor industry, and precision-machined parts.

Harry Moser, founder of the Reshoring Initiative and an authority on the economics of domestic production, ranked his top three sectors for CompanyWeek: “The hottest items in 2020 and 2021 are PPE and other medical products such as antibiotics,” he says, noting that “60 percent of companies reshoring production since March 2020 mentioned COVID as one cause.”

Moser continues, “Second, other essential or politically timely items with supply chain gaps, such as rare earth minerals, defense materiel, electronics, solar, and wind. Then, anything else now coming from China. Biden has said he will not end the China tariffs soon” — meaning companies manufacturing in China will be in the hunt for domestic options.

It adds up to a growth year for U.S. — and Colorado manufacturing.

Likelihood: 80%

2. Free trade is dead

Even before COVID, tariffs exposed America’s sub-par manufacturing supply chain, but more, the lack of a trade strategy. As The Wall Street Journal noted, Trump tariffs resulted in a mishmash of outcomes that benefitted well-connected companies, but left others wanting.

Instead, Colorado’s D.C. contingent should lobby for targeted protection in promising local industries like bioscience, where cheap and subpar Asian products handicap manufacturers here. President-elect Joe Biden has signaled a renewed commitment to manufacturing through the invaluable NIST MEP network. It’s a great start. Colorado Governor Jared Polis and his team at the Office of Economic Development and International Trade don’t set trade policy, but can also lead with a regional plan that accelerates promising manufacturing industries and fuels a more capable supply chain.

Manufacturing is “essential” again, free trade is an outdated notion, and a new U.S. industrial strategy should use tariffs and other tactics to protect key manufacturing industries and jobs.

Likelihood: 15%

3. Tactics to recruit and support manufacturing in Colorado get better

With the benefits of domestic manufacturing now in focus, the tactics to recruit companies and sustain more local production are improving. And it’s all about the supply chain. In 2020, companies responding to COVID-related supply-chain disruptions often stared down a lack of viable domestic options. This must change — and will, even if incremental improvements are the ’21 reality.

New manufacturing “places” are also fueling innovation in the supply chain. Real estate developments designed for “clusters” of complementary manufacturing businesses should continue to proliferate. Grand Junction, Fort Collins/Loveland, Montrose, Boulder County — these communities are in the game. Who will follow? And will it be enough to compete on a national scale?

Likelihood: 50%

4. Workforce health will become big business, and manufacturers will play a leading role

Manufacturing’s stock rose in ’20 in part because U.S. companies rushed in to fill the void in PPE. The trend continues in ’21 as manufacturers innovate to build solutions that keep our public places safe, but more, keep factories and consumer-facing production facilities like breweries and restaurants open.

It’s the latest noble endeavor for a sector that built the arsenal of democracy and landed a man on the Moon. Coronaviruses have no chance.

Likelihood: 60%

5. The FDA will finally provide regulatory certainty for hemp cannabis producers — and Colorado’s cannabis industry will explode

It’s unfathomable that we lack official data as to how many employees work in the state’s $1.5 billion cannabis industry; how many work in manufacturing vs. other functional areas; how many work at state-regulated, federally illegal THC producers vs. unregulated but federally legal hemp companies; or how much of the growth manifest in chemical or food manufacturing the past few years is attributable to cannabis.

Here’s what we know: When, in 2021, the FDA regulates hemp-derived CBD products as a dietary supplement or food additive (or both), the state’s nation-leading cannabis ecosystem will leap forward, again. For suppliers and service companies, ambivalent about cannabis today, it will be too late to jump on the bandwagon. Get aligned, find industry partners, advocate for Colorado’s homegrown industry — or watch from the sidelines.

Likelihood: 90%

Bonus forecast: CompanyWeek will report on 300 manufacturers in 2021

Here’s how we can help your company in 2021: If you haven’t been featured in CompanyWeek, send a note to Editor Eric Peterson to get on the editorial schedule. The CompanyWeek “tribe” will expand in ’21 and along with it, contact and connections with new business and trade partners.

Likelihood: 95%

Buh-bye ’20. Hello ’21.

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