Before California, Washington, Oregon, Colorado, and Nevada announced the Western States Pact last month to coordinate a “shared approach for reopening our economies” in response to COVID-19, states in America’s West had already formed a loose confederation. The informal union lacked a crisis of COVID’s magnitude to codify ties, and an official name, but the regional amity on display has been long in the making.
With one exception: Economic developers still work within state lines, and the self-interest that drives local economies encourages the active recruitment and poaching of companies from neighboring states.
No doubt local officials in Colorado were cheering on Governor Jared Polis last week when he jumped into the dustup in California between Tesla and Alameda County to curry favor with Elon Musk. That’s what governors do. They’re chief sales officers, they lead by example, and the example continues to be that all is fair in love and the pursuit of your neighbor’s major employers.
States in the West also smell blood in the water in California. Companies in the Golden State can be vocal about their frustration with the business environment. A litany of complaints is long and well documented, and the path from Denver, Salt Lake City, Phoenix, and Portland to Los Angeles and Oakland well-traveled by officials looking to lure away a trophy manufacturer like Tesla.
But in this case, it seems a poor choice, one that also works to undermine regional prosperity.
As we document weekly, OEMs and brands require capable supply chains. In Colorado, Polis’ enthusiasm runs headlong into the supply chain reality that today, the state is unequipped to support an automotive brand like Tesla.
“Colorado’s supply chain, in its current state, could not handle the Tesla requirement,” offers Larry Caschette, president of Westminster, Colorado-based Metalcraft Industries. “I was approached by Tesla when they were building the lines for the Model X, and they wanted us to build stamping tooling for their Fremont facility. They needed 150 auto body tools in less than six months. That would take Colorado metal stamping companies as a group years to accomplish.”
We report on California’s robust transportation supply chain regularly, including Tesla suppliers like San Leandro-based Scandic. Say what you will about California’s warts, but the state is dotted with advanced aerospace and automotive suppliers.
That’s not to say Colorado, and others, are far behind. But it’s a two- to five-year proposition, says Metalcraft’s Caschette, involving money and focus. “We would need access to capital and incentives to be successful, in my opinion, and lots of outside management and investment.”
“But I like where it’s going,” he adds. “We’ve needed a couple big industrials in the area forever — more Ball, Lockheed, Arrow, and Vestas-type companies. Our supply chain changed quickly when Vestas came to town. It seems the big boys — Magna, AutoDie, ITW, any of the big stamping supply chain vendors — go where the work is and quite quickly.”
That’s the formula Colorado’s Polis seems intent on following: Recruit nameplate OEMs, and a supply chain will follow. It’s also a formula that’s left the state’s manufacturing supply chain inadequate to support — and recruit — more companies.
There’s an alternative approach, linked to the promising economic drivers working to make a Western States Pact viable in the first place.
Even before COVID, OEMs and brands were bringing production back onshore where possible and looking to expand domestic production. COVID will accelerate the embrace of domestic supply chain development, and it happens that America’s Western states are flashing the industrial acumen to lead the U.S. into manufacturing’s new era. Forbes writer Anna-Katrina Shedletsky suggested that “COVID-19 requires the modernization of manufacturing.” Regional outposts throughout the West will lead the way.
More, consider manufacturing’s growth industries. From defense-related aerospace to innovations in transportation to food and beverage, bioscience, pharma, and chemicals, the West is poised to play a leadership role. America’s epicenter of mission-driven companies also tilts West. COVID is accelerating the move by dozens of companies to reconcile unsustainable, legacy offshore manufacturing strategies with brand promises made to customers.
Can Utah, or Colorado, or Arizona alone lead America into a brave new world of manufacturing? Can California?
The easy answer is no. States like Colorado and California need each other.
Governor Polis would best help Tesla by working with California Governor Gavin Newsom and others to assess gaps in the West’s manufacturing supply chain, and respond with focus and energy to develop a region-wide ecosystem that helps OEMs and brands bring production onshore from China, or enables local companies to tap resources in neighboring states in lieu of Asia or Europe.
Expand the Western States Pact to include economic programs that tap into the natural synergies of the region. And be leaders in developing a new American federalism, shaped by regional cooperation.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Workplace wellness is manufacturing’s imperative — and opportunity
/in General/by Bart TaylorThe haphazard way we’ve managed the pandemic continues to add new wrinkles to manufacturing’s workforce challenge. The latest is the trend of parents leaving work for good to stay home with kids as schools remain shuttered. A month ago, it was only a possibility. Today, it’s a reality. Companies are losing key employees.
Whether schools would reopen wasn’t supposed to be a variable in the fall of 2020. But there’s good news ahead: Kids will go back to school. And communities will turn to science to keep the public safe. They’ll have to. “If we don’t test, we won’t have more cases,” is a ruinous path.
In fact the science seems straightforward: Test more and faster, and innovate to make places safer. Until there’s a vaccine, and even after, how we interact with each other will change.
Manufacturing’s role will be threefold: 1) Make and assemble the solutions that will help us manage social interactions in our places — tools that measure and monitor biometrics, distance, density, etc.; 2) Deploy those tools in our factories, as stores, bars, restaurants, and schools do the same; 3) Lead a workforce wellness movement that highlights the healthiest and safest locations in our community. Our maker spaces and places should lead the way. It’s a natural corollary to manufacturers’ role as essential businesses.
The outcomes for business will mean everything. Companies able to create safe spaces will do more than just keep employees healthy and happy, they’ll be at the center of a new focus on wellness that distinguishes communities and its best companies. The ubiquitous “best companies to work for” contests will take on new meaning as the stakes become higher.
The flip side is that companies that don’t take steps to ensure employee health will lose out in the long run. Innovation in workforce wellness will become as important as investments in the latest production equipment and technology. To put it another way, IoT and Industry 4.0 is today changed forever, to include the monitoring and management of human capital.
Successful companies will win the competition for employees as they change our public places. Manufacturers can lead, or lag. There’s no doubt the sector will lead. American manufacturing has a long and distinguished record of transforming a crisis to a new more productive society.
A guns-to-butter moment has again arrived.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
2020 CMA Preview: Cannabis Manufacturer of the Year
/in General/by Bart TaylorThe three finalists for 2020 Cannabis Manufacturer of the Year represent the diversity of operations in the cannabis sector, but more, the high bar being established by companies for quality and safety.
Nominations were judged on the achievement of national quality and safety certifications and best practices.
Stillwater Brands
www.stillwaterbrands.life
Commerce City
Founded: 2014
Privately owned
Employees: 19
Industry: Cannabis & Hemp
Products: Beverages and edibles infused with THC and CBD
Stillwater Brands’ innovations extend beyond their extensive product and process testing protocols to product development, where the patented water-soluble Ripple brands of CBD and THC products have captured the imagination of cannabis consumers.
Trusted suppliers in the company’s raw material supply chain provide continuity that translates into consistent product quality for both CBD and THC lines. THC distillate is quality-control tested “before receipt” for potency, color, and aromas pursuant to highly transparent protocols.
CBD products are third-party tested for pesticides, heavy metals, residual solvents, potency, and microbiology. Raw materials sourcing is from U.S. providers only, with a focus on Colorado.
Finished goods manufacturing focuses on maintaining low formulation tolerances in the manufacturing process, targeting thresholds common in the food industry that ensure product consistency, quality, and safety. Shelf stability testing has been a staple of Stillwater protocols to verify dosage control.
CompanyWeek profile: https://companyweek.com/article/stillwater-brands
Medically Correct / incredibles
www.medicallycorrect.com
Denver
Founded: 2010
Employees: 101
Privately owned
Industry: Cannabis & Hemp
Products: Cannabis edibles, extractions, and equipment
Sustained success — staying power — is at the center of MedicallyCorrect’s stellar reputation in the cannabis market.
The company follows an operational path that reflects a deep food background, with emphasis on quality ingredients, refined processing, transparent packaging, and for cannabis, dosage management. The company’s consistently safe and quality-focused product line earned trust for Colorado’s industry early on, critical in the industry’s run-up.
Community involvement and industry and product education effort also distinguish the company. Medically Correct’s influence — and sales — will only increase as the company attains cGMP and other certifications. Yet there’s little doubt the company is already an elite operator.
CompanyWeek profile: https://companyweek.com/article/incredibles
Hemp Depot
www.hempdepotco.com
Colorado Springs
Founded: 2015
Privately owned
Employees: 85
Industry: Cannabis & Hemp
Products: CBD-infused products
Hemp Depot topped off impressive growth with an NSF Dietary Supplements GMP certification in 2020, increasingly the de facto standard for cannabis manufacturing operations. (View the Gold List of GMP certified manufacturers.)
Yet the company’s innovative and persuasive model also set the business apart. It’s in a catbird’s seat — touching much of the hemp CBD market, vertical integration in developing, growing, formulating, and wholesaling CBD seeds, clones, and an array of CBD oil. Many of cannabis leading brands deal in Hemp Depot products.
It adds up to a powerful position in a fast-changing hemp CBD world — a singular mission to certify and professionalize operations to feed a blue-ribbon list of brands. It’s a market position that also comes with responsibilities. The company has been up for the challenge thus far.
CompanyWeek profile: https://companyweek.com/article/hemp-depot
Colorado’s cannabis economy leads the nation. The mayor of its second-largest city pretends it doesn’t exist
/in General/by Bart TaylorIf you wish hard enough, maybe it will go away.
That seems to be the approach of Colorado Springs mayor John Suthers, who argued recently to prevent voters from deciding whether recreational cannabis could be sold in the city. His “sharp criticism” of the option dissuaded the city council from approving a ballot measure this fall.
Suthers position was summed up by the Colorado Springs daily newspaper, The Gazette:
“Suthers also argued the promises made by recreational marijuana proponents when it was legalized statewide in 2012, such as reigning in the black market, have not been kept. ‘We are spending infinitely more time and effort regulating marijuana than when it was illegal,’ he said.”
It’s an obtuse statement for the ages. We’re spending more time regulating marijuana, because we’re regulating marijuana. Plus, not only have proponents kept their promises, the dark, dystopian future forecast by opponents of legalization hasn’t materialized.
Suthers shouldn’t be held to account for opposing legal marijuana. He’s been consistent in his opposition to it. That the mayor would instead relegate a billion-dollar industry to the black market is unconscionable for the leader of Colorado’s second largest city. Meanwhile, Colorado’s cannabis locomotive rolls down the track. Every month, the state’s residents demonstrate new and unwavering support for the industry’s products.
It’s a sparkling industry at that. Tomorrow we’ll announce the winner of the second Colorado Manufacturing Awards Cannabis Manufacturer of the Year. One of the finalists, Hemp Depot, is a Colorado Springs company that’s brought dozens of jobs to the city. They’re a national leader, one of a select few cannabis companies to receive an FDA-endorsed GMP certification for professional operations. They bring much needed science, transparency, and operational acumen to a legal hemp CBD market that further legitimizes the cannabis space.
Not that the mayor would know the difference between THC and CBD. For cannabis deniers, it’s all the same.
For the city, it’s more of the same. The professed need of denying citizens their vote is to protect the defense economy. Or as The Gazette surmised, “Opponents argued legalizing recreational marijuana could hurt the town’s chances of becoming the next permanent home for U.S. Space Command because the military would likely weigh the drug laws in competing communities in its decision.”
Left to generals, the U.S. military would do no such thing. Time and again, military brass sloughs off a conservative stereotype with progressive, modern leadership that reflects the makeup of their standard bearers — soldiers, sailors, airmen and women, and scientists. If the U.S. Space Command seeks a cannabis-free zone to host operations, they’ll need to look outside the U.S.
In the real world, if those in Suthers’ camp would embrace regulation and not work to undermine the industry with misleading nonsense, the black market would fade away.
Wish for it. Maybe it will come true.
Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.
2020 CMA Preview: Innovative Product of the Year
/in General/by Bart TaylorInnovation comes in many forms, and in this inaugural Colorado Manufacturing Award for Innovative Product of the Year, companies were asked to submit products distinguished by design-centered manufacturing, with the following criteria:
Guerrilla Gravity
Consumer product, cycling frames
www.ridegg.com
Denver’s Guerrilla Gravity has earned a reputation both as an innovative cycling manufacturer and outstanding business, flashing important operational achievements including a $250,000 Advanced Industries grant from the Colorado Office of Economic Development and International Trade.
Yet a tightly integrated design-to-manufacturing process is the company’s calling card. Highly configurable designs, inspired by local talent, take into account the unique challenges of frame manufacturing. The use of proprietary carbon-fiber technology, in-house molds and printed parts are among the innovations that enable manufacturing of cycle frames in Denver, tipping over an industry paradigm that for decades have sent cycling OEMs offshore.
The improved manufacturability of the final product is further reflected in leading aesthetic functional attributes of the product, like impact resistance in demanding terrain.
CompanyWeek profile: https://companyweek.com/article/guerrilla-gravity
TEI Rock Drills
Commercial product, HCC10X Control Unit
www.teirockdrills.com
The innovative HCC10X control unit was inspired by a customer request to improve safety on the job site.
The company’s successful response started with a design process driven first by meetings with relevant manufacturing departments to address design concerns and simplify the manufacturing process. Design engineers were then available to shop managers once production started, to address issues that were missed in the concept phase.
The product’s rapid development required the use of additive manufacturing to meet the tight deadlines of the project. A working prototype was operational within two weeks, bypassing a longer lead time required with traditional tool and die processes.
The control unit is also functional with multiple excavators, enabling customers to utilize the product with rented equipment, potentially saving thousands of dollars in transportation costs alone.
CompanyWeek profile: https://companyweek.com/article/tei-rock-drills
Eldon James
Commercial product, SeriesLock disconnect coupler
www.eldonjames.com
The notable medical device manufacturer has been awarded multiple patents for spring-free couplers that improve user functionality while maintaining high levels of flow with lower line pressure.
A highly integrated design-to-manufacture process is distinguished by the use of additive manufacturing to rapidly prototype products, facilitate customer feedback, and move products to final production.
The shortened product manufacturing cycle enables a robust design process that results in enhanced usability, including improvements in latch mechanisms and mating features, that have set the product line apart.
SeriesLock innovations have also enabled the company to diversify from the biomedical industry to life science, automotive, and industrial food and beverage applications.
CompanyWeek profile: https://companyweek.com/article/eldon-james
The winners of this year’s Colorado Manufacturing Awards will be announced online from 2:30 to 5 p.m. on Aug. 6, 2020. REGISTER HERE>
How Polis, Newsom, and other Western governors can “get tough” on China
/in General/by Bart TaylorThe same day this week the Washington Post reported the Trump administration was “trying to block billions of dollars for states to conduct testing and contact tracing in the upcoming coronavirus relief bill,” Colorado Governor Jared Polis was encouraging the opposite, stating flatly, “The national testing scene is a complete disgrace,” while slamming the federal testing strategy as “almost useless from an epidemiological or even diagnostic perspective.”
For a Western governor to be sideways with President Trump isn’t unusual. From Oregon to California to New Mexico, COVID-19 continues to widen the Grand Canyon-like political divide in the West.
Ironically, COVID also provides a means for political adversaries to rally around shared interests. Manufacturing has emerged as one. However unlikely it is that President Trump will work with Polis, or California Governor Gavin Newsom, or New Mexico’s Michelle Lujan Grisham in an election cycle, in theory each state has much to offer a Trumpian “get tough” strategy on China, namely by helping companies locate more production here.
Governors can’t set U.S. trade policy, but they can provide a road map for federal policymakers. Here are three things western Governors can do to support local manufacturing and chip away at China’s stranglehold on hosting U.S. companies.
1. Work with local companies, one by one, to develop domestic productions strategies. America’s governors are in a unique position. They interact with influential companies — every day. It’s part of the job description.
What’s been lacking are sustained conversations about why local companies and brands offshore production. If this wasn’t the case, there would be more local manufacturing.
A new approach would first acknowledge the uncomfortable truth that U.S. brands have made China a manufacturing superpower. If U.S. companies and brands were key to China’s manufacturing ascendance, so too are they at the center of any American renewal.
Governors can be local manufacturing’s most powerful advocates. One company at a time.
2. Make manufacturing-related R&D a priority. America’s research ecosystem is formidable, but to assume technology acumen translates into manufacturing-related leadership in automation and robotics is misguided.
Arthur Herman’s Wall Street Journal op-ed this week referenced a 2015 Strategy& and PwC study that found “found that U.S. companies were steadily moving their research-and-development centers to China to be closer to production, suppliers and engineering talent.”
It’s a troubling conclusion. The lesson for governors is that a strong manufacturing base is vital to maintaining a world-class R&D ecosystem.
Ensure there’s a connection between universities, labs, and manufacturers. Host events. Facilitate conversations. Put our R&D ecosystem to work for manufacturing.
3. Encourage and subsidize local buying. Products made in the U.S. are often more expensive than those made offshore. Why? Because labor is less expensive.
But the cost of not supporting jobs and infrastructure here, to save a few dollars, can’t be measured. Governors have a bully pulpit to educate and rally citizens to buy locally made products and legislators to subsidize local production. They should use it. It’s a winning, bipartisan issue.
“Getting tough” on China is election-year sloganeering. Deep, strategic partnerships shape Sino-American business and economic ties. Yet for every U.S. brand that leaves China to invest in American workers and communities, China’s influence wanes.
Presidents Obama and Trump both used the office to advocate for domestic production. It’s left to governors and local officials to fill in the gaps and drive a U.S. manufacturing resurgence that works to shift the balance of economic power to America’s shores.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
COVID-19 provided an opportunity to rebuild CompanyWeek.com. What’s your plan?
/in General/by Bart TaylorFor the CompanyWeek team, July feels like January. We’ve used the COVID-19 disruption to invest in both a redesign of CompanyWeek.com and a new supply-chain portal — SCoP. We launched our new site Monday, as the summer turned and as many companies look to the second half of 2020 as a new beginning. SCoP’s around the corner.
If the site is better — improved search, less clutter, better organization of our content, and with SCoP a fundamental realignment of how suppliers are sourced — our efforts are also a response to the shifting ground for U.S. manufacturing.
A common sentiment today is that COVID disruptions will translate to opportunity for domestic manufacturing. And to be sure, factors have aligned to favor U.S. production.
Yet for many companies, across multiple industries, shortening supply chains or locating domestic factories is more talk than reality. As much as we’d like, and despite the interests arrayed to bring back pharmaceutical and PPE manufacturing, many U.S. brands and buyers will fall back on trusted, cheaper suppliers in Asia.
The bar is even higher for other industries.
In a terrific expose on the challenges facing outdoor industry brands, Outside writer Christopher Solomon’s “How the Outdoor Industry Responded to Coronavirus” points out OI’s China addiction, one we’ve reported on for years:
Jump on the manufacturing bandwagon — or else!
/in General/by Bart TaylorWe’re all righteous in our indignation.
Last April, after years of encouraging former Colorado Governor John Hickenlooper to lean on his industry experience to take up the cause for manufacturing, I gave up. At the time, Hickenlooper’s presidential campaign, devoid of even a mention of his manufacturing experience, had crashed.
I lamented the missed opportunity: “John Hickenlooper was a craft-brewing pioneer. He helped reimagine craft manufacturing in Colorado and make it fashionable again, demonstrating its power to reshape urban economies, create opportunities for passionate entrepreneurs and reshape entire industry sectors. . . . I envisioned talk of the virtues of shortening supply chains to bring jobs home, of providing pathways for families and kids into the trade, and of a new economy where U.S.-engineered and -designed products are increasingly made here.”
But I was wrong about Hickenlooper’s affinity or connection with manufacturing. If not wrong, judgmental. Advocacy for manufacturing is a cause I share with some, but not everyone.
Today, candidate Hickenlooper harkens back to his “restaurant experience,” not his beer-making chops, when talking of his business acumen. He identifies with his service background more than any manufacturing pedigree.
And that’s OK. I look back on my rather harsh pronouncements and cringe a bit.
Would a Hickenlooper campaign focused on manufacturing be relevant and powerful now? Yes. COVID-19 has thrust these very issues to the forefront of the national conversation. A different choice in 2019 might have positioned him perfectly for a Senate run.
It is heartening, I admit, to witness the wave of legislative efforts and business initiatives to reshore manufacturing, or promote more domestic production, in light of COVID-related disruptions. Tariffs, or IP theft, or other challenges that companies encounter managing global supply chains might have been the trigger, but weren’t. Whatever it takes.
For those inclined to jump the bandwagon, I’d encourage a wide view. Sure, rebuilding America’s manufacturing supply chain is about competing with China. But more, it’s about investing in American towns and cities and workers; about recapturing the unseen virtues of family-owned companies that span generations; about supercharging American ingenuity and sustaining a legacy of invention and innovation that only manufacturing fuels; about Ford and John Deere and Hewlett-Packard and Coca-Cola and the hundreds of American-made brands that brought us this far.
It’s these positive attributes that must shape our perspective on U.S. manufacturing, just as incentives, not tariffs, should guide efforts to convince American companies to reshore production, or cite it here in the first place.
We won’t be endorsing a particular candidate for the Senate, or for president for that matter, but we’ll certainly point out when elected officials distinguish themselves as manufacturing advocates, or not. It’s not too much to ask of any elected official to articulate their strategy to sustain manufacturing, both nationally and in our local communities.
For my part, more support and less snark seems an appropriate tactic, given the times. A different outcome would be a just reward.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com
Five steps to help U.S. OEMs and brands hire more domestic suppliers
/in General/by Bart TaylorIn 2013, we were a contrarian voice forecasting that headwinds battering U.S. manufacturing were subsiding and that an extended period of expansion was imminent.
But even we couldn’t have anticipated that, by June 2020, America would be united in its support for a full-on manufacturing comeback. Turns out COVID-19 is only the latest episode in a string of events that’s persuaded U.S. companies and business leaders that more domestic manufacturing serves our interests.
There’s also consensus on what needs to be done. We know we need more qualified workers. We agree that manufacturing’s digital transformation including automation and robotics must accelerate. And we support elected officials favoring industry with policy measures like the Beat China Act and others that provide incentives for companies to make more products here.
But these broad initiatives take time, and next week, or next month, when a production order needs to be filled, for many companies it will be back to business as usual. More needs to be done to compel OEMs and brands to change their behavior and consider new sourcing options.
U.S. manufacturing will roar back only when companies begin buying more services and products from domestic suppliers. Here are five things that would help:
1. Rally around manufacturing industries with clusters of suppliers and providers
Brands like Vestas and Tesla attract a constellation of suppliers — clusters of fabricators and service companies tuned to their needs. The supply chain for a small food brand (or battery maker or aviation OEM) is also unique.
Leadership in developing new industry-tuned clusters of suppliers, from funding through fabrication to shipping, should pay off in renewed interest and support from U.S. brands.
2. Build on local and regional success to expand nationally
If a growing marketplace of ideas, of products and services, is the national goal, success will first come from local and regional groups making new connections. More local collaboration, more transparency within industry supply chains, and more buying and selling across trade silos is the sure path to a more capable national network — and more options for OEMs.
3. Digital tools to power communication throughout the supply chain
A relationship between manufacturer and supplier pivots on any one of a dozen key variables. Again, companies tend to fall back on what’s known. Mapping the capabilities of domestic suppliers is hard enough; sorting through others that also influence compatibility — like company history and culture — and communicating with new partners, even more so.
The next generation of digital tools that transforms the process of helping U.S. companies find the perfect domestic supplier network will be the first.
4. Manufacturing fluency: We need business and political leaders encouraging local brands to invest in people and communities here
Many elected officials don’t know, or don’t care, where local OEMs or brands manufacture. This must change. U.S. companies transformed China into an economic powerhouse. Today the decision of where a company will source a supplier is a choice between supporting communities offshore and communities here. Gauge our manufacturing fluency in this election cycle. If your candidate comes up short, make a different choice.
5. Tell the truth
Without a coherent national manufacturing policy, local and regional efforts can succeed but national efforts will fall short.
In 2013, many business and policy leaders pushed back on the notion that manufacturing was in America’s strategic interest. Be part of the solution — or bow out of the process.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
All’s fair in the pursuit of Elon Musk’s innovative companies, but at what cost?
/in General/by Bart TaylorBefore California, Washington, Oregon, Colorado, and Nevada announced the Western States Pact last month to coordinate a “shared approach for reopening our economies” in response to COVID-19, states in America’s West had already formed a loose confederation. The informal union lacked a crisis of COVID’s magnitude to codify ties, and an official name, but the regional amity on display has been long in the making.
With one exception: Economic developers still work within state lines, and the self-interest that drives local economies encourages the active recruitment and poaching of companies from neighboring states.
No doubt local officials in Colorado were cheering on Governor Jared Polis last week when he jumped into the dustup in California between Tesla and Alameda County to curry favor with Elon Musk. That’s what governors do. They’re chief sales officers, they lead by example, and the example continues to be that all is fair in love and the pursuit of your neighbor’s major employers.
States in the West also smell blood in the water in California. Companies in the Golden State can be vocal about their frustration with the business environment. A litany of complaints is long and well documented, and the path from Denver, Salt Lake City, Phoenix, and Portland to Los Angeles and Oakland well-traveled by officials looking to lure away a trophy manufacturer like Tesla.
But in this case, it seems a poor choice, one that also works to undermine regional prosperity.
As we document weekly, OEMs and brands require capable supply chains. In Colorado, Polis’ enthusiasm runs headlong into the supply chain reality that today, the state is unequipped to support an automotive brand like Tesla.
“Colorado’s supply chain, in its current state, could not handle the Tesla requirement,” offers Larry Caschette, president of Westminster, Colorado-based Metalcraft Industries. “I was approached by Tesla when they were building the lines for the Model X, and they wanted us to build stamping tooling for their Fremont facility. They needed 150 auto body tools in less than six months. That would take Colorado metal stamping companies as a group years to accomplish.”
We report on California’s robust transportation supply chain regularly, including Tesla suppliers like San Leandro-based Scandic. Say what you will about California’s warts, but the state is dotted with advanced aerospace and automotive suppliers.
That’s not to say Colorado, and others, are far behind. But it’s a two- to five-year proposition, says Metalcraft’s Caschette, involving money and focus. “We would need access to capital and incentives to be successful, in my opinion, and lots of outside management and investment.”
“But I like where it’s going,” he adds. “We’ve needed a couple big industrials in the area forever — more Ball, Lockheed, Arrow, and Vestas-type companies. Our supply chain changed quickly when Vestas came to town. It seems the big boys — Magna, AutoDie, ITW, any of the big stamping supply chain vendors — go where the work is and quite quickly.”
That’s the formula Colorado’s Polis seems intent on following: Recruit nameplate OEMs, and a supply chain will follow. It’s also a formula that’s left the state’s manufacturing supply chain inadequate to support — and recruit — more companies.
There’s an alternative approach, linked to the promising economic drivers working to make a Western States Pact viable in the first place.
Even before COVID, OEMs and brands were bringing production back onshore where possible and looking to expand domestic production. COVID will accelerate the embrace of domestic supply chain development, and it happens that America’s Western states are flashing the industrial acumen to lead the U.S. into manufacturing’s new era. Forbes writer Anna-Katrina Shedletsky suggested that “COVID-19 requires the modernization of manufacturing.” Regional outposts throughout the West will lead the way.
More, consider manufacturing’s growth industries. From defense-related aerospace to innovations in transportation to food and beverage, bioscience, pharma, and chemicals, the West is poised to play a leadership role. America’s epicenter of mission-driven companies also tilts West. COVID is accelerating the move by dozens of companies to reconcile unsustainable, legacy offshore manufacturing strategies with brand promises made to customers.
Can Utah, or Colorado, or Arizona alone lead America into a brave new world of manufacturing? Can California?
The easy answer is no. States like Colorado and California need each other.
Governor Polis would best help Tesla by working with California Governor Gavin Newsom and others to assess gaps in the West’s manufacturing supply chain, and respond with focus and energy to develop a region-wide ecosystem that helps OEMs and brands bring production onshore from China, or enables local companies to tap resources in neighboring states in lieu of Asia or Europe.
Expand the Western States Pact to include economic programs that tap into the natural synergies of the region. And be leaders in developing a new American federalism, shaped by regional cooperation.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
OEMs, brands, contract manufacturers: Connect with local and regional companies to source and supply
/in General/by Bart TaylorWe’re inviting OEMs, brands, contract manufacturers, and key suppliers to communicate production and product updates in light of coronavirus-related disruptions. There is no fee for a 250-word submission with photography.
All submissions will become part of CompanyWeek’s new searchable supply chain directory — SCoP. Use this form to create a directly listing, post to the weekly Supplier Bulletin, and/or update your CompanyWeek profile. The Bulletin will ensure your company information is pushed out to CompanyWeek’s growing local and regional readership. The directory listing will ensure your company is searchable in the new SCoP directory, debuting in June 2020.
Today, we’re happy to enter your Supply Bulletin listing into the directory for you, if you’d like.
Send me a text document (no PDFs) that includes:
As always, contact me with questions or comments.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.