Barriers to a sustained and broad-based U.S. manufacturing comeback are well documented, but what opportunities should local and regional businesses and planners be focusing on? What industries or market openings best fit the attributes of local economies?
There are also opportunities leading manufacturers across industry boundaries to partner with companies that have similar customers and values. Business leaders should take note.
One area of considerable promise is the intersection between outdoor industry and natural products — calling cards of the economies of the American West. Think about it: Consumers of healthy food and beverages are often the same people leading active outdoor lifestyles.
Alissa Sears is co-founder of AdVenturesAcademy and VP growth & strategy at Christie & Co, a communications firm focused on companies across the natural products, outdoor, and sustainable agriculture industries. At Outdoor Retailer’s Summer Market in Denver this July, she’s organizing an event to showcase businesses operating at the intersection of these dynamic industries to like-minded investors.
“We have focused on the intersection of outdoor and natural products because of the inherent consumer alignments and shared values,” says Sears, “but it’s also about unrealized efficiencies. As retail continues to evolve, oscillating between e-commerce and brick and mortar, we’ve seen increased interest in natural products companies seeking to differentiate through being where their consumers live and play — camping, on hikes, in climbing gyms, or wherever their lifestyle choices take them.”
Sears sees retailers getting in the game as well, as does anyone who’s walked past the wall of energy bars and natural good products at an REI checkout. “Outdoor retailers are also looking for ways to increase frequency of customer visits, provide education around ‘clean fuel’ for their customers, and find other ways to add to their shopping experience,” says Sears. “Food, beverage, nutrition, and personal care have increasingly been seen as opportunities to achieve those goals.”
In the vernacular of these newly connecting industries, retailers are new “experiential channels,” according to Zach DeAngelo, partner at the brand management firm Rodeo CPG. For retailers, according to DeAngelo, Sears’ “clean fuel” is “a natural extension and opportunity to deepen customer engagement and experiential education.”
Heady stuff, and it’s not only product manufacturers and their distribution channels that are evolving. Investors are taking note, according to Sears. “We’ve also seen investors who have traditionally focused on one sector or the other realize the alignments and crossover opportunities,” she says. “They’re already a critical part of the growth ecosystem, and here, they also have the ability to help shape these emerging opportunities, with funds to expedite growth, guidance around prioritizing growth strategies, and the experience and wisdom of knowing when to say no. They are key growth partners and it’s essential to ensure alignment to best overcome the inherent challenges of growth together.”
Sears accomplishes this by bringing together companies and investors in out-of-the-box environments. When I mention the investor conferences we’ve hosted in Denver the past few years, she smiles — a “been there, done that” nod that was just less than disapproving. But why meet in a conventional venue when the mountains of Ecuador beckon?
“We harness the power of adventure to deepen engagement,” she explains, “bringing together entrepreneurs, investors and industry leaders at this intersection and get them outdoors together through our experiential programming — Colorado backcountry hut trips, surf trips in California, climbing in Ecuador. We know that the best businesses are the ones that do it differently. Push the limits. Make the impossible possible.”
She adds, “Companies are adapting to rapidly shifting terrain, realizing that ‘business as usual’ is no more. They are getting more creative in how they approach growth, exploring new distribution channels, developing collaborative product lines, engaging advisors and investors with cross-sector experience.”
Denver’s not Ecuador, but Sears has something special in mind for the pitch event at Outdoor Retailer. “The Entrepreneur + Investor [Tent]Pitch will go beyond the traditional pitch event to highlight the importance of aligned relationships between entrepreneurs and investors through connecting at a deeper level. We will showcase eight entrepreneur and investor teams at the intersection of outdoor and natural products, bringing together key decision makers from both industries to explore opportunities to align forces and unlock crossover growth opportunities.”
Sears is accepting applications for both companies and investors to participate in the OR pitch event. Contact her here, or drop me a line.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Why natural products and outdoor industry companies are collaborating to advance their interests.
/in General/by Bart TaylorBarriers to a sustained and broad-based U.S. manufacturing comeback are well documented, but what opportunities should local and regional businesses and planners be focusing on? What industries or market openings best fit the attributes of local economies?
There are also opportunities leading manufacturers across industry boundaries to partner with companies that have similar customers and values. Business leaders should take note.
One area of considerable promise is the intersection between outdoor industry and natural products — calling cards of the economies of the American West. Think about it: Consumers of healthy food and beverages are often the same people leading active outdoor lifestyles.
Alissa Sears is co-founder of AdVenturesAcademy and VP growth & strategy at Christie & Co, a communications firm focused on companies across the natural products, outdoor, and sustainable agriculture industries. At Outdoor Retailer’s Summer Market in Denver this July, she’s organizing an event to showcase businesses operating at the intersection of these dynamic industries to like-minded investors.
“We have focused on the intersection of outdoor and natural products because of the inherent consumer alignments and shared values,” says Sears, “but it’s also about unrealized efficiencies. As retail continues to evolve, oscillating between e-commerce and brick and mortar, we’ve seen increased interest in natural products companies seeking to differentiate through being where their consumers live and play — camping, on hikes, in climbing gyms, or wherever their lifestyle choices take them.”
Sears sees retailers getting in the game as well, as does anyone who’s walked past the wall of energy bars and natural good products at an REI checkout. “Outdoor retailers are also looking for ways to increase frequency of customer visits, provide education around ‘clean fuel’ for their customers, and find other ways to add to their shopping experience,” says Sears. “Food, beverage, nutrition, and personal care have increasingly been seen as opportunities to achieve those goals.”
In the vernacular of these newly connecting industries, retailers are new “experiential channels,” according to Zach DeAngelo, partner at the brand management firm Rodeo CPG. For retailers, according to DeAngelo, Sears’ “clean fuel” is “a natural extension and opportunity to deepen customer engagement and experiential education.”
Heady stuff, and it’s not only product manufacturers and their distribution channels that are evolving. Investors are taking note, according to Sears. “We’ve also seen investors who have traditionally focused on one sector or the other realize the alignments and crossover opportunities,” she says. “They’re already a critical part of the growth ecosystem, and here, they also have the ability to help shape these emerging opportunities, with funds to expedite growth, guidance around prioritizing growth strategies, and the experience and wisdom of knowing when to say no. They are key growth partners and it’s essential to ensure alignment to best overcome the inherent challenges of growth together.”
Sears accomplishes this by bringing together companies and investors in out-of-the-box environments. When I mention the investor conferences we’ve hosted in Denver the past few years, she smiles — a “been there, done that” nod that was just less than disapproving. But why meet in a conventional venue when the mountains of Ecuador beckon?
“We harness the power of adventure to deepen engagement,” she explains, “bringing together entrepreneurs, investors and industry leaders at this intersection and get them outdoors together through our experiential programming — Colorado backcountry hut trips, surf trips in California, climbing in Ecuador. We know that the best businesses are the ones that do it differently. Push the limits. Make the impossible possible.”
She adds, “Companies are adapting to rapidly shifting terrain, realizing that ‘business as usual’ is no more. They are getting more creative in how they approach growth, exploring new distribution channels, developing collaborative product lines, engaging advisors and investors with cross-sector experience.”
Denver’s not Ecuador, but Sears has something special in mind for the pitch event at Outdoor Retailer. “The Entrepreneur + Investor [Tent]Pitch will go beyond the traditional pitch event to highlight the importance of aligned relationships between entrepreneurs and investors through connecting at a deeper level. We will showcase eight entrepreneur and investor teams at the intersection of outdoor and natural products, bringing together key decision makers from both industries to explore opportunities to align forces and unlock crossover growth opportunities.”
Sears is accepting applications for both companies and investors to participate in the OR pitch event. Contact her here, or drop me a line.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
The Outdoor Industry faces a manufacturing reckoning. How will its leaders respond?
/in General/by Bart TaylorIs there an industry more challenged by its success than the Outdoor Industry?
Take Nike, a colossus of OI. Phil Knight’s now famous sojourns to Asia to establish a shoe manufacturing beachhead opened the floodgates for American brands to offshore en masse, and boy, have they. Still today, brands of all sizes follow Knight’s Orient Express to ensconse production in thriving, world-class shoe and apparel factories, primarily in China.
The results have been stunning. Chinese factories are so capable that today “the likes of Balenciaga have started manufacturing in the country,” according to GQ. (Did you know that a $700 cross-trainer was even available? Neither did I.) The investments in infrastructure and people have transformed China into an OI manufacturing superpower.
But as business media reports, Nike, Adidas, and others are leaving China in search of cheaper labor in other markets — like Vietnam. It’s part of a modern shell game brands now manage, one precipitated by their own success in creating centers of manufacturing excellence offshore that are, by definition, increasingly expensive to operate. Qualified labor, benefits, advanced technology, and materials — the price of world-class manufacturing — are becoming as pricey in China as they are in Detroit.
After helping transform China into a economic behemoth, sights are now set on other Asian countries where major investments in infrastructure can be offset by lower labor costs. It’s the offshore playbook, out of print and updated for an iPad.
Here’s the rub: Today OI brands are motivated by more than profit. It’s an industry packed full of change agents who are moved to steward public lands, develop “authentic” brands, preserve finite resources, and generally make the business world a more sustainable, friendly place.
How to rationalize, then, the inherent unsustainability of an Asian supply chain? Or rural unemployment and dogged underemployment in states home to the same brands that are investing in jobs and production infrastructure in overseas communities? Or how to justify a lack of credible environmental oversight in countries home to the apparel factories of U.S. OI brands, as the industry wields its considerable power here to punish states for public lands policy?
As uncomfortable OI brands are with this paradox, they’re not showing it. Domestic manufacturing is making a comeback, but in OI circles, the question of where its products are made is largely a back-burner issue. The Industry still operates under a halo of tacit approval that brands must offshore production to stay in business, or, that it’s okay to relegate manufacturing to remote destinations. We’ve embraced the methodology of U.S. brands pouring profits into the development of world-class manufacturing facilities offshore, not here.
Until now.
For one, there’s a vanguard of companies challenging conventional wisdom, companies that have simply said that offshore production will not be part of corporate or product DNA. CompanyWeek Editor Eric Peterson reminds us of several Colorado-based companies that fit the bill, this week.
Alchemy Bicycle Co. is first on the list and in the alphabet, but Ryan Cannizzaro’s mission and accomplishment is not trivial. Alchemy, like Utah-based ENVE, maker of the wheels mounted on most all of its frames, decided composite frame manufacturing could be established in the U.S. despite Taiwan’s hammer lock on the sector. Today Alchemy is battling for market share against U.S. brands made in Taiwan at the same time it challenges the notion that OI products have to be made offshore.
But it’s consumers who may force OI brands to follow the lead of Alchemy and others. Buyers unerringly force companies to keep their brand promise, and if OI is to live up to the lofty ideas and rhetoric of its spokespeople, the contradictions of its manufacturing strategy may move from back burner to center stage.
We’ll be there to celebrate the shift.
Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.
Skip tax cuts and invest in industry-specific supply chains to grow manufacturing
/in General/by Bart TaylorIn a Washington Post column last week, economists Jared Bernstein and Somin Park cited the work of Tim Bartik, who outlined what he called the “three habits of highly successful manufacturing-intensive communities,” including:
The upshot of Bartik’s analysis is that the standard playbook economic developers use to recruit and retain manufacturing companies — usually a mix of tax cuts and business incentives — today lacks in comparison to the benefit of investments in targeted services and strategies. Build a supply chain, and manufacturers will come.
A lesson from the regional markets we report on is that better yet, build an industry-tailored ecosystem.
Here’s why. If today your community lacks a capable base of precision contract manufacturers and engineering and design services, but boasts a rich farm and ag supply chain and concentration of outdoor and lifestyle assets, a deliberate effort to recruit and nurture natural food and craft beverage companies makes more sense than developing an aerospace cluster. Both are manufacturing. Both are increasingly attractive as communities seek more light industry. But one provides a more direct line to a thriving maker economy.
An investment strategy for communities might begin with an assessment of current business assets and capabilities, including:
It follows that cities and communities can then assess how well-matched target industries are to local and regional business assets, whether steps can be take to address supply-chain gaps, or whether a pivot to better-matched manufacturing industries might be a better plan.
How to fill the gaps? Over the next 12 months, CompanyWeek will be active in working with both companies and communities to develop more robust industry blueprints for the development of manufacturing supply chains. We’re certainly not alone in seeking to foster more manufacturing-intensive communities.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Here’s the second wave of 2018 Colorado Manufacturing Awards finalists
/in General/by Bart TaylorFive years ago, an awards program for Colorado makers and manufactures didn’t exist. Today, selecting finalists for the third annual Colorado Manufacturing Awards is like drinking from a fire hose. So much innovation, entrepreneurship, manufacturing acumen, and market leadership to choose from. Who knew?
We did.
Here’s the second and final wave of finalists for this year’s CMAs. (We published the first group last week.)
Last year, we named Fort Collins/Loveland the state’s top manufacturing community, given its compelling mix of manufacturing industries, R&D ecosystem, and effective trade leadership. This year, we invited the NoCo Manufacturing Partnership to help us with the Outstanding Consumer & Lifestyle Brand, in part because they made us look smart. The organization has received national attention for its approach in developing sector support for manufacturing, and the finalists in the category — Denver’s Sarabella Fishing and Knotty Tie, and Grand Junction’s mobile lifestyle brand Vintage Overland — represent the category, and entire state, with distinction.
CAMA, the Colorado Advanced Manufacturing Association, took a different tact and focused on the rich if underpublicized manufacturing community in Colorado Springs to select the three finalists for Outstanding Industrial & Equipment Manufacturer. The finalists are more diverse, with CNC stalwart Diversified Machine Systems, antenna concealment specialist ConcealFab, and the influential fabricator IP Automation, representing Colorado’s deep industrial category from the Springs.
In 2017, Colorado’s brilliant food sector had a distinctive industrial flavor at the CMAs, with bio-specialist MycoTechnology and supply-chain ace Ardent Mills capturing food-related hardware. This year, we invited Colorado Proud, the Colorado Department of Agriculture’s champion for local producers, to help us reconnect with smaller operators with the Small Food Brand of the Year award. It’s a gargantuan task given the innovation coursing through the sector. In fact, in the time it takes us to publish this list, finalists Blue Moon Goodness, Cusa Tea, and The Real Dill may already have outgrown the $2 million in top-line revenue we identified as a small brand threshold.
The Colorado Cleantech Industries Association (CCIA) continues to help companies commercialize and accelerate an array of solutions in the energy economy, at times against an unpredictable public policy backdrop. They also helped us identify three of Colorado’s top cleantech companies for Outstanding Energy & Environmental Manufacturer. Loveland’s Lightning Systems and Denver’s RavenWindow and AMP Robotics are a predictably strong group that again exemplifies the region’s influential cleantech ecosystem.
Aerospace is a regional economic calling card and when paired up with the growing number of electronics manufacturers, many developing solutions for aviation and aerospace OEMs, the award for Outstanding Aerospace & Electronics Manufacturer carries additional weight. This year the Colorado Space Business Roundtable and Manufacturer’s Edge looked across the spectrum of A&E companies to select AMPT, general aviation stalwart Air Comm Corporation, and one of Colorado’s spacecraft stars, Sierra Nevada Corporation’s Space Systems.
If you’re of the opinion that we’ve left some deserving companies off this list, you’re not alone.
As you ponder next year’s list, REGISTER HERE to attend this year’s Colorado Manufacturing Awards event. Miss it, and you’ll miss the best business event on the calendar.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
NAM’s politics shortchange small manufacturers
/in General/by Bart TaylorThings are good for America’s large manufacturers, says Jay Timmons, CEO of the National Association of Manufacturers (NAM). Timmons borrowed an Olympic metaphor last month to proclaim that manufacturing is “going for the gold,” pleased as he is with the trifecta of regulatory relief, lower tax rates, and a proposed $1.5 trillion infrastructure plan, courtesy of President Trump.
His elation is understandable given the high confidence level of his membership and newfound influence in the White House. Timmons picked sides, and his affection for President Trump is as well documented as his enmity for his predecessor.
But of all the reasons to be enthusiastic about manufacturing, and there are many, government’s stewardship of the manufacturing economy should excite Timmons the least. Sure, it’s NAM’s job to move public policy in favor of manufacturing. Yet NAM’s responsibility is to companies large and small, across diverse industries, and it’s an open question as to whether the vast community of small and middle-market companies are feeling the love. The celebration seems premature.
Today channeling Trump also means: supporting tariffs that may raise materials costs for manufacturers and diminish already thin supply-chain options; abandoning trade agreements altogether; diminished environmental stewardship, important to emerging manufacturing sectors like outdoor industry; uncertainty and confrontation in immigration, healthcare, and the emerging cannabis market; and outright hostility to business defying the NRA.
Companies will navigate America’s diverse business and cultural ecosystem to find the state or region that best fits their own operating values. Celebrating public policy that works to lift all of American manufacturing is a meaningful role for NAM, including advocacy for policy initiatives specific to the needs of small manufacturers:
Becoming just another partisan player in the polarized milieu in Washington, D.C. is a dead end for NAM and the small manufacturers it supports. Time to widen its purview.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Here’s the first wave of finalists for the 2018 Colorado Manufacturing Awards
/in General/by Bart TaylorWith the Olympic Games and Academy Awards providing a worthy backdrop, we’re set to announce finalists in the most important competition of the spring, the Colorado Manufacturing Awards. Gold medals and Oscars have nothing on us.
The 2018 CMAs again recognize outstanding maker and manufacturing businesses across multiple industries, but this year with a meaningful twist. We invited 10 of Colorado’s creative trade and business organizations to help us select worthy finalists within their industry communities. It’s a tip of the cap to their great work, but also a reminder of how manufacturing’s influence spans so many of the region’s key industries.
So here’s a first look at finalists from half the field. We’ll report on the rest next week, as we near the April 5 Colorado Manufacturing Awards gala event, where we’ll announce category winners at The Cable Center at University of Denver.
At some point in the past year, we had no choice but to distinguish Colorado’s brilliant cadre of contract manufacturers with their own category. We reached out to the Rocky Mountain Tooling and Machining Association (RMTMA) to help us identify three finalists, and it’s a predictably strong group. Boulder’s Tecomet, Ft. Collins’ Manes Machine, and standout Arvada aerospace shop Faustson Tool are this year’s deserving finalists for Outstanding Contract Manufacturer.
The Colorado Distillers Guild helped us select three candidates for Outstanding Craft Distiller. Finalists reflect a deep statewide movement that’s positioned Colorado’s sector as a national leader. Carbondale’s Marble Distilling Company, Crested Butte’s Montanya Distillers, and Denver’s standout early-mover Leopold Bros. comprise this powerhouse group.
The region’s craft brewers are a force of nature, today with over 350 companies shaping a regional beer tsunami. With so much innovation, entrepreneurship, and community-building, it’s at once easy yet incredibly difficult to select three — and only three — finalists for Outstanding Craft Brewery. With an assist from the Colorado Brewers Guild, this year’s finalist group includes Longmont’s iconic Left Hand Brewing Company, Divide’s barrel-aged masters Paradox Beer Company, and the upstart artisans at Broomfield’s 4 Noses Brewing.
The State of Colorado has pegged bioscience as a “key industry” and the Colorado Bioscience Association is one of the region’s accomplished trade and business associations. The industry sector is informed by entrepreneurship and great science but also by manufacturing acumen, and finalists this year for Outstanding Bioscience Manufacturer flash all three. As additive manufacturing transforms how surgeons operate, Littleton’s 3D Systems is on its leading edge, and Allison Medical’s story is as compelling as TOLMAR Inc.‘s cancer-treating innovation. The three companies represent Colorado’s bioscience industry with distinction.
Outdoor industry has crashed the national business scene with the force of an avalanche and Colorado’s OI sector is poised to become an epicenter of product innovation and manufacturing. CO Active Colorado, one of the state’s newest trade associations, selected three finalists overcoming the challenges of domestic manufacturing to make and assemble a generation of high-performance gear using local talent, expertise, and grit. Denver’s Meier Skis, Phunkshun Wear, and Alchemy Bicycle Co. fit the Outstanding Outdoor Industry brand.
Next week, we’ll showcase the remaining five industry associations and category finalists: Outstanding Industrial & Equipment, Consumer & Lifestyle, Energy & Environment, Aerospace, and Small Food brands of the year.
REGISTER for the 2018 Colorado Manufacturing Awards event, but don’t wait: The event will sell out.
Launch of Naturally Bay Area a catalyst for CA food brands. But where will they manufacture?
/in General/by Bart TaylorLast November, we reported that a group in San Francisco was in the process of bringing Naturally Boulder‘s community-building model west, to better organize and accelerate northern California’s natural and organic product ecosystem. Vision became reality January 21 with the sold-out kickoff of Naturally Bay Area at the Winter Fancy Food Show in San Francisco.
Naturally Bay Area is the first “regional affiliate” of a fledgling Naturally Boulder network. On one hand, it’s an acknowledgment of the staggering success of Colorado’s natural food and product community and NB’s community-building methodology. It’s also more proof, if any was needed, of the profound change transforming America’s gargantuan food industry. From Boulder to San Francisco, Brooklyn to Portland, a wave of early-stage brands has captivated both consumers and the industrial brands that, until now, have decided what we eat and how its made and distributed. Today, industry innovation resides squarely in emerging food and product communities throughout the country.
Naturally Bay Area will provide structure and organization to what until now has been a loose ecosystem of brands, service companies, investment partners, and other business mentors. If history repeats, Naturally Bay Area will become a community-building engine, nurturing startups, accelerating promising brands, and enhancing the delivery of key services to natural product entrepreneurs.
Less certain is how brands will manufacture. With a more efficient commercialization of ideas, demand for manufacturing should explode. But within the Bay Area’s technology-driven economy, prospects for a qualified manufacturing workforce are sketchy, and manufacturing infrastructure lacking. Where will Naturally Bay Area members make their products?
The evolution of Colorado’s model suggests that a network of new production resources will develop alongside brands. Powered by technology from food-savvy entrepreneurs like The Food Corridor, it should be much easier for early-stage brands to locate commercial kitchens than it was for companies a decade ago. Brands should be able to escape the limitations of one’s own kitchen earlier and easier.
For later-stage companies, a co-packer that manufactures for multiple brands is often the next destination. Colorado’s network of co-packers has been every bit the catalyst as brands in the development of its natural food play. Will a more capable network of Bay Area co-packers develop to meet demand?
If brands can’t manufacture here they’ll move or sell — to industrial producers with the capability to scale manufacturing and accommodate an influx of new products. It’s the goal of industrial players today to do just that, to innovate through acquisition instead of organic growth. Big Food has waved the white flag: It’s given up on competing with the innovation flashed by early-stage food companies. Today it buys innovation.
Exits are fine, but the goal of Naturally Bay Area and the public/private resources sure to rally in support, is the development of a thousand new brands, employing dozens of employees each, driven by the promise of sustained business and manufacturing support. It’s the promise of the sector in California or Colorado: to incubate middle-market growth companies that cut a wide swath through the economy, not the narrow, top-down ecosystem that consumers and entrepreneurs are abandoning.
Who, then, will rally California’s manufacturing ecosystem? In San Francisco and the Bay Area, the workforce challenge alone is enough to stop development cold. In this tech-centric economy, where will food manufacturing’s new labor force come from? What cities and communities will move to develop facilities and provide incentives for companies to stay and thrive? Where will a new manufacturing workforce find affordable housing?
And as Naturally Boulder evolves to the Bay Area, Los Angeles, and San Diego, are public and private resources ready to rally around manufacturing?
Colorado’s ecosystem has grown organically, without a concerted effort from public officials to juice its development. Given the scale of the manufacturing challenge, California’s natural product innovators may not have that luxury.
Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.
Apple and Molson Coors signal differing views on U.S. manufacturing
/in General/by Bart TaylorIt’s a contrarian view to consider Apple a manufacturer and not a tech company. But as we’ve argued, how else to describe the world’s most valuable brand? Last year Apple spent about $50 billion with U.S.-based suppliers and manufacturers to build its suite of technology products. By any measure, a company that invests $50 billion in the domestic supply-chain is an American OEM.
For its part, Apple has avoided the “manufacturer” label. And who can blame ’em? Keeping its factories offshore has worked in Apple’s favor in two big ways: keeping 700,000-plus “employees” outsourced and ensconced in offshore factories keeps labor costs down and working conditions obscured behind an “Asian Wall.” It also enables the company to call itself a technology company versus the dirty-and-dying image associated with manufacturing.
We play along with this curious reasoning, because, well, who cares? We love a winner and Apple’s certainly that.
But what if Apple had made more of an investment in American manufacturing early on? I quoted Harold Meyerson earlier this year, who wrote, “If those 700,000 were employed directly by Apple, of course, then Apple would be the world’s largest manufacturer.” What if billions in cash holdings had been invested in training, in apprenticeships, in factories, in resources to develop a more capable supply chain? What if Apple had wrapped itself in America’s industrial legacy, instead?
Last week the company signaled plans to do just that.
Yes, a small percentage of Apple’s $350 billion repatriation of cash and services will be invested in manufacturing infrastructure. But the company’s stated intentions matter to U.S. manufacturing.
Contrast this with news emanating from Molson Coors.
With a blog post titled “Brewery Taproom Visits Dragging Down Sales at the Corner Bar,” the company proclaimed, “As the number of local taprooms and brew pubs continues to grow, so does the number of legal-age drinkers bypassing their traditional neighborhood bars.”
Further, “Total on-premise traffic fell 3.6 percent in 2017, according to data analyzed by MillerCoors. Even more troublesome: In five major U.S. cities (Denver, San Diego, Seattle, Phoenix, and Detroit), between 79 percent and 82 percent of consumers did not visit a bar following a trip to a tasting room, the data show.”
Huh? Today the corner bar is a craft taproom. Where has Molly Ballash, the MillerCoors category development manager for on-premise, been the past few years? “Our bar partners are missing out on high-volume occasions like dinner and happy hour.”
If Molson Coors’ bar partners were today the craft breweries dazzling the sector, the company would be leading from the front. Its choice instead has been to diminish the entrepreneurs inspiring a new generation of beer drinkers, work to hamstring craft’s tenuous distribution channels, and otherwise act like an out-of-touch legacy brand.
Like Apple, Molson Coors also has a choice. It could develop the Coors Craft Fund and award one deserving, early-stage brewery cash and resources. It could graciously return compliments from craft operators who admire the consistent excellence of its iconic pilsner, Coors Banquet Beer, and respect its outstanding malting operation and supply chain acumen.
Apple has decided to take America’s shiny new manufacturing sector out for a test drive. Molson Coors could do the same by supporting its worthy beer-making heirs.
The time is now.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Here’s why manufacturing will, or won’t, prosper in 2018
/in General/by Bart TaylorU.S. manufacturing enters 2018 with momentum and considerable promise. For starters, in this golden age of corporatism, America’s blue-chip manufacturing brands are prospering.
More than that, manufacturers have a once-in-a-generation chance to improve their own fortunes by investing the windfall of tax reform into new companies and a more capable domestic supply chain.
Whether American OEMs choose to do so may define the fortunes of the sector for the next decade. It’s why this moment holds both promise and peril.
Here’s why manufacturing will, or won’t, prosper in 2018.
Will:
1. There are fewer big companies in the U.S. as influence and power consolidate into a new corporate oligarchy, but those at the top are thriving. Confidence within the membership of the National Association of Manufacturers has never been higher.
2. Lower corporate tax rates will provide a short-term financial boost for companies large and small, and a long-term benefit for those that reinvest in new factories and equipment.
3. Powerful trends point to sustained employment growth in multiple manufacturing industries even as robotics and automation put downward pressure on job growth in others.
4. Today, communities seek out manufacturing companies when, a decade ago, light industrial employers were less attractive than technology and service companies.
5. Higher education doesn’t deserve much of the self-serving attacks from its critics, but trends redirecting young people into trade and away from four-year degrees serve the economy, and manufacturing, well. There’s good reason to believe we’re on our way to solving manufacturing’s long-term labor challenge. The battleship has been turned.
6. Ask most anyone if it’s important that we make more stuff in America, and they’ll likely say yes. As obvious as this may sound, it’s a cultural sea change. We value manufacturing again.
Won’t:
1. Large manufacturers are prospering, but many small and middle-market manufacturers operate on a knife’s edge. Incentives, access to capital, labor, technology, new markets, and OEM supply chains tilt to a shrinking cadre of large companies and away from smaller operators. It’s also unclear whether blue-chip OEMs are committed to a more capable domestic supply chain; whether a newfound tax windfall, pressure from the White House, or new tariffs will compel big companies to make more in America.
Harold Meyerson, writing in The American Prospect notes that Steve Jobs once remarked to President Obama that “Apple had 700,000 factory workers employed in China.” What if Apple had invested in U.S. labor and infrastructure? “If those 700,000 were employed directly by Apple, of course, then Apple would be the world’s largest manufacturer. “Instead,” Meyerson says, “Apple conceals its factories — and responsibility for the working conditions there — behind two Chinese walls.”
Have things changed? We’ll find out. President Trump and the GOP Congress have provided U.S. corporations the means to invest in a new domestic supply chain; they’ve also provided us a measuring stick. If OEMs shift their gaze onshore, we’ll know.
2. Public sector support for manufacturing can be spotty. There’s no uniform manufacturing ‘playbook’ for developers, a challenge to begin with as manufacturing spans mulitple industries.
Meyerson’s Apple example underscores why this is important. Is a company that designs or engineers a consumer product locally, but is forced to push production offshore because of a lackluster domestic supply chain, a tech or design firm or a manufacturing company?
What if we’d celebrated our community of contract manufacturers the past decade as we do tech firms, and made it easy for our fictional design company to locate domestic production here?
Manufacturing’s future lies in the supply chain. 2018 included.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Related: Five reasons why manufacturing jobs are coming back to stay
3 takeaways from the (first) week in manufacturing
/in General/by Bart TaylorFresh off an eventful 2017, manufacturing picked up where it left off and continues to make news:
1. Manufacturing’s employment surge defies conventional wisdom
The business press is conflicted about manufacturing’s role in America’s 21st century economy. Much of the ambivalence stems from manufacturing’s employment paradox: U.S. productivity is at all-time highs, employment near an all-time low. With total jobs as the measure, it’s easy to conflate today’s otherwise healthy sector with a bleak future, and many analysts do.
In 2017, we forecast that employment growth in dynamic manufacturing industries would offset losses in sectors that clearly are in the midst of a fundamental change. New data from the Bureau of Labor Statistics released last week suggests we were right.
Will the net gains hold? Can manufacturing continue to add 200,000 jobs per year to offset structural losses sure to impact legacy industries?
The answer lies in our collective ability to nurture and accelerate thousands of new domestic brands alongside a capable new supply chain. Develop the supply chain and companies will make more things here.
2. Tesla’s production challenges challenge business analysts
Elon Musk would likely admit that a good share of personal and professional criticism he receives is well earned. But criticism of Tesla’s Model 3 production challenges is unrelenting.
In the latest fusillade, Business Insider lectured, “Tesla’s Achilles’ heel has always been its inability to build cars as effectively as the Toyotas and General Motors of the world.” Forbes‘ Jim Collins lamented, “Tesla is not a sustainable enterprise from a manufacturing standpoint, and investors buying the stock at current levels are completely missing that fundamental truth.” Stock picker Seeking Alpha announced, “Tesla’s game is ending.”
Tesla’s operation isn’t perfect, but among other things the company has demanded accountability from its supply chain, a kick in the pants that has already had a positive impact on U.S. manufacturing. Hale Foote, president of Tesla supplier Scandic, said in a CompanyWeek interview, “Bay Area companies like Tesla and Apple want to fail faster to succeed sooner. . . . In Detroit for example, there’s a seven- to 10-year development cycle. That’s why Tesla is so different. They don’t follow that old way of thinking. The idea is to iterate constantly and invent, invent, invent.”
No doubt Tesla’s cash burn and Musk’s financial brinksmanship are unsettling. But capital markets exist to be tapped. Even if Tesla tanks, and I’m betting on Musk, we’ll have been reminded that a steadfast commitment to domestic sourcing and manufacturing every single part of a complex product locally is possible, given the will.
3. Colorado companies innovating with cannabis
Editorial writers at the Wall Street Journal would have done well last week to cut short their defense of AG Jeff Sessions after making the very reasonable point that Congress must legislate a permanent reconciliation to the contradictory state and federal laws driving marijuana businesses — and Sessions — nuts.
Instead, the WSJ argued that a burgeoning $10 billion market would be better left in the shadows, its proprietors subject to federal prosecution, until such a time that Congress agrees otherwise. It seems a fatuous argument give the current state of dysfunction in D.C. and the stability of state-run marijuana markets.
Lost in the self-serving data cited by the WSJ is the irony that the attorney general’s views lack any connection to science or a scientific method.
We’re here to help out the AG.
In Eric Peterson’s enlightening summary of innovation in Colorado’s marijuana industry, we revisit a dozen cannabis companies profiled in CompanyWeek the past few years. Science and technology inform some, manufacturing acumen guide others. All are motivated entrepreneurs pulling a multi-billion dollar industry out from the shadows into the mainstream. In any other industry, the WSJ would be extolling their virtues. We’ll do it instead.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.