Colorado’s advanced manufacturing ecosystem is deep in aerospace acumen; established if underpublicized in bioscience and food and beverage; up and coming in battery and EV-related applications; and awakening as a semiconductor node, where America’s newfound interest in a national chip industry has raised the stakes for companies and communities.
It would be back to the future for Colorado Springs. As the Colorado Springs Gazette has noted,
“The semiconductor industry has a long history in Colorado Springs, starting when NCR opened the first local chip plant off Fillmore Street with 12 employees in 1975.
The plant Microchip operates was started by Honeywell in 1977, acquired by Atmel in 2009 and Microchip in 2016. At the industry’s peak, nine companies operated semiconductor manufacturing plants in Colorado Springs employing thousands of people and local boosters promoted the city as ‘Silicon Mountain.’”
Lindsay Pack and the team at Colorado Springs standout dpiX – now InnovaFlex Foundry – are intent on reimagining a new semiconductor ecosystem throughout the state. I interviewed Pack before last month’s CHIPS Act-related developments were announced. We’ll connect the dots from that news in a follow up column.
First, my chat with Pack:
Bart Taylor: I like the name, the reference to “foundry.” It’s now a modern, relevant term that connotes your ambition to expand your horizons in the semiconductor industry.
Lindsay Pack: Yeah, we were hoping that it would help make us a little bit more understood!
BT: So, speak to the new vision, reflected in your rebranding, and the future of the company if you would?
LP: When I joined, the focus really was on X-ray manufacturers. And understandably so: that’s our history. And I don’t want to stop supporting that industry. It’s such an important space. I mean, pretty much everyone has come in contact with one of our semiconductors via X-rays, right, at some point in their life. It’s clearly important. It is a very steady business – if not a lot of growth.
It’s also very price competitive. Clearly, fabs in China can produce things much more inexpensively than we can. Recognizing that we’re in a steady-state business with very low margins, I don’t want to abandon that space, but I need to diversify.
And when I think about who we are, I get excited about the future. We’re the only company in the United States that makes the type of semiconductors we do, we do it at scale, and we’re not a big-box firm. It’s not just, “Well, this is the semiconductor I make, take it or leave it.” We can actually work through innovation, we can partner in an IP-protected, secure environment to help develop very custom real solutions for unique problems, things that never were possible before.
The question I’ve asked is, “Why are we not more focused on U.S.-based products?” when there’s such high demand now in space, defense, and other markets. Let’s get focused on that. Let’s continue being great at X-ray detectors. But we’re going to use that foundation now to be great at other things as well, focused on things that really should be here in the United States.
BT: There’s opportunity for sure – though different, perhaps, from “conventional wisdom.” I just read Chip War (by Chris Miller), and he certainly puts your vision in context. One of the misconceptions about the U.S. semiconductor industry is that we don’t make a lot of chips here or support a thriving semiconductor industry. In some ways, that couldn’t be further from the truth.
As Miller points out, the U.S. is still a global leader in chip design and production. In fact, we make much of the equipment used offshore to manufacture the advanced semiconductors that represent the future, and we also design them here. Intel is manufacturing semiconductors in the U.S. that power a generation of servers and PCs. Apple buys radio-frequency chips for their iPhones (and other semiconductors) from U.S. suppliers in California and Texas, for example – and designs the chips that power the iOS operating system.
But they can’t manufacture those chips here: they’re manufactured by TSMC in Taiwan. As you’ve pointed out, upwards of 80 percent of those chips are manufactured outside of the U.S.
How do we square-the-circle? In addition to sharing the cost for TSMC to build new factories in Arizona and elsewhere, to build a new advanced manufacturing capability, are we in a position to also build out the current U.S. semiconductor ecosystem and get back in the game that we’ve allowed to move offshore to Taiwan in particular?
LP: I think largely, yes, and you’re right, a lot of design has been able to stay here in the United States.
But we have been losing those capabilities over time. I’ll tell you that for us, no one in the United States had the knowledge or expertise whatsoever for me to work on the new technologies that I need to work on. I have to recruit internationally to be able to bring in that expertise. Because the U.S. did shift a lot of that manufacturing offshore with the intent of maintaining the design and engineering expertise here.
But it’s so hard to separate manufacturing from design, especially when these processes are the design. And I don’t want us to be under the impression that we can keep design here in the United States and just simply have manufacturing somewhere.
We used to be able to get our equipment, components, all those things here in the United States. But as all of that production started shifting overseas, guess what, the suppliers did, too. So we do have to rely on many Asian suppliers to support the equipment that we have in the fab because there just isn’t anyone here in the United States that can provide those services.
What I think is so important with chips is that it’s not just us expanding, or our neighbors down the street that are producing some other sort of chip. It’s that when we invest in this, we need a center of mass to be here once again – where it makes sense for all of those suppliers to be located here to actually service companies here. I understand why for them, it wasn’t practical any longer to maintain business here. It was the unintended consequences of thinking, “Oh, well, we’re just moving manufacturing.” Over the years, it really eroded much more of the semiconductor ecosystem. As you point out, we have semiconductor expertise and we have semiconductor manufacturing. But I think we are at that pivotal moment where if we don’t do something to reestablish the manufacturing supply chain, we’ll lose the upper hand in the future of semiconductors.
BT: Your language could be straight out of the 2022 CHIPS and Science Act – the legislation intended to usher in a new era of investment in America’s semiconductor ecosystem. One derivative of CHIPs – the $10B Regional Innovation Hub competition – has attracted interest from several groups in Colorado. Are Regional Innovation Hubs the right mechanism, the right platform, at the right time, to supercharge the semiconductor supply chain? [Editor’s note: The Biden administration has announced finalists in the RIH program – view the list of designees here.]
LP: I think there certainly is a foundation here that we can build from to help companies that may not have been directly playing in this space to now have the opportunity to diversify. They may have fundamental capabilities, and they can diversify in this space as well.
This R&D component of CHIPs is so important – equally as important as funding the expansion of manufacturing. Because we don’t want to bring manufacturing back here just to lose it again tomorrow; we need to bring it all back. We need to be able to continue to innovate so that, tomorrow, we’re competitive and have the technology we need for our country. It’s why the R&D part is so important.
Even things like materials: we need alternatives to ones that, you know, might be challenging to get because of the Ukraine war, for example. I know we certainly deal with some materials – gases in particular – that you can’t get anywhere else. And so how are we thinking about alternatives? Again, it’s going to require research and development, because you can’t just swap out one gas for another gas and think everything’s going to work exactly the same. So, I think that’s a key part of the CHIPs act.
And a key part when we think about the supplier aspect is it’s not just ‘lift and shift – like for like.” There will be development that’s going to have to be involved in that process. And then, you know, the experience that I’ve had, as we’ve talked to some of these companies here in the United States, they’re like, “Yeah, well, we really haven’t put a lot of effort in investing into some of these technologies and capabilities, even if we used to do some of those things, because there hasn’t been a market.” And we’ve approached them and said, “Hey, with CHIPs act, hopefully we’ll get funding. And if we get funding, then we want to invest in this. What would that mean for you? Could you be our service provider? Could you actually continue to invest if we’re purchasing from you?”
That’s the idea. It’s a cascade and a trickle effect as we start to bring these things back. The investment then goes, you know, into the other pieces and the whole supply chain then benefits and is able to stand up because it will finally make sense.
It’s going to take the collaboration; that’s why the hub model is really valid. It’s going to take the collaboration of more than one company. Sure, an individual company can do research – it supports their own development and production. But for us to really move the needle and stay ahead of the technology, it’s going to take a collaborative innovation approach.
BT: By way of collaboration, do you envision a robust semiconductor ecosystem developing in Colorado?
LP: I do see the ecosystem developing in Colorado. I love Colorado as a whole, but for one, I think Colorado Springs also has such a unique culture that it’s very collaborative. My background isn’t DoD (Department of Defense), and I haven’t tried to sell into that space and really understand how to do business there. But guess what? Colorado Springs is really good at that. It’s easy for me to raise my hand and say, “Hey, you do business over there, you know how this works. I need help!” And people have been so gracious to just come alongside to make the connections and the introductions and help you find the paths through this process. That is one of the things I do love about Colorado Springs in particular.
And I’m hoping that we continue to expand that outside of just Colorado Springs and do that more effectively across Colorado as a whole. But you know, you’ve got Microchip here, you’ve got Entegris moving into Colorado Springs right now as well. And I think the really cool thing is all three of us are part of the semiconductor ecosystem, but we are not competing with each other. Together, we can utilize a lot of the same suppliers and, ultimately, further that same mission with the semiconductor industry in the United States.
And I think you start to see this again: that center of mass that I talked about. Now it becomes more interesting for those additional suppliers to continue to move into this space. In Colorado Springs, we used to be great at semiconductors. We have that foundation, those fundamentals. And it’s very exciting for me to see all the investment that’s here back in Colorado, again, focused in this space. But now with the long game in mind.
Bart Taylor is a Moss Adams BDE in Manufacturing & Consumer Products, Food/Beverage & Agribusiness, and is founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com
Next time: A look at how the Regional Innovation Hubs competition played out for Colorado.
2024 Manufacturing Forecast: 5 Sure Bets
/in General/by Bart TaylorU.S. manufacturing is on a winning streak, even as its success is challenging economic convention. How the newly energized sector co-exists with America’s powerful “import economy” is a topic of interest and intrigue in 2024.
As fashionable as it’s become to be pro-manufacturing, America still has a love/hate relationship with its industrial base.
Tariffs exemplify our split-personality. The Wall St. Journal op-ed page speaks for powerful economic interests in opposing the Trump/Biden tariff regime, even as squaring this position with a pro-U.S. manufacturing platform is really hard.
Unless, voices like Harry Moser of the Reshoring Initiative argue, the cost of manufacturing in the U.S. can be lowered by 20-30%. But the means to get there — action to devalue the dollar, graduate more manufacturing employees, uptool thousands of SMBs, and reformulate trade policy to protect domestic industry – seem today, impossibly elusive.
In an election year lip-service will be paid to U.S. manufacturers and employees, but America’s “import economy” is still king. How manufacturing fares in advancing its fortunes, is the story of the year.
(More with Harry Moser next time.)
2. Brand power: Local manufacturers elevate their brands to win
Wagner Skis in Telluride, Colorado, has no business being successful. They compete with high-volume, low-margin producers that win on price, “buy” editorial coverage and big-name influencers utilizing fat marketing budgets, and generally operate from a different playbook than smaller, U.S.-manufactured producers.
Wagner Skis’ founder Pete Wagner isn’t fazed. “It’s not that we’re ‘Made in the U.S.,” Wagner says, “it’s that we’re an agile company – and we’re a real brand.” The take-away? “Business is really good.”
Brand-builders focus on the customer experience – the visceral, emotional connection that sustains through price wars, supply-chain woes, or unforeseen pandemics. To interact with the Wagner team will change your outlook on the sport and brands you patronize, generally.
“Real” brands will thrive in 2024. Including comeback brands like the Isuzu Trooper, bought and reimagined in ‘24 by a savvy OEM.
3. Space Command re-re-locates as workforce investments payoff
Space Command should never have been moved from Colorado to Alabama in the first place. That its final location is still in play is ridiculous.
That said, two developments will shape the final, final, final decision: neither Biden nor Trump will win the general election in 2024, and Alabama officials will pivot to find their way before Colorado’s do by linking manufacturing-related employment to the success of the overall space industry.
Alabama’s investment in its aerospace manufacturing workforce will be rewarded.
4. Five CHIPs Act-inspired Regional Innovation Hub winners are…
According to China’s president Xi Jinping, Taiwan’s reunification with mainland China is “inevitable.”
Trusting that smarter people than me are assessing the heightened risk of China controlling America’s top supplier of advanced semiconductors, I’ll guess that CHIPs-inspired programs like the Regional Innovation Hubs competition will prioritize U.S. semiconductor manufacturing – the OG CHIPs goal – including a new advanced manufacturing workforce and U.S. leadership in a new global energy paradigm.
We reported on the 31 finalists last year. My forecast of the five winners:
America’s national security is at risk. EDA: get it right.
Can Elon Musk be Henry Ford and William Randolph Hearst at the same time?
He should try. Elon Musk is the world’s most consequential industrialist – with a media bullhorn. In the 20th century, Hearst newspapers were a voice for The Chief’s personal and political agenda. If only he’d owned a U.S. satellite monopoly.
Speculate about its future, but know that in 2024, Twitter/X’s AI-fueled algorithm will promulgate Musk’s social and commercial narrative.
Twitter/X’s corporate evolution gains steam in ‘24.
Bart Taylor is a Manufacturing & Consumer Products BDE at Moss Adams and founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com.
The Year in Manufacturing: Hits and Misses from 2023’s Five Sure Bets
/in General/by Bart TaylorIt’s time to revisit my annual forecast from a year ago – including an Elon Musk guess – to own-up to the misses and revel in my prescience. I’ll forecast the year ahead for manufacturing next time.
My fab five from last year:
First, this was a terrible “forecast”. I’ll pass on open-ended questions in ‘24, even if the answer in ‘23 was straightforward: no state has built a semiconductor roadmap, yet, to be copied or that ensures success. I’ll tease my ‘24 forecast with this observation: whoever develops an advanced manufacturing workforce will win. There’s still confusion about how to do this – but states like Maryland and cities like St. Louis are cracking the code by making direct investments in equipment to uptool manufacturers, and training a new generation of employees in new advanced manufacturing centers of excellence.
Score: Miss
Again, tough to score. The simple answer is probably yes: manufacturing companies interest engineers and STEM grads more than at any time this century.
But touring one of Colorado’s new and highly automated food factories, as I did earlier this month, tells me that as many current employees will likely be promoted to man the modern, gamified equipment that will festoon tomorrow’s factories, as degreed engineers. Which in my book is a win: let’s upskill current employees to meet the demand for qualified workers, first.
I’ll borrow the halo – and take the Dub.
Score: Hit
From a numbers standpoint, the stock market surge late in the year saved many blue-chip apparel and outdoor gear companies from a disastrous financial outcome in 2023.
That said, as creative and innovative many OI brands are, the industry continues its race to the bottom – an embrace of high-volume, low-cost models – that floods the market with cheap products manufactured offshore, many destined for the landfill. How many “sale” racks of cheap outerwear can a person sort through?
I’ll celebrate many a domestic brand that pushes back on this model, lament the state of much of the industry along with Patagonia founder Yvon Chouinard, and hope we rally around leaders that find a way to travel the last mile to manufacture in the U.S. – the sure way to upend the status quo.
Score: Hit
Ugh. Some progress was made in improving EV infrastructure: Ford embraced Tesla’s charging standard, which eased the pain of Ford CEO Jim Farly’s misadventure driving his Lightning F150 across California.
But generally, outcomes don’t match stated intentions and future plans. I’m not suggesting I have the answer – I’m not an EV driver. Nor do I buy into political moves to undermine efforts to usher in an EV revolution. EV efforts have revolutionized automotive manufacturing and forced other industries to reconsider just how much of any product can be manufactured in the U.S. (Thank you Elon Musk.) But still.
Score: Miss
Speaking of the enigmatic Musk, I forecast a year ago that Twitter was a “distraction (that) will limit Elon Musk’s ability to lead the manufacturing revolution.”
This may yet be the case. Musk is in over his head when lecturing on free speech and advertising “boycotts” – silly, self-serving tangents that also diminish the credibility of fans who parrot his pronouncements.
But no need to defend the indefensible. SpaceX is the most compelling manufacturer in the world – having in 2023 established itself as an American monopoly in launch and lift capabilities at a time when the U.S. desperately needed it. Musk, SpaceX, Tesla: more influential in manufacturing than ever.
Score: Miss
Scorecard: 2-3. I hope to do better next year.
Bart Taylor is a Moss Adams BDE and founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com.
Polis Officials Choose Tech Over Manufacturing: A Decision That Deserves Scrutiny
/in Advanced Manufacturing, Semiconductor/by Bart TaylorLast month I reported on the national competition for 20 regional innovation hubs (RIH) – to be funded by the CHIPs and Science Act – and the six Colorado entries invited to present to the Polis administration per its TechHubNow! initiative. The process was intended to preview the entries, enable feedback and, in the end, allow the Polis team to select its favorite even as other entries were encouraged to continue if they chose.
And that’s what happened. Polis’ TechHubNow! team threw its weight behind two entries and, not surprisingly, the U.S. Economic Development Administration (EDA) selected one of those entries, Elevate Quantum Colorado, as one of 31 national finalists in the competition for five new hubs.
The announcement was cause for celebration in Denver’s business press. The Colorado Sun announced, “Colorado named a U.S. Tech Hub for Quantum Computing.” The Denver Business Journal proclaimed that, “Colorado won a coveted tech hub designation. See why the state beat other tech regions.” But they didn’t really explain why.
That’s partly because the state hasn’t won anything, yet. As the EDA points out, “Designation is an endorsement of the region’s plans to supercharge their respective technological industries to create jobs, strengthen U.S. competitiveness, and protect national security.”
But an “endorsement” would be hollow if Colorado’s designee doesn’t actually win and, today, the Polis administration’s decision to back a promising but nascent technology entry, and not one aligned with Colorado’s advanced manufacturing ecosystem, deserves more scrutiny from leaders of his state’s highly regarded manufacturing community.
The RIH competition is progeny of the CHIPs and Science Act – legislation intended to fuel a new U.S. semiconductor manufacturing ecosystem. (Read my interview with InnovaFlex Foundry’s Lindsay Pack to better understand why.) Acknowledging that multiple technology and manufacturing-related paths are required to build out a modern U.S. sector, the EDA left room for entrants to interpret “innovation” through whatever lens they chose.
For their part, Polis officials chose a pure-play tech route. Quantum computing is next-level stuff – its applications may change our core computing methodologies. Elevate Quantum is also in good company: the EDA selected two quantum nominees among the 31 finalists, the other being The Bloch Tech Hub, a multi-state initiative based in Chicago that counts the Biden-friendly Illinois governor J.B. Pritzker among its champions.
But while quantum computing is many things, what Elevate Quantum is not is a change agent for short-term advanced manufacturing-related outcomes in Colorado and envisioned by CHIPs.
What should be concerning for Colorado manufacturers is that other Colorado entries seemed better aligned with the RIH RFP’s manufacturing focus. One nominee emerged from the process as a stronger, more inclusive option – much to the TechHubNow! team’s credit. The RAMP: Readiness Accelerated Manufacturing and Production became a collaboration among space-related industry groups, nameplate aerospace OEMs, community colleges and, importantly, regional participants in Wyoming – checking the box of a key EDA RIH criteria. (Without the Polis endorsement, RAMP didn’t make the finals.)
But Colorado officials read “innovation economy” to mean “technology economy.” Presented an opportunity to invest in Colorado’s manufacturing economy, the Polis team passed and chose tech.
The “why” is not a mystery: Governor Polis was first a technology executive. His go-to backers, including the TechHubNow! team, are tech investors and advocates. If Midwest and Rustbelt governors view their economic fortunes through a manufacturing-informed lens, the Polis team sees technology.
Can Elevate Quantum win one of the five coveted designations? It would vindicate the Polis worldview. But several factors are working against it.
At its core, CHIPs is a workforce engine, a tentacle of programs that, collectively, lay the groundwork to recruit and train a new generation of advanced manufacturing employees, attracted by the prospect of working in an up-and-coming industry, on projects that uptool our national capability to “manufacture, commercialize, and deploy critical technologies.”
Recent events have highlighted America’s semiconductor workforce deficit – most notably Taiwan Semiconductor Corporation’s (TSMC) decision to delay the opening of its Arizona factory by a year, citing a lack of qualified workers.
Regional innovation hubs are also intended to be just that – regional – inclusive of communities that historically have been underserved by programs like CHIPs/RIH. The Bloch Tech Hub is a three-state consortium: Illinois, Indiana, and Wisconsin. Colorado’s finalist is a Front Range-focused, multi-county initiative underwritten by the same technology R&D ecosystem that’s benefitted from most-favored status throughout two Polis administrations. There’s nothing underserved or neglected about Elevate Quantum’s investor community or downstream recipients.
It’s possible that Colorado’s TechHubNow! team is playing the RIH game just right. The farther away from Washington D.C. the CHIPs Act travels, the less its outcomes seem to track to the fortunes of U.S. manufacturing.
By choosing tech over manufacturing, Polis may have unwittingly contributed to this outcome in his home state.
We’ll know soon enough.
Bart Taylor is a Moss Adams BDE and founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com.
How CEO Lindsay Pack is leading Colorado Springs-based InnovaFlex Foundry, formerly dpiX, into America’s semiconductor future
/in Advanced Manufacturing, General/by Bart TaylorColorado’s advanced manufacturing ecosystem is deep in aerospace acumen; established if underpublicized in bioscience and food and beverage; up and coming in battery and EV-related applications; and awakening as a semiconductor node, where America’s newfound interest in a national chip industry has raised the stakes for companies and communities.
It would be back to the future for Colorado Springs. As the Colorado Springs Gazette has noted,
“The semiconductor industry has a long history in Colorado Springs, starting when NCR opened the first local chip plant off Fillmore Street with 12 employees in 1975.
The plant Microchip operates was started by Honeywell in 1977, acquired by Atmel in 2009 and Microchip in 2016. At the industry’s peak, nine companies operated semiconductor manufacturing plants in Colorado Springs employing thousands of people and local boosters promoted the city as ‘Silicon Mountain.’”
Lindsay Pack and the team at Colorado Springs standout dpiX – now InnovaFlex Foundry – are intent on reimagining a new semiconductor ecosystem throughout the state. I interviewed Pack before last month’s CHIPS Act-related developments were announced. We’ll connect the dots from that news in a follow up column.
First, my chat with Pack:
Bart Taylor: I like the name, the reference to “foundry.” It’s now a modern, relevant term that connotes your ambition to expand your horizons in the semiconductor industry.
Lindsay Pack: Yeah, we were hoping that it would help make us a little bit more understood!
BT: So, speak to the new vision, reflected in your rebranding, and the future of the company if you would?
LP: When I joined, the focus really was on X-ray manufacturers. And understandably so: that’s our history. And I don’t want to stop supporting that industry. It’s such an important space. I mean, pretty much everyone has come in contact with one of our semiconductors via X-rays, right, at some point in their life. It’s clearly important. It is a very steady business – if not a lot of growth.
It’s also very price competitive. Clearly, fabs in China can produce things much more inexpensively than we can. Recognizing that we’re in a steady-state business with very low margins, I don’t want to abandon that space, but I need to diversify.
And when I think about who we are, I get excited about the future. We’re the only company in the United States that makes the type of semiconductors we do, we do it at scale, and we’re not a big-box firm. It’s not just, “Well, this is the semiconductor I make, take it or leave it.” We can actually work through innovation, we can partner in an IP-protected, secure environment to help develop very custom real solutions for unique problems, things that never were possible before.
The question I’ve asked is, “Why are we not more focused on U.S.-based products?” when there’s such high demand now in space, defense, and other markets. Let’s get focused on that. Let’s continue being great at X-ray detectors. But we’re going to use that foundation now to be great at other things as well, focused on things that really should be here in the United States.
BT: There’s opportunity for sure – though different, perhaps, from “conventional wisdom.” I just read Chip War (by Chris Miller), and he certainly puts your vision in context. One of the misconceptions about the U.S. semiconductor industry is that we don’t make a lot of chips here or support a thriving semiconductor industry. In some ways, that couldn’t be further from the truth.
As Miller points out, the U.S. is still a global leader in chip design and production. In fact, we make much of the equipment used offshore to manufacture the advanced semiconductors that represent the future, and we also design them here. Intel is manufacturing semiconductors in the U.S. that power a generation of servers and PCs. Apple buys radio-frequency chips for their iPhones (and other semiconductors) from U.S. suppliers in California and Texas, for example – and designs the chips that power the iOS operating system.
But they can’t manufacture those chips here: they’re manufactured by TSMC in Taiwan. As you’ve pointed out, upwards of 80 percent of those chips are manufactured outside of the U.S.
How do we square-the-circle? In addition to sharing the cost for TSMC to build new factories in Arizona and elsewhere, to build a new advanced manufacturing capability, are we in a position to also build out the current U.S. semiconductor ecosystem and get back in the game that we’ve allowed to move offshore to Taiwan in particular?
LP: I think largely, yes, and you’re right, a lot of design has been able to stay here in the United States.
But we have been losing those capabilities over time. I’ll tell you that for us, no one in the United States had the knowledge or expertise whatsoever for me to work on the new technologies that I need to work on. I have to recruit internationally to be able to bring in that expertise. Because the U.S. did shift a lot of that manufacturing offshore with the intent of maintaining the design and engineering expertise here.
But it’s so hard to separate manufacturing from design, especially when these processes are the design. And I don’t want us to be under the impression that we can keep design here in the United States and just simply have manufacturing somewhere.
We used to be able to get our equipment, components, all those things here in the United States. But as all of that production started shifting overseas, guess what, the suppliers did, too. So we do have to rely on many Asian suppliers to support the equipment that we have in the fab because there just isn’t anyone here in the United States that can provide those services.
What I think is so important with chips is that it’s not just us expanding, or our neighbors down the street that are producing some other sort of chip. It’s that when we invest in this, we need a center of mass to be here once again – where it makes sense for all of those suppliers to be located here to actually service companies here. I understand why for them, it wasn’t practical any longer to maintain business here. It was the unintended consequences of thinking, “Oh, well, we’re just moving manufacturing.” Over the years, it really eroded much more of the semiconductor ecosystem. As you point out, we have semiconductor expertise and we have semiconductor manufacturing. But I think we are at that pivotal moment where if we don’t do something to reestablish the manufacturing supply chain, we’ll lose the upper hand in the future of semiconductors.
BT: Your language could be straight out of the 2022 CHIPS and Science Act – the legislation intended to usher in a new era of investment in America’s semiconductor ecosystem. One derivative of CHIPs – the $10B Regional Innovation Hub competition – has attracted interest from several groups in Colorado. Are Regional Innovation Hubs the right mechanism, the right platform, at the right time, to supercharge the semiconductor supply chain? [Editor’s note: The Biden administration has announced finalists in the RIH program – view the list of designees here.]
LP: I think there certainly is a foundation here that we can build from to help companies that may not have been directly playing in this space to now have the opportunity to diversify. They may have fundamental capabilities, and they can diversify in this space as well.
This R&D component of CHIPs is so important – equally as important as funding the expansion of manufacturing. Because we don’t want to bring manufacturing back here just to lose it again tomorrow; we need to bring it all back. We need to be able to continue to innovate so that, tomorrow, we’re competitive and have the technology we need for our country. It’s why the R&D part is so important.
Even things like materials: we need alternatives to ones that, you know, might be challenging to get because of the Ukraine war, for example. I know we certainly deal with some materials – gases in particular – that you can’t get anywhere else. And so how are we thinking about alternatives? Again, it’s going to require research and development, because you can’t just swap out one gas for another gas and think everything’s going to work exactly the same. So, I think that’s a key part of the CHIPs act.
And a key part when we think about the supplier aspect is it’s not just ‘lift and shift – like for like.” There will be development that’s going to have to be involved in that process. And then, you know, the experience that I’ve had, as we’ve talked to some of these companies here in the United States, they’re like, “Yeah, well, we really haven’t put a lot of effort in investing into some of these technologies and capabilities, even if we used to do some of those things, because there hasn’t been a market.” And we’ve approached them and said, “Hey, with CHIPs act, hopefully we’ll get funding. And if we get funding, then we want to invest in this. What would that mean for you? Could you be our service provider? Could you actually continue to invest if we’re purchasing from you?”
That’s the idea. It’s a cascade and a trickle effect as we start to bring these things back. The investment then goes, you know, into the other pieces and the whole supply chain then benefits and is able to stand up because it will finally make sense.
It’s going to take the collaboration; that’s why the hub model is really valid. It’s going to take the collaboration of more than one company. Sure, an individual company can do research – it supports their own development and production. But for us to really move the needle and stay ahead of the technology, it’s going to take a collaborative innovation approach.
BT: By way of collaboration, do you envision a robust semiconductor ecosystem developing in Colorado?
LP: I do see the ecosystem developing in Colorado. I love Colorado as a whole, but for one, I think Colorado Springs also has such a unique culture that it’s very collaborative. My background isn’t DoD (Department of Defense), and I haven’t tried to sell into that space and really understand how to do business there. But guess what? Colorado Springs is really good at that. It’s easy for me to raise my hand and say, “Hey, you do business over there, you know how this works. I need help!” And people have been so gracious to just come alongside to make the connections and the introductions and help you find the paths through this process. That is one of the things I do love about Colorado Springs in particular.
And I’m hoping that we continue to expand that outside of just Colorado Springs and do that more effectively across Colorado as a whole. But you know, you’ve got Microchip here, you’ve got Entegris moving into Colorado Springs right now as well. And I think the really cool thing is all three of us are part of the semiconductor ecosystem, but we are not competing with each other. Together, we can utilize a lot of the same suppliers and, ultimately, further that same mission with the semiconductor industry in the United States.
And I think you start to see this again: that center of mass that I talked about. Now it becomes more interesting for those additional suppliers to continue to move into this space. In Colorado Springs, we used to be great at semiconductors. We have that foundation, those fundamentals. And it’s very exciting for me to see all the investment that’s here back in Colorado, again, focused in this space. But now with the long game in mind.
Bart Taylor is a Moss Adams BDE in Manufacturing & Consumer Products, Food/Beverage & Agribusiness, and is founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com
Next time: A look at how the Regional Innovation Hubs competition played out for Colorado.
Colorado wants to land a CHIPs Act-inspired Regional Innovation Hub. Here’s what manufacturers need to know
/in Advanced Manufacturing, Innovation/by Bart TaylorThe Polis administration says it’s all-in on the national competition for 20 new innovation centers that could boost American advanced manufacturing. Local manufacturers stand to benefit – or not. By Bart Taylor, Moss Adams Science and technology influencers gathered in Denver in late May to parse ideas in support of a Colorado bid to land […]
2023 Manufacturing Forecast – 5 sure bets
/in General/by Bart TaylorBy 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
/in Free Trade, General/by Bart TaylorBy 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:
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
/in Workforce/by Bart TaylorBy 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.”
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
/in CAMA/by Bart TaylorBy 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:
Other ideas? Send them to me. We’ll provide the platform to showcase a wave of modern thinking around the sector.
Event Recap: 2023 Colorado Manufacturing Awards
/in General/by Bart TaylorThe 2023 Colorado Manufacturing Awards (CMAs) honored top-level companies in a variety of fields: craft food and beverage, consumer products, high-tech, and heavy industry. The awards ceremony emphasized the accomplishments — and importance — of leadership by women within manufacturing fields.
When Bart Taylor, who served as the event’s emcee, founded CMA co-sponsor CompanyWeek a decade ago, he took a risk that people would want to read stories about manufacturing — and that manufacturers would want their stories told to a like-minded audience.
Taylor noted how the landscape has changed since the pandemic: “Today, manufacturing is a national security imperative,” he said — a point affirmed by several CMA winners. Taylor has now teamed up with Texas-based Sustainment, in order to “showcase your capabilities” within an online manufacturing directory, he told the audience.
Similarly, event co-sponsor Manufacturer’s Edge is “part of a national movement to map the manufacturing supply-chain ecosystem,” in order to support and grow it, said CEO Glenn Plagens.
Sharing a vision for growing their Colorado industries, nominees came from locations across the state to participate: Grand Junction, Fort Collins, Buena Vista, and the site of the awards ceremony itself, Golden. Within videos prepared for the event, previous CMA winners provided observations on domestic manufacturing, noting recent supply-chain snags and labor shortages. Representatives from co-sponsors JPMorgan Chase and Moss Adams were on hand to announce some of the winners and highlight their companies’ services
Colorado Manufacturing Woman of the Year
Winner: Karen Hertz, Holidaily Brewing Company
Accepting the award on Hertz’s behalf, Hertz’s longtime friend and Holidaily COO Laura Ukowich recalled their panic after discovering — gulp! — Hertz needed to go gluten-free and stop drinking the beer made by their employer MillerCoors. “How do we go to tailgates?!” Ukowich recalls them thinking. Instead of giving up beer, Hertz opened a gluten-free brewery, instead. Not only that, Hertz is “dedicated to giving back to her community and mentoring young women in the brewing and manufacturing industries,” noted Amy Olson, the vice chair of the Colorado chapter of Women In Manufacturing, who announced the nominees in the category. (Where was Hertz during all this? Being a dedicated mom, attending her daughter’s state final soccer game.)
Read more about the finalists here.
Craft Food and Beverage Manufacturer of the Year
Winner: Polidori Sausage
This Denver brand nationally distributes its meat and sausage products within both retail and food service channels. And its upcoming centennial is definitely on the minds of the family business. “I get chills and tingles through my body when I think about that,” said Melodie Polidori Harris, noting how her great-grandmother came from Italy and started the Polidori family sausage business in (what’s now) Denver’s LoHi neighborhood in 1925.
After Polidori Harris expressed her excitement and surprise over winning, she noted her primary motivation for attending the event: “I came here to support Bart [Taylor of CompanyWeek] and the amazing work that he does for Colorado manufacturers.”
Craft Food and Beverage Contract Manufacturer of the Year
Winner: Claremont Foods
COO Adam Cioth said about the Colorado family business, “When we were little kids, we always dreamed of having something that we could do together.” Today, those siblings and their wives manufacture nationally-distributed energy, protein, and nutrition bars for about 20 different customers, utilizing cutting-edge technology at their 100,000 square feet of space in Longmont. “We love being here,” said Cioth about the state, citing Colorado’s central location, its labor force, and its high-tech and manufacturing ecosystems. “We can’t imagine being anywhere else.”
Read more about the finalists here.
Technology Manufacturer of the Year
Winner: dpiX
This Colorado Springs company has innovated X-ray imaging technology, replacing glass with a much lighter foil substrate on its panels. The U.S. Department of Defense finds that eminently useful, as do other medical and manufacturing concerns. CEO Lindsay Pack said about dpiX’s CMA victory, “Thank you so much for acknowledging the contribution that we’re making here in Colorado—as well as to the United States.”
Technology Contract Manufacturer of the Year
Winner: Blue Line Engineering
If a major aerospace manufacturer needs a component, Blue Line Engineering is ready to take the call. At its Colorado Springs facility, the company performs research and development all the way through final manufacturing. “Our products are used on the James Webb Space Telescope in four different places,” noted founder and CEO Greg Ames, who likens that technology for laypeople to “exquisite guitar pickups.” And Ames also drew a comparison of his company’s corporate culture to that of a theater company, with everyone lending their talents to bring about big results — which in Blue Line’s case “are so helpful for science, for defense, for commerce and industry.”
Read more about the finalists here.
Consumer Product Manufacturer of the Year
Winner: Fading West Development
Planning communities and constructing modular homes for the “workforce segment” of the market wasn’t something CEO Charlie Chupp had ever envisioned doing, given his previous manufacturing background. However, Chupp began asking himself, “How do we bring manufacturing concepts into construction?” Today, modular homes built by Fading West in Buena Vista are being shipped to communities, desperate to house and retain their workers, all across the state.
Consumer Product Contract Manufacturer of the Year
Winner: HookFish Manufacturing
President Mark Huebner runs a dye sublimation print house that also assembles a variety of garments: golf polos, team uniforms, and ski bibs are just some of the products coming out of his active contract manufacturing business. As the grandson of WWII German immigrants “who love this country dearly” and the son of a military combat service member, Huebner said, “They instilled in me the importance of making things in America.”
Read more about the finalists here.
Industrial & Equipment Manufacturer of the Year
Two winners were announced in the category.
Winner 1: Munro
As a manufacturing business over a hundred years old, Munro has made a variety of water pumps in Grand Junction since the early ’70s. Company president Katie Munro Powell highlighted the importance of local manufacturers in her acceptance speech: “Our companies are foundational job providers, are foundational industries for our state — and so incredibly important. And I feel very proud to be part of that.” (Munro Powell was also a contender within the Colorado Manufacturing Woman of the Year category.)
Winner 2: Walker Manufacturing
Company chairman Bob Walker discussed how his family’s business began after his parents courageously transitioned from farming to building golf cars. Nowadays, the Fort Collins company manufactures commercial riding mowers. But given how its top markets are in the Northeast, and its important components originate in the Midwest, why not relocate? “We don’t want to be somewhere else,” affirmed Walker. “We want to be here in Colorado.” Besides keeping company jobs in the state, Walker discussed how a multitude of ancillary businesses — like truck drivers — directly benefit from the company’s local manufacturing, as well.
Industrial & Equipment Contract Manufacturer of the Year
Winner: AMP Robotics
This Louisville company melds robotics with AI in order to create automation systems which sort recyclable material — technology now in use throughout the world. The company’s business development director Rob Writz said, “It is a really exciting time to be in recycling.” He pointed out how the Colorado legislature has now placed the burden for recycling on packaging producers, rather than taxpayers — a Canadian-style initiative which has seen “recycling rates of 70 to 85 percent.” Writz added, “Colorado is about to be a leader in this space in the United States. So, get ready: You all will be a big part of this.”
Read more about the finalists here.
Colorado Manufacturing Advocate of the Year
Winner: Mark Yoss, Metropolitan State University of Denver
Yoss, who transitioned from a 36-year career at Lockheed Martin to overseeing the Industry 4.0 Center of Excellence at Metropolitan State University of Denver, has both manufacturers and students in mind with his current work. Yoss invited the gathered manufacturers over to MSU Denver to learn more about “digital twins and augmented reality, and how you can use that at your workplace. And then, take a student with you back to your home shop to implement it, so that they then wind up getting a job and, hopefully, have a nice, long, rewarding career like I did.”
Nominations for the 2024 Colorado Manufacturing Awards will open in late 2023.