Outdoor Retailer’s a coup, but outdoor industry brands need more than a trade show to thrive

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We often beat the drum about the outdoor industry’s promise for manufacturing growth. Last week’s news of Denver’s successful bid to land Outdoor Retailer (OR), the industry’s most important trade show fumbled away by Utah, again highlights prospects for a new industrial play.

Here’s the opportunity in a nutshell: Of the thousand or so brands traveling to Denver in January 2018 to exhibit and take orders from retailers across the globe, most manufacture offshore. Yet more and more want to shorten supply chains and make more things in the U.S. Manufacturing economics increasingly favor local production, and importantly, so do millennial buyers.

The measure of how successful any city, or state, or region will be in developing the outdoor industry will depend not only on who reaps the tourism and service-sector windfall from convention business, but on who will develop supply chains for companies poised to create jobs to manufacture the toys of this multibillion dollar industry.

Is Colorado a better location than Utah (or California for that matter) as industry expands? The irony of OR’s move is that Utah has been better at recruiting outdoor brands than Colorado. Development of Ogden’s outdoor industry (OI) cluster has been deliberate — and successful.

But the industry’s power players bluntly demonstrated that OI’s progressive bent is a better fit in Colorado than in more conservative Utah, a reality that lays bare the stark choice forced on OR’s constituents. In Utah’s misguided zero-sum game, it was either oil and gas development or the outdoor industry. OI lost.

Utah’s outdoor industry will rebound and thrive. So will communities that develop innovative new tactics, a new toolbox, to recruit OI companies.

Here’s a short list:

Consider industry-tailored business centers and accelerators. OI manufacturers require specialized supply chains. Communities that integrate the disparate components into new centers of innovation, a common practice in technology and other growth industries, will become magnets for companies and talent.

In an editorial celebrating Colorado’s OR ‘coup,’ the Grand Junction Sentinel cites city plans to develop “a business park that will cater to outdoor industry manufacturers” as an important next step. It’s a game changer if the initiative also includes: an education partner to provide workforce training, ideally advanced curriculum and degreed programs (Utah State today offers a degree in Outdoor Product Design and Development); advanced manufacturing technology and equipment; mentorship and coaching; and bankers and investors, legal experts, and other business service providers.

Techstars in Boulder finds emerging technology companies, funds them, coaches and trains their leaders, and connects them with national and global opportunities. Who will develop the first OI accelerator in the region? (See Oregon’s Bend Outdoor Worx.)

Develop warehousing and fulfillment services. As Bill Gamber, Honey Stinger and Big Agnes CEO, said last week, Colorado lags in important infrastructure for manufacturing companies. Warehousing space for inventory is a challenge, especially for smaller companies in Denver, where costs have skyrocketed the past few years; rail access and other transportation issues like I-70 make other markets like Odgen look very attractive. Communities able to navigate these challenges on behalf of OI companies will have a leg up.

Embrace new marketing tactics. States with exceptional outdoor tourism assets understand how to attract visitors, but efforts to recruit and retain manufacturing companies often lag. It’s easy to market a location as a destination for skiers. There’s less understanding on how to promote a place as a destination for companies that manufacture skis.

Invite all manufacturers to the party. In the fast-growing food sector, manufacturers are benefitting from advanced manufacturing solutions developed in other industries, like energy and aerospace. NFT Automation is providing technology that helps co-packers and single brands alike automate production. It’s a huge development, the expertise for which was developed in other industries.

The reservoir of industrial talent here outside of the outdoor industry is deep. Companies needing to fabricate products in metal and other advanced materials can find resources here, but the resources must be brought to the discussion. Local economic development leaders know the companies that can help. Rally established manufacturers to new opportunity.

Develop regional strategies and partnerships. The outdoor industry is a regional and national opportunity. State’s that work to connect companies with regional supply-chains are certain to benefit most. Today it’s common to meet OI companies born and headquartered in Colorado, Utah, and Wyoming, with manufacturing in California.

Locating relevant and qualified supply-chain resources throughout the region will be a valuable service to OI companies.

Luis Benitez, director of Colorado’s Outdoor Recreation Industry Office, seems the right person to bring the industry together, across state lines. He’s been a collegial voice throughout a difficult time for the industry. “I think the most important aspect of this process,” he told me, “is to understand that whether it is Utah or Colorado or anyplace else in the country, the outdoor recreation industry has the opportunity to rise above politics, and show that the things we support and cherish know no borders or boundaries.”

Two years or so after Colorado copied Utah to establish a state-level office and appointed Benitez as its leader, Utah officials lost their minds and a billion-dollar OR windfall to Colorado. Last week’s high fives aside, Benitez’ comments are welcome salve. But if Colorado is to copy Utah industry’s success, the hard work’s just beginning.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Rust Belt bias flunks the 2017 Manufacturing and Logistics National Report Card

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Last year, the 2016 Manufacturing and Logistics National Report Card from Ball State University in Indiana raised eyebrows in Colorado’s manufacturing community when we reported the state was given a D. The bad grade provoked well-intentioned efforts to assess the state’s manufacturing shortcomings.

This year, our footprint has expanded west to include California and makes for an even larger data set to parse. Here’s the 2017 Manufacturing and Logistics National Report Card grades for California, Colorado, and Utah, the states where CompanyWeek now publishes.

There’s a lot to unpack here.

By the looks of things, the only subsector grade saving California from Colorado’s ignominious D in overall Industry Health is a A in Productivity and Innovation.

But in other states, including many in the Rust Belt, it doesn’t appear the overall grade correlates at all with subsector scores.

Consider Michigan:

Michigan’s A grade in overall ealth, without an A in the other categories, is a headscratcher. Likewise, Utah would appear to have earned a high overall grade.

The explanation seems to be that per-capita employment is weighted more heavily. According to the Report, Michigan’s manufacturing employment is 11.7 percent of the state economy, a high number compared with most states. The Report Card notes that 5 percent of Colorado employment, and 8 percent in California and Utah, is in manufacturing.

Is Michigan’s sector — or that of Indiana, Kentucky, Iowa, and South Carolina, other states with A grades for industry health — in better shape than California or Colorado’s because it has more jobs?

Maybe, but here’s why that’s a tough argument to make.

Manufacturing jobs have steadily decreased as a percentage of overall U.S. employment. Per-capita employment seems a dated metric; it’s yesterday’s measure of industry health.

That’s not to say workforce doesn’t matter. The opposite. Human Capital is the study’s most important metric. The lack of skilled labor is manufacturing’s biggest challenge — nationwide.

Today’s healthiest manufacturing economies are focused on developing the right workforce. What’s appealing to manufacturing companies is a future workforce flashing STEM skills. States experiencing a net in-migration of young talent, in economies with a rich R&D backdrop, is also a plus. Michigan’s D in Human Capital is telling, as is Kentucky’s D and South Carolina’s F.

Other criteria in the Report Card are important in the future. Sector diversification is manufacturing’s new calling card. Want to begin to solve manufacturing’s labor problem? Showcase its growth industries — beer and distilling, natural and organic good, technology-fueled fabrication in aerospace, and the outdoor industry — that appeal to a new generation. They’re the growth industries of the manufacturing economies in the West.

Global Reach is today a two-way street. Exports are only one side of the global manufacturing coin. Reshoring — shortening supply chains — is the flip side, and states developing manufacturing infrastructure to accommodate brands wanting domestic manufacturing will thrive.

Michigan’s recovery, with automotive manufacturing at the center, has been startling. It’s a testament to the power of industry innovation and deliberate economic development efforts to reimagine manufacturing in a key industry. Other states, like Tennessee (overall health: B+), are led by energetic and capable manufacturing leaders intent on bring new ideas to their communities.

But today manufacturing health will follow economies where talent enables innovation and communities understand the value of manufacturing jobs. If Michigan and other Rust Belt states leverage their manufacturing legacy to recruit a new generation of STEM-inspired employees to manufacture a widening portfolio of industry products, an A will be well-earned.

Otherwise, the centers of modern U.S. manufacturing will tilt toward R&D-inspired, entrepreneurial economies also benefitting from an influx of talent and money.

The race is on, and more than good grades are in the balance.

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

Defending Ivanka, Inc.: Trump can silence her critics by investing in U.S. apparel production

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U.S. apparel brands are working hard to improve working conditions in overseas factories that manufacture their products. But when should a brand invest in U.S. jobs instead?

If only the The Washington Post would have explored this question in last month’s takedown of Ivanka, Inc. We’d of learned more about Ivanka Trump’s operation and the apparel industry at large.

Instead, the paper settles for a political hit on Ivanka Trump that largely falls flat. Under the simple headline, Ivanka, Inc., the story trumpets,

“The first daughter talks about improving the lives of working women. Her father urges companies to “buy American.” But her fashion line’s practices collide with those principles – and are out of step with industry trends.”

The author’s real objection is that Ivanka, Inc. manufacturers offshore, at all. In related video content entitled ‘Here’s what Ivanka Trump has been doing in the White House’, the paper boasts,

“A Washington Post investigation revealed that Trump’s clothing line relies exclusively on foreign factories in Asian countries. That’s despite the administration’s call to “buy American.”

But most apparel companies rely on foreign factories in Asian countries and couldn’t manufacture here even if they’d like (many would like). Some investigation.

Kelly and Will Waters of Telluride’s homegrown brand Western Rise are navigating a global supply chain to build an apparel brand. I asked Kelly about her operations — Western Rise manufacturers offshore — the Post‘s story, and the challenges of manufacturing onshore.

“It’s a complicated, multifaceted issue,” Waters begins, “in that a lot of manufacturing jobs can’t come back because we don’t have the factories available, we don’t have the fabric suppliers here, we don’t have the workforce available, to sustain that level of manufacturing — and also to sustain it at the price the American consumer has come to expect as reasonable for their apparel. I think that’s one part of it.”

She continues, “One of the other things that can be difficult for apparel manufacturers, and I know this was mentioned in the article, is that very few manufacturers own their supply chain, and because of that, it can very difficult to regulate that supply chain, and the ethical practices in the mills and factories doing work for you. It becomes even more difficult when you use a third person, as was mentioned in the article, a ‘middleman’ you hire to negotiate rates with all these mills and factories. It’s another degree of separation between you and your supply chain, which makes it that much more difficult to check in on things like labor, and environment, and work hours, and the sustainability of the fabrics, or water consumption and environmental footprint of the factories you use, and all of the things that get looked at. It’s very difficult when you have that degree of separation.”

Waters has eliminated the middleman. “We source all of our fabrics directly with our mills,” she says, “and we contract work directly with our four different fabric and apparel factories.”

But bringing production to the U.S. is no simple task. “Short of billions of dollars in investments and state of the art facilities,” she adds, “it’s going to be hard.”

Who better than Ivanka Trump to invest in apparel infrastructure? If only the Post would have asked.

Where Ms. Trump shouldn’t be held to a different standard despite her high-profile father’s exhortations, Ivanka Trump, the company, can reasonably be expected to invest in U.S. manufacturing infrastructure, in keeping with President Trump’s message. The company has resources, influence, and a bully pulpit to effect change.

Waters has an idea where to begin. “I think the place you start is workforce training, but I would hesitate to say workforce training in the traditional cut-and-sew manufacturing process. I think we’ll see manufacturing come back to the U.S. is in the areas we excel, which is creative problem solving and technology, and things like 3D knitting, which we could house here in the United States, and what we need to run them is people who are familiar with code, versus people that are familiar with flat lock stitching. You’re talking about building an infrastructure from the ground up. And to be honest, we’re not going to be able to compete with Bangladesh and Africa on cut-and-sew prices and hourly wages for employees. We need to compete in areas where we have strength.”

Can Ivanka, Inc. evolve to where it’s a change agent in fashion apparel production? Trump’s low-cost, mass-merchandising product strategy also feeds the very offshore production system that U.S. brands view as unsustainable. It’s a brand strategy that Hap Klopp, founder of The North Face, calls the ‘race to the bottom’ — high volume, cheap products for the consumer and low margins for the manufacturer. Up and coming U.S. brands embrace the opposite.

If not Ivanka Trump’s company, Colorado and the region are home to a cadre of brands and entrepreneuers reimagining the global apparel supply chain. More are on the way. Of the thousand or so brands coming to Denver this January for the city’s first Outdoor Retailer, most manufacture overseas. As a regional blueprint for apparel production evolves, the possibilities for growth are intriguing. We’ll dig deeper into the concepts and people leading the discussion next time.

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

Why we write about manufacturers—and what we’ve learned since 2013

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As we expand into California this week after telling the story of 700 or so manufacturing companies in Colorado, Utah, and across the region, it’s a great opportunity for us to revisit why we launched CompanyWeek, and assess what we got right and wrong.

Reason #1: There’s a renewed passion for making things, and companies are transforming entire industries.

What we saw: In Colorado and much of the West, a wave of companies is breaking all the rules about manufacturing. Natural and organic food brands, craft brewers and distillers, entrepreneurs in outdoor industry, engineers and designers in aerospace and bioscience, industrial upstarts rediscovering technology — all, and at once, are transforming America’s manufacturing brand.

What we got right: The wave shows no signs of cresting. Trends favor a continued renewal of domestic manufacturing.

What we got wrong: The Boston Consulting Group noted that, “The U.S. manufactures $3.4 trillion worth of goods annually, nearly three-quarters of what it consumes.” Like everyone else, we called America’s new focus on manufacturing a renaissance. It’s more like an awakening, to new possibilities.

What we learned: For communities having success with manufacturing, industry clusters typically fuel supply-chain development that begets manufacturing. A lesson for developers: Decide what industries are a fit, and develop ecosystems to support and recruit companies. Boulder, Colorado, Ogden, Utah, and San Francisco are thriving manufacturing towns today because of cohesive industry strategies, around food, outdoor industry, and a thriving maker movement.

Reason #2: Powerful trends make the economics of American manufacturing increasingly competitive on the global stage.

What we saw: Companies are weary of managing global supply chains, especially with costs for overseas production on the rise. Today it’s often as expensive to manage factories overseas as manufacture domestically.

What we got right: A new cost equilibrium will keep more manufacturing jobs here, or nearer-shored.

What we got wrong: The domestic supply chain continues to limit growth. Ready to scale an apparel brand and want to keep cut-and-make local? You’ll search far and wide, and may near-shore, to Mexico, in lieu of a domestic manufacturer. We’ve not trained a new generation of apparel technicians, using the latest technology, in decades. We simply can’t reshore or develop some manufacturing jobs.

What we learned: Today, early-stage brands favor local inspiration and production. Shorter supply chains are now brand objectives. Millennials don’t want their food grown and shipped across entire oceans, or their favorite garment made for dollars-a-day labor.

Reason #3: Media have lost interest in manufacturing.

What we saw: Manufacturers lament the public’s perception of their sector. They call it the “Four Ds”: dirty, dumb, dying, and dangerous. It’s far from that, but as companies turned overseas to make things, media tuned out.

What we got right: Business media still can’t agree on the importance or significance of manufacturing — whether it’s a single industry or a service sector; whether a technology company that makes things (think Apple) is a tech brand or a manufacturing company; or if a thriving manufacturing economy alongside technology and service is integral to prosperity or not. Today, manufacturing bewilders business media.

What we got wrong: Media’s important, but industry and other business stakeholders are the arbiters of manufacturing’s success.

What we learned: It’s manufacturing’s responsibility to reimagine how the sector is perceived — and where investments in the manufacturing brand must be made or reconsidered. Media’s complicit in under-reporting the sector’s far-reaching impact, but it’s time for industry to make different decisions to promote its interests.

On that note, the best way to understand manufacturing is through its compelling companies and leaders. We’ll publish a standalone California edition of CompanyWeek, and in every issue, we’ll profile three of four of California’s finest manufacturers. Their stories are the real narrative of a modern, transformative sector.

We’ll do so monthly until the fall, when we’ll publish every week. Here’s why manufacturers in Colorado and Utah have come to value CompanyWeek.

Our journey in California begins this week.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Pittsburgh not Paris: Who will benefit as manufacturing’s growth industries surge?

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The notion that U.S. manufacturing is “coming back” has always been a misnomer. Most of the goods that feed America’s consumer-driven economy are still made here.

As Harold L. Sirkin of the Boston Consulting Group pointed out in 2012, “The U.S. manufactures $3.4 trillion worth of goods annually, nearly three-quarters of what it consumes.” It’s a staggering number.

But the story of modern manufacturing is also very much about the half-trillion-plus dollars of products U.S. companies make offshore, products often fabricated with less expensive labor sourced in overseas economies eager to accommodate cost-minded companies. In some cases, entire industries — like apparel — left the U.S.

What goes around comes around, and five years ago Sirkin identified seven industries at tipping points, industries poised to reshore manufacturing jobs as the economics of making overseas, especially in China, were becoming less attractive and brands were reawakening to the the benefits of domestic production. In 2010, these industries accounted for $200 billion in imports from China alone, or two-thirds of all Chinese exports to the U.S.

Sirkin’s forecast in 2012 of a new emerging price equilibrium that would have U.S. companies “reassessing their global manufacturing footprint” has generally materialized and, in some industries, accelerated. For example, Harry Moser’s excellent research at the Reshoring Initiative finds that U.S. companies are now reshoring as many jobs as they offshore.

The rising cost of labor in China and elsewhere is the main driver, but brand imperatives are also accelerating the fresh look at U.S. production. In emerging powerhouse sectors like the outdoor industry, companies view domestic production as key to brand authenticity and value. Today it’s counterculture for many companies to sell Millennial buyers products made with dollars-a-day labor. And that’s not to mention the tangible benefits of shortening supply chains to bring production closer to where products are designed, prototyped, and sold.

The trillion-dollar question: Where, or who, will land the jobs and business spend as industries and companies reimagine domestic manufacturing? Not only for the $200 billion-plus of product imported from China today, but for thousands of new companies that value “Made in the USA.”

Not Pittsburgh, Pennsylvania, according to some economic voices in the Steel City who were quick to run away from President Trump’s alliteration and from manufacturing. It was probably a knee-jerk reaction. The city’s R&D ecosystem is leading-edge and already instrumental in helping transform manufacturing to the high-tech, opportunistic sector reinventing itself across the U.S. Pittsburgh’s industrial future actually looks bright. How ironic.

So too are the prospects of Anytown, USA that values a new wave of brands that define success by quality, innovation, and responsiveness. Cities and communities who see a future in hosting brands that build great products, increasingly with robotics and automation, and, in so doing, are creating new middle-class wealth. Cities and communities around Denver, Salt Lake, Los Angeles, and San Francisco?

Time, and a trillion dollars, will tell.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Apparel and outdoor industry brands want production closer to home. Is Colorado a destination?

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Two regional developments promise to infuse much-needed expertise into the manufacturing supply chain. Last week, we reported on the Mountain West Advanced Manufacturing Network. This week: We look at Colorado State University’s National Science Foundation grant to study supply-chain dynamics in emerging clusters of small manufacturers.

The growing number of apparel brands looking to manufacture domestically face two big hurdles. One, there are simply too few qualified patternmakers and sewers. If there’s a poster child for a U.S. industry workforce devastated by the offshoring, it’s apparel. Today, about 5 percent of apparel purchased by U.S. consumers is made here. In 1960, that number was closer to 90 percent.

As we offshored jobs, we also stopped training the next generation of production specialists. In the process, we’ve lost much of our institutional memory on how to train new employees. Today there’s no blueprint, and no uniformity in methods, equipment, and leadership. We’re essentially starting over.

Carol Engel-Enright, Kelly Alford, and other local architects of a new apparel manufacturing infrastructure in Colorado have experienced this firsthand the past several years. Demand for a well-trained apparel and sewn-product production workforce is surprising strong. Has it outstripped the available talent? Maybe. Alford’s enterprise, The Whole Works, closed it doors late last year after a promising, highly publicized run ended with too few production specialists.

But setbacks have also proved helpful. Engel-Enright’s efforts, in particular, have garnered national attention. We chronicled the journey of the Rural Colorado Apparel Manufacturing initiative in previous columns, including an invitation from Walmart to apply for its Walmart’s U.S. Manufacturing Innovation Fund. RCAM lost out in the end.

Engel-Enright is also an internship coordinator and instructor in CSU’s Department of Design and Merchandising, and her persistent work to reconstitute apparel industry paid off in the form of a $385,000 National Science Foundation grant to the university, to study “the interactions and organizational development among emerging small manufacturing businesses, clusters, and a formal network, as supply chain partners.” If it sounds like an academic exercise, it is. But Colorado’s rural communities — RCAM communities — are a worthy testing ground to study supply-chain dynamics, including the “reported shift from vertical integration to dense networks of specialized suppliers that amplifies the contribution of small manufacturers to overall U.S. manufacturing growth and employment.”

Engel-Enright’s CSU grant is coup for the region. One possible outcome? The CSU Department of Design and Merchandising offers degrees in Apparel Merchandising with a concentration in Apparel Design and Production. The graduates of the program may be positioned to assume leadership roles in regional apparel manufacturing. It’s also an important step in developing a training blueprint for the industry.

One challenge that apparel manufacturers and close cousins in outdoor industry won’t have is a lack of demand. A wave of new companies now prefers to make things domestically, where brand values like quality, value, and responsiveness are more easily achieved.

It’s why brands are highly motivated to shorten supply chains and make products closer to where they’re designed and sold. Hap Klopp, founder of The North Face, outlined his reasons last month. Under Armour’s Kevin Plank told CNBC, “We should be bringing jobs back, not just to America, but tightening supply chains all over the world. We have the ability to do it better. It’s time for all of us to make an investment.” It’s why manufacturing will get its jobs back here in the U.S.

Can Colorado and the Rocky Mountain region be home to a 21st-century, cut-and-make infrastructure to accommodate the wave of new brands seeking domestic manufacturing? We’ll see. One one hand, the NSF grant already feels late to the party. Today, more than 300 outdoor industry brands call Colorado home, many that have overcome the talent crunch to build viable production capabilities, however small or geographically diverse. And entrepreneurs are streaming the West to launch new brands.

But RCAM’s already generated national interest. Colorado’s disparate eco-devo community would do well to help sustain the network as it finds its legs.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.

Why Utah and Colorado are collaborating to accelerate defense-industry diversification

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Two regional developments promise to infuse much-needed expertise into the manufacturing supply chain. This week we report on the Mountain West Advanced Manufacturing Network. Next week, we’ll review Colorado State University’s National Science Foundation grant to study supply-chain dynamics in emerging clusters of small manufacturers.

For the first time, higher education and industry from Utah and Colorado will collaborate in support of a regional advanced manufacturing supply chain, with Department of Defense dollars making it happen.

The Mountain West Advanced Manufacturing Network (MWAMN) will bring together the University of Utah and its new manufacturing extension partnership (MEP) center with Colorado School of Mines, Manufacturer’s Edge (Colorado’s MEP), and ADAPT, the Alliance for the Development of Additive Processing Technologies, created a year or so ago with an infrastructure grant from Colorado’s Office of Economic Development and International Trade. ADAPT is located at the School of Mines.

It’s a $3 million award, divided equally between Utah and Colorado, that will expand on the additive manufacturing work already coming out of the ADAPT center, connect Utah’s fledgling MEP to the research and data, and expand on the offerings by developing cloud-based repositories of information resulting from the MWAMN’s ongoing work. The approach is to develop advanced capabilities, in part through defense-related contracts, then use the expertise and knowledge gained to upskill and retool manufacturers to better compete in commercial markets.

According to ADAPT Technical Director Aaron Stebner, “This program creates a new manufacturing platform to advance economic and workforce resilience in response to changes in defense spending.” He adds, “Enabling manufacturers to deploy additive manufacturing processes helps diversify their product offerings, expand into non-defense markets, and provide resilient employment and value to their communities and the economy independent of defense spending.”

Tom Bugnitz, CEO of Manufacturer’s Edge, views the grant as a means to empower the next wave of commercially viable, high-tech manufacturers. “As these companies are especially hurt by the up-and-down cycles in defense spending, this project will help these companies use additive manufacturing methods to change from defense products to commercial products and back again quickly and profitably,” he says.

The University of Utah’s Bart Raeymaekers emphasizes the benefits of the data effort. “The data will be added to the cloud, and artificial intelligence will be employed to help establish links among process parameters and part performance. Ultimately, the cloud database will enable defense-related businesses to innovate new products, promote economic diversification, and accelerate product development cycles.”

The possibilities are intriguing. For starters, intra-state collaboration is a welcome development. States compete more than they cooperate.

Additive manufacturing, a.k.a. 3D printing, is at the center of much of the work. The parts and processes forthcoming from ADAPT’s work have already pushed the technology deeper into front-line production environments. Heidi Hostetter, vice president at Colorado machine shop Faustson and ADAPT’s industry board chair, notes the upside. “Today, building new parts or switching materials with this technology takes too long. Additive manufacturing holds the promise of enabling manufacturers to quickly adapt to changing market needs compared to traditional manufacturing methods.” She points to a case study involving Reaction Systems and its successful certification of a 3D printed prototype.

The Department of Defense and its Office of Economic Adjustment (OEA) is also sending a message that efforts to retool defense-manufacturers for commercial work will persist, despite growing pains with earlier programs, including SMART, the $6.6 million “defense-industry adjustment program” awarded to Colorado’s Office of Economic Development and International Trade (OEDIT) in 2014. The SMART (now FourFront) investment has paid some dividends, but defense diversification isn’t one of them.

OEA — and OEDIT — seem intent on getting it right. The public-private partnership model envisioned with MWAMN builds on work already underway. An OEDIT infrastructure grant funded advanced equipment that’s today available for members of ADAPT (and now Utah’s network) to utilize machines that, to be fair, might have benefitted the FourFront effort. Industry players like Ball Aerospace and Lockheed Martin are also more deeply embedded in this program.

In the end, the initiative will be evaluated on its ability to engage more companies, to spread the impact of taxpayer-funded programs and other investments. ADAPT’s off to a good start. Utah’s advanced manufacturers are world-class as are Colorado’s. But nothing resembling a functioning network connects the community. One that does so with expertise and information would be a fair payback, and if widely supported, provide a supply chain boost for regional manufacturing.

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

2017 Colorado Manufacturing Awards winners showcase innovation, teamwork

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The 2017 Colorado Manufacturing Awards celebrated innovation in manufacturing at The ART, a hotel, on April 13. Out of 30 deserving finalists across 10 categories, awards went to 10 winners for work in advancing the industry.

Emcee and CompanyWeek Publisher Bart Taylor called Colorado “a model for national manufacturing.” Noted Taylor to the event’s 240 attendees: “Many of you have small businesses competing improbably against larger businesses. Resources alone don’t equate to market leadership.”

The event was presented by CompanyWeek and Manufacturer’s Edge. Sponsors included BKD, UMB Bank, Squire Patton Boggs, Alliance Insurance Group, Colorado Advanced Manufacturing Alliance (CAMA), Colorado Office of Economic Development and International Trade, the City of Fort Collins, and the Northern Colorado Manufacturing Partnership.

Beyond innovation, teamwork was a common theme for the night. As Manufacturer’s Edge CEO Tom Bugnitz noted, “Manufacturing is the people behind it. We’ve got the best in Colorado. End of story. Period.”

The 2017 Colorado Manufacturing Awards Winners

Beer & Brewing: Crooked Stave Artisan Beer Project

The Denver brewery won for its mastery of sour beers and taming the wild brettanomyces yeast strains that produce them. “For our brewery, it’s founded out of research, and to see that research turn into manufacturing and something we can taste here today is really exciting,” said Crooked Stave founder Chad Yakobson.

Food & Beverage: MycoTechnology

Harnessing the food-enhancing power of fungi, MycoTechnology is moving from its initial bitter-blocking innovation, ClearTaste, into the protein market with PureTaste. “It will allow us to feed the world in new ways,” said Pete Lubar, founder and COO. Lubar expects the staff to hit 80 employees in 2018, up from four in 2013.

Industrial & Contract: Tag Team Manufacturing

The Parker-based contract manufacturer has invested in automation to stay on the leading edge. “This sounds trite, but the real support comes from our people,” said Tag Team CEO Terry Taggart. “And we wouldn’t be here tonight without our clients. We look forward to building upon the platform that’s been established.”

Electronics & Aerospace: Aleph Objects

Manufacturer of LulzBot 3D printers, Aleph Objects has seen annual sales grow more than tenfold to about $20 million in four years. “The company’s grown tremendously,” said Director of Marketing Ben Malouf. “We are totally focused on user freedom. We share everything under free licenses. We are really proud that not only are we manufacturing in Colorado and the United States, but we’re doing it in a way that’s completely unconventional.”

Bioscience & Medical: PharmaJet

CEO Ron Lowy credited CTO/COO Chris Cappello, and pointed to the fight against polio as an example of innovation at PharmaJet. “We’re right on the verge of eliminating it from mankind,” said Lowy. A shortage of vaccine is a big hurdle, but PharmaJet can help rectify that with its needle-free technology. “We invented a device that gets the same immune response with 60 percent less vaccine.”

Women in Manufacturing Woman of the Year Award: Marcia Coulson, Eldon James

“I can’t wait to get back and share this with the 45 people I work with,” said Coulson, president of the PVC-free medical tubing manufacturer. “You become who you associate with, so choose good friends, choose good co-workers, and good things will happen.”

Marcia Coulson with Lauren McIntosh

Innovation in Supply Chain: Ardent Mills

“Nothing happens without supply chain,” said CAMA’s Tim Heaton as he introduced the category. His analogy involved the realization you’re missing a key ingredient in the midst of making dinner. “Your cost just skyrocketed, and you probably have six angry customers at the table.”

Accepting the award, Ardent Mills COO Bill Stoufer said, “We’re just a sleepy little company that feeds 100 million people a day.” The flour-milling giant established its headquarters in Denver in 2014. “I grew up in Iowa and this food scene in Colorado is unrivaled across the country,” added Stoufer. “We’re very proud of it, and the state should be proud of it, and we couldn’t be more happy to be here.”

Built Environment: Prescient

Prescient‘s system for manufacturing steel-framed buildings has quickly gotten traction in the market as it expands nationally. Chairman and CEO Satyen Patel, a self-described “private-equity guy,” said that co-founders Michael Lastowski and John Vanker “deserve all the credit.” The company has grown from eight to 350 employees and won 29 patents in five short years and will cross the $100 million sales mark in 2017. Said Patel: “This company is on a roll.”

Energy & Enviro: Forge Nano

Forge Nano specializes in next-generation nano coatings that make for safer, longer-lasting lithium-ion batteries. “The key to our success was a really good team,” said VP of Engineering James Trevey. “We’re really excited about what we’re doing and there’s not one person who clocks in just like it’s a job.”

Lifestyle & Consumer: Ross Reels

“A lot of our success has been driven by two things: the stewardship of our employees and the stewardship of our city,” said David Dragoo, president of Ross Reels‘ parent company Mayfly Outdoors. The company has called Montrose home for more than 30 years and has numerous employees with 25 or more years of tenure. “We’re just really proud to represent Colorado manufacturers and Western Slope manufacturers,” added Dragoo.

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Made in China 2025: Menace or model for U.S. industry?

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American voices have been quick to denounce China’s ambitious Made in China 2025 manifesto, but would manufacturers here benefit from a national manufacturing strategy?

Made in China 2025 is a sweeping plan designed to transform the nation’s sector from the global epicenter of low-tech manufacturing to a self-sufficient, high-tech behemoth, where Chinese computer chips, aircraft, and automobiles compete with American and European counterparts in a global market. It’s also centralized planning, powered by $300 billion in low-cost loans, research funds, and other government aid.

The Trump administration is focusing on taxes and regulation as a means to improve the competitive standing of American companies, a carrot-and-stick approach of import tariffs, corporate tax reform, and regulatory relief with an occasional dressing-down of U.S. corporations moving jobs offshore.

Early returns suggest big U.S. manufacturers like the Trump approach. Regulatory reform was the big ask coming out of the Obama administration, and Obama’s loudest critic, the National Association Manufacturers (NAM), reports optimism at a 20-year high among its members.

Government oversight is never a good idea, but Made in China 2025 gets two things right, both important, and both potentially lacking in America’s new approach to sustain manufacturing.

The Chinese understand what’s at stake here, that global economic leadership depends on a healthy domestic manufacturing sector and supply chain. 2025 is a comprehensive upgrade to Chinese industry. Scott Kennedy from the Center for Strategic & International Studies notes that the plan “focuses on the entire manufacturing process and not just innovation” as it “promotes the development of not only advanced industries, but traditional industries and modern services.”

It’s an innovation boost for low-tech manufacturing while targeting “priority sectors” like automated machine tools and robotics, aerospace and aeronautical equipment and biopharma and advanced medical products.

We’re less committed, not so sure that economic security starts with a capacity to produce goods and services for consumption and export. We’re just not.

One example: Beholding to budget hawks who should know better, allocation for the NIST Manufacturing Extension Partnership (MEP), a nationwide network of public-private organizations like the MEP Center at the University of Utah, and Colorado’s Manufacturer’s Edge, was zeroed out in President Trump’s budget. The MEP program is responsible for tens of thousands of jobs nationally, carries local manufacturing voices to national policymakers, funnels federal dollars into targeted local initiatives, and costs U.S. taxpayers about the same as a single F-35 fighter jet its programs help build.

If the MEP system was provided a fraction of the $300 billion Chinese planners will make available in low-cost loans, America’s industrial base would be transformed overnight. $300 billion is implausible, absurd to consider here, but connecting early-stage and middle-market manufacturers with more capital is also critical to U.S. competitiveness.

If $300 billion is too much, how much is too little? In its annual report of per-capita manufacturing investments by state, Conway Analytics ranked Utah 41st and Colorado last in the nation, tied with Hawaii. NAM and its membership of influential large manufactures are confident. Earlier-stage manufacturers, at least in the West, are far less sanguine. And why not?

President Trump’s regulatory actions are a meaningful step if other initiatives in workforce development remain funded. A U.S. blueprint would also prioritize access to capital but immigration reform, compromise on healthcare, and supply chain investments cooked into the budget and not negotiated — outcomes that today seem elusive. Lifestyle manufacturers would also be assured support and not face new ideological headwinds.

A national strategy would have good company. We’ve supported the development of a national energy policy, a national framework to keep the internet accessible and open, and national health care legislation even as we disagree on its construct. Today, without a comprehensive plan to support the sector, U.S. manufacturing is in danger of becoming a sector of haves and have-nots, of large, capable exporters and a middle-market lacking a diversified, domestic supply chain.

In that case, Made in China 2025 will be much more than the object of U.S. scorn, but the source of a new global manufacturing hierarchy.

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

Related: China’s economy grows 6.9% on manufacturing, energy output

Why the U.S. is now winning the fight to keep manufacturing jobs onshore

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New research from the Reshoring Initiative confirms what many have been speculating: Rising costs for overseas labor and services and important brand considerations are now compelling U.S. companies to reshore jobs or create new jobs domestically.

From the new report:

“In 2014 and 2015 parity was reached between offshoring and returning jobs, indicating that the net bleeding of manufacturing jobs to offshore had stopped. As of 2016, for the first time, probably since the 1970s, there was a net positive gain in U.S. jobs. The U.S. has gone from losing about 220,000 manufacturing jobs per year at the beginning of the last decade, to adding 30,000 jobs in 2016. Measured by our trade deficit, of about $500 billion/year, there are still 3 to 4 million U.S. manufacturing jobs offshore at current levels of U.S. productivity, representing a huge potential for U.S. economic growth.”

As Harry Moser, founder of the Reshoring Initiative, says in the new report, “The tide has turned.” For American manufacturers, it may now make economic sense to manufacture in the U.S. where it didn’t before.

Moser has been documenting trends in manufacturing economics for several years. His contribution has been to provide manufacturers data, to one, help them understand trends (such as: “What industries and companies are reshoring jobs, and why?”), and reevaluate their own offshoring decisions. “We get their attention by showing how much is happening, and then, appeal to them to reevaluate,” Moser explains. “We have a free online ‘Total Cost of Ownership Estimator’ tool, which helps them go beyond their historical sourcing practices.” For companies, that’s always started with price, as in: “Where can I find acceptably competent workers at the lowest possible wage?”

But Moser’s tool incorporates other elements that often add up to 15 to 20 percent of additional costs to send jobs offshore, like “carrying costs of inventory, travel costs, intellectual property risk, and the impact on innovation when you separate engineering from manufacturing (or bring them back together), the lost orders and lost customers when you have volatility in demand and you stock out because you have a two- to three-month delivery where you wouldn’t have stocked out if you had a two- or three-week delivery because you have a local source or make it in your own factory here.”

As he began running the numbers, what he suspected might happen, in fact did. “When companies do the analysis, in some cases — not all cases — it makes sense to bring the work back,” Moser says. “To quantify that a bit, we took the first batch of cases we had with China versus the U.S., and in 5 percent of the cases that the company had done a cost analysis, the U.S. had the lowest price. But based on a total-cost analysis, the U.S. won 53 percent of the time, just by using the correct metrics.”

Is the number improving, given rising wages in China and other historically low-wage markets? “We believe it is,” Moser answers. “One the one hand, Chinese wages have been going up 13 to 15 percent per year. On the other side of that, the Chinese are investing more in automation and productivity than we are, so their productivity rate has been rising much faster than ours has been, and that counteracts some of that wage increase.” The new data seem to confirm the trend.

Moser’s analytics also coincide with a profound change in the how U.S. companies are building brands. Today, offshoring jobs and service contracts in pursuit of the lowest cost provider is out of favor, inconsistent with a new consumer ethos that favors quality and value — often the added value of creating homegrown jobs.

Hap Klopp, founder of The North Face, provides an elegant explanation as to why companies reach a similar conclusion as those using Moser’s total cost of ownership tool:

“The mistake the people in the apparel business are making right now is that they think it’s a race to the bottom because of price, and everyone’s trying to take ‘make’ out of the product. The real differentiation (for brands) is making something of value. If you’re not afraid of making the best, you’ll stand out from the crowd. 80 percent of the crowd are just trying to make something cheap, and the reality is that the cost of making these products at a distance is going up and up and up. The labor costs in China, in India, and in other places is going up much faster than in the U.S., and in eight or nine years the labor costs will be the same. Then the long lead times of getting products from Asia are really going to be a hindrance. There’s going to be more close-to-home product manufactured, and addition to that, ‘value’ is going to take over. And a brand is shorthand for value.”

The two related, but powerful trends — a new emerging price equilibrium based on true total costs of offshoring jobs, and evolving consumerism that values local manufacturing and its positive byproducts — are favoring the U.S.

It’s important new methods evolve to shore up support. In keeping with Klopp’s comment, the business and development ecosystem must rally to establish complete and compact supply chains that support local manufacturing. Gaps in the supply chain are plentiful. Labor tops the list, growth capital is stubbornly hard to come by, and the availability of structured services to accelerate growth companies is spotty. Some industries need more help than others.

But if a wave of new American brands equates success with quality manufacturing, and the economics of making are better here than overseas, maybe for the first time in decades, we may quietly have reached a tipping point. The tide might well have turned. The U.S. could finally be winning the war, if it’s only begun.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.