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.
Why the U.S. is now winning the fight to keep manufacturing jobs onshore
/in General/by Bart TaylorNew 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:
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 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.
Industry’s big shots must go small to rehabilitate manufacturing’s brand
/in General/by Bart TaylorHow important is it to rehabilitate manufacturing’s brand?
Last fall, I wrote that manufacturing had a media-fueled PR problem, but that grassroots growth in super-charged industries like food and beverage would overtake the dated, national narrative. Manufacturing is cool again, especially in its innovative early-and-middle stage companies, and for a sector searching for talent, an updated brand means everything.
Apparently that message isn’t getting much traction.
Last week, it was Snap-on Chairman and CEO Nick Pinchuk bemoaning the state of the industry. “Manufacturing has a PR problem,” Pinchuk said. “People are looking at manufacturing jobs as a consolation prize. Skilled workers, which is the essential to winning the global competition to jobs, are in scarce supply.” For many, a shortage of skilled labor, not manufacturing’s new vanguard, continues to be the national story.
There’s consensus on this point up and down the manufacturing value chain. That a dated, negative perception of manufacturing continues to hamstring the sector.
But the power and promise of emerging companies and industries has suddenly become lost in a confusing political mess that’s undermining manufacturing just as its rising stars are grabbing hold of the conversation. As we reported earlier this month, President Trump has zeroed-out the $150 million allocation for the Department of Commerce’s NIST Manufacturing Extension Partnership network in the “skinny budget” he presented to Congress.
There’s precedent here. In 2004, President Bush proposed slashing MEP’s budget by 63 percent, from from $106 million to $39.5 million. It changed the tone of the manufacturing dialogue, to say the least:
Try on a 100 percent cut for size. But cooler heads should prevail. For one, the National Association of Manufacturers (NAM), Washington’s powerful industry voice, has voiced support for MEP, something they wouldn’t do in 2004.
Second, there’s an even higher level of bipartisan support for MEP than there was in 2004, when passion ran high from regions steeped in manufacturing. Support now spans the nation, across even more industries.
Still, the fight may again expose a divide within manufacturing’s circle. Smaller companies who benefit from the operational focus of the MEP network are often outside the domain of member-based associations. Critics of the 2004 budget cut noted its potentially devastating impact on small manufacturers.
Small and middle-market manufacturers are the new face of sector. The outcome of the fight for MEP funding may determine who influences manufacturing’s brand in the future — small or big.
Industry’s top-shelf stakeholders would do well to go small — and support the people and ideas that promise to change the perception of manufacturing. Funding MEP, a network tuned in to the middle market, can be a jumping-off point.
Until then, its beleaguered brand will continue to hold it back.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
CO MFG Awards finalists, part II: industry stars, innovative supply chains and MFG Woman of the Year
/in General/by Bart TaylorThere are signs that the cross-industry manufacturing surge we report on every week is developing on a scale that’s beginning to impact national metrics. The Bureau of Labor Statistics reported last week that 28,000 new manufacturing jobs were added in February, led by the non-durable sector including food, which led all categories with 8,800 new jobs reported.
That’s not a surprise to us. We’ve chronicled the food manufacturing boom in Colorado, and it’s been the fastest growing manufacturing employment sector in the state for the past two years. Food will be a poster-child for the new manufacturing brand in the future. And the Food & Beverage finalists in this years Colorado Manufacturing Awards are the vanguard of this innovative, growth-minded sector.
The second group of finalists listed below (here’s last week’s first wave) also features a new award and a subtle change to another based on this year’s theme of Innovation in Product Manufacturing. CAMA will present the Innovation in Supply Chain award at the event next month, a nod to manufacturers using the supply chain to establish competitive advantage. We’re also excited to host the Colorado Women in Manufacturing association’s first Manufacturing Woman of the Year award. Finalists in both categories are deserving.
Here’s the remaining finalists for this year’s Colorado Manufacturing Awards. We’ll announce winners April 13 in Denver.
We’ll gather in a month to announce winners. For those who didn’t nominate or did and weren’t selected, thanks for all you’re doing to strengthen the innovation undercurrent in manufacturing. If not at the Colorado Manufacturing Awards, our commitment is to shine a light on companies like yours year-long.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Moving Outdoor Retailer out of Utah carries risk for OIA
/in General/by Bart TaylorIf Utah’s political leadership was under the impression that any short-term damage relating to its opposition to Bears Ears National Monument would fade away, Amy Roberts, executive director of Boulder-based Outdoor Industry Association, put that notion to rest last week.
In a memo to OIA stakeholders, Roberts said OIA would move Outdoor Retailer from its Salt Lake City location in 2019:
I wrote last month about Outdoor Retailer’s influence. Moving OR will be a huge loss for Utah.
Utah Governor Gary Herbert hopes to patch things up with OIA this week. He’ll have to assuage Roberts, who wasn’t thrilled with her reception by Utah’s legislative delegation recently in Washington D.C. He’ll also make the case, as he did in a newspaper editorial Sunday, that Utah’s support of public lands is misunderstood, suggesting his administration hasn’t done a good job communicating that Utah values its public lands heritage.
It’s a hard argument to make, given the lively debate throughout Utah the past couple years relating to the Public Lands Initiative (PLI), proposed federal legislation that codified Herbert’s perspective and those of Utah congressional leaders Rob Bishop and Jason Chaffetz. All of Utah also weighed-in on the issue. No Governor in America has been more clear on public lands than Herbert.
It’s the PLI to which opponents, including OIA, object. A year ago, Roberts outlined OIA’s concerns in an otherwise cordial letter to Congressmen Bishop and Chaffetz. “We would like to express our gratitude to you and your staff in particular, for the time, energy and resources that have gone towards crafting the Public Lands Initiative (PLI) over the past few years,” Roberts wrote, but then took pains to “point out some of our biggest concerns with the proposed legislation,” including:
In the end the Public Lands Initiative died in the finals days of Congressional debate last year. But when President Obama used the Antiquities Act to establish Bears Ears National Monument only weeks later, and Utah leadership doubled down with dramatic opposition, OIA leaders mobilized in protest and signaled plans to move Outdoor Retailer from Utah.
They’re following up, and it’s a bitter pill. Herbert’s own move to establish an Office of Outdoor Recreation, to in part support outdoor industry, was a master stroke, copied last year by Colorado. Brad Peterson, the first executive director of the Office, and Tom Adams, his successor, have been effective in bringing parties together and recruiting business. OR’s move may disappoint Gov. Herbert, but no more than Adams. We spoke last week. I had to ask whether the Office of Outdoor Recreation supported the administration’s position. Adams responded, simply, “We support the Public Lands Initiative.” (It was a dumb question; they are the administration.)
As principled a move OIA would suggest moving OR is, it carries risk. If Utah’s unfit to host OR, what of industry’s choices? Must member actions comport with the “principles” established here? What of decisions to invest in offshore manufacturing, for example, if a company has a choice? It can be everything brands avoid. Sustainable and authentic, it’s often not.
There are important exceptions. Last month, Peter Metcalf, founder of Utah’s Black Diamond, was out front bemoaning Utah’s fitness to host OR. Metcalf’s a powerful spokesperson. As we chronicled in 2015, Black Diamond made the difficult decision to reshore hard-goods manufacturing from Asia to Utah. It’s a gutsy, meaningful move that if copied more, would send outdoor industry into a new economic stratosphere.
At minimum, as OIA moves OR, it should ask its most powerful members to accelerate efforts to invest in local communities and domestic supply chains in support of U.S.-inspired brands. Otherwise, selective actions like moving OR are no more than posturing. The move from Utah divests in a community that’s been a worthy host.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Is manufacturing great again? Don’t ask. We stopped counting.
/in General/by Bart TaylorMedia coverage of manufacturing has become Groundhog Day, a series of recurring headlines and stories as unpleasant for manufacturers as it was for Phil Connors, the Bill Murray character who relived the film’s titular holiday again and again until he got it right. It’s a relentless loop of bad press that in one week last month included such stories as Can US Manufacturing Be Made Great Again? and Opinion: Manufacturing needs a rebrand, as well as the headline that’s now run through consecutive administrations: Can President Trump bring back manufacturing jobs? Apparently, we have none left.
But among the missives was this short, upbeat Huffington Post headline: Manufacturing Is A Job Multiplier. The multiplier effect is the go-to defense for manufacturing advocates. We know it well.
The author, Jerry Jasinowski, a former president of the National Association of Manufacturers, shared this nugget.
We’ve lamented this outcome before. Today, what Jasinowski describes is common practice. Meaning that contract design and engineering jobs at a satellite manufacturer aren’t counted as manufacturing jobs, though the positions wouldn’t exist without the product, the fabrication. As Jasinowski notes, the slight has become more pronounced in today’s high-tech sector:
There are other implications. An extension of this methodology is to treat manufacturing as a separate industry. It’s now common practice. Last week Debra Borchardt of Forbes wrote that Marijuana Industry Projected To Create More Jobs Than Manufacturing By 2020. It doesn’t occur to Borchardt that many of the marijuana-related jobs she references will be in manufacturing. More jobs for manufacturing is accurate.
Of course the “manufacturing industry” isn’t separate at all from industries like aerospace, or cannabis, or other high-growth sectors like food and beverage, bioscience, or the outdoor industry. Manufacturing is a catalyst in these sectors. Colorado is the epicenter of the natural and organic food ecosystem in part because of a manufacturing innovation — co-packers.
We’re witnessing more manufacturing-related innovation driving industry growth today, in nominations for the Colorado Manufacturing Awards. It’s a firehose of new ideas and creativity. Is there any doubt one or more will emerge to reshape entire industry sectors?
Far from the staid sector that struggles to capture the imagination of the national business media, local and regional manufacturers have not only made American manufacturing great again, they’re creating a new brand in the process, a brand inspired by innovation and technology that’s creating thousands of related service and supply-chain jobs.
The national media and those who would measure and promote manufacturing would do well to learn a new language, as Phil Connors did, that speaks to the progress and promise of the sector.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Here’s the first wave of finalists for the 2017 Colorado Manufacturing Awards
/in General/by Bart TaylorTodd Dutkin, CEO of Fresca Foods and a winner last year of the Colorado Manufacturing Awards in Food & Beverage, reminded me earlier this year that “ideas are the currency of business.” Today it seems an apt metaphor for the flood of new ideas and innovation coursing through Colorado’s manufacturing community, and a perfect segue to announce the first wave of finalists for this year’s awards program.
Last year, in the first-ever statewide manufacturing awards, we recognized uber-competitive manufacturers across eight industry sectors including the supply chain. It was a tip of the cap to established market leaders and industry standouts.
The 2017 theme, “Innovation in Product Manufacturing,” is proving a worthy follow-up. If ideas are the currency of business, innovation is the language of manufacturing. Researchers including McKinsey & Company have established that manufacturing contributes disproportionately to exports, innovation, and productivity growth. Manufacturers innovate, and the entire economy benefits.
Nominations for the 2017 Colorado Manufacturing Awards demonstrate why, as do the hundreds of profiles we published in the last year. It’s important to note that as we shine a light on a single company, a dozen others may be working on ideas that will change the world. Next month, we’ll recognize a select group. We also won’t forget about the others.
Here are the finalists from five industry categories. We’ll publish the remaining five, plus finalists for the inaugural Colorado Manufacturing Woman of the Year, next week.
Sign up to attend the Colorado Manufacturing Awards finals event, where we’ll announce winners April 13 in Denver.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Colorado’s Top 5 manufacturing communities, redux
/in General/by Bart TaylorIn June 2015, having profiled over 300 Colorado manufacturing and supply-chain companies, we ranked the state’s Top 5 manufacturing communities. Today, 700 companies in, and armed with a regional perspective, here’s our 2017 ranking. Our criteria: a growing, compelling industry or cluster of maker industries, supported by purposeful public/private efforts to build a robust manufacturing economy.
1. Ft. Collins/Loveland (2015 ranking: 3)
We wrote this in ’15:
And top the list it does. It’s more accurate to describe the community as Northern Colorado — in part because today the region enjoys the state’s most effective sector leadership in the form of the NoCo Manufacturing Partnership. But Northern Colorado industry speaks for itself. The sparkling new Woodward facility is adjacent to state-of-the art brewing infrastructure including the iconic Colorado brand Odell Brewing. The region is peppered with other other powerhouse homegrown manufacturing brands like New Belgium, Otter Products and Noosa. Makerspaces are easy to find, and nationally known EWI opened a facility in Loveland. Early-stage incubation is world-class. Colorado State University is waking up to manufacturing and its possibilities: CSU’s Carol Engel-Enright has been indefatigable in supporting a fledgling apparel manufacturing initiative in rural Colorado. Economic developers are pro-manufacturing. NoCo is becoming a national manufacturing story. Purposeful messaging and recruiting may be all that’s missing.
2. Denver (2015 ranking: 2)
From 2015:
Denver could easily become the city that defines the West’s neo-industrial character. It’s at the crossroads of literally every major economic trend shaping the country — past and present. A thousand manufacturers across multiple growth industries are finding motivated allies in economic development and higher education. But today it’s also a service-industries town, period, and well-intentioned efforts that would capture the imagination of brands and result in more manufacturing infrastructure remain unconnected. Manufacturers continue to be priced out of neighborhoods that, 18 months ago, we thought would be magnets for light industry and innovation clusters. Denver has resources. A citywide manufacturing strategy might provide a blueprint for the entire state.
3. Boulder County (2015 ranking: 1)
From 2015:
It’s hard to drop Boulder County from its lofty perch if only for one reason: the county’s brilliant natural and organic food sector, showcased each year by Naturally Boulder’s Pitch Slam and Awards. Moreover, innovation in the food industry is manifest spectacularly in manufacturing. Co-packers are salve for growth brands that at some point, must scale. But despite Boulder’s brand riches in food, beer, technology, aerospace, and the outdoor industry, there’s still an enthusiasm gap relating to the manufacture of these products. Boulder celebrates it glitter but not its gears. CU might do well to take a page from General Electric’s playbook, and connect its engineering graduates with the products they design. Manufacturing may indeed still be the sector that finally buries Boulder’s dated anti-business moniker, but not this year.
4. Grand Junction/Palisade (2015 ranking: 5)
From 2015:
Grand Junction/Palisade moves up a spot on our list on the back of its extraordinary food and beverage cluster and an awakening around the outdoor industry. As we pay more attention and connect means of production with brands we favor, Colorado’s wine industry should earn new respect — and customers. The wine and beverage factories of the Western Slope are unsung assets in the regional economy. We’ll guess Grand Junction also purposefully redirects its oil-and-gas and industrial acumen to the manufacture of outdoor industry products. Fabricating the tools and toys of millennial recreation is a natural fit for this gritty western community surrounded by Western mountain towns in need of a regional industrial base of operations. The expertise is here; rallying the varied interests needed to fullfill the vision is a work in progress.
5. Colorado Springs/Pueblo (2015 ranking: 4)
From 2015:
Colorado Springs manufacturers are no dummies. They crave an industrial development strategy that embraces new defense-related, advanced manufacturing initiatives, but also envision new opportunities. No doubt a positive vibe now permeates public/private efforts to get the Springs moving forward in a cohesive manner. Mayor John Suthers has stabilized a dysfunctional local government. The Springs also boasts a game-changing component that could be a catalyst for purposeful manufacturing development: labor. Companies like the Tumbleweed Tiny House Company moved manufacturing to the area because of a deep, ex-military workforce. In a national sector starving for a new generation of employees, why on earth isn’t manufacturing at the center of economic development efforts?
Disagree with our list? Send me your feedback. We’ll publish next week. And nominate your community’s best manufacturers in the 2017 Colorado Manufacturing Awards. We’ll announce winners at the Awards Finals in Denver on April 13.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Manufacturing a sore spot for otherwise booming, progressive outdoor industry
/in General/by Bart TaylorFor outdoor enthusiasts, the twice-annual Outdoor Retailer trade show in Salt Lake City is a feast for the soul. Last week’s Outdoor Retail Winter Market, the smaller of the two seasonal gatherings (small being a misnomer), again seemed a wild success, with nearly 1,000 brands and suppliers showcasing the latest in outdoor apparel, gear, materials — and opportunity. The optimism on display here is palpable, fueled now by the realization that outdoor industry has crashed the national scene. Smiles, and profits, flow freely at OR.
With growth comes new challenges though, and as brands scale up to meet growing demand, the industry faces an interesting crossroads. Most companies exhibiting at OR make things outside the U.S. But increasingly, the progressive ethos that informs the tastes of consumers and company development is running counter to the realities of offshore manufacturing. Offshore manufacturing is often everything that brands assiduously avoid. How will industry respond? Where and how will industry manufacturing evolve?
Today making offshore is assumed to be a prerequisite for growth brands. Expertise and margins often demand it. As we’ve chronicled, the offshoring of entire industrial sectors, like apparel manufacturing, has left little in the way of a domestic supply chain for U.S. brands. What’s here is expensive. There’s also a lack of a contemporary blueprint to develop new employees; the ‘institutional memory’ companies rely on in other sectors has faded.
As a result, supply chains stretch from Boulder or Jackson to Ho Chi Minh City or Guangzhou.
But for brands that value sustainability, and B Corp status, and the virtues of place in the development of ‘authentic’ U.S. or regional brands, explaining where one’s products are made and why, especially to a discerning millennial buyer, is increasingly challenging. Making offshore can be inherently unsustainable. Travel and shipping overseas is resource-intensive. Developing and prototyping products can be a messy, wasteful process, especially for small brands. Working conditions in overseas factories, greatly improved from a decade ago, still can be a cause for concern.
And how to impart brand values to such a significant part of one’s business, from thousands of miles away?
It’s hard to find a more progressive company than apparel-maker Toad&Co, founded in Telluride, Colorado. Their mission: “To lead with integrity and weave optimism into everything we do; To create meaningful change through socially & environmentally smart business; To inspire people to live their fullest lives.” It’s powerful stuff for Toad&Co’s target buyer.
Toad&Co manufacturers offshore. Marketing Director Sarah Matt, responding to a Q&A in Outdoor Retailer Daily, said this about the high standards the publication ascribed to its ‘foreign factories’: “We believe the factories we partner with are an extension of our brand, so we work hard to ensure they meet our standards for quality and sustainability, as well as providing fulfilling and humane working conditions.”
It’s a reasonable response, similar to one that a hundred brands would offer.
But Matt would acknowledge that Toad&Co manufacturers overseas primarily because of cost — meaning the factories would certainly be an extension of the brand if Toad&Co was a discount retailer. That’s not the case. To the contrary, most brands exhibiting at Winter Market are premium retailers. These companies earn, and deserve, higher price points because of quality and a value-add mission.
A truly sustainable, social-driven mission would involve manufacturing closer to where products are designed, prototyped and purchased. Shortening the supply chain would ‘green’ a company’s logistical operation. Investing in factories or contract manufacturers here would further embed brands into local communities and strengthen the authenticity of U.S. brands. Most powerfully, shortening the supply chain would create domestic, middle-class jobs and create fulfilling working conditions our communities need.
How to reconcile the dissonance of offshore manufacturing with the progressive vibe outdoor brands seek? The answer, of course, lies in the development of a more robust domestic supply chain.
Acknowledging the massive investments brands have made in overseas manufacturing is also part of a solution. It’s easy to throw stones; it’s harder to actually build and maintain a profitable business from several thousand miles away. And so many companies have navigated the complex, difficult process brilliantly. How else to account for the riches at OR?
Celebrating their success as both public and private voices contemplate a resurgent domestic supply chain is our path. More on the journey in the coming weeks.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Manufacturing a gem of Utah’s economy, and here’s the best of 2016
/in General/by Bart TaylorUtah’s powerful economy is no longer a national secret. Workforce advantages and an embarrassment of R&D riches driven by world-class universities is translating into, among other things, high-tech success. See the Silicon Slopes.
But Utah’s manufacturing ecosystem is emerging into a national model for growth and innovation. Magnificent legacy operators provide a foundation for modern machiners who’ve followed, all of whom may contribute to a sector poised to put the state on the national map — outdoor industry manufacturers.
It’s a cross-industry mix that’s also a blueprint for U.S. manufacturing. In addition, here’s the companies you favored, the most-read list; and Alicia Cunningham’s personal favorites.
Here’s my best of Utah manufacturing list from 2016:
Hammerton — Bill Shott, co-owner and president of Hammerton, said it all, “The majority of the lighting industry manufactures offshore in Asia. And of the few domestic players that exist, most of them source their glass offshore.” Modernizing the industry at the same time it sets an example for what can be made in the U.S. ‘Nuff said.
Robinson Fans — Cutters, benders, welders, craftspeople. I can’t get enough. That the Robinson family has done it for over 125 years in the region is testament to the enduring power of manufacturing and its profound impact on our socio-economic standing.
JD Machine — Speaking of an embarrassment of riches, Utah’s boasts a machining ecosystem worthy of national repute. Progress Manufacturing and Advanced Manufacturing Technology were also standouts.
Artisan Hardware — As with my Colorado list, I favor craftspeople in the building environment, and it’s impossible to not shine a light on the makers in Chase Norton’s operation. Artisans, indeed.
Kodiak Cakes — It’s impossible to leave Joel Clark’s company off my list. I use their product, they’re a leader that’s willing to stand out in front to lead a transformation of Utah’s natural and organic product sector, and their legion of followers pushed the feature to the lofty status of most-read of any profile in CompanyWeek in 2016. Utah, Colorado, wherever.
Best of 2016 a mash-up of manufacturing excellence
/in General/by Bart TaylorIf there’s a better job in business media than reviewing the stories and photography filed every week by our network of contributors, I’ll have to be reminded what it is. Business is about people and companies, and every week, I’m left shaking my head by the work, the passion, the outcomes, of those we write about.
In addition to the stories you favored most, here’s my list of gems from the past year, manufacturing stories that speak to why we do what we do.
1. Raw Urth Designs — The company’s tagline says it all for me — ‘A boutique metal shop creating custom designs.’ We need more ’boutique metal shops’ in our economy, companies that cut, bend, and weld; that celebrate entrepreneurship; and a passion for making things.
2. Naked Edge Snacks — I love Jonathan Castner’s photographs of John and Lisa McHugh, not to mention that they’re poster children for Colorado’s nation-leading natural and organic food sector that’s transformed the regional economy. We wrote about a couple dozen similar businesses in 2016 — coverage we’ll continue in 2017.
3. Swiss-O-Matic — Take your pick of companies from the machining ecosystem we profiled in ’16, they’re all favorites. But Claude Rocchia’s outpost in Montrose connects past and present, using magnificent machines from the 20th century to fabricate intricate parts for today’s OEMs.
4. Agri-Inject — Can manufacturing transform rural economies? Ag-tech certainly will, and Erik Tribelhorn’s company and others on Colorado’s eastern plains like Graham Electric Planter are helping farmers reinvent the sector while creating high-value jobs. Why are we so slow in rallying support for more early-stage, rural manufacturers? Their payback is colossal.
5. Industry Report: Cannabis R&D in Colorado — CompanyWeek Editor Eric Peterson’s exhaustive look at cannabis and hemp-related science underway in Colorado exposes our collective failure to educate the public on the different outcomes of cannabis legalization, some that have nothing to do with recreational use. The chilling effect of misguided federal policy on legitimate science can be breathtaking. Take note. Now.
6. Fly Pedals — On a lighter note, is there a better business story than two aspiring entrepreneurs reshoring the manufacture of a consumer product to the U.S. from China? Especially one that involves a foundry and machining? Simple answer. No.
7. Wynkoop Brewing Company — Take your pick of the dozens of craft brewers we profiled in 2017, but former Wynkoop brewer Bess Dougherty’s big personality stole the show for me. I also enjoyed Jonathan Castner’s photo expose from his epic summer cycling sojourn through Wyoming, Idaho, and Montana, which brought us Black Tooth Brewing Company and Grand Teton Brewing, among others.
8. The Whole Works — If I were to guess, Colorado’s apparel and outdoor industry sector will transform into a modern, tech-driven manufacturing ecosystem, with brands locating here to develop, prototype, and test. Those who make here in volume will utilize cut-and-sew operations that are able to scale and modernize, and recruit and train qualified sewers. Certainly one of those will be The Whole Works in Rifle, Colorado.
9. Watson Mills — Builders and craftspeople share an important space in our economy with benders and fabricators, and Todd Palmer’s artisans stood out for me. We profiled them in January of last year and I never lost sight of their skill set. None of us should.
10. Housefish — See above. And buy locally made stuff!