Rural America’s decisive role November 8 gives way today to the tough reality that economic prosperity is as elusive after the election as before. Small towns and communities face an uncertain future. Colorado’s rural outposts must also stand by and watch urban counterparts make national headlines for job growth, rising property values, and increasingly diversified economies. It can be a tough pill.
But for others it’s inspiration, and, increasingly, small towns are taking action. On Colorado’s eastern plains, in Wray and Julesburg, Rural Colorado Apparel Manufacturing cut-and-sew centers have opened to pursue business from new domestic apparel and outdoor gear companies. Trinidad and others are reimagining city centers. Farming communities, hardest hit, eye ag-tech manufacturing and new crops to feed a growing appetite for craft food, beer and yes, hemp and cannabis.
Limon, Colorado, is taking a different approach. Seventy-five miles southeast of Denver on I-70, population 1800, Limon is betting on foreign trade. Last year the U.S. Department of Commerce awarded Limon the state’s third foreign-trade zone (FTZ), #293, a development the city hopes will translate into new primary jobs, including manufacturing jobs, that will put this town on more sound economic footing. FTZ’s provide duty relief for companies importing manufactured goods for distribution and sale throughout the U.S., or for parts and components incorporated into products manufactured on U.S. soil. Commercial merchandise can be brought in and held without being subject to the tariffs and taxes imposed by U.S. Customs and Border Protection.
At first blush, the town and trade seem strange bedfellows. What you see is what you get here, an economy based on the service businesses visible from Interstate 70; business that translates into 80,000 room nights a year and $85 per capita in retail sales from domestic traffic passing through this high plains community.
But Joe Kiely, Limon’s assistant city manager and director of the new FTZ, isn’t satisfied. “Those jobs are good for government,” he says, citing tax receipts, “but not good for the citizens of Limon. They’re low-wage jobs, for one. We need to attract new primary jobs to Limon.”
Like much of rural Colorado, government is now the top employer here and in surrounding Lincoln County. It’s also the fastest growing sector, a tide of taxpayer-supported spending Kiely and other development professionals in surrounding counties would agree is unsustainable. Still, the gambit to begin providing services to companies that stand to benefit from FTZ’s – ‘the best kept secret in the business ecosystem’ as described to me – and attract foreign-direct investment to the region, is an eye-opener.
Two things work in Limon’s favor. Colorado has two other established FTZ’s, neither of which are serving a large number of companies or taking steps to expand or promote benefits. As result, there’s no real competition. Chalk it up to Colorado’s ambivalence about manufacturing, a theme I heard not only in Limon but from others. Michael W. O’Beirne, a national foreign trade consultant based in Washington D.C., with deep roots in Colorado, tells me it’s costing the region jobs. “After more than a decade trying to use Colorado FTZs, in my opinion a vacuum still exists that’s pushing companies into states like Texas and South Carolina, states proclaiming they’re ‘open for business'”, he says. O’Beirne was an advocate for Limon’s FTZ but also sees a need for others. “A new west-Denver FTZ extending from Castle Rock to Windsor might help provide options for companies. The benefits are real.”
Kiely see opportunity. “We’re a motivated partner for companies”, he says.
That may be. It also seems a prerequisite if Kiely or his counterparts in Denver and Colorado Springs are to be successful recruiting a new cadre of businesses into this opaque, often confusing program. Economic development officials may be less than enthusiastic, but clearly the manufacturing and supply-chain companies that stand to benefit most from an active FTZ network don’t understand the program, either. It’s a point not lost on Karen Gerwitz, president of World Trade Center Denver. “We’re supportive and would be more than happy to do more to educate the business community”, she offered, “but we just don’t see the interest or demand for information.”
Understanding the scope of Limon’s opportunity is itself a challenge. Limon’s FTZ actually extends east, into metro-Denver. But as O’Beirne notes, having worked with the city, “additionally, Limon could designate FTZ subzone sites anywhere within Colorado where U.S. Customs and Border Protection will also support FTZ usage. Subzones are single-user FTZ sites like Vestas, under the FTZ authority of Denver but with manufacturing in Pueblo.”
It turns out to be a huge geo-footprint that’s home to hundreds of potential manufacturers who might source materials arriving in the FTZ via rail or highway. Limon’s transportation infrastructure turns out to be its greatest asset for goods sourced from the coasts.
In the end, it may be Colorado’s improving international reputation as a regional growth economy that feeds Limon’s aspirations, along with more foreign-direct investment, or FDI, that comes with it. Today less than 100 Colorado companies are members of the Organization for International Investment, with 35% of those in manufacturing. In 2015 roughly 4% of the state’s private sector workforce was employed by foreign-direct investment. Those numbers are sure to improve.
Regardless, Joe Kiely and Limon’s brain trust aren’t looking back, they’re gazing forward, to a day when the city’s FTZ is a gateway for products and components, imported by companies region-wide or utilized by a growing cadre of manufacturers across multiple industry sectors. It’s ambitious, out-of-the-box thinking, equal to the opportunity also available to manufacturing companies operating in one of America’s fastest growing regional economies.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com. Contact Joe Kiely at joe.kiely@portstoplains.com.
Limon bets on foreign trade—and manufacturing
/in General/by Bart TaylorRural America’s decisive role November 8 gives way today to the tough reality that economic prosperity is as elusive after the election as before. Small towns and communities face an uncertain future. Colorado’s rural outposts must also stand by and watch urban counterparts make national headlines for job growth, rising property values, and increasingly diversified economies. It can be a tough pill.
But for others it’s inspiration, and, increasingly, small towns are taking action. On Colorado’s eastern plains, in Wray and Julesburg, Rural Colorado Apparel Manufacturing cut-and-sew centers have opened to pursue business from new domestic apparel and outdoor gear companies. Trinidad and others are reimagining city centers. Farming communities, hardest hit, eye ag-tech manufacturing and new crops to feed a growing appetite for craft food, beer and yes, hemp and cannabis.
Limon, Colorado, is taking a different approach. Seventy-five miles southeast of Denver on I-70, population 1800, Limon is betting on foreign trade. Last year the U.S. Department of Commerce awarded Limon the state’s third foreign-trade zone (FTZ), #293, a development the city hopes will translate into new primary jobs, including manufacturing jobs, that will put this town on more sound economic footing. FTZ’s provide duty relief for companies importing manufactured goods for distribution and sale throughout the U.S., or for parts and components incorporated into products manufactured on U.S. soil. Commercial merchandise can be brought in and held without being subject to the tariffs and taxes imposed by U.S. Customs and Border Protection.
At first blush, the town and trade seem strange bedfellows. What you see is what you get here, an economy based on the service businesses visible from Interstate 70; business that translates into 80,000 room nights a year and $85 per capita in retail sales from domestic traffic passing through this high plains community.
But Joe Kiely, Limon’s assistant city manager and director of the new FTZ, isn’t satisfied. “Those jobs are good for government,” he says, citing tax receipts, “but not good for the citizens of Limon. They’re low-wage jobs, for one. We need to attract new primary jobs to Limon.”
Like much of rural Colorado, government is now the top employer here and in surrounding Lincoln County. It’s also the fastest growing sector, a tide of taxpayer-supported spending Kiely and other development professionals in surrounding counties would agree is unsustainable. Still, the gambit to begin providing services to companies that stand to benefit from FTZ’s – ‘the best kept secret in the business ecosystem’ as described to me – and attract foreign-direct investment to the region, is an eye-opener.
Two things work in Limon’s favor. Colorado has two other established FTZ’s, neither of which are serving a large number of companies or taking steps to expand or promote benefits. As result, there’s no real competition. Chalk it up to Colorado’s ambivalence about manufacturing, a theme I heard not only in Limon but from others. Michael W. O’Beirne, a national foreign trade consultant based in Washington D.C., with deep roots in Colorado, tells me it’s costing the region jobs. “After more than a decade trying to use Colorado FTZs, in my opinion a vacuum still exists that’s pushing companies into states like Texas and South Carolina, states proclaiming they’re ‘open for business'”, he says. O’Beirne was an advocate for Limon’s FTZ but also sees a need for others. “A new west-Denver FTZ extending from Castle Rock to Windsor might help provide options for companies. The benefits are real.”
Kiely see opportunity. “We’re a motivated partner for companies”, he says.
That may be. It also seems a prerequisite if Kiely or his counterparts in Denver and Colorado Springs are to be successful recruiting a new cadre of businesses into this opaque, often confusing program. Economic development officials may be less than enthusiastic, but clearly the manufacturing and supply-chain companies that stand to benefit most from an active FTZ network don’t understand the program, either. It’s a point not lost on Karen Gerwitz, president of World Trade Center Denver. “We’re supportive and would be more than happy to do more to educate the business community”, she offered, “but we just don’t see the interest or demand for information.”
Understanding the scope of Limon’s opportunity is itself a challenge. Limon’s FTZ actually extends east, into metro-Denver. But as O’Beirne notes, having worked with the city, “additionally, Limon could designate FTZ subzone sites anywhere within Colorado where U.S. Customs and Border Protection will also support FTZ usage. Subzones are single-user FTZ sites like Vestas, under the FTZ authority of Denver but with manufacturing in Pueblo.”
It turns out to be a huge geo-footprint that’s home to hundreds of potential manufacturers who might source materials arriving in the FTZ via rail or highway. Limon’s transportation infrastructure turns out to be its greatest asset for goods sourced from the coasts.
In the end, it may be Colorado’s improving international reputation as a regional growth economy that feeds Limon’s aspirations, along with more foreign-direct investment, or FDI, that comes with it. Today less than 100 Colorado companies are members of the Organization for International Investment, with 35% of those in manufacturing. In 2015 roughly 4% of the state’s private sector workforce was employed by foreign-direct investment. Those numbers are sure to improve.
Regardless, Joe Kiely and Limon’s brain trust aren’t looking back, they’re gazing forward, to a day when the city’s FTZ is a gateway for products and components, imported by companies region-wide or utilized by a growing cadre of manufacturers across multiple industry sectors. It’s ambitious, out-of-the-box thinking, equal to the opportunity also available to manufacturing companies operating in one of America’s fastest growing regional economies.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com. Contact Joe Kiely at joe.kiely@portstoplains.com.
A cluster to envy: Ross Reels and Montrose rally outdoor industry to growth
/in General/by Bart TaylorRoss Reels had been in Montrose, Colorado, since 1983, a leader in precision machining in the fly fishing industry. But David Dragoo, president of Mayfly Outdoors, had already made a fateful decision after acquiring Ross and taking over operations in early 2014. “Essentially, we’d decided then that we were going to move the company,” he says. “And that was a big deal. Ross had been a primary employer here for a long time.”
How things changed. “We stayed, and the reason was simple,” he reflects. “The city has been a huge supporter of our company, along with Montrose County and the Montrose Economic Development Corporation. They have championed the cause to grow U.S.-based manufacturing.”
Today Dragoo is paying it forward in Montrose. In October, Mayfly Outdoors (Ross Reels’ parent company) announced plans to develop a world-class center for outdoor industry and enthusiasts along the famed Uncompaghre River, a development that may thrust Montrose to the front of a national wave of industry-cluster projects transforming American business.
Dragoo’s vision for the Colorado Outdoors project, to be developed on 150 acres around the river, expands on a trend we’ve written about often, of like-minded manufacturing and supply-chain businesses clustering to tap growing demand for domestic-made craft and consumer products; and of the opportunity for new manufacturing companies to again be woven tightly into the broad economic fabric as a result.
“I think the project encompasses three things,” Dragoo says. “It’s a revitalization of a beautiful part of the north side of town, when so much growth has been south. It’s a preservation of the river. We’re a manufacturing company that makes outdoor products for fisherman, hikers, and bikers, so the river is a key resource, an untapped resource in many ways. One outcome will be protecting and preserving the Uncompaghre. And the third thing is obviously the economic driver — bringing jobs, affordable housing, and the like. It’s a powerful combination.”
For those of us who’ve been rooting for these types of projects, it’s the makeup of the industry-cluster concept that’s also exciting.
“This community of outdoor manufacturing businesses we can bring together, the synergies of being together, is very compelling. Imagine small to medium size companies combined with larger enterprises — two-man crews to 250 employees, working and operating in close proximity. Or growing companies like Wagner Skis in Placerville [now in Mountain Village], maybe five or six people in a flex space, with an apartment above, warehouse in the back, retail in the front.”
Dragoo continues to gaze forward. “Then you have big companies, say Yeti Cycles, and they have 200 people in their end of the project — operating in a mix of industries and company sizes with a focus on designing and manufacturing outdoor gear and outdoor products.”
I mention the regional conversation taking place, from Grand Junction to Durango to Steamboat Springs, and the “lift” the collective dialogue about promoting outdoor industry would provide Dragoo and Montrose. He jumps to a tactical benefit: “This cluster of outdoor companies should begin to collectively develop some clout that individually we don’t have. Healthcare’s really tough on small companies, but if we can get 40 companies, for example, from across the region to speak with a single voice, maybe we can develop some negotiating power,” he says.
But for Dragoo it comes back to Montrose, and how the project can benefit the community he’s now committed to support.
“Regional pull for this project means several things for Montrose. We want folks to come stay, live and work here in the city and in the county. One of the challenges we have is that our nightly stay in the hotel is 1.5 nights. Go down to Ouray it’s 3.5 nights. We want to give folks a reason to stay here — to come and do factory tours, walk along the river, to enjoy some nice restaurants as well.”
It’s easy to envision. It’s also a model to emulate, not Dragoo’s vision necessarily, but the process of reimaging economic development that combines resurgence craft or light manufacturing with local attributes that provide for the ‘authentic’ experience consumers crave and new brands build around. Both will travel to embrace the experience.
And the region will benefit as a result.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Phylloxera comes to Colorado, and the wine industry holds its breath
/in General/by Bart TaylorThe wine sector is the crazy old uncle of Colorado’s prolific beverage industry. A wealthy uncle to be sure, with fertile bottomland, magnificent crops and impressive factories. Eccentric to the point of being a bit standoffish, miffed by the sudden success of brewing and distilling nephews, his mood’s improved lately. A burst of creativity — ciders and canned wines — has captured the public’s imagination.
In 1992, the scene across the Napa Valley was desolate. In what had been some of the most beautiful vineyards in the world, piles of dead vines pulled from the soil were being burned. The pall of black smoke mirrored the mood of winemakers, who watched grimly as their lifeworks went up in flames.
Is it possible Colorado vineyards might suffer the same fate? I had a lengthy conversation with Dr. Horst Caspari, CSU State Viticulturist, about the discovery of phylloxera and its possible impact on the sector. Caspari and I have spoken before. When I reached him on the phone, he chuckled. “I guess I know why you’re calling.” A scientist, Caspari measured his assessment.
Boulder’s U.S.-leading food scene again on display at 12th annual Pitch Slam & Awards
/in General/by Bart TaylorAmerica’s food revolution rolls on in Boulder, Colorado, where natural products enthusiasts convened last to week to parse, among other things, the metaphysical state of ice cream snacks.
Of course, there were more tangible outcomes for the 25 natural food and product innovators competing at Naturally Boulder’s 12th annual Pitch Slam & Autumn Awards, such as coveted booth space at Expo West, business consulting and a higher profile that boosts the early-stage companies pitching to judges and enthusiastic supporters. As I wrote last year, the event has become a spectacular showcase of innovation and entrepreneurship — a window into a movement and industry that’s profoundly changed Colorado’s economy and for consumers nationwide, the way we develop product and food concepts and make and distribute what we eat.
As impressed as I was last year, the crop of companies pitching this year was even stronger in my view, with great products but equally, very capable entrepreneurs. The business acumen of this group was off the charts.
Naturally Boulder again demonstrated why it’s among the most influential and productive trade organizations in America. I hooked up after the event with Bill Capsalis, past board president and early mover in standing up NB, to assess what we witnessed at the 12th annual Pitch Slam.
Our coverage of Pitch Slam finalists also includes this week’s profile of LoveTheWild. Stay tuned as we work our way through this incredible list of innovators and entrepreneurs.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
A Trump presidency unnerves cannabis manufacturers. Is it time to change tactics?
/in General/by Bart TaylorSpeculation about the impact of a Trump presidency on U.S. manufacturing has developed along familiar lines, much in keeping with America’s split-personality on the sector. Last week, media surmised that robots will thwart Trumps effort to reshore jobs at the same time his election may discourage the migration of businesses offshore. Midwest manufacturers are “wary of Trump’s free-trade stance” even as the Wall Street Journal reports that manufacturers are mixed on the prospect of a Donald Trump presidency in part because of his ‘protectionist’ rhetoric. So it goes.
Uncertainty and Trump also seem to go together. But here’s what we know: Candidate Trump ran on restoring U.S. manufacturing. And won. The prospects for American manufacturing appear bright.
Colorado’s cannabis manufacturers are probably less assured. Uncertainty has been a constant companion and today, the industry faces the prospect of a Rudy Giuliani or Ted Cruz-led Department of Justice, both of whom have been outspoken in opposing legalization.
I reached out to several of Colorado’s leading cannabis manufacturers to assess what steps industry and elected officials might take to insulate business here from a change-of-opinion at DOJ. The popular sentiment is to continue a ‘wait-and-see’ approach, that with all that’s happening within a new administration, the difficulties involved with unwinding the current hands-off approach and the vote to legalize in four additional states, the rules of engagement shouldn’t change.
Leaving the prospects of a billion-dollar Colorado industry to chance may be the right approach. It’s reasonable to let things play out. But should cannabis leaders and officials elected by the same voters who legalized pot also set in motion a full-throated defense of the industry?
Advocates would do well to publicize the positive impact of legal marijuana on conventional business in the state. They could start with manufacturing.
As President-elect Trump probably understands, creating new manufacturing jobs will pivot on the development of a new domestic supply chain more than legislation that will penalize companies who locate elsewhere, favored Trump campaign rhetoric.
It’s no different here and in Colorado, cannabis farming and production is supporting a wave of new supply-chain companies whose products and services bleed into conventional economy: production supplies including organic soils, lighting hardware, and systems automation; packaging, labeling, and printing including plastic products and fabrication services. Architects and builders are contemplating new facilities. A transportation and logistics network today supports increasingly advanced solutions to bring the industry’s products to market. It’s a long list and getting longer.
Also important is the growing number of capital providers migrating to Colorado and other states with legal marijuana to fund the cannabis industry. Small business requires capital and business services that incubate early-stage companies. Cannabis manufacturing is driving money and expertise into the early-stage ecosystem here and alongside the influx of dollars funding Boulder’s surge in natural food and statewide momentum in craft beverages and other specialized early-stage manufacturing, it’s easy to envision Colorado becoming a financing hub for light manufacturing. Cannabis is a catalyst.
The impact on the labor supply is more mixed. Cannabis complicates efforts of conventional manufacturers in what is already a difficult labor market.
But the jobs paradox that afflicts manufacturing nationally is also at work here: Companies lament a lack of qualified workers, yet point to the loss of manufacturing jobs offshore, or to robots, as the real challenge. Colorado’s manufacturing leaders seem hard at work fixing the workforce challenge. The ‘cannabis contribution’ to new job creation shouldn’t be overlooked.
It still may be a bridge to far for some, but business and policy leaders looking closely will determine that Colorado’s cannabis experiment is today an engine of conventional economic growth.
A rationale to which President-elect Trump can relate.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
—
Cannabis profiles and features in CompanyWeek:
CBDRx
Blue Kudu
Industry Report: Cannabis R&D in Colorado
EZTrim
Mary’s Medicinals
Waste Farmers
O.pen Vape
Dixie Elixirs & Edibles
Workforce paradox: Automation key to manufacturing job growth
/in General/by Bart TaylorEven as manufacturing’s percent of U.S. employment lingers around 10 to 12 percent of total employment (and about 9 percent in Utah and Colorado), U.S. manufacturing is alive and well. American industrial output is at an all time high. We’re simply making more, with less. From Vox.com:
Since 1987, US manufacturers have increased their output by 80 percent at the same time as they have reduced their workforce by about 17 percent. In other words, American factories are about twice as efficient today as they were three decades ago. So we’re producing more and more stuff, even as we use fewer and fewer people to do it.
It’s a testament to America’s incredible R&D engine — and entrepreneurial ecosystem that commercializes innovation and technology.
But in the new manufacturing economy, where we make more with fewer employees, we still struggle to develop the right workforce. Today’s manufacturing employees are challenged to learn the skills that match our 21st century industrial makeup: technology-informed and in many cases, skill-sets we stopped teaching decades ago.
This was demonstrated again at last last month’s third annual Apparel + Lifestyle Manufacturing Summit. New cut-and-sew centers are launching in Colorado to meet growing consumer demand for apparel, backpacks, shoes, and other sewn products. Utah’s lifestyle industry boom is also fueling the development of more production businesses. But since we’ve not trained successive generations of pattern-makers, sewers, and finishers, there’s a workforce shortage and no real manual today for workforce development. Who’s an ideal candidate? What’s an appropriate curriculum, and for what equipment?
Even as we find and train workers, one reality is that technology will change everything. As Utah and Colorado look for footing in new (but old) industry sectors like garment manufacturing, technology will shape anew how industry redevelops here. Will the region be home to thousands of new sewers? More likely, based on themes that emerged from the Summit, new production epicenters may look different, featuring more automized systems working in support of smaller, smarter teams — prototyping hubs that enables brands to develop new products and manufacture to test in the field and with new consumers. Volume manufacturing may happen here, or elsewhere.
Consider how this model might proliferate across industries for communities that get it: diversified economies featuring dynamic craft food and beverage sectors that also sustain high-tech agriculture; advanced, agile middle-market manufacturers fabricating refined parts and assemblies; and lifestyle companies prototyping new products here in response to consumer’s preference for all things local. Automated, small-batch manufacturing everywhere.
Here’s a path ahead: Follow the lead of industry and higher-education advocating for fundamental change in how we train a next generation manufacturing workforce — but expand the dialogue into industries not yet party to the conversation. Maker industries that stand to gain from technology and innovation. And feed and incubate early-stage manufacturing companies in these same industries.
We’re destined to make things with fewer employees. But if we expand the breadth of what we make, across industries we’ve forgotten or ignored, we’ll add jobs by breaking down barriers erected in the past couple decades.
With the hammer of American R&D.
Bart Taylor is publisher of CompanyWeek. Reach him at baylor@companyweek.com.
More on CompanyWeek’s most-read content from 2016
/in General/by Bart TaylorWe’ll devote time and energy this fall doing what many of you do — assessing the popularity of our products (in our case, content), determining what’s working and what isn’t, and developing new content that do what most good products do: meet a demand in the marketplace or solve a problem.
Here’s a list of what you liked, the most-visited content pages at www.companyweek.com, January through September this year:
And here’s a couple takeaways:
Manufacturing companies are interested in each other. We organize and archive company profiles by industry type at CompanyWeek, and this list reflects the popularity of those archives. It’s no surprise, really. It’s the only resource of its kind. But the practical takeaway is that many of the early-stage and middle market companies we profile are interested in how others are managing the challenges, needs, and opportunities outlined each week. Plus there’s business to be had in company-to-company connections.
There’s growing interest in a manufacturing resurgence in lifestyle industries. There was obviously the most interest in a good old-fashioned David-and-Goliath story when brawny Walmart tapped Rural Colorado Apparel Manufacturing a finalist for it’s Manufacturing Innovation Fund then rejected it in favor of more academic exercises, like The Science of Making Old Clothes New Again.
RCAM has since been told no again by Walmart, but here’s guessing that it’s only a matter of time before an authentic manufacturer taps the upstart apparel cut-and-sew resource to make garments — utilizing labor sourced from rural America. RCAM is a sleeping giant, either as an entity or as a concept.
The #2 ranked content on the list was first published over a year-and-a-half ago, in June 2015. Our report on Colorado’s bike manufacturer continues to do well in web searches. Interest is high in U.S.-made gear.
Witness the Food & Beverage juggernaut. We’ve documented Colorado’s food and beverage surge — it’s the fastest growing manufacturing sector in the state. Utah’s Kodiak Cakes is the no. 1 read-profile this year, a result in no small part to its legion of fans active on social media.
But F&B has also been the no. 1 category archive destination this year, a trend that should continue as we shine a light on more regional companies driving a revolution in what we eat and how we distribute it.
Industrial manufacturers continue to be the under-publicized bedrock of sector. If others forget about cutters, benders, machinists, and welders, we won’t, and neither will readers or visitors landing at CompanyWeek.com from web searches.
Finally, on the other end of the spectrum, here’s the best column I wrote this year that nobody read. Can’t win ’em all.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
From startup to small batch: when a craft business becomes a manufacturer
/in General/by Bart TaylorHow important is it that we continue to incubate small businesses so they become thriving companies?
Michael Porter, co-chair of the Competitiveness Project and the Harvard Business School, declared on CNBC’s Squawk Box. “We’re stalled in America. Our performance, economic performance, on many metrics is worse than we’ve seen in many generations. I mean not five years. I mean 10, 15, 20, 30 years,” he said. “The combined failure of the political system and business class has had a greater negative impact on small business.”
According to Harvard’s fifth annual U.S. Competitiveness Project report, the reasons are easy to identify and impact small business most. The study finds:
The United States retains key strengths in areas like higher education, entrepreneurship and capital markets. But those advantages have been offset by weaknesses in the corporate tax code, early and secondary education, infrastructure, the political system and health care.
Those problems have gone unsolved because Washington has failed to have an honest conversation about addressing them, and the country lacks a cohesive economic strategy, particularly at the federal level.
Colorado’s economy is small business-centric, as are many neighboring states, so as we enjoy a regional boom compared to other parts of the country, it’s a reminder that while things are good, not all may be well.
Yet small business success was the topic last week at a Denver Startup Week panel I moderated along with Brooke Wolfe of Merchants Office Furniture. The topic was ‘Startup to Small Batch – How Craftsmen Become Manufacturers.’ On the panel were founders from several companies we’ve profiled — including Winter Session, Topo Designs, Azure Furniture, and Waste Farmers — and two we’re excited to write about, Coda Coffee and Rachio.
Their stories are an intriguing mix of a passion and place, of determination and controlled insanity, really. How else do you explain a decision to stay the course after realizing those pesky details like relationships, weekends, and vacations take a back seat to running a business?
One pivotal point for small maker companies may be that moment — that opportunity — when a company evolves from craft business to full-fledged manufacturer. There are many existential moments for small businesses, but it was fascinating to hear when these successful entrepreneurs realized they’d graduated to another level. Getting more small business to this moment is the objective.
For John-Paul Maxfield, founder and CEO of Waste Farmers, it was a recurring financial theme. “We knew we were a manufacturer when our rapid growth required diligent attention to capital allocation as we invested significant capital into our manufacturing capacity to keep up with our current and projected sales,” he explained.
“When we grew from my garage into a slightly larger 6,000-square-foot facility that we leased, it never hit us that we were a manufacturer, even as we manufactured our products, it was just a logical evolution of being really excited about the products we were making. When we moved into the 80,000-square-foot facility we’d recently purchased to give us 10X capacity, that quickly brought the reality of the importance of the manufacturing component of our business to the forefront,” he added.
Topo Designs Mark Hansen also pointed to finances. “Our banking relationship became more important.”
Azure Furniture’s Corbin Clay had no doubt when they arrived. “I realized it when we had two shifts running, when 6 p.m. came around and I decided to head home, and everything just kept on going,” he said. “Production kept on running long after I left the building. That is when I realized that not only had Azure gotten much bigger than myself, but that it was a proper manufacturer; with SOPs, and policies, and managers. Pretty cool feeling.”
Tommy Thwaites of Coda Coffee had a similar experience. “My brother (and business partner) and I were always hesitant to take vacations at the same time — we always thought one of us needed to be there,” he laughed. “But we finally did and came back and were relieved, but not surprised really, that the lights were still on and things were running smoothly.” An exclamation point for the importance of the care of feeding of small business.
More on the journey of small manufacturers in coming weeks.
Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.
Manufacturing is losing the PR battle. Does it matter?
/in General/by Bart TaylorDespite the best efforts of candidates Hillary Clinton and Donald Trump, manufacturing continues to get killed in the business press. In Monday’s debate, Clinton even used a term endearing to government and policy wonks — “advanced manufacturing” — to promote its importance.
But business media remains generally unimpressed. It’s more popular today for local and national voices to dismiss manufacturing as a relic than view it as integral to the future.
How else to explain the Denver Business Journal releasing its Book of Lists last week without a single manufacturer among the 22 finalists and 11 Power Book winners?
Manufacturing wasn’t even a category. Instead:
The Power Book is an exclusive look at business men and women in 11 industry categories who were prominent in the news over the last year or who, in our judgment, otherwise deserve recognition for recent business accomplishments.”
No manufacturing executives in Colorado deserve recognition? Astonishing.
As head-scratching the DBJ‘s omission, the national media is often more transparent in its anti-manufacturing bias. Here’s Forbes‘ Tim Worstall:
[T]he truth is that manufacturing simply isn’t important as a part of the economy these days. The attention we all pay to it is simply an historical overhang from when it was more important.
Worstall’s anti-manufacturing opinion is one thing. His bias is more problematic when he misleads with statistics. Worstall cites manufacturing’s share of “real GDP’,” arguing that its influence has diminished:
The truth is that manufacturing is only 15% of the entire global economy. And it’s some 12% of the US economy. . . . That is, it’s unimportant.
Was manufacturing “unimportant” in 1960? Quite the contrary. But using Worstall’s statistic of choice, ‘the truth’ is that manufacturing’s 50-year historical average has remained the same:
Manufacturing’s not the employment engine it once was. Today we make more with less workers. It makes manufacturing less important from an employment standpoint. It also makes it an industry in transition.
It should be easy for business media to see past the employment sea change, as dramatic as it is. As we’ve documented, American productivity has never been higher. Candidates running for president would do well to explain why manufacturing is important to the U.S. economy. Here’s a national perspective from Brookings:
How long can the list go? Try local reasons:
On the eve of the election, consider bias in media and how, if you’re a manufacturer, it matters.
And what you intend to do about it.
Bart Taylor is publisher if CompanyWeek. Reach him at baylor@companyweek.com.
We hope to see you Wednesday afternooon at the third annual Apparel + Lifestyle Manufacturing Summit in Denver to help advance regional manufacturing!
Utah’s new MEP—the University of Utah—a promising resource for local manufacturers
/in General/by Bart TaylorThe U.S. Department of Commerce channels resources to American manufacturing through NIST, the National Institute of Standards and Technology and its Manufacturing Extension Partnership (MEP) network.
It sounds like layers of government bureaucracy, but the MEP network is actually a diverse public-private mix, collectively pursuing the objective of supporting U.S. manufacturing. Today every state in the union has a single, federally supported Manufacturing Extension partner. Each is different: the national network is a mix of private sector, non-profit, university and local organizations, tailored to the meet the unique makeup of each state. The partners provide services “ranging from process improvement and workforce development to specialized business practices, including supply chain integration, innovation, and technology transfer.”
The feds require that entities occasionally ‘compete’ for the contract with NIST and the funding and support that comes along with it. It’s not an inconsequential amount of money: Utah’s new MEP, the University of Utah’s MEP Center, ‘will receive $16 million in funding over the next five years from both federal and state governments as well as local industry.’
The University of Utah competed to become Utah’s new MEP and in the end will replace Utah Valley University as the NIST partner. In Colorado, California, New Mexico and other centers throughout the West, MEP’s are hybrid organizations with university ties. Some operate for-profit businesses, many selling services to help manufacturers improve operational performance using concepts like Lean Six Sigma.
Yet Bart Raeymaekers and Bruce Gale, engineering faculty and authors of the grant proposal and recipients of the MEP charter, envisioned a different focus. I asked Raeymaekers what compelled the university to compete for the MEP opportunity.
“We noticed that the entire MEP system nationwide has been focused heavily on operational excellence, and realized that the future of manufacturing, and for small and medium sized businesses to compete in the global marketplace, that operational excellence can only bring you so far,” he explained. “You can only shave so much costs from your operation. Ultimately, we believe you have try to grow top line line revenue to compete.
“What we’re really good at in this country is technology and innovation and that’s what we’re going to focus on,” he added. “That was the the new paradigm we pitched — helping companies drive top-line revenue growth while still providing operational excellence to grow profits.”
Utah’s new center will accomplish this by introducing companies to technology and leveraging America’s great R&D advantage, a common theme now emerging nationwide as manufacturing reinvents itself.
“We’ll be heavily focused in helping companies focus on implementing advanced manufacturing technologies, help them innovate w their processes and products,” Raeymaekers said, “to go after new markets, help them with business intelligence to do that (data-driven intelligence) and at the same time also provide workforce education, because if you want to implement new technologies, you have to train workforce and management to be able to adopt these new technologies within the company.”
Yet the manufacturing opportunity today is much more than high-tech manufacturing. For one, consumers are driving demand for locally-made products to satisfy new tastes for craft or on-demand products. Today consumers are reshaping the manufacturing landscape as much as technology. It’s not lost on Raeymaekers. I pointed out that Utah boasts a healthy mix of high-and-low-tech manufacturing.
“First of all you’re right. We did an analysis of Utah’s sector and it’s certainly not all high-tech. But our center will be focusing on process and product innovation, advanced technologies, workforce education, and operational excellence, all of which really apply to all different sectors. We can bring the same tool sets and skill we have on staff to serve manufacturers independent of the sector they’re in.”
He also added, insightfully, “Even if you’re making tee-shirts, you can still benefit from data-driven business analytics — the best markets to pursue or products to launch. We have those tool sets available and want to deploy across the entire manufacturing sector.”
Lastly, Raeymaekers pointed out the Center will also help companies acquire capital and financing, a critical service as manufacturing truly develops from small business upward. “If companies are to innovate that means they need to get funded. We want to link companies with investment sources to provide financing, including subject matter experts at the university to help small business go after technology grants, for example.”
Music to my ears. We’re excited to work with Utah’s new MEP to bring the first Manufacturing Growth & Financing Conference to the state in the spring of 2017.
Also, more on how the Center will arm Utah manufacturers with advanced technologies in the coming weeks. In the interim, contact Bart Raeymaekers at bart.raeymaekers@utah.edu.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.