This past October, the Colorado Office of Economic Development and International trade was awarded a $6.6 million grant to help manufacturers impacted by defense-related budget cuts retrain employees and develop advanced capabilities to better compete in a fast-changing marketplace.
CAMA, the Colorado Advanced Manufacturing Alliance, was tapped by OEDIT to administer the grant, described in detail last year in CompanyWeek.
CAMA recently announced changes to SMART, including a new name: FourFront. I met with CAMA President Tim Heaton and Chief Strategy Officer Karla Tartz to discuss the changes.
CW: SMART, the $6.6 million “defense-industry adjustment program” grant awarded to Colorado last year is itself being adjusted to reflect a new name — FourFront — and revised program. Why the change less than a year into the program?
A: The simple answer is SMART is a very crowded acronym and is used for many program initiatives. After consulting with members of the manufacturing industry around the state, we decided to create a name that tells the story behind this initiative. The mission is still the same — creating a long-term economic development strategy focused on accelerating the growth and resiliency of manufacturers across Colorado’s Advanced Industries, with a focus on advancing and assisting Colorado’s defense sector. We have always envisioned creating centers in each of our four regions that help to keep our advanced industries at the forefront of innovation and advancements — hence the name FourFront.
CW: What are the four regions?
A: Our manufacturers divided the state as follows:
-
Western Slope, from Grand Junction to Durango including all of mountain communities such as Vail, Telluride, and Steamboat;
-
Southern Colorado, including Colorado Springs, Pueblo, and other manufacturing centers such as La Junta;
-
Northern Colorado, which includes the communities from Frederick to Fort Collins and east through Greeley; and
-
Greater Denver metro area.
CW: SMART envisioned identifying 30 or so defense-impacted manufacturing companies that might benefit from retraining. FourFront envisions a wider impact. Who will benefit?
A: Yes, FourFront is about helping manufacturing across all advanced industries. However, we are not losing our focus on defense diversification.
We are currently searching for Colorado companies, whether a prime defense contractor or a first, second, third, fourth, or lower-tier subcontractor to a prime contractor affected by past defense budget cuts in federal fiscal years 2014, 2015 or will be impacted by 2016 defense reductions.
If a firm experienced a loss of or an imminent threat of a loss of at least 5 percent of sales and/or production, or of a major product line (defined as 25 percent of total sales or production), and in employment because of defense cuts; or, at least 5 percent of the firms loss in sales or production can be attributable to defense budget reductions within federal fiscal years 2014, 2015, or will be impacted by 2016 defense reductions, we want to hear from them. It’s our goal to assist these companies with technical training that will identify competencies or areas of needed improvement or advancements that will ultimately allow them to pivot into new markets or identify new opportunities.
But FourFront is more than just providing technical services and training to those directly impacted; FourFront is about providing and sharing best practices and lessons learned to ensure that our Advanced Industries are working together and not in silos. We want to connect impacted companies into a larger mentorship and support system that can assist them well beyond the end of any single technical assistance program.
CW: You mentioned the regional technical and training centers — FourFront calls for a primary Application Center connected virtually to the other regional Advancement Centers across the state. What type of equipment do you envision in the Application Center?
A: We are working with EWI, a 30 year old manufacturing applied research firm. EWI actually teamed with CAMA in the development of its response to the RFP released by OEDIT last year. FourFront and CAMA are supporting EWI as they are finalizing a 5-month process to identify applied research needs across Colorado’s manufacturers across the state. The final business plan will be completed shortly and will identify the implementation plan and the technology focus needed in Colorado. This will then dictate the types of equipment needed for such applied research. If EWI adds a site in Colorado, we will work with them on a process for making sure that the right equipment is available for all manufacturers.
We certainly envision the Advancement Centers connecting regional manufactures to technology being developed at universities and federal labs, specifically NNMIs. It is our goal to deploy and integrate these technologies into the supply chain across Colorado. EWI has a proven track record of helping manufacturers all across the nation from their Ohio facility. We are confident that with FourFront’s collaboration and EWI’s demonstrated success, all manufacturers in Colorado will be able to tap into this tremendous resource when it is available.
CW: How do food and beverage, consumer and apparel, and other manufacturers not classified as “Advanced Industries” stand to benefit?
A: We are very glad you asked this question as this is a topic that has been raised many times. Advanced Industries includes advanced manufacturing and here in the great state of Colorado our manufacturers serve diverse sectors across the Colorado economy — from electronics and consumer products to clean energy systems, aerospace vehicles, medical devices and food manufacturing and beverage processing.
Advanced manufacturing is more precisely identified at the company level rather than the industry level, and is based on company high-tech manufacturing processes, machinery, and materials rather than their final products. But it’s a question we’d like to expand on next time.
CW: What other specific outcomes does CAMA envision from FourFront and is the program a bridge to future state or regional efforts to support manufacturing, or other federal programs in the works?
A: The first and most critical step is creating the foundation or infrastructure that will allow FourFront’s mission to succeed. Too often, funding is given to silo’d or one off projects without focusing on the development and creation of a platform upon which future and deeper initiatives can occur. This first step is by far the hardest and no one state has created regional ecosystems that are then connected to each other and to national initiatives. When completed, this foundation is definitely a bridge to further state, regional and federal efforts. For example, cyber research and training is a natural next step that cuts across all Advanced Industries and can benefit all regions, especially if they are working together.
CW: In rolling out the original program OEDIT and CAMA stated transparency was a high-priority, given that tax dollars are involved. How much of the $6.6 million grant has been spent thus far — and is a cost accounting available for public view?
A: Transparency is very important and something we are working on being better at. We hope the CompanyWeek platform is just one of many that we can use to communicate updates to Colorado manufacturers. Additionally, CAMA is launching a FourFront website. In the meantime, those interested can find information and updates on CAMA’s website.
We have been very cautious up to this point (some would say too cautious) and we have only spent about 5 percent of the allocated budget. Below is an overview of spend per project through our 3rd reporting period.
Total Budget Expended in 3rd Reporting Period
Project #1: $1,000,000 $54,670
Project #2: $75,000 $34,193
Project #3: $30,000 $18,703
Project #4: $30,000 $4,972
Project #6: $300,000 $12,475
Project #7: $4,235,000 $102,859
Project #8: $200,000 $21,483
Project #9: $1,200,000 $70,082
Total: $7,270,000 $340,555
Our approach has been “go slow to go fast.” We have focused on building a solid infrastructure so we can truly build a sustainable ecosystem that benefits the state for years to come. We are close to finalizing center locations and will begin hiring and acquiring needed assets for each region. EWI is close to finalizing its report and a portion of FourFront funding will be used for Colorado’s application center. However, we know that this application center will need additional funding and we are working with local stakeholders to identify additional funding opportunities for EWI.
(Part one of a series on FourFront.)
Bart Taylor is founder and publisher of CompanyWeek. Reach him at 303-888-2832.
Gov. Hickenlooper’s cycling gambit falls just short. Here’s how to fix it.
/in General/by Bart TaylorThere’s much to like about Gov. John Hickenlooper’s bold pronouncement at the Interbike conference last week to invest $100 million in Colorado cycling infrastructure — trails, bike lanes and interconnectivity. It’s practical and progressive and on the surface it’s a timely and well-aligned economic development strategy. Building on Colorado’s already strong national reputation as a destination for outdoor enthusiasts, Hickenlooper’s making a wise bet that ongoing leadership will translate into an economic windfall.
It’s also expensive, especially relative to money not being spent on roads and highways. But cycling enjoys bipartisan support and not every politician who complains that dollars should instead be spent on roads can stand in Sen. Randy Baumgardner‘s shoes. Last year, the Republican from Hot Sulphur Springs introduced a bill to raise $3.5 billion for road projects. (It failed.) Most of Hickenlooper’s opponents have done far less to advance transportation infrastructure funding. The politics fall the Governor’s way.
All that said, Hickenlooper’s bold stroke falls just short. Today, the economic benefits of cycling — or skiing, hiking, and other health and fitness industry for that matter — go beyond the number of new trails or urban bike lanes. Hickenlooper missed a chance to make a bigger splash.
A plan that truly taps the economic benefits of cycling would have included a vision to establish Colorado as the new U.S. destination for cycling industry. The seeds of an international-leading sector are here: trailblazing frame, component, clothing and cycling gear brands and entrepreneurs, lifestyle talent to employ and world-class terrain and topography including Colorado’s embarrassment of outdoor riches to support testing and training.
To be fair, the dynamics of manufacturing domestically have to this point been a significant barrier. Outliers like Hanson ski boots notwithstanding, most everything we’ve bought the past generation to ski or hike or ride or wear have been made offshore.
But that’s changing, and in a profound way. Over the past two years we’ve written about dozens of equipment, component and apparel companies making things here and in Utah. The sea change, for those paying attention, is unmistakable: The economics of making in the U.S. have shifted, and those who realize this will birth new industry clusters that transform communities.
It also requires developers to connect the dots and ironically, Hickenlooper’s own economic blueprint is a barrier. Tourism and Outdoor Recreation is largely disconnected from lifestyle manufacturers. A new Office of Outdoor Recreation was developed last year and could provide a bridge but it’s unclear how the office plans to marry up related sectors into effective outdoor industry clusters.
The governor’s pronouncement was timely and informed. It will benefit from a related industry push that costs less money as it challenges Colorado’s economic development orthodoxy.
Bart Taylor is founder and publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
CompanyWeek at 2 years: what’s in store for Utah
/in General/by Bart TaylorSince CompanyWeek debuted two years this week, we’ve shined a light on 400 or so manufacturers, chronicled the policy efforts to support them (some good, some bad), and been an advocate for manufacturing even as business voices debate the so-called manufacturing renaissance.
We’ve published a standalone version in Utah for just under a year now in partnership with Todd Bingham and the Utah Manufacturers Association, profiling 80 or so Utah companies as part of the regional mix. Here are six takeaways from two years of publishing in Colorado. We’ll compare these six to factors shaping Utah’s manufacturing sector next issue.
But as we celebrate our 2nd anniversary, it’s important we communicate what’s ahead for CompanyWeek Utah:
We know this: a broad-based cross-industry manufacturing revival is underway in Utah, the Rocky Mountain west and across the U.S. We’re confident CompanyWeek is meeting a growing demand for information.
Manufacturers can rally around their own media to advance the sector. More on what else must happen next time.
Utah joins a growing national list of manufacturing hotspots
/in General/by Bart TaylorToday’s ‘Made in America’ renaissance is actually a dozen different iterations, driven by local economic realities, by regional trends and attributes. It’s a hundred distinct movements, some connected, some not, though it’s easy to find an important connection between a craft brewer and a medical products manufacturer. Companies that make stuff have things in common.
To its credit the U.S. Department of Commerce has recognized this diversity and designated last week an additional 12 communities as “Investing in Manufacturing Communities Partnership” award recipients, each aligned with opportunity distinct to the region.
Utah’s emerging composite materials sector, one I’ve written about often in the context of cycling and recreation and the companies in particular that make Ogden home, is on the list. It’s a great example of trends revitalizing U.S. manufacturing and coalescing in powerful ways where opportunity meets targeted support — in this case the Utah Outdoor Recreation Office’s purposeful push to attract lifestyle-related industry.
Public-private partnerships are at the core of the Manufacturing Community Partnership awards. Here’s a summary of the new 12 from the Commerce release. (Here’s the full release.)
Colorado is absent from the list and the previous dozen, though its aerospace sector would rank alongside any of the half-dozen or so designees. With New Horizons’ Pluto fly-by in the news, so are the efforts of Colorado’s space initiatives, at least in local newsfeeds.
The state’s Office of Economic Development and International Trade was also awarded $6.6 million to identify and retrain defense-impacted ‘advanced manufacturers,’ so the Feds certainly value the state’s manufacturing community.
Neither Utah nor Colorado is developing a blueprint that brings all of the manufacturing economy together – a ‘manufacturing communities partnership’ on a regional scale fit to the region’s unique blend of attributes, talent and history.
But future partnerships like this may be regional in scope, so even though planners at GOED view this helping competitive efforts with Colorado, as OEDIT would, both Utah and Colorado win in the long run.
Collaboration is in the offing.
CAMA on SMART/FourFront: A Q&A with Tim Heaton and Karla Tartz
/in General/by Bart TaylorThis past October, the Colorado Office of Economic Development and International trade was awarded a $6.6 million grant to help manufacturers impacted by defense-related budget cuts retrain employees and develop advanced capabilities to better compete in a fast-changing marketplace.
CAMA, the Colorado Advanced Manufacturing Alliance, was tapped by OEDIT to administer the grant, described in detail last year in CompanyWeek.
CAMA recently announced changes to SMART, including a new name: FourFront. I met with CAMA President Tim Heaton and Chief Strategy Officer Karla Tartz to discuss the changes.
CW: SMART, the $6.6 million “defense-industry adjustment program” grant awarded to Colorado last year is itself being adjusted to reflect a new name — FourFront — and revised program. Why the change less than a year into the program?
A: The simple answer is SMART is a very crowded acronym and is used for many program initiatives. After consulting with members of the manufacturing industry around the state, we decided to create a name that tells the story behind this initiative. The mission is still the same — creating a long-term economic development strategy focused on accelerating the growth and resiliency of manufacturers across Colorado’s Advanced Industries, with a focus on advancing and assisting Colorado’s defense sector. We have always envisioned creating centers in each of our four regions that help to keep our advanced industries at the forefront of innovation and advancements — hence the name FourFront.
CW: What are the four regions?
A: Our manufacturers divided the state as follows:
CW: SMART envisioned identifying 30 or so defense-impacted manufacturing companies that might benefit from retraining. FourFront envisions a wider impact. Who will benefit?
A: Yes, FourFront is about helping manufacturing across all advanced industries. However, we are not losing our focus on defense diversification.
We are currently searching for Colorado companies, whether a prime defense contractor or a first, second, third, fourth, or lower-tier subcontractor to a prime contractor affected by past defense budget cuts in federal fiscal years 2014, 2015 or will be impacted by 2016 defense reductions.
If a firm experienced a loss of or an imminent threat of a loss of at least 5 percent of sales and/or production, or of a major product line (defined as 25 percent of total sales or production), and in employment because of defense cuts; or, at least 5 percent of the firms loss in sales or production can be attributable to defense budget reductions within federal fiscal years 2014, 2015, or will be impacted by 2016 defense reductions, we want to hear from them. It’s our goal to assist these companies with technical training that will identify competencies or areas of needed improvement or advancements that will ultimately allow them to pivot into new markets or identify new opportunities.
But FourFront is more than just providing technical services and training to those directly impacted; FourFront is about providing and sharing best practices and lessons learned to ensure that our Advanced Industries are working together and not in silos. We want to connect impacted companies into a larger mentorship and support system that can assist them well beyond the end of any single technical assistance program.
CW: You mentioned the regional technical and training centers — FourFront calls for a primary Application Center connected virtually to the other regional Advancement Centers across the state. What type of equipment do you envision in the Application Center?
A: We are working with EWI, a 30 year old manufacturing applied research firm. EWI actually teamed with CAMA in the development of its response to the RFP released by OEDIT last year. FourFront and CAMA are supporting EWI as they are finalizing a 5-month process to identify applied research needs across Colorado’s manufacturers across the state. The final business plan will be completed shortly and will identify the implementation plan and the technology focus needed in Colorado. This will then dictate the types of equipment needed for such applied research. If EWI adds a site in Colorado, we will work with them on a process for making sure that the right equipment is available for all manufacturers.
We certainly envision the Advancement Centers connecting regional manufactures to technology being developed at universities and federal labs, specifically NNMIs. It is our goal to deploy and integrate these technologies into the supply chain across Colorado. EWI has a proven track record of helping manufacturers all across the nation from their Ohio facility. We are confident that with FourFront’s collaboration and EWI’s demonstrated success, all manufacturers in Colorado will be able to tap into this tremendous resource when it is available.
CW: How do food and beverage, consumer and apparel, and other manufacturers not classified as “Advanced Industries” stand to benefit?
A: We are very glad you asked this question as this is a topic that has been raised many times. Advanced Industries includes advanced manufacturing and here in the great state of Colorado our manufacturers serve diverse sectors across the Colorado economy — from electronics and consumer products to clean energy systems, aerospace vehicles, medical devices and food manufacturing and beverage processing.
Advanced manufacturing is more precisely identified at the company level rather than the industry level, and is based on company high-tech manufacturing processes, machinery, and materials rather than their final products. But it’s a question we’d like to expand on next time.
CW: What other specific outcomes does CAMA envision from FourFront and is the program a bridge to future state or regional efforts to support manufacturing, or other federal programs in the works?
A: The first and most critical step is creating the foundation or infrastructure that will allow FourFront’s mission to succeed. Too often, funding is given to silo’d or one off projects without focusing on the development and creation of a platform upon which future and deeper initiatives can occur. This first step is by far the hardest and no one state has created regional ecosystems that are then connected to each other and to national initiatives. When completed, this foundation is definitely a bridge to further state, regional and federal efforts. For example, cyber research and training is a natural next step that cuts across all Advanced Industries and can benefit all regions, especially if they are working together.
CW: In rolling out the original program OEDIT and CAMA stated transparency was a high-priority, given that tax dollars are involved. How much of the $6.6 million grant has been spent thus far — and is a cost accounting available for public view?
A: Transparency is very important and something we are working on being better at. We hope the CompanyWeek platform is just one of many that we can use to communicate updates to Colorado manufacturers. Additionally, CAMA is launching a FourFront website. In the meantime, those interested can find information and updates on CAMA’s website.
We have been very cautious up to this point (some would say too cautious) and we have only spent about 5 percent of the allocated budget. Below is an overview of spend per project through our 3rd reporting period.
Total Budget Expended in 3rd Reporting Period
Project #1: $1,000,000 $54,670
Project #2: $75,000 $34,193
Project #3: $30,000 $18,703
Project #4: $30,000 $4,972
Project #6: $300,000 $12,475
Project #7: $4,235,000 $102,859
Project #8: $200,000 $21,483
Project #9: $1,200,000 $70,082
Total: $7,270,000 $340,555
Our approach has been “go slow to go fast.” We have focused on building a solid infrastructure so we can truly build a sustainable ecosystem that benefits the state for years to come. We are close to finalizing center locations and will begin hiring and acquiring needed assets for each region. EWI is close to finalizing its report and a portion of FourFront funding will be used for Colorado’s application center. However, we know that this application center will need additional funding and we are working with local stakeholders to identify additional funding opportunities for EWI.
(Part one of a series on FourFront.)
Bart Taylor is founder and publisher of CompanyWeek. Reach him at 303-888-2832.
Colorado aerospace fires back at national slight as NASA, Lockheed Martin land at NFT/Paradigm
/in General/by Bart TaylorI mentioned last week how Colorado missed out on the latest round of the U.S. Commerce Department’s Investing in Manufacturing Community Partnership awards, but that the state’s aerospace sector, to name one, was deserving of recognition.
Two events last week underscored the strength of the sector. The same day that New Horizons zipped past Pluto with Colorado-made parts on board, officials from NASA and Lockheed Martin quietly landed at NFT’s Paradigm aerospace division to recognize the company’s contributions to a different space mission, the successful first test flight of Orion in December 2014. (Orion is NASA’s new spacecraft, designed “to take humans farther than they’ve ever gone before.”).
NFT president John Allbery and vice president Gary Vaillancourt welcomed a slew of VIPs including officials from NASA’s Johnson Space Center in Houston and a contingent of Lockheed executives led by Vice President and Orion Program Manager Mike Hawes.
The NASA team made the special trip to Paradigm to award the company the agency’s “Program Manager’s Commendation” for outstanding performance by the Orion spacecraft team for their contributions to the successful Exploration Flight Test-1 mission. Paradigm earned the award by precision-machining more than 1,000 parts for Orion, no small number and a testament to its expertise. It also sets up the company well for future Orion missions. As one NASA official said, “We’re counting on NFT to be a key supplier on our next launch.”
Given Orion’s high-profile status, the award is significant on several levels. For starters, it says a lot about the unique skill set of NFT. “We built parts for every major subsystem, for every piece of the spacecraft,” Vaillancourt says. “For every stage of the launch and flight, NFT was identified as one of the key suppliers of the space vehicle.”
Allbery seemed most pleased about the “unexpected” reaction from his visitors. “I think the lead executives from both NASA and Lockheed Martin were fascinated with our non-aerospace business. Unlike some of their other suppliers who operate only in aerospace, we’re a precision machinist in industrial, automation and nuclear markets. We have a much broader knowledge base than a typical machine shop,” he says, adding, “We can be a more value-add supplier.”
For NASA and Lockheed, who Allbery says are hoping to move more supplier contracts closer to Colorado, it’s an important differentiator. “Colorado doesn’t have as much manufacturing, as many high-precision machinists as other states,” he notes, echoing an oft-repeated sentiment.
But the incentive for OEMs like Lockheed, or major manufacturing brands in any other market sectors is unambiguous: reducing a long and costly supply chain with more robust and growing local resources is a powerful trend. We’ve said it more than once: As the supply chain goes, so goes regional manufacturing.
For NFT, the labor pool is supply challenge number one.
“We’re really trying to train up and push U.S. manufacturing.” Allbery says, and describing the state of workforce in “advanced” manufacturing says, “We find a lot of machinists in their early 20s and in their 60s. We’ve missed three generations of machinists. It’s a challenging environment.”
But even as NFT outsources work to meet the needs of its unique and high-profile customers, the payoff last week for Allbery and Vaillancourt means everything. For the company. For the region. It’s worth noting that the Orion test was flung into space by a ULA rocket, also headquartered along the Front Range.
And as the Commerce Department contemplates its next round of Manufacturing Community Partnerships, the work being done by Colorado’s charged-up aerospace ecosystem will be hard to ignore.
Bart Taylor is founder and publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Colorado’s Top 5 manufacturing communities
/in General/by Bart TaylorManufacturing’s rebound has even outspoken cynics taking note. Joel Kotkin from Forbes acknowledged as much in a useful take on the sector’s new boomtowns. The Cities Leading a U.S. Manufacturing Revival lists 10 communities experiencing measured growth, including Detroit’s eye-opening comeback:
“Since 2009 the Detroit area has seen a remarkable 31.3% rebound to 89,300 industrial jobs, including a 9.8% expansion last year. This growth has helped begin to reverse a long-standing decline in employment overall — still down 12.3% since 2003 — with overall employment up 5.9% since 2009.”
Kotkin’s list is rust-belt heavy, because, hey, that’s what we all think when we think manufacturing. The way economists measure manufacturing is also skewed to industrial metrics so it’s no surprise that Colorado is absent from the list.
But as we chronicle every week, a manufacturing revival is underway in the Rocky Mountain West. So after two years and over 300 profiles of maker and manufacturing businesses it’s time we ranked Colorado’s top manufacturing communities. Our criteria: a growing, compelling industry or cluster of maker industries, supported by purposeful public/private efforts to build a robust manufacturing economy.
Collectively it’s a strong group. Is it of national caliber? Yes, but there are reasons it’s not captured more attention. The state’s industrial soul may reside in Pueblo — absent from our Top 5. Pewag (profiled here), a well-known German firm, selected the city for its only U.S. location, in part because of its manufacturing heritage. Add a purposeful push from Pueblo industry to match the energy of its community college, and Colorado’s national bona fides might improve.
No matter. Colorado’s manufacturing star is on the rise.
Contact Bart Taylor, founder and publisher of CompanyWeek.
On Finance: The M&A market is “frothy”—if you can get there.
/in General/by Bart TaylorFinancing seems a universal challenge for business today, regardless of geography, and as a result we’re also featuring the recap today of last week’s Manufacturing Growth & Investor Conference held in Denver for the benefit of Utah readers. Trends shaping access to capital are more sector-specific than anything. Plus, we’re bringing the event to Utah next year.
Two or three themes emerged from the discussion:
Lenders and investors are eager to offer debt and equity financing to the right companies, largely growth companies with experienced, proven management teams with a solid balance sheet. The market for M&A was described as “frothy.”
Growth companies have always had preferred access to capital, but today it remains difficult for early-stage companies to get funded. The infamous financing “Valley of Death” is deeper today than in recent memory. Friends and family can only take a start-up so far. For manufacturing entrepreneurs this means alternative funding options are more important than ever. Panelists at the Investor Conference offered great ideas on asset and purchase-order funding, family offices, convertible notes, and tactics to sway lenders and investors to your side.
Aside from early-stage woes, a strengthening economy is providing a window of opportunity for companies’ intent on raising capital in the near term. Tony Giordano, President of BKD Corporate Finance, is bullish on the next few years.
“History tells us M&A cycles are typically five to eight years,” Giordano told me. “Assuming there is not a major domestic or international event that would derail the markets, and keeping in mind the capital raise or sales process is typically a six to nine month period, we believe there is still a two to three year window for business owners to complete a transaction in a very positive environment”.
It’s also evident that most any money, debt or equity would love to see the manufacturing sector thrive. And why not? It’s brick and mortar. It’s often family-owned. It’s tangible and consumers want more things made locally.
Last month, the first-ever Marijuana Investor Conference in Denver drew over 1000 attendees. Pot’s a fad. Manufacturing’s a backbone. We need a moneyed sector. That travels. See you in Utah next year.
Bart Taylor is founder and publisher of CompanyWeek. Reach him at 303-888-2832.
‘Heck yeah,’ it’s a tech company. Well, not really
/in General/by Bart TaylorIt’s generally bad form for a small media brand like CompanyWeek to publish opinions critical of the Denver Post. Especially mine. If nothing else it sends the wrong message. I’m a fan of the paper, any newspaper for that matter. And its days in print are numbered, soon to follow the halcyon years that have already passed.
But I’m not required to be an apologist for the Post. Plus, as it relates to business coverage, it’s far easier to be a critic. For the moment, I’ll set aside good form.
I’ve written before how the Post just doesn’t get manufacturing. Does it matter? Maybe not. Manufacturers don’t seem to care, have given up caring, or like millennials don’t read the newspaper anymore.
All of which is no excuse for lousy business content. Take the pithy attempt to dress up the Tech+ blog, authored by the otherwise capable Tamara Chuang. Titled ‘Heck yeah Colorado profiles,’ this content is intended to highlight “Colorado tech companies that make cool stuff. These little snippets are intended for readers to explore the technology being made right here. One company at a time, of course.”
I suppose it’s a reasonable attempt at some differentiated content, unless of course a company it ‘profiles’ isn’t a tech company at all but a manufacturer, like Colorado’s iconic brand OtterBox — now a product unit within an expanding corporate umbrella known as Otter Products. Chuang’s “Heck yeah” feature on OtterBox ran yesterday.
Otter Products indeed makes cases for tech stuff. And, as with most other manufacturers today, the company deploys technology in increasingly innovative ways, including “smarter” cases with built-in batteries, LEDs, and other techy features that may again set a new standard for the sector.
But heck no, Otter Products isn’t a technology company but a manufacturer managing a complex global supply chain from its Fort Collins headquarters with assembly operations along the Front Range. It actually is a terrific story, one we’ll embellish with an interview of Otter Products VP Brent Hunter in an upcoming issue.
Manufacturers should care about misinformation like this even if they don’t. Manufacturers do care about their brand, and an outdated public perception that still makes it difficult to recruit talent and advance a sector that’s very much informed by technology — and by cool products like OtterBox and companies like Otter Products.
As employees at the Denver Post suffer another round of layoffs, perhaps going back to basics would attract readers to an institution worth saving — and, in doing so, save some jobs. ‘Basics’ entails a straightforward account of industry sectors that define Colorado’s economy. And whether it’s beer, natural food, satellites, or iPhone cases, in Colorado, it’s manufacturing.
Heck yeah.
On Strategy – KOTA Longboards: Growth, brand extension fuel capital needs
/in General/by Bart TaylorFor Mike Maloney, founder of KOTA Longboards, the only thing that stays the same is change.
Winner of the Chase Mission Main Street Grant and $150,000, the rush of publicity and recognition, including a national television ad campaign, fueled a sales surge — leaving KOTA and Maloney on the hunt for capital to finance more growth.
It’s the story of so many small manufacturers. “We’re growing at an extraordinary rate,” Maloney says. “The $150,000 was great. Now we’re ready for the next round.”
Chase is obviously a willing lender, but Maloney is wary of funding growth with more bank notes. “I don’t want to service debt with debt,” he says. “On our current pace, we should be cash flowing this fall, but we’re doubling and tripling our raw materials orders. It’s a close call if we have enough cash on hand to keep up this pace. However, over-leveraging the company is something I don’t want to do.”
It’s a challenge. Maloney is moving quickly to extend the successful KOTA brand into a line of soft goods, licensing agreements, and partnerships with other lifestyle companies. “KOTA’s a lifestyle brand,” he explains. “We have all of the attributes such as meaning, context, and authenticity. If we do this right, it could end up being a billion-dollar brand.” To back up the point, he flips through a catalogue with featuring KOTA apparel and describes plans for accessories like messenger bags.
Maloney’s vision is compelling in that KOTA seems well positioned to follow the path of other well-known gear and outdoor companies that started with a signature product, only to see an entire franchise blossom. Maloney will have to navigate the infamous “death valley” to become the next Burton or Oakley; KOTA’s revenues are still catching up with costs incurred from a first round of financing — in people, equipment, and new product development.
It’s why Maloney doesn’t spend any time now reveling in the ongoing national recognition from the Chase Mission Main Street Grant, as good as it continues to be. “KOTA is a ‘visual’ brand so the ongoing national exposure alongside Chase and Google, two exceptional companies, is invaluable for us,” he explains. The marketing reach alone is worth well more than the amount of the grant. The experience has been incredible.”
But he’s focused on the next round of investment capital he believes will push the company beyond startup phase into sustainable growth. “We used the grant money to prepare KOTA to rapidly scale. Increasing production staff and output, lining up multiple touch points such as international distributors, domestic rep groups, large co-brand partners, and introducing new product. We’ve always known we’ll need another, larger round of investment to take advantage of this growth. If we can get to cash-flow stability, we open up debt, convertible debt, and equity-based capital sources. If we need money before that event, additional equity investment may be our best — or only — choice.”
Where should local manufacturers stand on free trade?
/in General/by Bart TaylorNational policymakers align with the outcome of the Trans-Pacific Partnership (TPP) negotiations in fairly predictable ways. Republicans generally support free trade and big business that benefit most from more open access to foreign markets. Democrats value their labor credentials and argue that agreements like TPP sap U.S. manufacturing jobs. Moderates in both parties tend to favor U.S. engagement over protectionism.
Manufacturers are equally divided on the issue of trade, and how free it should be. For every company that supports efforts like TPP, another views it a tangible threat that provides unfair and unreciprocated access to the U.S. economy.
Given the region’s manufacturing ambitions, it’s fair to ask what position local manufacturers should take on the deal.
Trade agreements are usually never as onerous as detractors suggest or enriching as advocates claim. But I also agree with Jay Timmons, chief of the National Association of Manufacturers (NAM). I asked Timmons about the dissonance among manufacturers, and to his credit he responded with a short and direct answer: With whom most every country the U.S. has a free trade agreement, we also have a positive trade balance. That’s apparently good enough for NAM.
Certainly “free trade” can be one-sided. And despite recent gains, domestic U.S. manufacturing hasn’t recovered to a level required to be competitive across industry sectors. But in the end, it seems that no amount of tariffs can protect the American economy from quality, global producers.
Competitiveness is the key. If we agree to keep the U.S. market open and available, the competitiveness of U.S. industry must continue to improve. For manufacturers, the formula’s not that complicated: ready access to capital; streamlined regulation; a qualified workforce; a world-class innovation ecosystem; modern infrastructure, e.g. roads, airports, and water; and a resurgent cultural emphasis on making things here, and supporting businesses who do exactly that.
Surprisingly, for as much as manufacturers lament the sad state of the manufacturing ‘brand’, consumers are already leading a quiet but profound manufacturing comeback. In the West, food, lifestyle/consumer and technology manufacturing is being driven by growing demand. American-made is hot; the brand issue may be taking care of itself.
Finance? Not so much. Only this year will a first-ever manufacturing investor conference be held in the region. Workforce? Much has been done but there’s more to do. World-class innovation? Check. Infrastructure? Regulatory and tax reform? Pending.
Competitiveness is the key. It’s time to acknowledge that manufacturing success is more than just open markets, workforce development and innovation and technology. An embrace of fair and balanced trade first acknowledges that manufacturing’s an economic linchpin — regardless of industry sector. And that at all-out effort to improve competitiveness starts with recognizing what we lack.
Embrace free and open trade — then develop the most competitive manufacturing economy in the world.