CompanyWeek hosted the first-ever Colorado Apparel Manufacturing Summit at the Fashion Design Center Denver on the night of Oct. 9, and the crowd was standing room only.
There was a genuine hunger for a conversation about the state of the apparel business in Colorado — and it sounds like it’s just getting started.
The elephant in the room, everyone agreed, was offshoring, and its impact on Colorado’s apparel industry. In a panel discussion led by some of Colorado’s brightest apparel stars, concerns were raised about controlling quality and intellectual property, stalled innovation and a limited workforce.
On the flip side Colorado’s apparel manufacturing sector is coming back, driven by the region’s desirable lifestyle and brand attributes. But where does fashion and technical clothing fit into the economic-development puzzle? As CompanyWeek founder and publisher Bart Taylor put it, “Colorado can’t figure out where to put you.”
“Do they even know we’re here?” interjected panelist Jon Thomas of Janska Clothing.
Founded by Thomas’ wife and fellow panelist, Jan Erickson, Janska employes 20 sewers at its factory in Colorado Springs and is “totally committed to manufacturing in the United States,” said Erickson.
Panelist Dan English, CEO of Pagosa Springs-based Voormi, said his manufacturing partners are on the coasts, but he keeps his sourcing local in the form of Rocky Mountain Merino wool.
“We decided to do something different,” said English. “We focused on the textile industry because of a lack of innovation since 1972” — when W.L Gore & Associates developed polytetrafluoroethylene-based fabric better known as Gore-Tex.
English said Voormi is rethinking technical clothing in a manner more akin to the tech sector than apparel, but compared the end results to a totally different product: “We are the microbrew of apparel.”
While Voormi might not manufacture in-state, English said it was a goal, but it was up to the industry to build — and rebuild — the necessary infrastructure. “It’s up to us as business leaders to find ways to drive manufacturing back here. When it comes back, he added, “It’s not going to look the same.”
What will it look like? A more nimble and vertically integrated industry that puts out innovative runs of products in small batches and pushes quality without worrying about retail price. “We maximize price and we don’t allow retailers to discount,” English noted.
Another panelist, Joe Silva, president of Denver-based Garb, echoed English’s sentiment when he spoke of the issues associated with manufacturing offshore. “I would love nothing more than to do that [manufacture in Colorado],” he said.
Garb makes kid’s golf and tennis clothing at facilities all over the world, including China, India, Pakistan, and Mexico. With all of those locations, “The supply chain is a very difficult thing to manage,” he said. “If you can cut that cycle time, it’s magic. We can’t do that working in India, China, and all of the other countries, but there’s nothing that exists [in Colorado] that can handle 1 million pieces, 10 colors, and 12 different sizes. I call it my Rubik’s Cube — it’s very, very complicated.”
Panelist Dave Boger, co-founder of Denver’s Jiberish, said the snowboard-centric fashion brand started making sweatshirts and T-shirts at one of Colorado’s largest cut-and-sew facility in 2005, but as volume increased, the partnership proved to be a mismatch. In 2008, Jiberish moved production offshore.
“It’s a big challenge to do it in Colorado,” he said. Existing facilities don’t have high capacities to handle sudden bumps in demand, and the workforce is lacking in terms of both scope and skill.
Innovation, whether it’s process- or product-related, is critical, said Voormi’s English and Topo Designs‘ Mark Hansen, another event panelist. “I don’t think there’s any other way,” said Hansen.
Topo strives not only to manufacture in Colorado, but to source raw materials domestically, he added. The end result? Higher quality and prices, and lower margins.
“That’s probably not sustainable,” Hansen observed. “It’s interesting that people will go into Whole Foods and buy a $10 juice and say, ‘That’s good juice,’ but the same people will go across the street and buy a $3 T-shirt.”
Panelist C.J. Riggins, VP of merchandising and development at Boulder’s Kidrobot, previously worked in sourcing for Pearl Izumi in Louisville. She said innovation is critical in some sectors, but not as much so in others.
“The zipper was developed in 1919 and hasn’t changed,” she noted. At Pearl Izumi, “We were trying to force innovation,” but the key ultimately is skilled workers who can handle cut-and-sew fundamentals and produce quality garments.
However, as is the case in the southeastern U.S., China’s most skilled sewers are getting older, and their kids don’t want to work in the factories.
Garb’s Silva seconded Riggins’ notion. “In my opinion, it is a low-tech, artisan craft that is as labor-intense as you could ever imagine.”
He followed up with a story from early in the Garb days when he was wandering the Garment District in Manhattan and met a bespectacled old Jewish man, chomping on the stereotypical cigar who gave him some sage advice: “Inventory — it’s like produce. After a while, it starts to smell.”
The moral, Silva argued, was that while losses due to unsold surplus can be easily measured, apparel manufacturers cannot track opportunities lost to lead times of 120 days when working with overseas factories because “demand might pass you by” when the product is in transit.
“It requires immense planning, forecasting, and scheduling to make that model work,” he said. If Garb could work with a Colorado facility and cut that down to 20 days, it would “cancel out” a price bump of 20 percent or more. “It would reduce the headaches and the risks,” said Silva. “My banks would be thrilled — they’d kiss me on the lips.”
Janska’s Thomas illustrated the industry’s risk with some hard data: U.S. apparel manufacturers with $1 million to $4 million in sales have an average profit margin of negative 7 percent. Scary stuff.
Jiberish’s Broger said the discombobulated supply chain will help drive investment into the industry, noting, “People with money will get behind consumer products because it’s not efficient right now.”
Attendee Jack Makovsky, VP at stalwart supplier Ralph’s Power Sewing Machine Co. in Denver, said the local apparel industry hit hard times in the 1980s after the government actually incentivized offshoring. “In the late 1960s, ’70s, ’80s, we had quite a booming industry in this area,” he said. “We need to get this thing reversed.”
Moderator Carol Engel-Enright of Colorado State University’s Design & Merchandising program pointed out that three new cut-and-sew facilities opened in Denver in 2014, but “now that we have cut-and-sew happening, we don’t have skilled operators.”
Steve Weil of Rockmount Ranch Wear was in attendance. “The issue is: How complicated are your products?” he said. “My shirts have 25 operations — they’re complicated.”
Rockmount makes its shirts in the Southeast, but embroiders them offshore. When he “The bottom line is who wants to grow up in the United States and work in a shop for $10 to $12 an hour?” he added. “It’s really tough.”
Janska’s Erickson said immigration — and immigration reform — was critical to building Colorado’s apparel workforce. “We need some of those people from other countries to come and help us.
Julie Worley, executive director of the Phillips County Economic Development Corporation in Holyoke on the Eastern Plains, offered a partial solution.
“In every rural town in Colorado, you have the 4-H champion seamstress, you have the sewing club, you have women who want to work from 9 a.m. to 3 p.m.,” she said. “You have the workforce in rural Colorado — I guarantee it.”
Riggins said that research from her Pearl Izumi days showed the company’s margins would drop by nearly 15 percent if the company manufactured in the U.S., but that wasn’t a deal-killer. “We still could have been a $150 million company, I have no doubt,” she said.
Garb’s Silva did a back-of-the napkin calculation and said that he could conceivably pay skilled sewers $20 an hour and make the numbers work — if there was a local manufacturer that could handle thousands of SKUs.
Phillips County’s Worley jumped out of her seat. “Do you know what $20 an hour can do in a rural community?”
Another attendee, Rachael Cox from the African Community Center of Denver, chimed in with another means of bolstering the local workforce: refugees who are resettled in Denver. “It’s gorgeous and it’s making my heart jump out of its skin,” she said of the possibility.
Though the two-hour discussion felt like it was just getting started Taylor closed the night’s conversation. “Can we count on everybody to stay involved in this process?”
Judging from the sound of the applause of the 150-plus attendees, the answer was a resounding “yes.”
[Read about the 2015 Summit.]
Year in Review: Best of Utah Manufacturing
/in General/by Bart TaylorThe most-read profile at CompanyWeek.com in 2016 was Park City’s Kodiak Cakes. Its legion of fans rallied to push it to #1 in CompanyWeek’s annual readers-choice list.
It’s not a surprise. Across the U.S., manufacturing today is a dynamic mix of industries and companies, early-stage and legacy businesses that combined, are reshaping and energizing the sector. Kodiak follows in a long line of noteworthy Utah food manufacturers. The difference is that today, consumers lead the change, demanding more locally-made products.
It’s the same in other industries, and Utah manufacturers are well positioned in outdoor industry products, in consumer sectors like healthcare and wellness, in technology-driven fabrication, and more.
Alicia Cunningham, the South Jordan-based editor of CompanyWeek Utah, offers her year-in-review favorites here. Bart Taylor, publisher and founder of CompanyWeek, favors companies and leaders who’ve laid a maker and manufacturing foundation.
Collectively, our Year in Review lists offer a glimpse of more to come from Utah’s powerful manufacturing sector.
1. Kodiak Cakes
2. DPS Skis
3. Allgood Provisions
4. Monnit
5. Ogio
The Sun Products Corporation
/in General/by Bart Taylorwww.sunproductscorp.com
Salt Lake City (HQ: Wilton, Connecticut)
Founded: 2008 (1975 as Huish Detergents)
Owned by Vestar Capital Partners
Employees: 3,000 total at locations in Utah, Connecticut, Kentucky, Tennessee, Arkansas, Minneapolis, and Ontario, Canada
Plant Director Darren Ericson is helping guide the country’s second-largest manufacturer of laundry detergent to growth with a turnkey private label operation.
Founded as Huish Detergents, the Sun plant in Salt Lake opened in 1985. The corporate offices moved to Connecticut following a 2007 merger with Unilever’s North American laundry detergent division, but the facility remains the hub of the company’s manufacturing for the western U.S.
Melding national consumer brands with Huish’s private-label focus, the merger represented “a unique opportunity,” says Ericson, a 20-year company veteran who’s helmed the Utah operation since 2009. “Huish was a major player in the retail-brand business.”
That’s something of an understatement. The company commanded 95 percent of the private label market, a statistic that still holds true today. The client roster reads like a who’s who of retail, including Costco, Target, Walmart, and Kroger.
But the private label detergent business has changed in recent time. “It’s been an interesting evolution,” says Ericson. “The emerging trend is a lot of our customers want to offer top-tier national brand equivalents.” The proof is in the detergent: Sun has won accolades from Consumer Reports for its private label products.
That change has helped drive strategy in recent years, and the push towards premium has been matched by Sun Products’ approach. “We’re not just your vendor, but we’re truly your partner,” Ericson explains. The company offers its private-label clients a marketing team, point-of-sale support, and other services.
But the business is not dominated by private labels. The company’s national brands, including All, Sun, Snuggle, Surf, and Wisk, have the second-highest market share in the U.S. and represent roughly half of the company’s sales, he adds.
In all, Sun Products makes 3,200 SKUs in Salt Lake and ships all over the West. A sister plant in Bowling Green, Kentucky, covers the East.
Ericson says the Utah facility does all of its plastics, packaging, and printing in-house and is also home to a R&D lab. “One thing that makes Sun very unique in our industry is our vertical integration,” he explains. “We have complete control of our supply chain. We view it as a competitive advantage.”
Challenges: A shift in corporate culture started taking root in 2013. “We’re working on a ‘high-performance environment’ concept, which is all about empowering our workers,” says Ericson. “It’s a different way of managing that takes a different perspective: It’s no longer command and control, it’s more mentoring, coaching, and encouraging to be more empowered in their daily work. They feel they belong to something more, rather than [just being] one of 700 or 800 people at a factory.”
The challenge is ongoing. “It’s a journey,” he adds. “It’s about continuous improvement.”
Opportunities: Ericson notes that the overall market has been flat in recent years as Sun’s market share has risen. Powdered detergents have been on the wane as a new market takes off.
“The new and emerging technology is single-dose detergent.” Sun makes both single-dose detergents for both laundry machines and dishwashers and is “experiencing double-digit growth across the segment,” says Ericson, noting that the new manufacturing capability required “significant capital investment.”
Needs: Talent. “We are always on the lookout for good people,” Ericson says.
Another continuous need: “We will continue to make significant capital investments,” he adds. “We don’t see that slowing down. We have a lot of equipment and a lot of automation, and we continue to invest in our infrastructure.”
Recap: Colorado Apparel Manufacturing Summit
/in General/by Bart TaylorCompanyWeek hosted the first-ever Colorado Apparel Manufacturing Summit at the Fashion Design Center Denver on the night of Oct. 9, and the crowd was standing room only.
There was a genuine hunger for a conversation about the state of the apparel business in Colorado — and it sounds like it’s just getting started.
The elephant in the room, everyone agreed, was offshoring, and its impact on Colorado’s apparel industry. In a panel discussion led by some of Colorado’s brightest apparel stars, concerns were raised about controlling quality and intellectual property, stalled innovation and a limited workforce.
On the flip side Colorado’s apparel manufacturing sector is coming back, driven by the region’s desirable lifestyle and brand attributes. But where does fashion and technical clothing fit into the economic-development puzzle? As CompanyWeek founder and publisher Bart Taylor put it, “Colorado can’t figure out where to put you.”
“Do they even know we’re here?” interjected panelist Jon Thomas of Janska Clothing.
Founded by Thomas’ wife and fellow panelist, Jan Erickson, Janska employes 20 sewers at its factory in Colorado Springs and is “totally committed to manufacturing in the United States,” said Erickson.
Panelist Dan English, CEO of Pagosa Springs-based Voormi, said his manufacturing partners are on the coasts, but he keeps his sourcing local in the form of Rocky Mountain Merino wool.
“We decided to do something different,” said English. “We focused on the textile industry because of a lack of innovation since 1972” — when W.L Gore & Associates developed polytetrafluoroethylene-based fabric better known as Gore-Tex.
English said Voormi is rethinking technical clothing in a manner more akin to the tech sector than apparel, but compared the end results to a totally different product: “We are the microbrew of apparel.”
While Voormi might not manufacture in-state, English said it was a goal, but it was up to the industry to build — and rebuild — the necessary infrastructure. “It’s up to us as business leaders to find ways to drive manufacturing back here. When it comes back, he added, “It’s not going to look the same.”
What will it look like? A more nimble and vertically integrated industry that puts out innovative runs of products in small batches and pushes quality without worrying about retail price. “We maximize price and we don’t allow retailers to discount,” English noted.
Another panelist, Joe Silva, president of Denver-based Garb, echoed English’s sentiment when he spoke of the issues associated with manufacturing offshore. “I would love nothing more than to do that [manufacture in Colorado],” he said.
Garb makes kid’s golf and tennis clothing at facilities all over the world, including China, India, Pakistan, and Mexico. With all of those locations, “The supply chain is a very difficult thing to manage,” he said. “If you can cut that cycle time, it’s magic. We can’t do that working in India, China, and all of the other countries, but there’s nothing that exists [in Colorado] that can handle 1 million pieces, 10 colors, and 12 different sizes. I call it my Rubik’s Cube — it’s very, very complicated.”
Panelist Dave Boger, co-founder of Denver’s Jiberish, said the snowboard-centric fashion brand started making sweatshirts and T-shirts at one of Colorado’s largest cut-and-sew facility in 2005, but as volume increased, the partnership proved to be a mismatch. In 2008, Jiberish moved production offshore.
“It’s a big challenge to do it in Colorado,” he said. Existing facilities don’t have high capacities to handle sudden bumps in demand, and the workforce is lacking in terms of both scope and skill.
Innovation, whether it’s process- or product-related, is critical, said Voormi’s English and Topo Designs‘ Mark Hansen, another event panelist. “I don’t think there’s any other way,” said Hansen.
Topo strives not only to manufacture in Colorado, but to source raw materials domestically, he added. The end result? Higher quality and prices, and lower margins.
“That’s probably not sustainable,” Hansen observed. “It’s interesting that people will go into Whole Foods and buy a $10 juice and say, ‘That’s good juice,’ but the same people will go across the street and buy a $3 T-shirt.”
Panelist C.J. Riggins, VP of merchandising and development at Boulder’s Kidrobot, previously worked in sourcing for Pearl Izumi in Louisville. She said innovation is critical in some sectors, but not as much so in others.
“The zipper was developed in 1919 and hasn’t changed,” she noted. At Pearl Izumi, “We were trying to force innovation,” but the key ultimately is skilled workers who can handle cut-and-sew fundamentals and produce quality garments.
However, as is the case in the southeastern U.S., China’s most skilled sewers are getting older, and their kids don’t want to work in the factories.
Garb’s Silva seconded Riggins’ notion. “In my opinion, it is a low-tech, artisan craft that is as labor-intense as you could ever imagine.”
He followed up with a story from early in the Garb days when he was wandering the Garment District in Manhattan and met a bespectacled old Jewish man, chomping on the stereotypical cigar who gave him some sage advice: “Inventory — it’s like produce. After a while, it starts to smell.”
The moral, Silva argued, was that while losses due to unsold surplus can be easily measured, apparel manufacturers cannot track opportunities lost to lead times of 120 days when working with overseas factories because “demand might pass you by” when the product is in transit.
“It requires immense planning, forecasting, and scheduling to make that model work,” he said. If Garb could work with a Colorado facility and cut that down to 20 days, it would “cancel out” a price bump of 20 percent or more. “It would reduce the headaches and the risks,” said Silva. “My banks would be thrilled — they’d kiss me on the lips.”
Janska’s Thomas illustrated the industry’s risk with some hard data: U.S. apparel manufacturers with $1 million to $4 million in sales have an average profit margin of negative 7 percent. Scary stuff.
Jiberish’s Broger said the discombobulated supply chain will help drive investment into the industry, noting, “People with money will get behind consumer products because it’s not efficient right now.”
Attendee Jack Makovsky, VP at stalwart supplier Ralph’s Power Sewing Machine Co. in Denver, said the local apparel industry hit hard times in the 1980s after the government actually incentivized offshoring. “In the late 1960s, ’70s, ’80s, we had quite a booming industry in this area,” he said. “We need to get this thing reversed.”
Moderator Carol Engel-Enright of Colorado State University’s Design & Merchandising program pointed out that three new cut-and-sew facilities opened in Denver in 2014, but “now that we have cut-and-sew happening, we don’t have skilled operators.”
Steve Weil of Rockmount Ranch Wear was in attendance. “The issue is: How complicated are your products?” he said. “My shirts have 25 operations — they’re complicated.”
Rockmount makes its shirts in the Southeast, but embroiders them offshore. When he “The bottom line is who wants to grow up in the United States and work in a shop for $10 to $12 an hour?” he added. “It’s really tough.”
Janska’s Erickson said immigration — and immigration reform — was critical to building Colorado’s apparel workforce. “We need some of those people from other countries to come and help us.
Julie Worley, executive director of the Phillips County Economic Development Corporation in Holyoke on the Eastern Plains, offered a partial solution.
“In every rural town in Colorado, you have the 4-H champion seamstress, you have the sewing club, you have women who want to work from 9 a.m. to 3 p.m.,” she said. “You have the workforce in rural Colorado — I guarantee it.”
Riggins said that research from her Pearl Izumi days showed the company’s margins would drop by nearly 15 percent if the company manufactured in the U.S., but that wasn’t a deal-killer. “We still could have been a $150 million company, I have no doubt,” she said.
Garb’s Silva did a back-of-the napkin calculation and said that he could conceivably pay skilled sewers $20 an hour and make the numbers work — if there was a local manufacturer that could handle thousands of SKUs.
Phillips County’s Worley jumped out of her seat. “Do you know what $20 an hour can do in a rural community?”
Another attendee, Rachael Cox from the African Community Center of Denver, chimed in with another means of bolstering the local workforce: refugees who are resettled in Denver. “It’s gorgeous and it’s making my heart jump out of its skin,” she said of the possibility.
Though the two-hour discussion felt like it was just getting started Taylor closed the night’s conversation. “Can we count on everybody to stay involved in this process?”
Judging from the sound of the applause of the 150-plus attendees, the answer was a resounding “yes.”
[Read about the 2015 Summit.]
Industry Report: Incentives
/in General/by Bart TaylorThe latest in a series of Industry Reports from CompanyWeek.
Industry Report: Developers are rethinking economic incentives as competition intensifies and industry’s ask evolves.
US manufacturers have begun to flex their newly re-shored muscle. In response, cities, states and regional economic developers are focused on how to attract and retain energized primary job creators.
Take Tesla’s $5 billion gigabattery factory, for example. When the company announced plans to build a new plant, economic developers throughout the country kicked into action. Elon Musk’s vision could bring an estimated 6,500 jobs and unparalleled bragging rights to the winning city and state.
Odds-on favorites this spring were the states of Texas, Arizona, New Mexico and Nevada. All offered traditional tax based incentives as well as low labor costs and less government red tape. Last week, however, the LA Times reported that Stockton, Calif. (population 296,000) is a leading contender. California taxes are higher, but the proposed Stockton site is near another Tesla plant and major suppliers. It also offers industrial-zoned property, a port that handles ocean-going vessels, major freeway access and nearby rail and airport facilities – plus an existing auto manufacturing-trained workforce.
Tesla is hardly the only company on the move. Last year Colorado saw national firms like Fidelity, Charles Schwab and Visa open new operations, and is now the 4th fastest job-growth state in the country. Utah has attracted Microsoft, Twitter, Cabelas, Exelis, Salomon and more, and Wyoming continues to build on its core energy sector.
The Mountain West may be less populous, with a smaller workforce and industrial supply chain components than its East and West coast counterparts. But it also boasts powerful regional selling points. Highways are – in most cases – designed to handle increased population and traffic. Its urban infrastructure is “younger” and in better shape than that of many Rust Belt states. Personal property taxes in Colorado, Utah and Wyoming are also lower than elsewhere. And Rocky Mountain R&D-focused university labs offer attractive partnering opportunities for corporate innovators.
Some communities are well-organized with incentive packages for new hires and business growth.
Metro Denver EDC Economic Development Manager Laura Brandt, sees mixed results, however, from reliance strictly on job performance-based tax incentives, enterprise zones, entitlement fast-tracking and short term loan programs.
“While I think companies like to tell their board and stockholders that they negotiated a great incentive package, some companies don’t follow through,” she says, noting that over 5 or 10 years corporate management changes or slower-than-projected hiring may push tax base audit forms and paperwork to a low priority.
Metro Denver EDC and its local economic partners (a 9-county consortium) help companies identify and qualify them for the appropriate local incentives, once top locations are identified.
Programs vary by community but generally include the following:
· Personal Property Tax Credits – Cities, counties, and special districts may negotiate a personal property tax rebate of up to 100% for 10 years.
· Local Tax Rebates – Cities may consider waiving or rebating local sales/use taxes for construction materials, personal property, and manufacturing equipment.
· Waiver of Permit Fees – In addition to expediting the building permit process, cities may choose to waive all or part of various permit fees.
· Employee Relocation Assistance – Local economic development organizations may offer packages of discounted products and services to assist employees relocating to the metro area.
· Training Assistance – Cities may offer additional training assistance for qualified projects.
· Recruitment Services – The Colorado Workforce Development Centers offer free recruitment assistance including listing jobs, advertising jobs, hosting job fairs, and screening candidates. Employers make the hiring decisions.
One size rarely fits all. “Intangibles,” can be equally important, says Boulder Economic Council Executive Director Clif Harald.
High tech, biomedical, aerospace and other knowledge-based industries like Boulder County’s Oracle, Ball and IBM don’t limit their expansion searches to the cheapest market. Some sectors — outdoor sports, apparel and natural foods companies – actually prefer mountain and foothills communities where they find the quality of life necessary to attract talent, organic products and like-minded suppliers.
Boulder County is home to strong supply chain clusters, a highly educated workforce and to University of Colorado research and development laboratories, but Harald believes that manufacturers are attracted to the attributes of the region — “not to any ‘special sauce’ in Boulder.”
“It’s everything we have to offer along the Front Range,” he says.
His view, much like that of Companyweek.com Publisher Bart Taylor, is that collaborative regional strategies – along with traditional tax incentives, enterprise zones and entitlement fast-tracking — are vital to attracting new industry.
So how are Colorado and neighboring states incorporating collaborative strategies so far? Here’s a brief recap.
Wyoming
A few years ago, the Wyoming Governor’s office rounded up 15 key business leaders to form a statewide Business Council.
Bob Jensen, then-CEO of the Wyoming Business Council, says his state decided to rethink its outdated economic development strategies.
“Whatever we were doing in the `80s and `90s didn’t work,” Jensen says. “It wasn’t effective. We’ve always had a low tax base, but that in itself isn’t an incentive to get businesses to come here or grow here.”
Area Development.com – a go-to website for site and plant location consultants and companies, reports the Council adopted a proactive “economic gardening” approach. When companies express interest in the Equality State, Council members work directly to find grants, address infrastructure issues and arrange creative financing. The result: In its first three years, the program drew more than 3,000 new jobs to the state.
Colorado
Fort Collins in Larimer County had been home to a Woodward, Inc. engine manufacturing facility since 1955. The area’s climate and outdoor recreation made it a recruiting plus. The community also offered attractive intangibles: a highly acclaimed K-12 system, a research university, verdant well-maintained parks and rich recreational, sports and cultural activities. In short, a great place to raise a family. Those factors all contributed to management’s decision in 2006 to move Woodward’s corporate headquarters to Fort Collins.
Fast forward to 2013. The company had grown to a $2 billion operation. It needed room to expand. In spite of compelling offers from other states – including at least one that exceeded the local community’s $23 million incentive package — Woodward accepted the Fort Collins City Council’s offer. Community partnership and quality of life won out.
No checks were written, no money changed hands explains an observer of the process, former CEO of the Colorado Springs Economic Development Corp. and former member of the board of the Northern Colorado Development Corp Rocky Scott.
In the end, the city negotiated the company’s tax base, allowing Woodward to donate land and improvements for a city park as well as for public road improvements.
Top talent loves Colorado, Scott says.
“Corporate (tax) incentives are a secondary factor. They alone are not enough to make key talent – the driving force behind a successful business – move their families or to remain in a less than satisfactory environment.”
Utah
The Utah Governor’s office operates in much the same way, and it’s already paying off. Business Marketing Director Michael O’Malley and EDC Utah chief Jeff Edwards often collaborate on industry-attracting incentives.
The state’s EDTIF tax credit is a post-performance, refundable tax credit for up to 30 percent of new state revenues (sales, corporate and withholding taxes paid to the state). A new company, for example, might qualify for a 10-year agreement to bring 250 new jobs. Those positions must pay 125 percent of the average county wage plus benefits. Each year, the operation’s tax burden is offset, based on actual new jobs created. A key provision: each benefiting community must contribute something to the deal.
But tax incentives alone – though important – don’t get the job done by themselves.
“From our experience they’re not the most critical,” O’Malley says.
Like Rocky Scott, he sees pristine quality of life and proximity to recreational amenities as a top draw for owners and employees. Utah is the first state in the country to create an Office of Outdoor Recreation in support of outdoor products industries. As a result, Enve Composites, a growing carbon fiber road and mountain rim and wheel systems maker, has opted to stay in Ogden City. The city’s existing aerospace advanced composite industry resources created an additional win-win R&D opportunity.
The region also benefits from a well-nurtured logistical environment. Named the 4th most diverse economy in the nation, Utah promotes a “robust set of industry verticals” — from Information Technology to Life Sciences, from Outdoor Recreation to Aerospace/Defense.
“Likes attract,” O’Malley says. “It’s a weaving process. A small state can get things done quickly, collaboratively. It’s easier to get key players in the same room talking.”
Walker Manufacturing
/in General/by Bart TaylorWalker Manufacturing
Fort Collins
www.walkermowers.com
Privately held
No. of employees: 155
Product focus and a purposeful culture drive Walker Manufacturing, one of northern Colorado’s enduring companies
“We build machines we’d like to own ourselves”, say Bob Walker, President of Walker Manufacturing. Bob and his brother Dean lead one of northern Colorado’s most successful companies.
The sentiment dates back to the company’s formative years, on the Walker farm in southwest Kansas near Dodge City.
“Farmers would develop an implement, make one, and the next thing you know they’re making stuff. My dad, Max Walker, saw that. By 1960 he’d quit farming.”
Max Walker’s design and production talents evolved from a fully functional mini-Caterpillar he built for his sons, to a gas-powered golf cart, the first full-production machine of the fledgling Walker manufacturing company. In the ensuing years, the product line changed, as did the Walker family’s locale, following opportunity – and financing.
“The squeeze was on. There was always the challenge of managing seasonal operating lines with the bank, of meeting financing and cash flow demands.” It was a recurring theme in the company’s early years.
The Walkers eventually landed in Colorado to do contract manufacturing for a company in Greeley, with Bob, who in 1975 and six years out of college left Cessna Aircraft in Wichita, Kansas to join his dad and brother at the ‘new’ Walker Manufacturing. Based in Ft. Collins, the now full-on family business built tractor cab-coolers, making over 70,000 units until the contract ended in 1983.
By the late 70’s, though, the company already had begun to diversify, landing on an idea for a much-improved riding lawn-mower.
“The notion of ‘contract landscaping’ was just taking hold. We went shopping and bought a couple riding mowers in the spring of ‘77, and after using the mowers knew we could build a better machine. In ’77 and ‘78 we built prototype each year, and in ‘79 built another and took that one to the 3i SHOW (an agri-business expo) in Kansas. Based on interest there we built 25 machines on speculation. It took us a year to build and a two years to sell ‘em.”
The company garnered national interest in the early ‘80’s. A product announcement in the landscape trade press generated calls from Florida.
“My dad sold our first big order his first trip there – a contractor maintaining big retirement villages bought 48 units. In 1982 we built 125; in 1984, 450 machines. By then we were out of the cab-cooler business.”
Walker’s dealer network and business also expanded geographically. In 1984 the company entered Australia and New Zealand in 1988. In 1986 Europe. And while the ‘great recession’ hit the company hard in the late 2000’s, Bob Walker forecasts the company will rebound to sell 6000 units in 2014 through its network of 46 worldwide distributors.
Today Walker Manufacturing employs nearly 160 employees in a sprawling, 216,000 square-foot manufacturing facility just east of Ft. Collins. The company builds machines at the “high-end” of the market, resisting over the years the promise of economy mowers or ancillary products to focus instead on its commercial-grade, signature brand. The Walker Mower Model B is the latest in a single, long line of machines, each improved from the last but retaining the mower’s unique visual and functional attributes.
The company is equally focused on corporate culture. “Strong companies are made up of strong people”, Walker says, “and employees benefit from strong families.” The company maintains the Walker Family Resource Center for employees.
Walker also hands me a list of the companies operating principles – labeled ‘What We Believe’ – as we sit down to talk, a list that’s posted on-site and online. The Walkers espouse a purposeful culture.
For how big the company feels when visiting, Walker Manufacturing’s regional presence seems understated. By contrast the Walker legacy, on the community and its customers, will likely be deeply felt.
Challenges: Walker’s concerned about uncertainty surrounding Obamacare. “The net effect of some of the increases we’re looking at could materially impact our business. Operating with relatively small margins, as we do, it creates a challenge for how you price your product.”
Opportunities: “We think there’s room to improve our market share”, Walker says. “Two of our key product differentiators – the steering lever system and front-mount mower deck – have proven their value.”
Needs: Cost-certainly around employee health-care.
Eagle Claw
/in General/by Bart Taylorwww.eagleclaw.com
Denver
Founded: 1925
Privately owned
Employees: About 200
Denver’s iconic sports and outdoor brand prefers a low profile that belies its global reach and tech-driven growth ambitions
Perhaps no global brand is as iconic and influential in its market yet keeps as low a profile as Denver’s Eagle Claw. Those who fish have spent a lifetime using its products. But for this enduring company, conceived on a stretch of the Colorado River in the early 1920s, success comes with one condition, that it’s done quietly.
That’s the way the McGill family, founders and owners of Eagle Claw and other Wright & McGill Co. brands, prefer it.
It also suits the president of the company, Donn Schaible. It’s clear he’s at home when describing the 90-plus year company’s demeanor. “We’re still a privately-held company that doesn’t seek the spotlight,” he says. “Lee McGill’s a private individual, and our company’s the same way.”
To equate modesty with complacency, though, would be a mistake. Eagle Claw’s a global powerhouse — the only hook manufacturer in the Western Hemisphere — and Schaible’s ambition to keep the company on top is unmistakable.
“We direct all our efforts toward driving sales,” he says, obviously proud of the company’s products like the ultra-sharp, high-end Trokar hook brand and the fact they’re made in the U.S. and not Asia, manufacturing home of global competitors Mustad (Norway) and Gamakatsu (Japan). “100 percent of our products are made right here, and we’re the number one importer of ‘terminal’ tackle in the U.S., made to our specifications.”
The company guards its IP and manufacturing processes fiercely, in keeping with its reserved nature but as a practical matter as well. A tour of the sprawling manufacturing facility is out of the question.
Think making hooks, rod and reels, and other equipment is easy? Think again. “Much of our equipment is highly proprietary,” Schaible says. “What we do here is very unique.” Technology’s an important driver here, as is the company’s commitment to advancing the industry. “Innovation is very important. Our people want us to be seen as the drivers of innovation in our markets”.
As with most companies, market conditions have impacted business, but in a surprising way. “When the economy is tough, sales tend to increase,” says Schaible. “People tend to stay closer to home, to do more camping and fishing.” Schaible keeps close watch of long-term trends. The sale of angler licenses in the U.S. has been flat for the past decade or so, but natural resource management and the availability of ‘fishable waters’ leaves him more concerned.
“There’s pressure from very well-organized groups working to diminish the amount of water available for sports fishing,” he says. “We’re very supportive of groups like Keep America Fishing and others working to protect habitat and access to public waters.”
That said, Schaible, Eagle Claw, Lazer Sharp, and the people and brands of Wright & McGill Co. look from the outside to be doing very nicely.
So is the company growing? Schaible smiles, and simply responds, “Yes.”
Challenges: As with other manufacturers, workforce is a challenge, Schaible says. “We manufacturer here, so we pay higher wages than our competitors who don’t. It’s also difficult here in Denver to find talent, even though it’s finally getting some attention. We have to stop demeaning the industry, even at a high-school level. Manufacturing is different than it used to be. But trying to find employees with the right skill set has been a challenge.”
And Schaible chafed when discussing the “raft” of regulation the company manages. “It’s a constant battle to keep up with amount of regulation this company faces,” he says. “It’s ludicrous.”
Opportunities: Technology is disrupting manufacturing operations in a positive way. “Trokar’s a good example. No one else is playing in that market, or have the machines to be able to make that work.”
Schaible is also bullish on the long-term prospects for the industry. “Over 90 percent of us have a favorable impression of fishing, despite the efforts of some who unfairly berate the industry.”
Needs: Eagle Claw actively seeks to improve its supply chain. “We continually evaluate our suppliers from a cost, quality and availability standpoint. Quality is key but it must also be cost competitive and the suppliers must have a track record of delivering on time.”