Machinists, fabricators, and brokers fueling a manufacturing boom along Colorado’s Front Range gathered in Denver last week wasted no time getting to the topic du jour — workforce development. Speakers at the 2022 Rocky Mountain Machining & Tooling Association (RMTMA) Fall Conference parsed workforce topics throughout the day, from retention to recruitment to change management, in response to the sector’s acute workforce need.
But a dearth of employees did little to dampen good feelings here about prospects for growth and new work. Demand for U.S.-manufactured products is strong — generationally strong. A decade or so removed from an historic crash, U.S. brands and contractors have refocused on domestic manufacturing. Domestic supply chains are in. Outsourcing is out.
For suppliers here, it means that as prospects for growth are high even as most pursue opportunity with one hand tied behind their back. Focused on Machining‘s Justin Quinn, the outgoing RMTMA chapter president, summed it up: “It’s easier to find a customer than a good employee.”
Angela Rose’s summary this week of challenges, opportunities, and needs of the manufacturers we’ve profiled so far in 2022, bears out the challenge of pursuing new business that’s there for the taking. Managing growth is the third-most cited challenge behind manufacturing’s two steady and pervasive headaches: supply chain and workforce.
Still, the need for human capital is this time framed against a backdrop of opportunity for domestic machine shops and OEMs that’s fundamentally different from anything we’ve seen.
I sum up this generational opportunity in three macro-trends powering a new golden age of domestic manufacturing:
Offshore supply chains are irrevocably broken. Among the factors: We’re decoupling with China. It may happen over time. It may happen overnight.
With business leaders joining the “Made in America” consumer movement, there’s enthusiasm economy-wide for U.S.-made products. Domestic production options are more competitive as companies see brand value in manufacturing here.
We’re nearer to solving the workforce problem than we think. Automation and technology are set to catalyze manufacturing employment, not diminish it.
We’ll report on all the above in future editions, but today nothing is more important than funding a new wave of technology and automation in manufacturing. Outcomes would work at once to improve processes and products that would keep more work in the U.S., but also work to attract a new generation of STEM employees.
“As we grow this business, we don’t want to just grow it by employees,” he says. “We want to grow by automation, by use of robots, and different things we’re interested in doing.”
That makes for different prerequisite skill sets, and a pair of employees in their twenties are up to the task. “They’re really adaptable to automation,” says Curry. “A lot of the challenge is to keep them challenged. That’s a big thing for us: We want to give them opportunities to be challenged.”
Imagine manufacturers competing for engineering and technical talent graduating from the university system. It would fuel exponential employment growth in the sector, through a generation of new companies. We’re nearing that point.
How to accelerate the momentum? For starters, it’s crucial to align the vast ecosystem of money — grants, opportunity funds, and the like — toward helping small manufacturers automate.
And quickly: The Hill recently quoted Deputy Secretary of Defense Kathleen Hicks, who “noted that over the past decade, the number of small businesses in the defense industrial base shrank by over 40 percent. ‘The data shows that if we continue along the same trend, we could lose an additional 15,000 suppliers over the next 10 years.'”
Tooling up small manufacturers is a vital step to stop the slide.
https://mfginsider.com/wp-content/uploads/2023/11/MFG-INSIDER-word-logo2.png00Bart Taylorhttps://mfginsider.com/wp-content/uploads/2023/11/MFG-INSIDER-word-logo2.pngBart Taylor2022-10-10 16:14:562022-10-10 16:14:56Feast and Famine at the RMTMA Conference: Manufacturing’s generational opportunity and challenge
I’m excited to follow up on Bart Taylor’s column last month and formally introduce CompanyWeek’s new partner, Sustainment. It’s a treat to speak directly to a community I’ve known only eight or nine short months but value so much that we, like Bart, bet our future on it.
Sustainment is a technology platform built to help manufacturers find, evaluate, and engage with qualified U.S.-based suppliers as well as help suppliers showcase their expertise and capabilities to new customers and partners. It’s a mouthful, I know, but for us the mission is more important today than we could have imagined when we launched the business a few years ago. Manufacturing supply chains weren’t a part of the everyday business narrative then — today, they’re everyday national news.
We’re focused on enabling local and regional connections first — we cut our teeth supporting Air Force customers operating in Oklahoma and Texas, to help solve the DoD’s massive challenge of adding tens of thousands of new manufacturers to the Defense Industrial Base. It’s in Texas that we found CompanyWeek’s TX Manufacturing Report. Bart was looking for more advanced technology to connect the CompanyWeek community. We were totally impressed with that community — you. Today we’re partners.
Much has happened even in the handful of months since we joined forces. I’m pleased to share the news that Sustainment recently closed a $12MM Series A financing led by Unless, an investment firm focused on catalyzing the new industrial revolution. This is a transformational moment for our team and the community we serve, as we work together to revitalize manufacturing in the United States.
The raise puts CompanyWeek/Sustainment in a great position to lead a national effort to bring together what today is a highly fragmented ecosystem. In our evaluation of what has and has not worked in other countries and in prior eras of U.S. industrial history, we observed that manufacturing never works well in silos. There must be vibrant interaction between all tiers of the supply chain, from the large OEM down to the family-owned machine shop down at the fourth and fifth tier.
Our approach is to link this entire ecosystem on a single platform that delivers value to all members, resulting in quality, timely manufacturer data which can be applied to solve critical challenges at the local, state, and national level. Three broad initiatives frame our efforts:
We provide a free community experience for small-medium sized manufacturing suppliers who want to present their capabilities to new customers while finding, connecting, and collaborating with new partners.
We enable sourcing and supply chain professionals in both government and industry who need modern, data-driven tools to find, compare, organize, and securely engage with the best domestic manufacturing suppliers.
We accelerate the effectiveness of state, regional, and national manufacturing support organizations who need access, visibility, and connectivity into regional manufacturing ecosystems.
As a manufacturer or supplier, we hope you’ll begin exploring Sustainment. Learn more. Take a few minutes to build a profile. There are no fees.
You see where this is going: long-term, CompanyWeek readers will learn about companies and suppliers and use Sustainment to get connected — two platforms growing together to form one highly-connected and growing community. As CompanyWeek’s regional footprint grows, Sustainment data teams are also recruiting new companies into the platform. We’re focusing on buyers and suppliers in the industrial niche first, then later this fall, we’ll expand to include multiple manufacturing industries.
Our vision of a hyperconnected, secure, and resilient ecosystem includes the industry and government organizations that contribute so much to the manufacturing economy. If that’s you, we’ve also developed Blueprint, an analytics toolkit that provides the community visibility and access to the resources you’re developing to support manufacturing. Take a look.
That’s a lot to do in order to make an impact. For now, it’s a privilege to be part of your community, working together to advance U.S. manufacturing. Contact me anytime.
Harry Moser had already anticipated a U.S. manufacturing comeback in 2013 when I started telling stories of American manufacturers. He was tracking how many jobs companies planned to reshore in support of U.S. production, and today is among the nation’s top experts on reshoring because the trickle he reported early on became a tsunami.
It’s good to be right.
His new report measures more of the same: Moser’s Reshoring Initiative (RI) tracks the number of manufacturing jobs U.S. companies plan to reshore, as well as foreign direct investment (FDI) in domestic manufacturing, and RI’s “current 2022 projection of jobs announced is around 350,000 — another record, up from 260,000 in 2021. If the projection is achieved, 2022 will bring the total jobs announced since 2010 to over 1.6 million.” (Kentucky, North Carolina and Georgia are the top three destinations for jobs, all with large EV battery investments. Texas has dropped from #1 in 2021 to #13. Arizona ranks #16.)
It’s no mystery why companies want more U.S. manufacturing: Doing business in China (the source of 44 percent of reshoring announcements) is risky, offshore supply-chain bottlenecks are wreaking havoc, and consumers want stuff made in the U.S. Brand promises matter.
Companies are also just doing the math — with Moser’s help. RI’s Total Cost of Ownership (TCO) tools are helping many companies factor in all the expenses involved in offshore manufacturing operations, not just price (cost of production.) As the report notes, “The Chinese factory price is, on average, 30 percent lower than the U.S. price,” but “by switching to TCO, companies will see that about 20 percent of what they now import from China can be sourced domestically without raising prices or cutting profits.”
How important is TCO? Moser notes that historically, most companies that left to find cheaper factories offshore just didn’t do the math — in industries like machinery, transportation equipment, and appliances. “More recently, activity has shifted to include more essential products which the U.S. government should have recognized as too essential to rely so heavily on imports, including electric batteries, semiconductors, PPE, pharmaceuticals, and rare earths,” the report concludes.
But demand for more U.S. manufacturing runs headlong into what Moser describes as America’s “deindustrialization” policy — a mix of anti-manufacturing policy outcomes that stand in the way of more domestic production. He’s leading the charge for a “permanent industrial policy” that would “level the playing field enough that the companies would decide to reshore in their own self-interest.” Here’s Moser’s Congressional testimony to that effect.
His roadmap is part of a new national narrative that’s identifying ways to lower barriers to growing U.S. manufacturing. His prescriptions would:
Train a new — and much larger — skilled workforce
Reduce the value of the U.S. dollar
Maintain low corporate income taxes and capital investment breaks
Lower healthcare costs to reduce burden
Make the Section 301 tariffs permanent, or, better, replace it with a border adjustment tax (BAT) on all imports from all countries
Eliminate other sales taxes and use the extra revenue to fund Social Security and Medicare
Cooperate with Mexico and Canada to attract work from Asia to North America
Fill supply-chain gaps in the U.S. — and aggregate demand to drive the domestic supply chain
While Moser’s roadmap may end up being his true legacy, it’s also worth asking how realistic it is to assume that key pieces of the plan are likely to cross a finish line. For example, how likely is it that Congress would agree on a strategy to lower the value of the U.S. dollar and implement tariffs to specifically benefit manufacturing?
It’s fair to say that U.S. policymakers — and most U.S. multinational corporations — oppose tariffs, border taxes, and industry-targeted VATs of any kind. You’re normal if you support “free trade” and seen as a bit unconventional if you don’t. It’s deeply ingrained: Most business leaders, politicians, and chambers of commerce and trade associations oppose tariffs. Because most U.S. corporations do.
Instead, America’s new industrial reality will likely be shaped by us, by families and young people and employers who decide manufacturing is an occupation worth pursuing. The U.S. will need more than 3 million new, highly skilled manufacturing employees in the next decade, to meet the demand Moser anticipates and sustain a post-global industrial economy.
RI’s report touches on a promising trend: “Currently, reshoring and FDI are continuing to add more high-tech jobs than low-tech ones, again driven by the essential products push. . . . . The challenge is to upskill our workforce so that more of them can work competitively on more highly automated production of lower-tech products.”
I anticipate a pivot to this seminal point in future RI reports — that automation and technology transforming U.S. manufacturing will catalyze employment growth in the sector, not diminish it, which is today conventional wisdom. When U.S. manufacturing companies can compete with their technology counterparts for STEM students, we will have won.
We might look back on one small nugget in Moser’s 2022 Congressional notes as a clue to what might transpire in the years ahead — Utah’s new Manufacturing Modernization Grant, a modest $10 million fund designed to help “establish, relocate, retain, or develop the manufacturing industry in Utah.” If companies use the money to invest in new equipment, assets that act as a magnet for new talent, others will follow.
More on the challenge and promise of transparent supply chains, and their potential to fuel more reshoring, in future editions.
I’ve written about the manufacturing supply chain since 2013, and today believe the “next big thing” in America’s latest (and ongoing) industrial revolution — a.k.a. Industry 4.0 — will be the interconnection of the U.S. supply chain.
The big breakthrough is AI-enabled search that will help manufacturers find ideal suppliers. In May, I bet the future of CompanyWeek on the idea, joining forces with Sustainment, the ascendent tech startup developing an advanced sourcing and connectivity software platform.
It’s left to all of us to nurture a growing community of suppliers, and our new partnership will enable us to showcase more companies and people, but to also lean into our role as a champion for domestic suppliers. For me, it will be more of the same.
In early 2015, I took note of companies leaving Colorado in search of suppliers. “Gold Star is a good example of how much manufacturing growth in Colorado will pivot on supply chain development,” I wrote. “It’s why manufacturing is developing unevenly across industries and why the economy will be well-served by efforts to shore up resources that will drive manufacturing businesses.”
Our clarion call was underway by 2016. “Want to engage in a real conversation to advance U.S. manufacturing?” I asked after the election. “Be an advocate for the domestic supply chain so that U.S. manufacturers have everything they need to make things here, including labor.”
In 2018, I encouraged communities to “assess how well-matched target industries are to local and regional business assets,” and “whether steps can be taken to address supply-chain gaps, or whether a pivot to better-matched manufacturing industries might be a better plan.”
By January 2021, my optimism had turned to pandemic-fueled exasperation. I complained that: “American companies in part funded China’s world-class supply chain. Cheap labor and short-term profits were too hard to pass up. Now it’s up to us to bring it home. Let’s earmark substantial public sector support to hasten its reshoring as we take matters into our hands.”
But during the pandemic, we launched SCoP, short for “supply-chain portal”, to provide more transparency into the growing community of manufacturers featured in CompanyWeek, and to enable easier and more informed connections between manufacturers and suppliers. We put words into action. But it wasn’t great.
But Sustainment impressed me most, and by May, we’d joined forces. Here’s why.
First, our shared vision is that the community, not the technology or data, is most important. As I discussed a partnership with CEO Bret Boyd and the Sustainment team, the narrative always returned to one thing: you. Today our community is 50,000-plus CompanyWeek readers and technology users in 20,000 manufacturing companies across the West — and growing – connected by stories and a common mission but not yet by advanced tools and software.
That will change quickly. Sustainment has been building software and enabling tools since 2020 to help U.S. Air Force customers in Oklahoma and Texas reimagine procurement in what is a massive defense supply chain — millions of parts, components, and products. It’s a “local and regional first” development strategy: locate and map the closest suppliers to start.
It’s a tech foundation that I trusted would be the best match for CompanyWeek’s audience. Our goal is to bring together our community with Sustainment technology to connect with each other, meet new people, find new buyers and providers, publicize new processes and capabilities, and otherwise help you be successful. Today, we’re in this together.
Our approach is to perfect the platform for suppliers and contractors in the machine-shop economy, by focusing on supplier processes, then expand the platform into other key manufacturing industries beginning this fall. Every small business machining, fabricating, or finishing parts or products should be listed in the Sustainment platform now — and we can help.
Join the platform. There are no fees. Take it for a drive. Tell us where we can improve. I’m confident we’re building on a solid foundation.
We’re not alone in this quest, nor should we be. If we’re successful, manufacturing will have taken a momentous next step — as a prelude, it turns out, to Industry 5.0 – an era that “recognizes the power of industry to achieve societal goals beyond jobs and growth to become a resilient provider of prosperity.”
As we’re a public benefit corporation, we’re ready for that, too. More on that in future editions.
The narrative around the health of California’s economy changes depending on where you are. But as U.S. manufacturing’s fortunes rise, so too does the outlook for California’s economy. Yes, the state may earn its notoriety as a high-cost place to do business, but if your company makes things, California’s production ecosystem is a calling card.
That’s especially true in aerospace, and the companies atop California’s bluechip sector are determined to remind anyone who listens that the epicenter of U.S. aerospace manufacturing tilts decidedly West.
Alongside the California Manufacturing and Technology Association (CMTA) and the Aerospace State Association (ASA), California’s largest aerospace companies are hosting Aerospace Day, August 3, in Sacramento. The program is organized through CMTA’s Aerospace Defense Alliance of California (ADAC) committee.
We recently caught up with Joe Ahn from Northrop Grumman, Mark Taylor from Boeing, and Eric Fox from Lockheed Martin to talk about California aerospace and the event.
CompanyWeek: Tell us what’s at stake here. Why an Aerospace Day, and what are you trying to accomplish?
Joe Ahn: I’d begin by just providing a 50,000-foot view of the aerospace industry in California. The numbers speak for themselves: $100 million in economic activity, 511,000 high-paying jobs, $11 billion in wages and benefits, $2.9 billion in payroll taxes, and $7 billion in state and local taxes paid.
As for Northrop Grumman, we’re the largest aerospace organization in the state of California, with 32,000 employees in 120 locations. And like my colleagues from Boeing and Lockheed, we make everything from military aircraft to long-range strikes, hypersonics, satellites, and components. Probably our most recognizable system right now is NASA’s James Webb telescope. We’re happy to say it was built, manufactured, and designed here in California.
Mark Taylor: Boeing also has a rich history in California today, with about 13,000 employees at our four main sites and dozens of other smaller sites including a couple high-profile joint ventures and subsidiaries.
We have the world’s largest satellite manufacturing facility, we provide 24/7 support to 14,000 in-service airplanes for 900-plus operators worldwide, and we can’t forget about all of the design and engineering support our teams in California provide across our enterprise. We are also building for the future in areas such as autonomous systems, all here in California.
Just to circle back to the event, Aerospace Day is to remind the Capitol community how important aerospace is. Joe did a nice job of summarizing the high-level statistics, and they open people’s eyes to the fact that aerospace, as an industry in California, is larger than entertainment and agriculture combined!
I think there’s a misconception that aerospace has left California, and that couldn’t be farther from the truth. In addition to all the big companies that are still here with a huge presence, Boeing has more than 2,200 suppliers in the state of California, and it’s the number two state in the country in terms of our supply base, both by dollar value and by number.
Far from being gone, aerospace has a huge presence here. We’re the backbone of the economy. And we’re here to ensure the future is equally bright for aerospace in California.
Eric Fox: Lockheed Martin has been in California since 1912, flying a seaplane in San Francisco Bay. We’ve got about 10,000 folks in California as well, prominent in Sunnyvale for our space systems and, of course, the iconic skunkworks in Palmdale. That was in Burbank, California, after World War II. Across our footprint we’re also working on batteries and energy sources for the future.
To amplify what Mark said to give you an idea of the scope of the F35 program — which Joe Ahn (Northrop Grumman) is a partner on and is helping California employment there as well — Lockheed has more F35 suppliers in California than our next four states combined: Texas, New York, Florida, and Connecticut. And if you just saw the headline, we think we got a spit-and-a-handshake deal for 375 more F35s with the federal government. And then, of course, we’re selling them internationally quite quickly given what’s happening in Ukraine. So, it’s a long-storied history in California that’s getting even better. As Joe mentioned, hypersonic (weapon systems) are going to be born and raised in California; everyone’s competing on that. We’re adding jobs; we’re wide open for business.
And also, even though they’re not on the call, I’d put a plug in for our good friends at Raytheon, who’ve announced they want to hire another 1,000 people in their El Segundo facility. California is thriving and growing because of the leadership of Governor Gavin Newsom and Dee Dee Myers at CalCompetes. California is the birthplace of next-generation aerospace.
CW: I wanted to touch on Mark’s comments about Boeing’s rich California supply chain. It’s obviously integral to your operations. I’d assume the care and feeding of America’s top aerospace supply chain is important?
Joe: Yes! Without our suppliers, we wouldn’t be able to manage back to the OEMs. In fact, depending on what systems and products you’re talking about, sometimes half the work is actually done by our supply base. It’s very important.
Just to bring CMTA into the conversation, the reason we have an affiliation and partnership with CMTA is that a lot of our suppliers don’t have the ability to articulate or share their thoughts about public policy that are important to them and us. By working through CMTA, we’re able to amplify to policy makers those things that are important to us and, by default, to our suppliers. We talked about hiring and recruiting. I don’t think there is any question that the challenges we’re facing with workforce are shared by our suppliers.
In the next 10 years, at Northrop Grumman, we’re going to lose half our workforce. We hear similar concerns from our supply chain. So, it’s very important that the supply chain remains robust to achieve our goals of supporting civil space, the military, and other applications.
Eric: Workforce development is obviously a focus within all our states. With California having the worldwide leader in higher education in the form of the University of California system, we’re going to find our engineers here.
But you also have to have the people to put together aircraft, hypersonics, and whatever the next generation “thing” is. What we’ve found is that we also have to partner with community colleges — not everybody needs a four-year degree. We need to work with these entities to get the curriculum we need to start the feedback pipeline.
As our workers start to mature out, we’re working with CMTA through ADAC to lay the groundwork for the workforce of the future. And today it’s a different game. These are well-paying, high-quality, long-lasting jobs. The days of a dirty factory are gone. Everything today is high-tech, high-skilled — including the defense industry in California.
Mark: Just to mention ADAC again, in addition to regulatory and competitiveness issues, workforce is one of the key things we focus on. There’s a lot of competition for skilled labor in California. We’re spending a lot of time, as an organization, at the high-end of the engineering spectrum as well as the trained, hands-on workforce we’ll need to build things in California.
Feast and Famine at the RMTMA Conference: Manufacturing’s generational opportunity and challenge
/in General/by Bart TaylorMachinists, fabricators, and brokers fueling a manufacturing boom along Colorado’s Front Range gathered in Denver last week wasted no time getting to the topic du jour — workforce development. Speakers at the 2022 Rocky Mountain Machining & Tooling Association (RMTMA) Fall Conference parsed workforce topics throughout the day, from retention to recruitment to change management, in response to the sector’s acute workforce need.
But a dearth of employees did little to dampen good feelings here about prospects for growth and new work. Demand for U.S.-manufactured products is strong — generationally strong. A decade or so removed from an historic crash, U.S. brands and contractors have refocused on domestic manufacturing. Domestic supply chains are in. Outsourcing is out.
For suppliers here, it means that as prospects for growth are high even as most pursue opportunity with one hand tied behind their back. Focused on Machining‘s Justin Quinn, the outgoing RMTMA chapter president, summed it up: “It’s easier to find a customer than a good employee.”
Angela Rose’s summary this week of challenges, opportunities, and needs of the manufacturers we’ve profiled so far in 2022, bears out the challenge of pursuing new business that’s there for the taking. Managing growth is the third-most cited challenge behind manufacturing’s two steady and pervasive headaches: supply chain and workforce.
Still, the need for human capital is this time framed against a backdrop of opportunity for domestic machine shops and OEMs that’s fundamentally different from anything we’ve seen.
I sum up this generational opportunity in three macro-trends powering a new golden age of domestic manufacturing:
Offshore supply chains are irrevocably broken. Among the factors: We’re decoupling with China. It may happen over time. It may happen overnight.
With business leaders joining the “Made in America” consumer movement, there’s enthusiasm economy-wide for U.S.-made products. Domestic production options are more competitive as companies see brand value in manufacturing here.
We’re nearer to solving the workforce problem than we think. Automation and technology are set to catalyze manufacturing employment, not diminish it.
We’ll report on all the above in future editions, but today nothing is more important than funding a new wave of technology and automation in manufacturing. Outcomes would work at once to improve processes and products that would keep more work in the U.S., but also work to attract a new generation of STEM employees.
Eric Peterson’s report this week on automation and the manufacturing workforce alludes to the possibilities, including this from Summit Peak Manufacturing CEO Ken Curry in Murray, Utah:
“As we grow this business, we don’t want to just grow it by employees,” he says. “We want to grow by automation, by use of robots, and different things we’re interested in doing.”
That makes for different prerequisite skill sets, and a pair of employees in their twenties are up to the task. “They’re really adaptable to automation,” says Curry. “A lot of the challenge is to keep them challenged. That’s a big thing for us: We want to give them opportunities to be challenged.”
Imagine manufacturers competing for engineering and technical talent graduating from the university system. It would fuel exponential employment growth in the sector, through a generation of new companies. We’re nearing that point.
How to accelerate the momentum? For starters, it’s crucial to align the vast ecosystem of money — grants, opportunity funds, and the like — toward helping small manufacturers automate.
And quickly: The Hill recently quoted Deputy Secretary of Defense Kathleen Hicks, who “noted that over the past decade, the number of small businesses in the defense industrial base shrank by over 40 percent. ‘The data shows that if we continue along the same trend, we could lose an additional 15,000 suppliers over the next 10 years.'”
Tooling up small manufacturers is a vital step to stop the slide.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Accelerate3D
/in General/by Bart TaylorOne Source Manufacturing
/in General/by Bart TaylorIndustrial intent: A mission to connect manufacturing
/in General/by Bart TaylorI’m excited to follow up on Bart Taylor’s column last month and formally introduce CompanyWeek’s new partner, Sustainment. It’s a treat to speak directly to a community I’ve known only eight or nine short months but value so much that we, like Bart, bet our future on it.
Sustainment is a technology platform built to help manufacturers find, evaluate, and engage with qualified U.S.-based suppliers as well as help suppliers showcase their expertise and capabilities to new customers and partners. It’s a mouthful, I know, but for us the mission is more important today than we could have imagined when we launched the business a few years ago. Manufacturing supply chains weren’t a part of the everyday business narrative then — today, they’re everyday national news.
We’re focused on enabling local and regional connections first — we cut our teeth supporting Air Force customers operating in Oklahoma and Texas, to help solve the DoD’s massive challenge of adding tens of thousands of new manufacturers to the Defense Industrial Base. It’s in Texas that we found CompanyWeek’s TX Manufacturing Report. Bart was looking for more advanced technology to connect the CompanyWeek community. We were totally impressed with that community — you. Today we’re partners.
Much has happened even in the handful of months since we joined forces. I’m pleased to share the news that Sustainment recently closed a $12MM Series A financing led by Unless, an investment firm focused on catalyzing the new industrial revolution. This is a transformational moment for our team and the community we serve, as we work together to revitalize manufacturing in the United States.
The raise puts CompanyWeek/Sustainment in a great position to lead a national effort to bring together what today is a highly fragmented ecosystem. In our evaluation of what has and has not worked in other countries and in prior eras of U.S. industrial history, we observed that manufacturing never works well in silos. There must be vibrant interaction between all tiers of the supply chain, from the large OEM down to the family-owned machine shop down at the fourth and fifth tier.
Our approach is to link this entire ecosystem on a single platform that delivers value to all members, resulting in quality, timely manufacturer data which can be applied to solve critical challenges at the local, state, and national level. Three broad initiatives frame our efforts:
We provide a free community experience for small-medium sized manufacturing suppliers who want to present their capabilities to new customers while finding, connecting, and collaborating with new partners.
We enable sourcing and supply chain professionals in both government and industry who need modern, data-driven tools to find, compare, organize, and securely engage with the best domestic manufacturing suppliers.
We accelerate the effectiveness of state, regional, and national manufacturing support organizations who need access, visibility, and connectivity into regional manufacturing ecosystems.
As a manufacturer or supplier, we hope you’ll begin exploring Sustainment. Learn more. Take a few minutes to build a profile. There are no fees.
You see where this is going: long-term, CompanyWeek readers will learn about companies and suppliers and use Sustainment to get connected — two platforms growing together to form one highly-connected and growing community. As CompanyWeek’s regional footprint grows, Sustainment data teams are also recruiting new companies into the platform. We’re focusing on buyers and suppliers in the industrial niche first, then later this fall, we’ll expand to include multiple manufacturing industries.
Our vision of a hyperconnected, secure, and resilient ecosystem includes the industry and government organizations that contribute so much to the manufacturing economy. If that’s you, we’ve also developed Blueprint, an analytics toolkit that provides the community visibility and access to the resources you’re developing to support manufacturing. Take a look.
That’s a lot to do in order to make an impact. For now, it’s a privilege to be part of your community, working together to advance U.S. manufacturing. Contact me anytime.
Bret Boyd is CEO of Sustainment. Reach him at bret@sustainment.tech.
Reshoring Initiative’s crystal ball for U.S. manufacturing proves prescient
/in General/by Bart TaylorHarry Moser had already anticipated a U.S. manufacturing comeback in 2013 when I started telling stories of American manufacturers. He was tracking how many jobs companies planned to reshore in support of U.S. production, and today is among the nation’s top experts on reshoring because the trickle he reported early on became a tsunami.
It’s good to be right.
His new report measures more of the same: Moser’s Reshoring Initiative (RI) tracks the number of manufacturing jobs U.S. companies plan to reshore, as well as foreign direct investment (FDI) in domestic manufacturing, and RI’s “current 2022 projection of jobs announced is around 350,000 — another record, up from 260,000 in 2021. If the projection is achieved, 2022 will bring the total jobs announced since 2010 to over 1.6 million.” (Kentucky, North Carolina and Georgia are the top three destinations for jobs, all with large EV battery investments. Texas has dropped from #1 in 2021 to #13. Arizona ranks #16.)
It’s no mystery why companies want more U.S. manufacturing: Doing business in China (the source of 44 percent of reshoring announcements) is risky, offshore supply-chain bottlenecks are wreaking havoc, and consumers want stuff made in the U.S. Brand promises matter.
Companies are also just doing the math — with Moser’s help. RI’s Total Cost of Ownership (TCO) tools are helping many companies factor in all the expenses involved in offshore manufacturing operations, not just price (cost of production.) As the report notes, “The Chinese factory price is, on average, 30 percent lower than the U.S. price,” but “by switching to TCO, companies will see that about 20 percent of what they now import from China can be sourced domestically without raising prices or cutting profits.”
How important is TCO? Moser notes that historically, most companies that left to find cheaper factories offshore just didn’t do the math — in industries like machinery, transportation equipment, and appliances. “More recently, activity has shifted to include more essential products which the U.S. government should have recognized as too essential to rely so heavily on imports, including electric batteries, semiconductors, PPE, pharmaceuticals, and rare earths,” the report concludes.
But demand for more U.S. manufacturing runs headlong into what Moser describes as America’s “deindustrialization” policy — a mix of anti-manufacturing policy outcomes that stand in the way of more domestic production. He’s leading the charge for a “permanent industrial policy” that would “level the playing field enough that the companies would decide to reshore in their own self-interest.” Here’s Moser’s Congressional testimony to that effect.
His roadmap is part of a new national narrative that’s identifying ways to lower barriers to growing U.S. manufacturing. His prescriptions would:
Train a new — and much larger — skilled workforce
Reduce the value of the U.S. dollar
Maintain low corporate income taxes and capital investment breaks
Lower healthcare costs to reduce burden
Make the Section 301 tariffs permanent, or, better, replace it with a border adjustment tax (BAT) on all imports from all countries
Eliminate other sales taxes and use the extra revenue to fund Social Security and Medicare
Cooperate with Mexico and Canada to attract work from Asia to North America
Fill supply-chain gaps in the U.S. — and aggregate demand to drive the domestic supply chain
While Moser’s roadmap may end up being his true legacy, it’s also worth asking how realistic it is to assume that key pieces of the plan are likely to cross a finish line. For example, how likely is it that Congress would agree on a strategy to lower the value of the U.S. dollar and implement tariffs to specifically benefit manufacturing?
It’s fair to say that U.S. policymakers — and most U.S. multinational corporations — oppose tariffs, border taxes, and industry-targeted VATs of any kind. You’re normal if you support “free trade” and seen as a bit unconventional if you don’t. It’s deeply ingrained: Most business leaders, politicians, and chambers of commerce and trade associations oppose tariffs. Because most U.S. corporations do.
Instead, America’s new industrial reality will likely be shaped by us, by families and young people and employers who decide manufacturing is an occupation worth pursuing. The U.S. will need more than 3 million new, highly skilled manufacturing employees in the next decade, to meet the demand Moser anticipates and sustain a post-global industrial economy.
RI’s report touches on a promising trend: “Currently, reshoring and FDI are continuing to add more high-tech jobs than low-tech ones, again driven by the essential products push. . . . . The challenge is to upskill our workforce so that more of them can work competitively on more highly automated production of lower-tech products.”
I anticipate a pivot to this seminal point in future RI reports — that automation and technology transforming U.S. manufacturing will catalyze employment growth in the sector, not diminish it, which is today conventional wisdom. When U.S. manufacturing companies can compete with their technology counterparts for STEM students, we will have won.
We might look back on one small nugget in Moser’s 2022 Congressional notes as a clue to what might transpire in the years ahead — Utah’s new Manufacturing Modernization Grant, a modest $10 million fund designed to help “establish, relocate, retain, or develop the manufacturing industry in Utah.” If companies use the money to invest in new equipment, assets that act as a magnet for new talent, others will follow.
More on the challenge and promise of transparent supply chains, and their potential to fuel more reshoring, in future editions.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
Pivot Manufacturing
/in General/by Bart TaylorHere’s why CompanyWeek is joining forces with Sustainment
/in General/by Bart TaylorI’ve written about the manufacturing supply chain since 2013, and today believe the “next big thing” in America’s latest (and ongoing) industrial revolution — a.k.a. Industry 4.0 — will be the interconnection of the U.S. supply chain.
The big breakthrough is AI-enabled search that will help manufacturers find ideal suppliers. In May, I bet the future of CompanyWeek on the idea, joining forces with Sustainment, the ascendent tech startup developing an advanced sourcing and connectivity software platform.
It’s left to all of us to nurture a growing community of suppliers, and our new partnership will enable us to showcase more companies and people, but to also lean into our role as a champion for domestic suppliers. For me, it will be more of the same.
In early 2015, I took note of companies leaving Colorado in search of suppliers. “Gold Star is a good example of how much manufacturing growth in Colorado will pivot on supply chain development,” I wrote. “It’s why manufacturing is developing unevenly across industries and why the economy will be well-served by efforts to shore up resources that will drive manufacturing businesses.”
Our clarion call was underway by 2016. “Want to engage in a real conversation to advance U.S. manufacturing?” I asked after the election. “Be an advocate for the domestic supply chain so that U.S. manufacturers have everything they need to make things here, including labor.”
In 2018, I encouraged communities to “assess how well-matched target industries are to local and regional business assets,” and “whether steps can be taken to address supply-chain gaps, or whether a pivot to better-matched manufacturing industries might be a better plan.”
By January 2021, my optimism had turned to pandemic-fueled exasperation. I complained that: “American companies in part funded China’s world-class supply chain. Cheap labor and short-term profits were too hard to pass up. Now it’s up to us to bring it home. Let’s earmark substantial public sector support to hasten its reshoring as we take matters into our hands.”
But during the pandemic, we launched SCoP, short for “supply-chain portal”, to provide more transparency into the growing community of manufacturers featured in CompanyWeek, and to enable easier and more informed connections between manufacturers and suppliers. We put words into action. But it wasn’t great.
By January of this year, in a column entitled “Supply-chain scramble: the race to connect you with suppliers and OEMs,” I acknowledged others were in the game. Today, multiple players are striving to better connect the U.S. manufacturing economy, from Xometry/Thomasnet to Mfg.com to Connex Marketplace.
But Sustainment impressed me most, and by May, we’d joined forces. Here’s why.
First, our shared vision is that the community, not the technology or data, is most important. As I discussed a partnership with CEO Bret Boyd and the Sustainment team, the narrative always returned to one thing: you. Today our community is 50,000-plus CompanyWeek readers and technology users in 20,000 manufacturing companies across the West — and growing – connected by stories and a common mission but not yet by advanced tools and software.
That will change quickly. Sustainment has been building software and enabling tools since 2020 to help U.S. Air Force customers in Oklahoma and Texas reimagine procurement in what is a massive defense supply chain — millions of parts, components, and products. It’s a “local and regional first” development strategy: locate and map the closest suppliers to start.
It’s a tech foundation that I trusted would be the best match for CompanyWeek’s audience. Our goal is to bring together our community with Sustainment technology to connect with each other, meet new people, find new buyers and providers, publicize new processes and capabilities, and otherwise help you be successful. Today, we’re in this together.
Our approach is to perfect the platform for suppliers and contractors in the machine-shop economy, by focusing on supplier processes, then expand the platform into other key manufacturing industries beginning this fall. Every small business machining, fabricating, or finishing parts or products should be listed in the Sustainment platform now — and we can help.
Join the platform. There are no fees. Take it for a drive. Tell us where we can improve. I’m confident we’re building on a solid foundation.
Join here.
We’re not alone in this quest, nor should we be. If we’re successful, manufacturing will have taken a momentous next step — as a prelude, it turns out, to Industry 5.0 – an era that “recognizes the power of industry to achieve societal goals beyond jobs and growth to become a resilient provider of prosperity.”
As we’re a public benefit corporation, we’re ready for that, too. More on that in future editions.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
American Precision Engineering
/in General/by Bart TaylorCompanyWeek Q&A: CA’s Aerospace Primes host Aerospace Day
/in General/by Bart TaylorThe narrative around the health of California’s economy changes depending on where you are. But as U.S. manufacturing’s fortunes rise, so too does the outlook for California’s economy. Yes, the state may earn its notoriety as a high-cost place to do business, but if your company makes things, California’s production ecosystem is a calling card.
That’s especially true in aerospace, and the companies atop California’s bluechip sector are determined to remind anyone who listens that the epicenter of U.S. aerospace manufacturing tilts decidedly West.
Alongside the California Manufacturing and Technology Association (CMTA) and the Aerospace State Association (ASA), California’s largest aerospace companies are hosting Aerospace Day, August 3, in Sacramento. The program is organized through CMTA’s Aerospace Defense Alliance of California (ADAC) committee.
We recently caught up with Joe Ahn from Northrop Grumman, Mark Taylor from Boeing, and Eric Fox from Lockheed Martin to talk about California aerospace and the event.
CompanyWeek: Tell us what’s at stake here. Why an Aerospace Day, and what are you trying to accomplish?
Joe Ahn: I’d begin by just providing a 50,000-foot view of the aerospace industry in California. The numbers speak for themselves: $100 million in economic activity, 511,000 high-paying jobs, $11 billion in wages and benefits, $2.9 billion in payroll taxes, and $7 billion in state and local taxes paid.
As for Northrop Grumman, we’re the largest aerospace organization in the state of California, with 32,000 employees in 120 locations. And like my colleagues from Boeing and Lockheed, we make everything from military aircraft to long-range strikes, hypersonics, satellites, and components. Probably our most recognizable system right now is NASA’s James Webb telescope. We’re happy to say it was built, manufactured, and designed here in California.
Mark Taylor: Boeing also has a rich history in California today, with about 13,000 employees at our four main sites and dozens of other smaller sites including a couple high-profile joint ventures and subsidiaries.
We have the world’s largest satellite manufacturing facility, we provide 24/7 support to 14,000 in-service airplanes for 900-plus operators worldwide, and we can’t forget about all of the design and engineering support our teams in California provide across our enterprise. We are also building for the future in areas such as autonomous systems, all here in California.
Just to circle back to the event, Aerospace Day is to remind the Capitol community how important aerospace is. Joe did a nice job of summarizing the high-level statistics, and they open people’s eyes to the fact that aerospace, as an industry in California, is larger than entertainment and agriculture combined!
I think there’s a misconception that aerospace has left California, and that couldn’t be farther from the truth. In addition to all the big companies that are still here with a huge presence, Boeing has more than 2,200 suppliers in the state of California, and it’s the number two state in the country in terms of our supply base, both by dollar value and by number.
Far from being gone, aerospace has a huge presence here. We’re the backbone of the economy. And we’re here to ensure the future is equally bright for aerospace in California.
Eric Fox: Lockheed Martin has been in California since 1912, flying a seaplane in San Francisco Bay. We’ve got about 10,000 folks in California as well, prominent in Sunnyvale for our space systems and, of course, the iconic skunkworks in Palmdale. That was in Burbank, California, after World War II. Across our footprint we’re also working on batteries and energy sources for the future.
To amplify what Mark said to give you an idea of the scope of the F35 program — which Joe Ahn (Northrop Grumman) is a partner on and is helping California employment there as well — Lockheed has more F35 suppliers in California than our next four states combined: Texas, New York, Florida, and Connecticut. And if you just saw the headline, we think we got a spit-and-a-handshake deal for 375 more F35s with the federal government. And then, of course, we’re selling them internationally quite quickly given what’s happening in Ukraine. So, it’s a long-storied history in California that’s getting even better. As Joe mentioned, hypersonic (weapon systems) are going to be born and raised in California; everyone’s competing on that. We’re adding jobs; we’re wide open for business.
And also, even though they’re not on the call, I’d put a plug in for our good friends at Raytheon, who’ve announced they want to hire another 1,000 people in their El Segundo facility. California is thriving and growing because of the leadership of Governor Gavin Newsom and Dee Dee Myers at CalCompetes. California is the birthplace of next-generation aerospace.
CW: I wanted to touch on Mark’s comments about Boeing’s rich California supply chain. It’s obviously integral to your operations. I’d assume the care and feeding of America’s top aerospace supply chain is important?
Joe: Yes! Without our suppliers, we wouldn’t be able to manage back to the OEMs. In fact, depending on what systems and products you’re talking about, sometimes half the work is actually done by our supply base. It’s very important.
Just to bring CMTA into the conversation, the reason we have an affiliation and partnership with CMTA is that a lot of our suppliers don’t have the ability to articulate or share their thoughts about public policy that are important to them and us. By working through CMTA, we’re able to amplify to policy makers those things that are important to us and, by default, to our suppliers. We talked about hiring and recruiting. I don’t think there is any question that the challenges we’re facing with workforce are shared by our suppliers.
In the next 10 years, at Northrop Grumman, we’re going to lose half our workforce. We hear similar concerns from our supply chain. So, it’s very important that the supply chain remains robust to achieve our goals of supporting civil space, the military, and other applications.
Eric: Workforce development is obviously a focus within all our states. With California having the worldwide leader in higher education in the form of the University of California system, we’re going to find our engineers here.
But you also have to have the people to put together aircraft, hypersonics, and whatever the next generation “thing” is. What we’ve found is that we also have to partner with community colleges — not everybody needs a four-year degree. We need to work with these entities to get the curriculum we need to start the feedback pipeline.
As our workers start to mature out, we’re working with CMTA through ADAC to lay the groundwork for the workforce of the future. And today it’s a different game. These are well-paying, high-quality, long-lasting jobs. The days of a dirty factory are gone. Everything today is high-tech, high-skilled — including the defense industry in California.
Mark: Just to mention ADAC again, in addition to regulatory and competitiveness issues, workforce is one of the key things we focus on. There’s a lot of competition for skilled labor in California. We’re spending a lot of time, as an organization, at the high-end of the engineering spectrum as well as the trained, hands-on workforce we’ll need to build things in California.
REGISTER for Aerospace Day here>>
Bart Taylor is publisher of CompanyWeek and the CA Manufacturing Report. Reach him at btaylor@companyweek.com.
Franks Manufacturing
/in General/by Bart Taylor