As CompanyWeek turns six, what I got right about manufacturing, and wrong

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In the run-up to CompanyWeek‘s six-year anniversary in September, I’m looking back at columns I wrote to see what I got right, and wrong, along the way.

What I got right

  • Manufacturing’s comeback:

Announcing the launch of CompanyWeek in August 2013, I wrote, “Manufacturing’s at the center of profound change in the economy.”

This past June, the Economic Innovation Group (EIG) released a new study, MANUFACTURING’S REAL BUT PATCHWORK REBOUND, stating:

“Manufacturing’s rebound is real. After shedding manufacturing jobs relentlessly between the turn of the century and the Great Recession, the United States has now added them in 82 out of 100 months since January 2011. Such a turnaround is remarkable in a sector in which employment shrunk by nearly one-third between 2000 and 2010.”

  • On the Western U.S. becoming a new model for American manufacturing:

Also in August 2013, I forecast the West would be at the center of America’s manufacturing comeback in a column entitled: Made in America: Will a MFG revival transform the Rocky Mountain economy?

“Colorado will be a case-study in how a region will leverage new manufacturing to great gain, or miss-out to communities that harness the favorable winds pushing along goods-producing businesses.”

The EIG report confirmed the trend. First, The New York Times referenced the new report in a surprising conclusion: “The manufacturing sector is steadily realigning after the shocks of the early part of this century,” said John Lettieri, president of EIG. . . . “The West is emerging as a new growth engine for the sector.”

The report provided more detail:

“The average western county added manufacturing jobs at an annual rate of 3.9% from December 2016 to December 2018, the highest in the country. That figure also represented a sizable acceleration over the 1.7% annual growth rate registered in the typical western county from December 2012 to December 2016.” And, “nearly one-quarter of U.S. counties (24%) now contain more manufacturing jobs than they did at the turn of the century. In the West, the figure is 42%.”

  • On manufacturing’s new industrial character:

In 2017, I bemoaned a national report card on manufacturing in this column, Rust Belt bias flunks the 2017 Manufacturing and Logistics National Report Card: “Sector diversification is manufacturing’s new calling card. Want to begin to solve manufacturing’s labor problem? Showcase its growth industries — beer and distilling, natural and organic food, technology-fueled fabrication in aerospace, and the outdoor industry — that appeal to a new generation. They’re the growth industries of the manufacturing economies in the West.”

Today EIG agrees:

“Most manufacturing subsectors saw modest to healthy growth in jobs from December 2016 to December 2018. A veritable boom was underway in food and beverage manufacturing, which added 84,400 jobs to the economy from December 2016 to December 2018. Beer, wines, and spirits accounted for much of that growth, adding 29,700 jobs and growing by 22% over two years.”

What I got wrong

  • Outdoor industry brands moving production back onshore

I’ve forecast along the way that outdoor industry brands would be leaders in moving production back onshore. In a column, Moving Outdoor Retailer out of Utah carries risk for OIA, I said, “Brands are highly motivated to shorten supply chains and make products closer to where they’re designed and sold. Hap Klopp, founder of The North Face, outlined his reasons last month. Under Armour’s Kevin Plank told CNBC, ‘We should be bringing jobs back, not just to America, but tightening supply chains all over the world. We have the ability to do it better. It’s time for all of us to make an investment.’ It’s why manufacturing will get its jobs back here in the U.S.”

I overestimated their enthusiasm, and the difficulty in developing a U.S. supply chain that supports apparel and accessory manufacturing. Just two weeks after first posting this column, Utah-based Black Diamond stunned employees by announcing 70 layoffs as part of plans to move manufacturing back offshore, reversing a decision made in 2015 to reshore manufacturing to Utah. I would have preferred to have been wrong, again.

Similarly, in “Five reasons why manufacturing jobs are coming back,” I was 20 percent wrong. I’m still convinced that, “Brands want to make more stuff here…in response to consumers, and for other compelling reasons including cost, access to technology, brand integrity, and social responsibility, the trend in product management is for companies to shorten supply chains in support of domestic manufacturing.” I didn’t forecast tariffs would be the biggest motivator.

  • Enthusiasm for the cannabis economy

In December 2017, in a column entitled, A Trump presidency unnerves cannabis manufacturers. Is it time to change tactics?, I wrote, “It still may be a bridge too far for some, but business and policy leaders looking closely will determine that Colorado’s cannabis experiment is today an engine of conventional economic growth.”

Wrong. Cannabis industry continues to suffer an “enthusiasm gap” from business leaders and economic development pros. It’s a mistake, but it’s real. Cannabis is no more an existential threat to conventional business than craft brewing was in its infancy. Billion-dollar industries can’t live in the shadows.

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As for new forecasts, here are three major trends currently reshaping manufacturing, trends we’ll write about and that will inform most all our initiatives. Ignore at your risk.

  1. Contract manufacturers rule: Not only have contract manufacturers prospered the past five or six years, growth has occurred industries, a trend we’ll see accelerate. CMOs hold the keys to more domestic manufacturing.
  2. Design-centered Manufacturing: Industrial designers can now control their means of production. Stand by for a wave of innovative products designed for domestic manufacturing as the promise of additive manufacturing and other enabling technologies becomes reality. It’s one reason local contract manufacturers, flashing new tools and technologies, will thrive.
  3. Manufacturing’s brand will evolve to reflect the automation and technology that’s transforming it. See above.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.