I reached out to several manufacturers last week to ask about COVID-19-related disruptions and assess — to the extent we can at this early stage — any long-term effects on operations or supply chains that support regional manufacturing.

Companies managing global operations have been dealing with COVID-19 fallout for many weeks. A redundant or diverse network of suppliers is serving companies well.

Doug Campbell, CEO at battery innovator Solid Power in Louisville, describes a challenging international landscape. “Our partners in Europe vary in terms of their extent of shutdown: Partners in France and Italy are in total shutdown although still taking telecons from home. In contrast, our partners in Germany are partially operational.”

“Asia is quite a bit different,” Campbell continues. “Our partners in Korea appear to be getting back to business as usual and the worst seems to be behind them. Japan appeared to be in a similar situation but I learned from a call last night that the number of positive cases is starting to rise again and so the Japanese government is heavily encouraging folks to stay home again although it’s questionable how strongly they can enforce it.”

The domestic situation is similar. “Partners here in the U.S. are either in partial or complete shutdown. I had a call with one in Detroit earlier today who said things were pretty bad there and the governor announced they are at peak infection next week,” Campbell notes. “We’re lucky in terms of having such a diverse, international supply chain, as things might be bad in one area but not so bad in another.”

Kelly Watters, co-founder of Telluride apparel brand Western Rise, agrees. “We have a very diverse global supply chain, which is more important now than ever, ” she says. “One of the other areas we will be focusing on is a factory’s ability to respond to a changing environment quickly. For example, we are working with our pants factory in Los Angeles to modify the production lines to make masks, and several of our international factories on new shift policies to allow for more social distancing while keeping production going.”

Companies sourcing from China have been managing a raft of issues, some of which existed before COVID-19, including tariffs. Mike Henderson with Colorado-based lean consulting firm FlowVision canceled a trip there in February, but describes chaotic supply-chain logistics. “Through the third week of March, China couldn’t produce to meet customer demand due to COVID-19,” he says. “They can now produce at capacity and are filling up the shipping containers they have and putting them into transit.”

U.S.-bound products run headlong into the crisis here. “The containers in the U.S. are not being unloaded and returned at the rate needed, so there is now a shortage of containers returning to China,” notes Henderson. “Since China is building to eliminate the backlog, they will be running out of containers to put the material in and in a month shipments will slow down again. To top it off, in July people will want to start filling their shelves with products for Christmas.”

Lakewood-based Encore Electric has some exposure to shipping challenges, says Vice President Jeff Thompson. “I am concerned about light fixtures and fire alarm supplies, which largely come from China,” he says.

Logjams are developing in the U.S. as well. “Some U.S. suppliers have reduced their workforces, slowing production and distribution, including the New York docks,” Thompson notes. “Others have suspended manufacturing and shipments due to shelter-in-place directives from state governors. However, most manufacturers we deal with are currently on track, but they are issuing warnings to expect potential delivery issues in the future.”

It’s enough to encourage brands and companies to manufacture or source more locally — where possible. A supply chain that would support wholesale reshoring here doesn’t exist today. Will COVID-19, like tariffs and IP theft before, be a spark?

Mark Inboden, president at control-panel maker UCEC in Arvada, speculates it might. “Businesses will rethink their sourcing strategy. They must assess the delivery risk from each supplier,” he says. “This is a great opportunity to rely on strong local and regional partners.”

Inboden believes there will be more businesses looking at opportunities to reshore overseas sources. Post-crisis, he forecasts, “Chances are that businesses that survived COVID-19 have been establishing new supply chain resources, and those should be their new “go-to” partners and not forgotten. Businesses need to develop new supply chain partners for worst case scenarios, and local partners will be paramount.”

For John Morse and Englewood-based Dubach Tool Company, Colorado’s reputation as a manufacturing backwater, deserved or not, remains a barrier. “Colorado is interesting in that in spite of a healthy manufacturing community, I feel we are not perceived as “real” by the rest of the country.” he says. “I suppose this is true when you hold us up to regions that have a lot of heavy industry. Still, we serve medical, aerospace, food processing and others, so we are not going away. The economic aspect of this crisis is going to leave some wreckage in its wake, so we will have to wait until it has passed to see what we have left.”

But for Morse and Dubach Tool Co., one the region’s few tool and die manufacturers, business is still good. “For now, we are still working,” he says, modestly.

Few companies have been thrust front and center into the COVID-19-related crisis, with U.S.-made equipment, as Colorado Springs-based dpiX. CEO Frank Caris describes dpiX as “a single point of failure in the U.S. to keep the complete supply of x-ray devices going,” the very definition of mission critical in today’s crisis.

Caris says that the company is seeing a big spike in demand for its portable X-ray sensors and detectors made by dPix’s partners from permanent and temporary hospitals, due in part to the ability to scale to a facility’s need.

He is clearly proud of his company’s role in battling the pandemic — and its U.S. roots. “It shows that we can do all of this in the U.S.A. — and we should keep it that way,” he says, alluding to challenges in America’s manufacturing ecosystem.

In particular, Caris says he worries about offshore competitors and the lack of industrial policy that would protect, at some level, key American manufacturing industries against unfair competition. “I think as a country we need to continue defining what critical manufacturing and supply chains we demand to be in this country,” he says. “There is not a single soul who is actively promoting outsourcing critical military products to non-allied countries. We don’t build our aircraft carriers overseas.”

He adds, “[T]he current crisis has exposed vulnerabilities underneath the surface. Look upon it like an unexpected X-ray picture that has now been shared with the American people. . . . It’s up to all of us to define the best way forward.”

For Colorado and the region, the way forward may already be laid out in front of us. As Dubach Tool’s Morse points out, the state and region boast a diverse industrial character. As COVID-19 refocuses attention on the manufacturing supply chain, a first step for companies is to redouble efforts to work with more local providers.

Our list of possible new partners is growing. Let’s maintain the momentum.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com to connect with these manufacturers and others.

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Among America’s growth industries, none seem to value the importance of company culture more than the Outdoor Industry. OI companies and the trade groups that support them — including the Outdoor Industry Association, its powerful national mouthpiece — are today leaders in sustainability, climate and environmental awareness, diversity, employee empowerment and other progressive values. It’s commendable stuff.

Yet a challenge for many OI companies is ensuring these admirable tenets extend across supply chains that stretch from here to Asia. Most domestic OI companies make things, and most of them make things offshore. Materials, labor, expertise — the industry’s manufacturing supply chain — have largely been offshored.

OI brands have become master supply-chain managers, if not domestic manufacturers. In the best cases, owners and operators have developed relationships with offshore factories that extend a brand’s core values, manifest in how materials are sourced, products are made, and employees are managed.

But let’s be real. Qualities that define a company can be lost along the way, stopped cold by distance, the vastness of the Asian production ecosystem, and cultural differences. More, supply chains stretching from here to Asia are highly unsustainable compared to a domestic counterpart. And the machinations of designing and prototyping products locally, only to marry them up with an overseas factory to refine the prototype and manufacture, present ongoing challenges.

Yes, factories in Asia are modern and efficient: how else to explain the fantastic products and high level of quality emanating from most American OI brands? And many companies manage, over time, to find production partners that become reasonable extensions of the U.S. company they build for. (For an example, read our Krimson Klover feature from last week.)

But they’re Asian companies! OI’s investment in Chinese human capital and infrastructure alone, is staggering. That U.S. corporations aren’t making those investments in the U.S. manufacturing commons is the irreconcilable piece of the brand extension game. It’s also the most underreported story in the outdoor industry.

It’s easy to understand why: The biggest and most outspoken brands in the outdoor world are investing millions in materials, workforce development, technology, and machinery in Asia. It’s not a story that VF Corporation’s PR team is rushing to get published.

The Industry’s trade groups follow along. Protecting public lands in Utah was a priority for OIA. Adding substantial manufacturing and production content to the educational track of Outdoor Retailer? Not so much. Developing a 21st-century U.S. production ecosystem doesn’t seem a priority for its largest sponsors and stakeholders. It would shine light on an issue that OI leadership would prefer remain behind the Asian production wall.

This then, is OI’s crossroads as the decade begins. Yes, brands like Patagonia, Under Armour, even Nike, are investing in U.S. factories. It’s not enough. Until domestic production is a central part of the industry ethos, OI companies will continue to manage bifurcated organizations where the brand promises a company lives by matter to only parts of the business.

It’s no less than an existential decision, a “Boeing moment”. Last year, The Atlantic‘s Jerry Useem summed up Boeing’s current crisis by citing a single event: the decision in May of 2001 to move of 500 executives to Chicago away from 30,000 engineers in Washington. “The present 737 Max disaster can be traced back,” Useem said, “to the moment Boeing’s leadership decided to divorce itself from the firm’s own culture.”

Today, some OI companies have divorced themselves from the culture their customers value. In 2020, we’ll focus a lens on companies choosing the road often less traveled; companies working hard to ensure that brand promises are best kept by shortening a supply chain, by investing in local talent and local entrepreneurs.

It’s the least we can do to advance their cause, and that of American manufacturing. Today they’re one and the same.

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

As we look back this week at a great 2019, it’s also time to forecast the storylines shaping 2020 manufacturing in Colorado and the region.

1. Food’s undersized brand gets a lift

Before publishing last week’s manufacturing employment report, I asked a handful of respected manufacturing executives and development officials to name Colorado’s largest manufacturing industry employer. One got it right.

Colorado’s food sector may be underappreciated, but its success can’t be taken for granted. For example world-class growers along the Arkansas River plains, in verdant Western Slope enclaves, and emerging cannabis plays across the state would benefit from a more cohesive and robust production ecosystem and supply chain widely available along the Front Range.

Developing a Colorado food brand that fuels interest and collaboration statewide seems a priority. Do we even know how to do that?

2. Technology’s oversized reputation gets an overhaul

Here’s a stunning factoid from the Wall Street Journal about the U.S. technology sector that also puts Colorado’s manufacturing opportunity in perspective.

Just five metropolitan areas—Boston; San Diego; San Francisco; Seattle; and San Jose, Calif.—accounted for 90% of all U.S. high-tech job growth between 2005 to 2017, according to the research by think-tank scholars Mark Muro and Jacob Whiton of the Brookings Institution and Rob Atkinson of the Information Technology and Innovation Foundation.

The report also mentions technology’s next tier. No Colorado city is part of that group, either. Boise, Idaho; Provo, Utah; and Madison, Wisconsin, are, and while they may be up and coming tech outposts, they sure ain’t Denver when it comes to overall economic heft.

Colorado’s tech ecosystem may be worth the considerable hype and attention we seem to shower on it. But tech-informed manufacturing is a blue ocean opportunity that technology isn’t. Ergo:

3. Will Colorado’s global manufacturing brands engage more locally?

Big companies comprise a small percentage of manufacturing here, but also lead the industry in technology and automation. But for every Woodward, RK, and OtterBox, big manufacturers investing in growing the local production ecosystem, many others seem uninterested.

Colorado could be an epicenter for outdoor industry manufacturing. A new technology-inspired production paradigm is waiting to be championed by any of a dozen global brands that call the Rocky Mountains home. Innovation percolates in small companies — ask Molson Coors or any number of industrial food brands investing in Colorado startups — but manufacturing needs its bellwether brands to reach down and engage with best practices, experience, and talent.

4. Industrial cannabis is here. Like, right here.

In the second half of 2019 we profiled three cannabis manufacturing companies that combined, employed 400 people — Folium Biosciences (220), Mile High Labs (140), and Paragon Processing (40). Include Colorado’s largest self-manufacturing brands like incredibles and Wana Brands and dozens more that employ thousands, and it’s clear that cannabis is a workforce tsunami.

Manufacturers and the associations that support them have been unenthusiastic or downright hostile to cannabis industry. We hope this changes in 2020. For one, the kids working at Colorado’s cannabis companies would benefit from understanding a career pathway that would keep them in manufacturing when they’re ready to move on if not up.

Last year at this time I wrote that manufacturing is codependent, that manufacturers must come together to solve their challenges. I also said that collaboration is “a work in progress.” Let’s ensure the epicenter of industrial cannabis, and the human capital that’s catalyzed growth, stays here.

5. It won’t always be this easy.

America’s longest peacetime expansion will end, if not in 2020, then sometime soon. What happens when a growth economy normalizes?

For starters, business development becomes mission-critical. In the race for new business, Colorado’s top industries are highly competitive nationally:

Top Gainers (% employment gain in 2018, excludes sectors with less than 50 jobs):

Chemical manufacturing +10.7% (6th fastest-growing sector nationally)

Primary metal manufacturing +5.46% (12th nationally)

Machinery manufacturing +4.5% (19th nationally)

Beverage manufacturing + 4.1% (31st nationally)

Food manufacturing +2.2% (13th nationally)

Our collective challenge is to ensure these industries remain best-in-class as companies work harder to land new contracts when the going gets tougher.

Good luck in 2020!

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