Managing growth, workforce were the top challenges facing manufacturers in Q4 2018

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Each week, company executives outline challenges, opportunities, and needs in interviews with CompanyWeek writers. Here’s a summary of data from profiles published the final quarter of 2018.

In Q4 2018, we published 48 in-depth profiles:

Primary Industry: Oct.-Dec. 2018

Bioscience and Medical 4
Brewing and Distilling 7
Built Environment 3
Cannabis 1
Consumer and Lifestyle 11
Contract Manufacturing 2
Electronics and Aerospace 2
Energy and Environment 1
Food and Beverage 6
Industrial and Equipment 5
Supply Chain 6

Total 48

The top challenge for manufacturing companies continues to be managing growth. However, workforce has jumped back up to the #2 spot (as it was in the first half of the year). In Q3, competition had secured the #2 ranking.

Challenges: Oct.-Dec. 2018

Managing Growth 40%

Workforce 25%

Government Regs 17%

Market Awareness 13%

Competition 10%

Location 10%

Workforce/Labor/New Employees, real estate/space and finance/funding continue to be the top three needs for companies profiled (same order as Q3). Efficiency had made an appearance in the top five in the first half of 2018, and new suppliers/service partners ranked in the top five in Q3, neither of which appeared in the Q4 top five.

Business Needs
Workforce/Labor/New Employees 40%
Real Estate/Space 23%
Finance/Funding 19%
Marketing 17%
Equipment 10%
New Customers 10%

In two CEO roundtables I hosted late in the year, executives also expressed concerns about promises made by incoming Governors Polis and Newsom during the campaign. A fear is that business may be asked to carry an additional regulatory or financial burden to fund new social programs.

And tariffs continue to be a topic of conversation. Manufacturers I asked last year seemed to be evenly split on the issue. We’ll be convening more CEO roundtables to discuss this and other issues throughout the year. More on the topic later.

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

For a year’s worth of data, or to receive updates from CompanyWeek profiles on a real-time basis, subscribe to our All Access+Data package, available at discounted rates through January. Click here>>.

The Farm Bill passed and hemp is legal, right? Not quite. Here’s what’s next.

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If you’re following the cannabis business, you know the 2018 Farm Bill creates an open and legal marketplace for hemp and hemp-derived products like CBD. Farmers can grow hemp, manufacturers can refine the crop into any number of new products, and cannabis businesses can act like real companies. They can operate between states, bank, borrow, insure, invest, and develop brands like any other business.

Just not yet. The Farm Bill requires each state to submit a plan to the USDA for approval signaling, among others, that its ready and capable to implement the new regulatory framework spelled out the legislation. Colorado, California, Oregon, Washington — none have yet submitted their plan, in part because the USDA hasn’t given the states much guidance.

For now, it’s business as usual, according to Duane Sinning, division director for the Division of Plant Industry at the Colorado Department of Agriculture.

“Colorado continues to operate under the current plan, the ‘old rules,'” explains Sinning, even as work has begun on the USDA submittal. “We’ve been in discussions about testing protocols and other details in the Farm Bill.”

Sinning says he is confident the state will lead, and not follow, throughout the process. “Our deliberative approach to the development of a regulatory environment has been successful and a model for other states, in part because we’ve utilized our Industrial Hemp Advisory Committee and input from our various stakeholders. And already discussions are happening between states so conflict doesn’t develop,” he adds.

As for a timeline, much will depend on the feds. “Without any guidance, everybody is kind of operating in the dark,” Sinning says. “But I’d guess states will be submitting plans this summer and fall, including us. Depending on the statutory requirements, some legislatures won’t convene until the follow year, so it may be a year from this summer before the new rules are in place.”

Among the new regs that Sinning and others will be dealing with (thanks to Hemp Industry Daily):

  • THC testing procedures, including inspections done at least annually, as hemp must contain no more than 0.3 percent THC on a dry-weight basis
  • Bookkeeping procedures to keep track of land approved for hemp cultivation
  • Plans for “effective disposal” of hemp plants with too much THC

“We hope we’re not in the business of fingerprinting senior property owners,” Sinning jokes, as new rules to track land and crop use take effect.

Still, the game has changed. As Sinning surmises, hemp “is now just another agricultural crop.” And U.S. farmers are really good at growing things. Product development will explode, not only in CBD but also in other consumer markets that turn to hemp. We’ll see the end-to-end professionalization of the hemp supply chain, from farming to manufacturing to logistics and brand development.

And service. Cannabis companies have been able to work around the lack of banking, of insurance, of capital, of the expertise that resides in companies on the sidelines. But with a clear path to a legal marketplace, more service companies will be arriving on the scene, with increasingly capable offerings.

But until the USDA approves Colorado’s plan, and other states, a company’s brand and reputation may pivot on how well-informed, or well-intentioned, local authorities are. The landscape is still confusing. Hemp and marijuana are both cannabis, but only one will be federally legal in the coming months. Sinning says Colorado officials are busy providing as much information as they can, like “giving law enforcement information on the location of particular crops,” to help avoid uncomfortable confrontations. Dustups that might result in the kind of bad press that so many companies have been intent on avoiding.

We’ll provide updates to help inform industry and service along the way.

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

Best of 2018 California Manufacturing

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CompanyWeek editor Eric Peterson’s must-read Best of Manufacturing 2018 summary this week aptly describes the emerging maker economy throughout the western U.S.:

“The connective tissue is ingenuity. Sometimes, it’s simply about efficiency in the face of a flood of imports. Other times, it’s about rethinking an entire category from the ground up. And in rare cases, it’s about creating something nobody has ever seen before.”

California’s sector looks up at no other state in the Union, so it’s simply left to me to compile a list from this year’s coverage that reflect what Peterson articulates. We featured nearly 80 California manufacturers this year, all exemplary in their own right. Here’s a short list of companies that represent the group with distinction.

URB-E: Cycle and scooter manufacturing has largely been sent offshore, but a vanguard of designers, engineers and tinkerers are embracing domestic builds, and the results are spectacular. The spectrum of work is wide, from full-on composite frame manufacturing to assembly only, but celebrating any or all the fabricating and wrench-turning seems equally appropriate. Grant Delgatty’s head-turning scooters are only slightly more compelling than the cool “factory” that churns them out.

Imperial Commercial Cooking Equipment

Who doesn’t love a top-of-the-line appliance made in the U.S. and not, well, anywhere else? At one point brands like Whirlpool and Maytag were poster children for American industrial might and aptitude. I couldn’t get enough of Peter Spenuzza’s family business from the time the story was filed.

Cayson Design and Betabrand

sewer at Betabrand

technician at Cayson Design

Apparel manufacturing is tethered to cut-and-sew production, a process that looks much like it did a half-century ago. America stopped training or recruiting qualified labor about the same time, so local brands that manage to develop and sustain cut-and-sew staffs are truly remarkable businesses. Cayson Designs in San Francisco is one such company.

It’s why the sector also begs for innovation in any form, and Betabrand’s unique crowd-based model of prototype to small batch to volume production has catapulted the company to substantial size and influence.

Deering Banjo Company

Manufacturing is at times industry and art, and when family generations manage to sustain the combination in musical instruments like a Deering Banjo, the results demand our respect and awe. That Gregg Deering manages to prosper in the face of offshore competition is testament to his craftmanship and our willingness to pay more for quality and a rich story.

Vortex Engineering

I’m a sucker for bending, cutting, and welding, dating I’m sure to my grandfather’s shop in central Kansas. He welded it all, from farm implements to truck axles. Today’s job shops are at once far removed from Comfort Garage, and not. Vortex Engineering is one of a brilliant new cadre of California contract manufacturers finding a second wind in OEM supply chains like Northrop Grumman’s that demand lower tolerances and faster delivery. But Michael Bice’s shop also earns its stripes by handling difficult work worthy of a true throwback. Cue the sparks.

Jan Al Cases

The story. The rock stars. The craftmanship. The quality. I was enthralled from the first read. As you will be.

Soldering not software: Why Governor Newsom must rediscover California manufacturing

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The popular narrative as Gavin Newsom ascends to lead California is that the worst is ahead, that a laundry list of challenges will develop into full-blown crisis, a red-hot economy will cool, and campaign promises will bankrupt the state and sabotage his tenure.

That’s just the start. Has any newly elected official suffered from such stilted expectations?

Governor Newsom will be wise to focus on those things he can control, and despite naysayers, California’s still an economic beast, a bellwether by any estimate. The pieces are in place for Newsom to do great things. If he can pull the right levers, California can be ground zero for an authentic populist economic movement.

This includes the prospect of California’s wide and deep manufacturing economy catalyzing a period of growth, of innovation and expansion. Consider:

  • California manufacturing is today on the front lines of national trends transforming the sector, from consumer-driven growth in new and dynamic industries, to innovation that’s keeping more work in the U.S. It’s a sector today alive with possibilities, across multiple industries.
  • Its innovators are young entrepreneurs who value where things are made, and by whom, across multiple high-growth industries. Maker industries like natural food, craft brewing and distilling, and cannabis are shaping a regional and national tsunami of new products. Brands in outdoor industry prefer to keep production here, if possible, or bring it home.
  • Manufacturing has always been an R&D catalyst, and California’s R&D ecosystem leads the nation. Yes, software development and medical research and programming brilliance are California calling cards. But so are e-vehicles and advanced robotics. The walls between design, engineering, and manufacturing are tumbling down. We’re finished designing products with no preference as to where they’ll be manufactured. It follows that products engineered and designed in California should be manufactured here.
  • The state’s agricultural and energy assets provide the basis for a new era of rural redevelopment — and manufacturing’s at the center of plans. Ag-tech is a spectrum of products made in California that enable and fuel growth in California food brands, in food manufacturing, in R&D. The same closed-loop ecosystem drives energy and energy manufacturing.

Governor Newsom can be the first to connect the dots, to reimagine manufacturing and its role in California’s future. In doing so, the state would emerge a model, not a punchline.

Here’s hoping Mr. Newsom seizes the moment.

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

Here’s why the Colorado Manufacturing Awards take on deeper meaning in 2019

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It’s interesting to watch the shine come off technology’s bellwether brands in the New Year and speculate whether manufacturing will follow suit. Last week’s whipsaw stock market sent mixed messages — as did a weaker-than-expected ISM report on December manufacturing.

Manufacturing advocates who take ISM with a grain of salt were rewarded by a strong jobs report. But even Forbes manufacturing columnist Marco Annunziata, who got it right with “U.S. Manufacturing Can Take The Punches – It Is Stronger Than You Think,” misses a key point: Manufacturing’s strength is as much a result of industry diversity as “innovations in manufacturing technologies.”

We’ve witnessed this firsthand, and it’s one reason the Colorado Manufacturing Awards has become such a powerful standalone event, and a metaphor for a sector in transition. Here’s how:

  • Manufacturing’s high-growth sectors are in the surprise industries we’ve followed closely the past five years, and food and beverage lead the way. This year three Awards categories will showcase Colorado’s dynamic industries:
    • Outstanding Craft Brewer
    • Outstanding Craft Distiller
    • Outstanding Food Brand/Co-packer

It’s worth a reminder that the food is the fastest growing manufacturing sector in Colorado. It’s an embarrassment of riches we’ll again showcase.

  • For the first time, cannabis manufacturers will have a seat at the Awards table. The CMAs will recognize the state’s maturing industry in the Outstanding Cannabis Manufacturer category. It’s time, with emphasis provided by the 2018 Farm Bill. Hemp cultivation and product manufacturing is today legal at the federal and state level. If you’re not working with or selling services to cannabis businesses today, you will be. (Factoid: Hemp is cannabis sativa).
  • The core strength of traditional manufacturing in Colorado will again be showcased from bellwether industries:
    • Bioscience & Medical Manufacturer of the Year
    • Industrial & Equipment Manufacturer of the Year
    • Electronics & Aerospace Manufacturer of the Year
    • Energy Manufacturer of the Year
    • Builder/Construction Company of the Year
  • Contract manufacturing has always enjoyed a special place at CompanyWeek, and we’re celebrating the category this year by showcasing key outcomes manifest in the region’s job shops. Companies here have been asked to do so much to stay competitive — by OEMs, by employees, by skeptical media. We’re confident that finalists and a winner from Colorado’s sector are world-class operators — much like last year’s winner. We’re fixin’ to find out.
  • We profiled more Colorado consumer manufacturers in 2018 than those from any industry sector, and the 2019 Awards will be well-represented by two categories that underscore the promise of both current and future consumer manufacturers:
    • Outstanding Outdoor Industry Brand
    • Outstanding Consumer & Lifestyle Brand

The diversity of the CMAs is also reflected in the criteria developed to recognize companies. We’ll look at business through the industry lens for each category.

As the year gets underway, the best way to celebrate manufacturing is to acknowledge the accomplishments of companies from across the spectrum of industries transforming the sector. It’s why the 2019 CMAs hold special meaning.

—

View the criteria here and nominate your company!

We’ll report on the process along the way, including features on all the finalists, and gather to celebrate them all along with alumni from past years. And we’ll convene April 4 in Denver to announce winners and celebrate manufacturing. Grab a seat at the Awards event and contact me or Katie Keating with questions.

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

Best of Manufacturing 2018: A short list with outsized influence

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CompanyWeek published 236 in-depth profiles of manufacturing companies in 2018, an enlightening portrayal of industry and economy across Colorado and the western U.S.

Here’s an industry breakdown (some companies are listed in multiple industries):

Industry

Profiles

Bioscience and Medical

20

Brewing and Distilling

44

Built Environment

24

Cannabis

9

Consumer and Lifestyle

61

Contract Manufacturing

42

Electronics and Aerospace

22

Energy and Environment

7

Food and Beverage

37

Industrial and Equipment

38

Supply Chain

39

The collection defies abbreviation, but companies on my short list promise to capture the imagination of a generation of buyers and employees and the communities where they reside. They’re changing the face of modern manufacturing.

Spyderco

I’m a sucker for good old-fashioned cutting, bending, and welding. It’s a granite-like foundation for every manufacturing era, including this one. When we profile companies where employees’ skill sets would span generations, I’m hooked. Spyderco’s blades fit the bill.

Manes Machine

A top supplier to Boeing, Bruce Page is investing in automation to stay competitive. One outcome of automation has been a reset of workforce needs away from harder-to-find, multi-year machine operators to more of a technical engineer-operator.

Manes is the tip of the spear, a leader in what is otherwise an underappreciated but uber-capable collection of contract manufacturers throughout the West.

Cayson Designs and Betabrand

Apparel manufacturing is tethered to cut-and-sew production, a process that looks and feels much like it did a half-century ago. America stopped training or recruiting qualified labor about the same time, so local brands that manage to develop and sustain cut-and-sew staffs are truly remarkable businesses. Cayson Designs in San Francisco is one such company.

It’s why the sector also begs for innovation in any form, and Betabrand’s unique crowd-based model of prototype to small batch to volume production has catapulted the company to substantial size and influence.

NuVue Pharma

Colorado’s business community has been slow to warm up to it’s homegrown cannabis industry. Malik Hasan and NuVue Pharma lead a cadre of manufacturers that will change the perception of the region’s hemp and marijuana industry.

Hasan’s NuVue is letting science do the talking, and where his R&D will lead may change our recalcitrant views and everything else about the business. It’s easy to envision new medicine and tailored wellness products emanating from NuVue’s operations, products that also relieve us from Big Pharma’s unhealthy stranglehold.

Cusa Tea

We profiled nearly 40 food and beverage companies in 2018 (not including brewers and distillers). It’s an embarrassment of riches if you’re a fan of innovation and more, of leaders transforming staid industries into vital new sectors.

I was drawn to one company that encapsulates all of these attributes except local manufacturing. Jim Lamancusa’s lightbulb moment may have been on a camping trip or outdoor excursion, one of a hundred we’ve all enjoyed as denizens of the West, but followed through to tip-over an entire category with science, entrepreneurship, and determination. Not to mention an aversion for coffee.

Tailwind Nutrition

One notable southwest Colorado company is manufacturing locally as they borrow technology from local brewing cousins and play to the active consumers in the region. Jennifer and Jeff Vierling’s growing company is just one of a wave of brands emerging or locating on Colorado’s Western Slope, an up-and-coming outdoor industry juggernaut.

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

Also VIEW Editor’s Choice: Best Profiles of 2018>>

A thriving sector, divided: Manufacturing’s tenuous hold as 2018 winds down

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Our “Best of Manufacturing 2018” coverage begins next week in our last issue of year. It’s a beginning and not an end as we also open nominations for the fifth annual Colorado Manufacturing Awards this month that culminate April 4, 2019, when we announce winners.

We’ll talk plenty about the CMAs in the coming weeks. But in these final days of 2018, and before we reveal the companies that left us impressed, surprised, and in awe, here’s a year-end observation about the state of manufacturing in Colorado and the western U.S., through the lens of 236 company profiles and nearly 100 in-person interviews at executive roundtables: Its differences define it and make it great.

Here’s another: Its challenges are equally formidable, and unless manufacturing comes together to solve problems like workforce development, we may be at high point. It’s a pivotal moment.

It’s no exaggeration to say that what’s happening on the shop floors of manufacturers in the West is revolutionary. We read about it every week. Here, manufacturing is shaped by progressive consumers and the tech-fueled R&D ecosystems of the region. It’s about local food production and small-scale contract manufacturing. It’s about OEM supply chains, not OEMs. It’s about emerging markets in new consumer product categories, and companies challenging conventional wisdom relating to where and how products are made. It’s a dizzying mix of innovation and commerce. It’s a compelling story that’s pushing manufacturing into the mainstream economic conversation in the West.

Manufacturing’s different look here also creates challenges. Our understanding of whether manufacturing is important is shaped by other places, other regions with rich industrial legacies. Manufacturing in the Midwest is a way of life, a powerful, singular economic force. In Indiana, Ohio, and Michigan, expectations are that manufacturing should comprise 15 to 20 percent of employment and an even higher percentage of GDP. When they struggle to do that, like now, communities teeter on an edge. And issues like GM moving production to Mexico or China become outsized and enormously important.

Manufacturing comprises about 7 percent of employment in Colorado, all industries combined. By those measures Colorado and the West underperform. Does it matter?

In the competition for resources, for employees, for infrastructure — yes, perception matters. It’s why manufacturing’s challenge in 2019 is to overcome the differences that make it great, and unify in pursuit of the means to make it grow.

Examples are plentiful. Contract and industrial manufacturers need consumer and lifestyle brands to help change the perception of a manufacturing career. To remain local and true to their mission, food brands need a thriving, transformative ag-tech sector to power the next generation of local growers and suppliers. Innovation coursing through the aerospace and aviation supply chain is desperately needed in the outdoor industry, or manufacturing jobs for products designed here by companies located here will stay elsewhere.

As 2018 winds down, it’s accurate to write that the state of manufacturing in Colorado and the West is strong. But more than that, it’s codependent. Manufacturers can come together to solve their challenges. Let’s just say collaboration is a work in progerss.

Celebrating the best of the sector across multiple industries, as we do next week and well into 2019, is part of the solution. We look forward to telling more captivating stories of the companies leading manufacturing to the next level.

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

Small companies working overtime to automate and compete

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Ferey Feridian’s excellent column this week on the potential of automation to transform U.S. manufacturing also underscores the gap in the rate of adoption between small and large manufacturers and the “uneven rates of digitization across sectors,” referenced by Feridian that we read about each week. It’s a big deal: Ensuring that small companies are tethered to productivity gains will determine whether America’s industrial renaissance fulfills the promise Feridian and others envision.

Three regional industries provide three different case studies in how companies are keeping pace, or not.

The West’s dynamic aerospace and aviation sector is earning plaudits not just for the eye-opening accomplishments of its compelling brands, but for manufacturing prowess that’s fueling growth, much if residing in in the supply chains of SpaceX, Boeing, Lockheed, and others. Today it’s evident that contract manufacturers are responding to the promise and certainty of steady work by investing in equipment, in process upgrades and in technology. Yes, OEMs are demanding lower tolerances, tighter deadlines, and better QC, but in the five short years we’ve been profiling jobs shops throughout the West, there’s been tangible productivity improvements. CompanyWeek’s Contract Manufacturing archive speaks for itself.

In Colorado and much of the West food manufacturing is the single fastest growing manufacturing industry, driven by changing consumer tastes and a preference for all things local. The industry has largely kept pace; smaller brands have managed to self-manufacture or tap a network of co-packers to contract manufacture for them. Technology is also playing a role. Digitization is manifest throughout the sector including apps that help small brands find production facilities nearby.

But that may soon change, in large part by a growing labor crisis. In California, a booming artisanal food sector is certain to pressure the state’s ability to locate and house a sufficient manufacturing workforce. Across the West, a ravenous cannabis industry is siphoning off employees, even though many cannabis businesses already are reported as food businesses. And without meaningful immigration reform, labor markets throughout agriculture and food production will get much tighter before they get better for growers and manufacturers.

Automation is already at the center of any long-term solution in food manufacturing. Technology is migrating across industries into food, from advanced production lines to highly automated logistics and distribution solutions available to small brands. But the race is on and the stakes are high for U.S. manufacturing: Will growth in a modern and decentralized food production ecosystem keep pace as labor markets tighten? The worry isn’t that automation will replace human labor; it’s that industry won’t automate fast enough to make up for an acute labor shortage.

The potential to reshore billions of dollars of product manufacturing frames the outdoor industry opportunity, and technology and automation will determine how fast U.S. brands can repatriate production. An industry long defined by cut-and-sew production is poised for a productivity renaissance.

The wait may be long. Unlike aerospace, apparel and outdoor industry OEMs are largely resigned to maintaining operations offshore and investing in technology and automation through international partners. There are outliers. Brands like Nike, Apple, Patagonia, and GE are investing in U.S. production.

But homegrown brands are the domestic manufacturing heroes in this space, and not surprisingly, companies that would benefit most from technology-fueled productivity gains. It’s here that community players in economic development, in government, in trade and education must be more deliberate in incubating and accelerating the prospects for more domestic manufacturing. And for making technology and automation more accessible to promising companies.

Small steps. In Colorado, the Office of Economic Development and International Trade’s Advanced Industries program today includes outdoor industry and consumer product firms in the pool of grant applicants. Cities throughout the region are fostering industry clusters to better recruit and support consumer-facing brands that make things.

Manufacturing’s future is indeed bright, all the better if the sector’s well-heeled brands and community stakeholders embark on a deliberate path to push technology and automation down and sideways — to small businesses and across industries — in a bid to sustain U.S. manufacturing.

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

Manufacturing by the numbers: Takeaways from 2018 and a peek at 2019

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I’ve been fortunate to participate in CU Leeds’ excellent Colorado Business Economic Outlook the past two years, parsing manufacturing data with capable economists and business stakeholders lined up by Richard Wobbekind’s team at the Business Research Division. The 54th annual Report will be presented December 10 at the Grand Hyatt in Denver.

Here’s a first look at where manufacturing is forecast to end up in 2018 with a peek at ’19, and what the numbers say about the state of Colorado manufacturing as this incredible economic year winds down. (The primary source of the following data is the Colorado Department of Labor and Employment.)

  • Manufacturing is growing modestly in 2018 but faster than forecast in the report last year, with total employment expected to rise 2.8% by year’s end to 147,000 jobs, adjusted from a near-flat projection of 1.1%. The initial forward-looking forecast calls for 2% growth in 2019, to roughly 150,000 jobs.
  • The 2018 employment numbers are on track to be the highest since 2006, basically reaching pre-Great Recession numbers. But even at that point, manufacturing was on a long and precipitous employment fall, bottoming out in 2010 at 124,000.
  • In 2000, manufacturing sustained nearly 188,000 jobs in Colorado, fueled by a lively Computer & Electronics category (recall the technology corridor in Boulder/Broomfield) that alone supported nearly 47,000 employees. Today, Computer & Electronics is enjoying a comeback of sorts in Colorado, growing to 22,500 jobs and forecast to exceed 23,000 total jobs in 2019, second only to food manufacturing as the top manufacturing industry.
  • Readers have asked why we feature so many food and beverage companies, and growth in these industries reveals why. Food is today the single largest manufacturing industry in Colorado supporting just over 23,000 jobs. We track the sector as Food & Beverage, and total employment in those two sectors exceeds 30,000.
  • Manufacturing industries outpacing the overall sector’s steady but modest growth in 2018 include Transportation Equipment at 2.8% — a category that includes Colorado’s robust aviation and aerospace industries; Beverage and Tobacco manufacturing (not be to confused with cannabis) at 3.6%; and the aforementioned Computer & Electronics sector at 3.6%. Industries that underperformed include Non-metallic Mineral manufacturing, 1.7%; Fabricated Metals, 0.7%; and Printing & Related Services, down 1% in 2018. It seems a strong overall economy is helping print media hold on: a 1% dip seems relatively healthy given the disruptions in media.

Cannabis is the outlier. Chemical Manufacturing has jumped 9.8% to 7550 jobs and is forecast to add another 5% in 2019, growth likely attributable to cannabis manufacturing. Growth in Food Manufacturing may also be benefitting from an influx of cannabis companies.

If cannabis data seems anomalous, so too does the state of industry reporting overall, not just here but across the U.S. Is manufacturing an industry, or a sector? Are energy extraction companies manufacturers? Are companies based here yet manufacture offshore, manufacturers at all? We’ve visited these questions before. In Colorado, it’s also challenging to track apparel brands, medical device manufacturers, and aerospace companies, as employment categories aren’t always a clean fit.

Anomalies aside, the 2018 numbers tell a fascinating story. For starters, while Colorado’s manufacturing standalone contribution is relatively modest (just under $25 billion, or about 7% of state GDP), contrary to a prevalent narrative, it’s growing. Jobs were to have been replaced by automated operations by now. But as CU’s Brian Lewandowski has noted in CompanyWeek, “With the multiplier effect, direct industry activity supports a total of 441,000 jobs in the state, and contributes approximately $47 billion to state GDP.” And only this week, the Economic Development Council of Colorado pointed to a new study and suggested the state is “poised to grow its manufacturing industry.” (Also check out Oregon’s sector — today comprising 20% of the state’s GDP.)

But it’s growth industries here that hold so much promise, not only in leading employment gains, but in redefining the narrative around manufacturing. This is not your grandfather’s sector. Manufacturing today is a mix of disruptive food and beverage brands; of advanced fabrication sending satellites into orbit, fashioning electric motors, and developing the next wave of U.S.-made medical devices and bio-products; and of aspirational brands across the catch-all “Other” category in the language of economists.

It’s also a sector underpinned by a solid foundation — a cadre of welders, benders, and cutters in such high demand that RK, a regional infrastructure giant, today has 300 apprentices in its four-year program, with plans to hire them all. 300!

Underestimated, the manufacturing economy soldiers on.

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

Gov. Hickenlooper’s outdoor recreation outcomes a worthy start to an unfulfilled industry mission

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I wouldn’t be the first to say that VF Corporation‘s recent decision to move to Colorado was the culmination of one of Governor Hickenlooper’s big missions. He set out to establish his state as an international leader in the powerful new outdoor recreation space, and he’s succeeded, some would say brilliantly.

But even as we gathered last Thursday afternoon for the fifth annual Apparel & Outdoor Industry Manufacturing Summit (here’s a recap), I suggest we pump the brakes on pronouncing the governor’s tenure an unabashed Outdoor Industry success. Early in his second term, the governor traveled to the Interbike conference to announce a $100 million investment in Colorado cycling infrastructure. In the following column from 2015, I made note then of the importance of the initiative, but also cautioned that “recreation” doesn’t necessarily equate to “industry.”

There’s been important progress. That visionary brands and companies are today investing in infrastructure and programs to manufacture more of the tools and toys of OI in Colorado is heartening. We heard from several such players at the Summit in Denver.

But there’s so much more to be done. The next governor of Colorado must help global brands identify a path to bring production home. He must convince bellwether communities like Denver to get off the sidelines, to view OI manufacturing as a corollary to bike trails and ski hills. He must be an evangelist for the new trade — and personally recruit a new generation of young people to design and fabricate a wave of new OI products here in Colorado.

Well done, Governor. We hope Colorado’s next chief executive embraces your mission and develops a worthy successor, one brimming with possibilities of new industry and commerce.

—

From September 22, 2015:

There’s much to like about Gov. John Hickenlooper’s bold pronouncement at the Interbike conference last week to invest $100 million in Colorado cycling infrastructure — trails, bike lanes and interconnectivity. It’s practical and progressive and on the surface it’s a timely and well-aligned economic development strategy. Building on Colorado’s already strong national reputation as a destination for outdoor enthusiasts, Hickenlooper’s making a wise bet that ongoing leadership will translate into an economic windfall.

It’s also expensive, especially relative to money not being spent on roads and highways. But cycling enjoys bipartisan support and not every politician who complains that dollars should instead be spent on roads can stand in Sen. Randy Baumgardner’s shoes. Last year, the Republican from Hot Sulphur Springs introduced a bill to raise $3.5 billion for road projects. (It failed.) Most of Hickenlooper’s opponents have done far less to advance transportation infrastructure funding. The politics fall the governor’s way.

All that said, Hickenlooper’s bold stroke falls just short. Today, the economic benefits of cycling — or skiing, hiking, and other health and fitness industry for that matter — go beyond the number of new trails or urban bike lanes. Hickenlooper missed a chance to make a bigger splash.

A plan that truly taps the economic benefits of cycling would have included a vision to establish Colorado as the new U.S. destination for cycling industry. The seeds of an international-leading sector are here: trailblazing frame, component, clothing and cycling gear brands and entrepreneurs, lifestyle talent to employ and world-class terrain and topography including Colorado’s embarrassment of outdoor riches to support testing and training.

To be fair, the dynamics of manufacturing domestically have to this point been a significant barrier. Outliers like Hanson ski boots notwithstanding, most everything we’ve bought the past generation to ski or hike or ride or wear have been made offshore.

But that’s changing, and in a profound way. Over the past two years we’ve written about dozens of equipment, component and apparel companies making things here and in Utah. The sea change, for those paying attention, is unmistakable: The economics of making in the U.S. have shifted, and those who realize this will birth new industry clusters that transform communities.

It also requires developers to connect the dots and ironically, Hickenlooper’s own economic blueprint is a barrier. Tourism and outdoor recreation are largely disconnected from lifestyle manufacturers. A new Office of Outdoor Recreation was developed last year and could provide a bridge but it’s unclear how the office plans to marry up related sectors into effective outdoor industry clusters.

The governor’s pronouncement was timely and informed. It will benefit from a related industry push that costs less money as it challenges Colorado’s economic development orthodoxy.

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