Tariffs spur short-term export boom—cause for celebration or concern?

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Under normal circumstances, an 11 percent year-to-year increase in Colorado’s exports would be cause for great celebration. However, these are not normal circumstances.

The Trump administration’s tough stance on trade policy has incentivized manufacturers to stockpile import inputs and expedite export sales to beat the tariffs now imposed by the U.S. and reciprocated by our strongest trading partners. President Trump is already taking a bow for export increases as well as a strong U.S. economy. Some think that the numbers justify this, but many others think we should hold off to see next quarter’s numbers as a truer representation of our economy. Some levers meant to boost our economy, such as tax reform, seem to now be countered by the latest tariff increases. Now we must see if the once-settled precedent that tariffs make for a weaker economy will play out like it has in trade wars past.

I, like most, thought that the tough talk on trade was going to be more rhetoric, and I had the attitude, “This too shall pass.” When the tariffs were discussed early this year and came into play in March on aluminum and steel, and soon levied on our strongest allies, we still saw a 33 percent increase in aluminum imports and a 57 percent increase in aluminum exports out of the state. Disruptions to the market often have such unintended consequences. Yet other impacts can be as predictable as the tides, such as foreign and local investments starting to wither in Colorado.

For example, we recently learned of a Canadian manufacturer who invested in a plant and staff in Colorado but is no longer competitive in the U.S. due to the steel and aluminum tariffs. Additionally, with the on-again, off-again threat to pull out of the world’s largest trading bloc, NAFTA, U.S. policy is no longer stable enough to entice investment. Since the aforementioned company’s largest customer is PEMEX in Mexico, the operations will most certainly move south due to uncertainty about NAFTA.

Whether manufacturers stitch together a coalition of domestic producers or continue to source internationally, the tariff hike will now raise the components costs, making U.S.-made goods less competitive on the world stage and more expensive for consumers here.

Let’s take a closer look at more recent tariffs impacting Colorado goods sold in China, such as whiskey, yogurt, and cheese. Colorado companies making these products are at a disadvantage to exporters from countries enjoying more favorable trade deals with China. For example, many of the Trans-Pacific Partnership countries export to China under some form of free trade agreement. Colorado manufacturers, like the agriculture industry that recently pushed back on the $12 billion subsidy offered by the administration after the Chinese tariff retaliation, would rather have access to China’s 1.4 billion consumers and competitive manufacturing inputs.

It may seem like our booming economy can withstand compounding tariffs with our biggest trading partners, but the reverberations have yet to be recognized in the numbers. Trade is the foundation of prosperity for all sides. It is not a win-lose, zero-sum game. Instability that is caused by trade wars trickles down to investments, operational decisions, and even buying practices. For a country that touts innovation and products that are the envy of the world, let us truly evaluate the message we are sending by continuing to raise tariffs to protect our industries.

It would be a mistake to allow this short-term boost in our economy to translate into a license to move forward on auto tariffs on our allies, $200 billion of additional tariffs with China, and a sunset of NAFTA.

I ask, who are we protecting?

Karen Gerwitz is the president and CEO of the World Trade Center Denver, a trade association supporting Colorado manufacturers for more than 30 years in expanding their businesses globally. The World Trade Center Denver is an advocate for open market access. If you have questions about how trade policy may affect your business, contact their Help Desk at 833/ASK-WTCD.

Also read, Taxing imports is a stopgap. Where’s the plan? Bart Taylor, CompanyWeek.

Why we’ve developed a CompanyWeek paywall, part II

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Last week in introducing CompanyWeek‘s paywall (see below), I mentioned a new data service, a value-add to content access for subscribers.

It’s important to note what the data set is, and isn’t. We think the value of the company profiles is the story executives tell of challenges, needs, and opportunities, based on their industry and the products they make. It’s a unique window into manufacturing and to the companies, and we’ve collected and organized this information in a searchable database.

It’s also intelligence that can help savvy business partners shape services and processes that help these companies grow.

We’re not sharing contact information through this data service, but we’re confident our data can help connect the community and juice its development.

Sample more of the data here.

Part I

After nearly five years of publishing, CompanyWeek is taking the important step of charging fees for the products we make. Beginning this week we’ll ask readers to subscribe after reading three company features each month.

Important for who, you might ask? It’s a fair question.

For us, of course, and for our customers, who we think will support this new phase of our business. Asking a fair price for quality work is something our readers understand, and our commitment is to invest in product development to get even better.

It should also send a message that we’re bullish on community building. The manufacturing and supply-chain executives that read and use CompanyWeek want more — more connections, more storytelling, more data, more ideas that lead to success. Companies we write about strive to solve a problem or fill a need in the market. We do as well, and as manufacturing expands into new frontiers, we think CompanyWeek can be an even more important resource.

We’ve also waited to establish a paywall until we can also offer an important value-add service to our subscribers. As we push past 1000 total company profiles, we now have an aggregate data set that provides a important window into regional manufacturing. Companies can use the information to better understand macro trends, track industry and product activity, or identify potential business partners or local industry innovators.

We’re not the first publisher to establish a paywall. But we’re confident that even as we’re late to the game, our trade-specific information is more valuable than scores of sites that trade in news, the Internet’s content commodity. We also believe our content and data is already on par with other fee-based services that promise new contacts or connections. We connect the modern manufacturing community every week.

Casual readers will still be able to read three profiles a month for free. And our content packages are priced to provide affordable access to all of our content — manufacturing content you will find nowhere else.

Subscribers who also choose the data option will receive a monthly data set summarizing new profiles, as well as original surveys, invites to special events, discounts on services from participating underwriters, and more. As it was five years ago when we debuted, our mission is to be at the center of manufacturing community in the West.

Please contact me with questions or comments. Or subscribe to ensure access to the full sweep of CompanyWeek content and services. And in doing so, contribute to elevating the regional dialogue about U.S. manufacturing. It’s a worthy cause, and we’re champions for the sector.

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

Colorado avoids flunking Conexus’ national manufacturing scorecard, but not by much. Where to now?

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For the 10th consecutive year, Colorado was given a D for manufacturing sector health in the Conexus Indiana 2018 Manufacturing and Logistics National Report. It lands Colorado much closer to neighbor New Mexico and Alaska — both Fs — than annual favorites Indiana, Kentucky, Iowa, and Michigan, who again led a Midwest sweep of the top scores, all As.

Colorado actually slid from a D+ in 2014 to a D in 2018. Here’s how the report scored the state in the sub-categories that make up the aggregate score:

So what’s it mean?

I still think the Conexus methodology favors labor and industry statistics that underreport the reach of manufacturing’s value chain in industries like aerospace, food and beverage, and cannabis. The disconnect is obvious in the C grade Colorado gets for productivity and innovation. The state bleeds innovation. Its food sector alone has helped reimagine the national industry.

But my full-throated defense from past years seems, well, out of date. Colorado manufacturing is healthy, but it could be so much better.

If the Conexus methodology is a bit stale, others are providing more modern and relevant benchmarks that demonstrate why.

Sridhar Kota and Thomas Mahoney’s brilliant but worrisome new report, Manufacturing Prosperity, A Bold Strategy for National Wealth and Security, is one.

The report’s a must-read and pointed to three grand challenges of American manufacturing:

  1. Rebuild the “Industrial Commons,” the set of knowledge and practical skills, supply chains and production capacity, materials and equipment, and overall industrial ecosystems that enable manufacturing across multiple industries.
  2. Convert national R&D to national wealth and security. The study concluded that technologies invented here are being licensed, sold, or given away to manufacture overseas, which, in effect, is subsidizing R&D for other countries.
  3. Lead emerging industries. The United States must have a leadership position in emerging industries such as autonomous vehicles, robotics, multi-material additive manufacturing, bio-manufacturing, energy storage, advanced materials, and quantum computing, to name a few.

It’s an assessment that will resonate with manufacturers here, as do the ‘critical next steps’ cited by the report to address the challenges:

  1. Invest in transitional research and manufacturing innovation, including funding needed to develop operational prototypes, demonstrate manufacturability, and identify viable markets
  2. Encourage pilot production and scale-up. To restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

Are Kota and Mahoney’s prescriptions a better roadmap, a new benchmark, for success?

Weighed against the report’s grand challenges, certainly Colorado’s sector is still a work in progress. Colorado’s Industrial Commons — its companies, supply chains, regions, universities and colleges, production facilities, and talent — are unconnected and want for a unifying voice and vision. Financing and funding for early-stage companies, to fund pilot production and scaled operations, is difficult to secure. SMMs operate without the resources of tech and service counterparts.

But I wrote last year “the centers of modern U.S. manufacturing will tilt toward R&D-inspired, entrepreneurial economies also benefiting from an influx of talent and money.” It seems an apt description of Colorado’s economy. It’s a harder case to make for Kentucky and other perennial Conexus favorites that struggle to attract a highly educated workforce and lag in rankings of state economies, like here and here.

So what’s a fair grade?

Innovation, and an economy and lifestyle that’s a magnet for talent, should weigh more heavily in the state’s favor. Colorado is a destination for leading brands in dynamic manufacturing industries. Manufacturing is simply better here today than in 2009.

Let’s call it a C+. And next year, with progress on the steps outlined above, an end to Colorado’s Conexus conundrum.

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

Two ways robotics and automation are transforming manufacturing in our backyard

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Manufacturing automation is in the news and in our profiles. Here are two or three takeaways.

Two weeks ago, I attended the California Network of Manufacturing Innovation’s excellent conference, “Automation: The Next Generation of Lean,” at UC Irvine. Among the messages from industry professionals speaking at the event: Automation is coming, get ready or get left behind; the implementation “gap” between large companies and the small to midsized majority of manufacturers is Grand Canyon-like — but cobots and other entry-level robots provide a short-path to automation; and robots are less displacing workers than enabling companies to reallocate labor to more value-added roles.

It’s a key point, one echoed by owner Dave Kush in the Axis Robotics profile in this week’s Colorado newsletter. Contrary to the popular narrative, many robotics deployments are enabling companies to free up employees to focus on more value-add work. As one panelists said, “We don’t see a lot of jobs being lost to automation. We see a repurposing of labor into areas that are value-added to the company.”

For one, the trend is changing what a Quality Control room looks like. Today in job shops throughout manufacturing, people are inspecting hundreds and thousands of the same part, nobly searching for minor imperfections. In five years, QC will be a fully automated function for many of these same companies.

(As a cautionary tale, a slower embrace of robotics and automation challenges the notion that collectively, U.S. companies are leading a global tech surge in manufacturing. For a more sobering assessment of productivity gains in the US compared to other advanced manufacturing countries, read this eye-opening feature in Quartz.)

I wrote last week that Swiss Productions‘ Timo Lunceford is chasing opportunity by investing in equipment at the Ventura-based company — in this case new machines to more precisely fabricate the parts and pieces of bioscience and medical device manufacturing. Lunceford is driving growth by being more precise in what he currently does, innovation that’s enabling him to expand what he makes and assembles for key OEMs.

It’s a trend we see more in California manufacturing: technology, processes, and OEM interest in reimaging a domestic supply-chain — all leading to a heightened competitive capability in the sector, in contract manufacturing in particular.

I couldn’t have written a better description for what’s happening at Colorado Manufacturing Award-winning Manes Machine in Fort Collins. I stopped in to visit CEO Bruce Page last week.

Page is also investing — on a larger scale. Manes is a best-in-class aerospace manufacturer whose calling card has been large, fabricated components in aircraft like Boeing’s 787 Dreamliner.

Page is increasing Manes’ competitiveness with robotics that connect multiple machining platforms, as state-of-the-art data management tools provide constant information to operators and managers. It’s a technology and automation play that is truly transformative. Page’s advanced machines are fabricating the same parts for Boeing’s fleet of airplanes, but with increased efficiency and access to data that’s improving company profitability and competitiveness.

But there’s more: The technology is fundamentally changing Manes’ workforce equation by attracting talent that a decade ago would have bypassed heavy contract manufacturing altogether. It’s also lessening the burden of training and retaining a workforce that’s become nearly impossible to replace. It’s the new face of manufacturing. We’ll profile Manes Machine later this summer.

As I also said last week, it’s an incredible time to be involved with manufacturing.

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

California gets a C in Conexus’ annual manufacturing scorecard. Here’s a better measuring stick.

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For the 10th consecutive year the Conexus Indiana 2018 Manufacturing and Logistics National Report graded California’s manufacturing economy a C. It’s cause for less concern than states like Colorado, where a 10th straight D leaves that state closer to Conexus flunkies in New Mexico and Alaska.

At the same time, it leaves America’s largest manufacturing economy stuck in average, looking up at Conexus’ annual favorites like Indiana, Kentucky, Iowa, and Michigan, who again led a Midwest sweep of the top scores, all As.

Here’s the grid:

I’ve taken issue with Conexus before. I think the methodology favors labor and industry statistics that underreport the reach of manufacturing’s value chain in industries like aerospace, food and beverage, and, in a modern twist, cannabis. How a state like California scores a D in Sector Diversification is also confounding.

Other studies have also emerged that seem a better benchmark to evaluate the health of manufacturing economies. Much has changed since Conexus began ranking states. Sridhar Kota and Thomas Mahoney’s brilliant but worrisome new report, Manufacturing Prosperity, A Bold Strategy for National Wealth and Security, is one.

The report’s a must-read, but it pointed to three grand challenges of American manufacturing:

  1. Rebuild the “Industrial Commons,” the set of knowledge and practical skills, supply chains and production capacity, materials and equipment, and overall industrial ecosystems that enable manufacturing across multiple industries.
  2. Convert national R&D to national wealth and security. The study concluded that technologies invented here are being licensed, sold, or given away to manufacture overseas, which, in effect, is subsidizing R&D for other countries.
  3. Lead emerging industries. The United States must have a leadership position in emerging industries such as autonomous vehicles, robotics, multi-material additive manufacturing, bio-manufacturing, energy storage, advanced materials, and quantum computing, to name a few.

The report cites these critical next steps to address the challenges.

  1. Invest in translational research and manufacturing innovation. Including, funding for the translational research needed to develop operational prototypes, demonstrate manufacturability, and identify viable markets is frequently unavailable.
  2. Encourage pilot production and scale-up, to restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

Are Kota and Mahoney’s challenges and prescriptions a better benchmark for success? I’ll say yes. California manufacturers are focused on these issues.

At minimum, a new scale provides room to move up the ranking system if progress can be made, something the Conexus model seems unable to provide.

We’ll track that progress throughout the year.

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

3 companies, 3 trends: This week’s mix of profiles tells a larger story of trends shaping California manufacturing

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Last week I was fortunate to attend the California Network of Manufacturing Innovation’s conference, “Automation: The Next Generation of Lean,” at The University of California, Irvine. Among the messages from industry professionals speaking at the event: Automation is coming, get ready or get left behind; the implementation “gap” between large and small-to-midsize companies is Grand Canyon-like, but cobots and other entry-level robots provide a short-path to automation; and robots are not displacing workers, but enabling companies to reallocate labor to value-added roles.

It’s a key point, one echoed by owner Dave Kush in this week’s Axis Robotics profile. “I’ve seen people in manufacturing making the same part for 30 years,” he says. “When that repetitive task is automated, that same employee ends up learning how to program, run the robot, and oversee the process. In the end, they become more valuable to the company because they know what to do if there’s a breakdown. If they leave, they also take with them experience that makes them more valuable in the job market.”

As one conference panelist said, “We don’t see a lot of jobs being lost to automation. We see a repurposing of labor into areas that are value-added to the company.”

Even so, Axis’ Kush also sees a challenge for him and for other technology “integrators.” As ease of use improves and as the “interface” between robots and their human programmers becomes easier, integration firms will suffer. It was another theme at the CNMI event: When robots can program themselves, well, where does it end?

In Ventura, Swiss Productions GM Timo Lunceford is chasing opportunity by also investing in equipment — in this case new machines to more precisely fabricate the parts and pieces for bioscience and medical device manufacturers. Lunceford is driving growth by being more precise in what he currently does, innovation that’s enabling him to expand what he makes and assembles for key OEMs. “They’re realizing that getting five components from us, then having to assemble it themselves, is costing more than having us just ship them the completed part,” he explains.

It’s a trend we see in California manufacturing: Technology, processes, and OEM interest in retooling a domestic supply-chain are leading to a heightened competitive capability in the sector.

Finally, the seismic California cannabis manufacturing sector is transforming at a rate that will be viewed as no less than astonishing when we look back. Those who are not paying attention to the entrepreneurship and science now informing the sector may wish they had.

Dr. Jeffrey Raber’s The Werc Shop has already pivoted from testing lab into contract manufacturing, and the move has transformed the company. The staff has grown 30-fold in four years as revenue has been “doubling and doubling,” says Raber. “It’s hard to predict how big we can grow.”

It’s just another reminder that cannabis industry shares in the upside of manufacturing’s incredible resurgence, and at the same time benefits from its first-moving counterparts in the natural food and craft beverage industries. The pieces are all there: refined science and product testing, advanced production and quality control, and fast-changing product distribution and customer strategies. (Also read Eric Peterson’s important summary of challenges in California’s cannabis supply chain.)

What a time to be involved in California manufacturing.

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

Food revolution the tip of the iceberg as manufacturing industries innovate

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The Wall Street Journal‘s reporting last week on how big food is struggling to keep pace with innovation underscores the influence of the 100-plus food companies we’ve featured the past four-plus years. It also echoes the message we’ve been trumpeting at the same time: We’re witnessing a full-on food and beverage revolution.

But as much as CompanyWeek‘s food and beverage archive, or a WSJ headline like “Small Brands Are Taking a Thousand Little Bites Out of Campbell’s Business” reflect manufacturing’s new influence and character, production is often downplayed. Brands innovate, the thinking goes. Where, or how, companies choose to manufacture products is a minor detail.

I recently argued how flawed this thinking is with respect to the outdoor industry. The logic falls flat in the food business as well, if for other reasons. Without a new and innovative manufacturing ecosystem, the “thousand bites” taking a toll on Big Food would be a half-dozen, and Campbell’s would still today be the arbiter of innovation in the sector.

But it’s not, because Richard Lappen, Robbie Rech, and Manoj Venugopal and other first-moving production innovators were busy developing a world-class, scalable manufacturing ecosystem. Food brands don’t have the option to offshore production; without enhanced domestic production focused on small companies, we wouldn’t have a revolution in the food sector.

Food innovators are also looking outside the conventional supply chain for new ideas and inspiration. Josh and Christi Skow’s Canyon Bakehouse looked to aerospace innovator NFT Automation for automation solutions in their gluten-free bakery. Jennifer and Jeff Vierling at Durango’s Tailwind Nutrition leaned on Ska Fabricating, progeny of the prolific Ska Brewing, to develop production lines for Tailwind’s line of powdered drink mixes.

It’s the tip of the iceberg. Manufacturing innovations will drive product and brand development in countless other ways, much of it current technology and processes bleeding across vertical markets. Call it Supply Chain 4.0, a new ecosystem where production innovations developed by brewers and distillers, wine and beverage brands, food, edibles, and the variety of consumer brands and OEMs in the region are shared across industries, refined, and delivered back by a more capable supply chain.

Today manufacturers need to know how other companies are utilizing new workforce options like apprenticeships; how equipment innovation is facilitating new, low-tolerance fabricating onshore, across multiple industries; the promise of direct-to-consumer models in apparel and consumer goods that enable brands to cut costs, dollars that can be poured back into design, domestic sourcing, or production; and myriad other innovations transportable across vertical markets and industries silos.

The lessons of Small Food, where creativity and the will to challenge conventional wisdom have combined with production innovations to vault the regional sector to national renown, aren’t isolated. As we bring companies together from across industries to explore the possibilities, we’ll report on the seismic outcomes.

Stay tuned.

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

Takeaways from a year of publishing in California

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June marks the one-year anniversary for CompanyWeek in California. It’s been a year of exploration, of growth, of learning and listening, and, more than anything, of coming to grips with America’s largest and most diverse statewide manufacturing economy.

Here’s a short list of takeaways after year one:

  • I lost track of the number of conversations I had with manufacturers who first cited how hard it is to do business in California, and, in their next breath, told me they’d never leave or consider moving. California companies have a torrid love/hate relationship with their home state.
  • Open rates of CompanyWeek‘s California e-publication have been comparable to those in Colorado and Utah. Click-through rates on stories are slightly lower. I think it’s an outcome of California’s size — sprawling urban environments and geographic and industrial diversity. Plus, “local” matters more than ever. It’s a dynamic playing out across the business community, notably for us in growth in industries like food and beverage manufacturing. Our goal is to write about companies doing things that should matter to manufacturers across the region. It doesn’t always work that way.
  • For us this means reporting on companies across manufacturing industries. The list of most-popular features in California after a year reflects manufacturer’s interest in other maker companies regardless of industry — a dynamic at work across our publishing footprint. It’s a cross-industry mix of standout companies.

1. Virginia Park Foods, Riverside.

2. Abel Reels, Camarillo, California/Montrose, Colorado

3. Bishop Wisecarver Corporation, Pittsburg

4. Circa of America, San Francisco

5. Häns Swipe, Santa Fe Springs

6. Fender Musical Instruments Corporation, Corona

7. Scale 1:1, Los Angeles

8. Scandic, San Leandro

9. Odor No More, Tustin

10. Rosenblum Cellars, Oakland

  • The list also reflects our main interest today in middle-market companies operating within OEM supply chains, and OEMs committed to domestic production. That’s not to say we won’t be featuring more multinational OEMs like Apple, or automotive OEMs that source globally. But to understand the state of American manufacturing today, look to the companies reinventing what it means to be a true domestic manufacturer. California hosts them in the thousands. Companies within Apple’s $55 billion domestic annual supply-chain spend capture our imagination.

As we get underway in Year Two, we’ll pick up the pace of coverage with more profiles and industry reports. And we’ll bring manufacturers together around funding and financing and to collaborate across industries.

Thanks for supporting our mission along the way.

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

Skip tax cuts and invest in industry-specific supply chains to grow manufacturing

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In a Washington Post column last week, economists Jared Bernstein and Somin Park cited the work of Tim Bartik, who outlined what he called the “three habits of highly successful manufacturing-intensive communities,” including:

  • Customized services for small- and medium-sized manufacturers help them to overcome financing and information barriers, improve their technology and product design, and link them up to global supply chains;
  • Infrastructure and land-use investment includes improving the transportation infrastructure and other services associated with a neighborhood’s land to make it more attractive for business development;
  • Life-cycle skill development, including high-quality child care, high-quality preschool, K-12 education, college scholarships, and adult job training. Bartik finds that “better skills for local workers help attract and grow higher-wage jobs.”

The upshot of Bartik’s analysis is that the standard playbook economic developers use to recruit and retain manufacturing companies — usually a mix of tax cuts and business incentives — today lacks in comparison to the benefit of investments in targeted services and strategies. Build a supply chain, and manufacturers will come.

A lesson from the regional markets we report on is that better yet, build an industry-tailored ecosystem.

Here’s why. If today your community lacks a capable base of precision contract manufacturers and engineering and design services, but boasts a rich farm and ag supply chain and concentration of outdoor and lifestyle assets, a deliberate effort to recruit and nurture natural food and craft beverage companies makes more sense than developing an aerospace cluster. Both are manufacturing. Both are increasingly attractive as communities seek more light industry. But one provides a more direct line to a thriving maker economy.

An investment strategy for communities might begin with an assessment of current business assets and capabilities, including:

  • Current number of related industry OEMs and brands
  • Workforce: state of the current employment pool including demographics
  • Sourcing: availability or access to raw materials, technology, design and engineering assets and related industry expertise
  • Manufacturing: availability of related fabrication, forging, assembly, contract manufacturing services, packaging
  • Logistics: shipping, transportation, and related services
  • Educational opportunities in support of industry development
  • Lifestyle and recreation attributes

It follows that cities and communities can then assess how well-matched target industries are to local and regional business assets, whether steps can be take to address supply-chain gaps, or whether a pivot to better-matched manufacturing industries might be a better plan.

How to fill the gaps? Over the next 12 months, CompanyWeek will be active in working with both companies and communities to develop more robust industry blueprints for the development of manufacturing supply chains. We’re certainly not alone in seeking to foster more manufacturing-intensive communities.

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

The Outdoor Industry faces a manufacturing reckoning. How will its leaders respond?

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Is there an industry more challenged by its success than the Outdoor Industry?

Take Nike, a colossus of OI. Phil Knight’s now famous sojourns to Asia to establish a shoe manufacturing beachhead opened the floodgates for American brands to offshore en masse, and boy, have they. Still today, brands of all sizes follow Knight’s Orient Express to ensconse production in thriving, world-class shoe and apparel factories, primarily in China.

The results have been stunning. Chinese factories are so capable that today “the likes of Balenciaga have started manufacturing in the country,” according to GQ. (Did you know that a $700 cross-trainer was even available? Neither did I.) The investments in infrastructure and people have transformed China into an OI manufacturing superpower.

But as business media reports, Nike, Adidas, and others are leaving China in search of cheaper labor in other markets — like Vietnam. It’s part of a modern shell game brands now manage, one precipitated by their own success in creating centers of manufacturing excellence offshore that are, by definition, increasingly expensive to operate. Qualified labor, benefits, advanced technology, and materials — the price of world-class manufacturing — are becoming as pricey in China as they are in Detroit.

After helping transform China into a economic behemoth, sights are now set on other Asian countries where major investments in infrastructure can be offset by lower labor costs. It’s the offshore playbook, out of print and updated for an iPad.

Here’s the rub: Today OI brands are motivated by more than profit. It’s an industry packed full of change agents who are moved to steward public lands, develop “authentic” brands, preserve finite resources, and generally make the business world a more sustainable, friendly place.

How to rationalize, then, the inherent unsustainability of an Asian supply chain? Or rural unemployment and dogged underemployment in states home to the same brands that are investing in jobs and production infrastructure in overseas communities? Or how to justify a lack of credible environmental oversight in countries home to the apparel factories of U.S. OI brands, as the industry wields its considerable power here to punish states for public lands policy?

As uncomfortable OI brands are with this paradox, they’re not showing it. Domestic manufacturing is making a comeback, but in OI circles, the question of where its products are made is largely a back-burner issue. The Industry still operates under a halo of tacit approval that brands must offshore production to stay in business, or, that it’s okay to relegate manufacturing to remote destinations. We’ve embraced the methodology of U.S. brands pouring profits into the development of world-class manufacturing facilities offshore, not here.

Until now.

For one, there’s a vanguard of companies challenging conventional wisdom, companies that have simply said that offshore production will not be part of corporate or product DNA. CompanyWeek Editor Eric Peterson reminds us of several Colorado-based companies that fit the bill, this week.

Alchemy Bicycle Co. is first on the list and in the alphabet, but Ryan Cannizzaro’s mission and accomplishment is not trivial. Alchemy, like Utah-based ENVE, maker of the wheels mounted on most all of its frames, decided composite frame manufacturing could be established in the U.S. despite Taiwan’s hammer lock on the sector. Today Alchemy is battling for market share against U.S. brands made in Taiwan at the same time it challenges the notion that OI products have to be made offshore.

But it’s consumers who may force OI brands to follow the lead of Alchemy and others. Buyers unerringly force companies to keep their brand promise, and if OI is to live up to the lofty ideas and rhetoric of its spokespeople, the contradictions of its manufacturing strategy may move from back burner to center stage.

We’ll be there to celebrate the shift.

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