President-elect: Focus on domestic supply chains not trade agreements to grow manufacturing

Hillary Clinton’s nod to Denver’s Knotty Tie at the Democratic National Convention — or was it Neil Borin’s Carrot & Gibbs? — is only the latest example of how manufacturing is influencing the 2016 general election. (Given U.S. Treasury Secretary Jack Lew’s visit to Knotty Tie last March, which we chronicled, she probably meant the former.)

Of course the sustained posturing from each candidate about manufacturing relates to international trade agreements and their impact on jobs. But like this election, there’s nothing conventional about how each views the issue. Candidate Trump could be confused for a pro-labor Democrat, angling to win Rust Belt states by blaming NAFTA and the pending TPP treaty for driving manufacturing jobs — union jobs — offshore.

Clinton seems bent on threading the needle and playing both sides, and as a result I can’t say today if I understand her position for or against. I can only surmise that in keeping with the craziness of the election, she’s aligned more closely with the dependably pro-Republican National Association of Manufacturers than Trump in generally favoring free trade.

Neither, really, articulate a reasonable alternative to the nation’s trade agreements or a fix that would actually benefit U.S. manufacturing. And there are clearly better ways to support the American manufacturing resurgence, full on underway, than canceling trade agreements to force companies to reshore jobs or stop sending them overseas, agreements that also open markets to U.S. companies.

The reality is that most are already considering more U.S.-based manufacturing, with good reason. Overseas labor is increasingly expensive. Quality and intellectual property are hard to control. Prototyping takes forever. Bottom line: Companies are simply weary of managing a 10,000-mile supply chain, and won’t if they don’t have to. The sheen is off. Owning and operating a multinational manufacturing company today if flat-out hard.

Instead, companies are interested in U.S. operations that enable them to tap a wave of new technology from America’s R&D engine. They seek to respond in real time to changing consumer tastes here and abroad — meaning speedier go-to-market outcomes made possible by shorter supply lines including locally sourced raw materials and labor. Yes, labor. A sea change is underway. We’re on the front end of a national movement to rediscover manufacturing careers. It’s driven in part by manufacturing’s new connection with millennials who want to buy locally made beer, food, clothes, skis, bicycles, and electric cars.

Want to engage in a real conversation to advance U.S. manufacturing? Be an advocate for the domestic supply chain so that U.S. manufacturers have everything they need to make things here, including labor. Want more apparel made in America? Rally support for initiatives like the Rural Colorado Apparel Manufacturing initiative, born right here, to develop cut-and-sew labor infrastructure brands need. Want major brands like Nike and Apple to make more shoes and iPhones in America? Invest in urban skunkworks that incubate technology and skilled labor that connects R&D with manufacturing processes. Start over. Embrace the design-to-manufacturing continuum, not just the design. Help Nike and Apple rediscover domestic manufacturing by reinventing processes and doing it in small batches, here, first.

It’s a campaign issue that could actually unite a divided electorate: Embrace manufacturing as a cause célèbre, without vilifying companies for pursuing the resources needed to build quality products alongside growing profits.

As candidate Trump and Clinton allude to reimaging manufacturing, we’re doing it. On the heels of the second annual M2 Manufacturing Growth & Financing Conference, we’ll convene at the third annual Apparel + Lifestyle Manufacturing Summit this September to connect brands with a growing supply chain.

If you’re interested in advancing U.S. manufacturing, and not politics, you’ll be with us September 28 in Denver.

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

Utah 4th, Colorado 13th in aerospace manufacturing ranking as more confusion reigns

Data continues to trickle out this summer that ranks and grades states for business and manufacturing prowess. It’s been a better month for the region even as analysts and journalists continue to struggle to get a handle on a fast-changing manufacturing sector.

In CNBC’s annual ranking of America’s Top States for Business 2016 Utah grabbed the top spot, Texas was second and Colorado third. California (32), New Mexico (39), and Nevada (40) found the lower half of the rankings among other western neighbors.

Utah also crashed the top five of PricewaterhouseCoopers’ 2015 Aerospace Manufacturing Attractiveness Rankings, with an impressive overall ranking of four. Colorado was 13th. For Utah, it’s a strong comeback from the Conexus Indiana report that confounded as much as it informed. Despite awarding the state three As out of eight categories, the report gave Utah’s manufacturing sector an overall grade of C. The PwC report is a deserved correction.

Washington, home to global powerhouse Boeing, ranked 12th and pundits there weren’t pleased. The Seattle Times‘ John Talton was incensed:

Washington boasts one of the planet’s two largest aerospace clusters (along with “Aerospace Valley” in Toulouse, France). In addition to Boeing, more than 1,300 aerospace-related companies are located here. In May, 91,700 employees worked in aerospace product and parts manufacturing. This is the backbone that makes Washington the nation’s third largest state for merchandise exports. Aerospace education is ubiquitous. Oh, as for taxes, don’t forget the nearly $9 billion in aerospace tax breaks associated with the 777X.

He concluded, with a sneer, “it appears the rankings are a combination of statistical fluke and reliance on local (potentially boosterish) reports”.

But as we’ve documented the past few weeks, manufacturing is confounding most everyone who’s measuring or writing about it.

Patty Silverstein, president and chief economist at Development Research Partners in Jefferson County, Colorado, chalks up growth in Colorado’s food and beverage manufacturing sector to cannibas. But she’s not sure.

Silverstein made the correlation referencing growth in food manufacturing numbers in a Denver Post article last week:

Recreational cannabis sales began in 2014. That year, “we had a 3.5 percent increase in employment. In 2015, a 4.9 percent increase in food-manufacturing employment,” she said. “The data doesn’t allow us to slice and dice to say, ‘These are indeed edibles or not,’ but the recognition is this is where they would be classified.”

She continued:

“Is it cavalier of me to say (manufacturing growth is directly correlated to the cannabis industry)? Absolutely,” she said. “I cannot prove or disprove it. But you look at who are the new entrants.”

It’s a surprising admission in light of other data and stories we’ve uncovered the past two and a half years, in the form of our weekly features on Colorado’s proliferating food and beverage companies. The ‘new entrants’ are dozens of innovators changing the national food conversation from Boulder, Fort Collins, and Denver and pitching their ideas across the state. They’re in plain sight.*

Colorado economic development officials can’t seem to believe their eyes either. How else to explain the comments of Laura Blomquist, senior manager of strategy and analytics at the state’s Office of Economic Development and International Trade?

In celebrating the state’s strong “knowledge-based” economy and high-percentage of educated workers, Blomquist used words that marginalize Colorado’s strong manufacturing economy. “The United States is transitioning to a post-industrial society increasingly comprised of knowledge-based enterprises,” she said. “These enterprises create higher paying jobs that typically require significant preparation through higher education and a high degree of complexity and innovation in the work itself.

I read recently the U.S. Secretary of Commerce refer to new manufacturing jobs as the “IT jobs of the future.” With manufacturing companies here and elsewhere struggling to find qualified employees, it’s time to roll out a new vocabulary that better meets the needs of a neo-industrial society that includes modern manufacturing.

We’d all be less confused.

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

[*Panelists will be providing an update on Colorado’s natural and organic food sector at next week’s Manufacturing Growth & Financing Conference in Denver. Register here.]

‘Lies, damned lies and statistics’: Parsing manufacturing data an exercise Twain would appreciate

“There are three kinds of lies: lies, damned lies, and statistics.”

Mark Twain’s frequently used quote was my first thought when reading the Conexus Indiana 2016 Manufacturing & Logistics Report Card for the United States.

Covered in a recent column by CompanyWeek‘s Bart Taylor, the report gave Colorado manufacturing a D grade for overall manufacturing industry health. It looked at eight different categories when developing this grade: Logistics Health (C-), Human Capital (C+), Worker Benefit Costs (B), Tax Climate (C), Expected Fiscal Liability Gap (C), Global Reach (D), Sector Diversification (C), Productivity and Innovation (B).

Are these grades an accurate reflection of the Colorado manufacturing sector? Is the report an unbiased measurement?

Conexus Indiana, the group responsible for the report’s development and publication, is a private sector led initiative similar by mission to the Colorado Advanced Manufacturing Alliance (CAMA). The first page of the report proudly states, “Conexus Indiana is focused on making Indiana a global manufacturing and logistics leader.” The actual data collection and analysis was completed by Indiana’s own Ball State University.

Did I mention Indiana got an A grade?

I will let you decide if I am guilty of an association fallacy, or if you agree that this report card is suspect because of its association with Conexus and Ball State.

For the sake of argument, let’s assume there are no “Indiana biases,” and the data is sound. After all, the report cites its sources which are generally from our own federal government. For example, when dispensing grades for Global Reach (the level of international trade in both imports and exports), the reports cites the U.S. Department of Commerce International Trade Administration. For the previous five years, Conexus has given Colorado the following grades for Global Reach: D+/2011; F/2012; D/2013; D/2014; D+/2015; and a D this year in 2016.

Ironically, I pulled from my files a March 2013 article by Bruce Goldberg, then with the Denver Business Journal. This article reported that Colorado was one of only 11 states to grow exports in double digit percentages from 2011 to 2012. What was the source for this positive report? The same U.S. Department of Commerce International Trade Administration data used by Conexus and Ball State. To refresh your memory, in 2012, Conexus gave Colorado an F.

Damned lies and statistics!

Does that mean I believe Colorado should have all As? Absolutely not. While I might cast reasonable doubt on the validity of this report, I am not willing to suggest Colorado isn’t woefully lacking in many of these areas.

Conexus’ category on Human Capital provides a nice example. According to the report, Human Capital measurements include rankings of educational attainment at the high school and collegiate level, the first-year retention rate of adults in community and technical colleges, the number of associate degrees awarded annually on a per capita basis, and the share of adults enrolled in adult basic education.

Conexus gave Colorado a C in this category. Probably a fair grade as workforce continues to be the number one issue facing Colorado manufacturers. But the report only looked at statistics. Statistics gathered by the government are always a lag measure. The Conexus report fails to report on the positive steps Colorado manufacturers are taking today to fundamentally change the way we build our future workforce.

Business and Schools in Collaboration, or BASIC, is designed to help manufacturers make their next generation of workers through internships and apprenticeships and put an end to the inflationary practice of buying our workers from neighboring companies. Using the Innovative Industries Internship Act, a program CAMA helped create with Representative Pete Lee from Colorado Springs, more than 162 Interns are currently involved in experiential learning with Colorado businesses. In light of this, I would certainly expect Colorado to have a higher grade in the near future.

Unfortunately, the same cannot be said in other categories. Ask any Colorado manufacturer if the state’s Tax Climate is favorable for manufacturing. Don’t be surprised if they give Colorado an F.

Another area where Colorado manufacturers might suggest a lower grade than that provided by Conexus is Logistics Health. Traffic congestion is a well-known fact in Colorado. What manufacturers understand better than most is that congestion costs drivers $1.35 billion annually in delays and fuel. When you have to ship product by truck, these costs are passed on to the shipper, adding to the cost of goods sold and reducing profitably. With a $25 billion transportation funding shortfall looming over the next 25 years, something must be done to improve Colorado’s highway infrastructure, or you can expect to see lower Logistics Health grades in the years to come.

While the validity of the grades posted by the Conexus report may be suspect, the issues they identified are real. Over the next four weeks, CAMA will examine, with industry experts, four of the topics: Human Capital, Logistics Health, Tax Climate, and Global Reach. We will discuss the issues in more detail and outline specific action items manufacturers can take to improve the situation. In many cases, improvements will come only through legislative actions. In other areas, manufacturers can take unilateral actions to improve their own and the Colorado manufacturing industry’s health.

Next week’s column will take a closer look at what the World Trade Center has to say about Colorado’s export/import climate, what they are doing to help the Colorado manufacturing sector, and how you as a manufacturer can take advantage of these opportunities. Stay tuned.

Tim Heaton is president of CAMA. Contact him at tim.heaton@co-cama.org.

Utah gets a ‘C’ in manufacturing but flashes workforce advantages

In Colorado we’re ruminating over two reports released last month that rank the state’s manufacturing sector poorly. Tim Heaton, president of the Colorado Advanced Manufacturing Alliance, follows up on a column I wrote about the Conexus Indiana 2016 Manufacturing & Logistics Report Card for the Unites States that gave Colorado a ‘D’ in overall health for its manufacturing sector.

Utah fared better, but not much. Despite ‘A’ grades in three of the eight categories, Utah’s overall grade was a ‘C’, placing it behind such manufacturing juggernauts as Connecticut, Kansas and Tennessee. Both states also did poorly in a Site Selection magazine ranking of ‘manufacturing investments per capita’, a measure of million-dollar capital investments in manufacturing facilities per million residents. Colorado ranked 47th, Utah 39th.

Both Heaton and I found plenty to grumble about, especially in the Conexus report, from dated data to questionable methodology. I suspect that when or if Todd Bingham at the Utah Manufacturers Association gets around to responding he’d have similar issues with data that’s almost three years old, or bias that tends to award legacy logistics and supply-chain infrastructure that today struggles to support emerging growth sectors.

But the data is not without merit. It provides meaningful perspective for those like us who aspire to develop world-class manufacturing ecosystems. Wanna know how far we have to go? Kentucky ranked 1st in per capita investment with 173 manufacturing projects topping $1 million in capital or involving 20 new manufacturing jobs. Colorado and Utah each had nine. Think rust-belt legacy doesn’t matter? Think again.

Colorado’s ‘D’ grade is also focusing the conversation on areas where indeed, the state’s logistics and support network undermines economic development and manufacturing investment. Transportation may top the list. Interstate 70 has a reputation that transcends the state. It’s a lesson in inaction Utah policy-makers would do well to learn and not gloss-over.

Utah’s ‘A’s, in Worker Benefit Costs, Tax Climate, and Expected Fiscal Liability Gap, and a ‘B’ in Human Capital underscore its transparent workforce strength, a building block for success in manufacturing. Where other states are forecast to struggle mightily to train and equip a next generation of employees, Utah seems extraordinarily well-positioned in this critical area. Companies like JD Machine, profiled this week in CompanyWeek, are national models in adopting progressive workforce development strategies.

Ironically, Utah’s ‘B’ in Sector Diversity may play more to Conexus bias than communicate a true strength of the sector today. Yes, bioscience, aerospace and advanced manufacturing lead a fairly diverse sector that also boasts industrial food and energy stalwarts.

But manufacturing diversity in the future will also be defined by robust, dynamic artisanal sectors responding to changing consumer tastes that favor locally made food and beverage and lifestyle and consumer products; or feature a wave of start-up, technology-informed manufacturing companies that sustain world-class innovation in whatever form. Is Utah a hotbed of entrepreneurship and innovation in manufacturing, sustained by a progressive vibe that informs business environments in California, New York and even Colorado?

Yes and no. I’ve written extensively about Utah’s emerging leadership position as a hotbed of outdoor industrial development, namely Ogden’s growing ecosystem of lifestyle manufacturing companies and initiatives.

But at times, the cultural attributes that provide economic stability and offer sustained workforce advantages in Utah don’t translate into the state being a trend-setter. For example the natural and organic food tsunami of the past decade, a true revolution that’s changed the way America eats, has been slower to catch on here. It’s altered the economic landscape in neighboring Colorado and farther west in Oregon and Washington, where a food manufacturing renaissance is long underway.

Better late than never. We’re involved in a conversation with innovators in Utah’s natural food and products space to accelerate development of sector that’s simmering just under boil. More on this initiative soon.

On balance, other states like Colorado and California would likely trade manufacturing challenges with Utah as states strive to improve the sector. Workforce is a deep, systemic challenge that requires myriad investments — and time. Standing-up resources to accelerate growth in promising new sectors feels less daunting. We’re about to find out.

Improving Utah’s ‘C’ grade will be a positive outcome.

Results of Manufacturing Business & Operational Forecast good news for regional economy

On the heels of two reports we shared earlier this month that portrayed a vulnerable manufacturing sector in Colorado, results of CompanyWeek‘s first Business and Operational Forecast offers better news. Momentum, not malaise, is the operative takeaway.

In late May, with the help of The Neenan Company and Manufacturer’s Edge, we pushed out a 10-question survey to 991 manufacturers, randomly selected from CompanyWeek‘s readership, from 10 industries and the supply chain. Just under 10 percent responded. The results provide a snapshot of the sector, as do other data, but communicate a healthier ecosystem than the national reports we referenced. (Also read Dawn McComb’s analysis of manufacturing real estate trends here.)

Most respondents were company owners or founders:


Industrial manufacturers were most eager to respond:

Consistent with Colorado’s small- to medium-sized business community, most respondents were middle-market companies:

A big majority, nearly 62 percent, forecast revenue growth this year and another 40-plus percent were already bullish on 2017:

Companies are hiring — 64 percent have plans to hire employees this year and 34% currently have job openings:

Respondents were more careful about investing in new facilities or expansions — 16 percent were moving or expanding this year and of those 21 percent were onsite renovations:


Innovation’s another matter. Fully 67 percent of respondents indicated plans to invest in technology in support of manufacturing operations — production/processing/manufacturing assembly. Over 39 percent indicated plans to invest in business systems — enterprise resource planning, financial systems, analytics and market and business development:


Questions we’ve raised about the adequacy of the local supply chain to support dynamic growth in manufacturing were reflected in the data: over half of respondents, nearly 53 percent, cited a preference for local suppliers but difficulty in finding them:

It all adds up to be an interesting counterweight to national reports that offered near-flunking grades for Colorado manufacturing. Challenges persist — like workforce, reasonably-priced real-estate and a supply chain that forces manufacturers to source outside the region. Not to mention business development for those operating in under-performing sectors like oil and gas.

But as we report every week, there’s a ton to build on here.

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

Colorado is flunking manufacturing. Or is it?

Like a left-right combination from Muhammad Ali, Colorado manufacturing was staggered this month by two reports that portray a struggling sector. What to make of the news?

Conexus Indiana’s 2016 Manufacturing & Logistics Report Card for the United States gave Colorado a ‘D’ grade for overall manufacturing sector health. The report grades states in eight categories, from sector diversification to global reach to human capital. Only New Mexico, Hawaii, and Alaska fared worse, with F’s.

Misery loves company, and based on data compiled by Conway Data Analytics for Site Selection magazine, Colorado ranked 47th in per capita manufacturing investments in 2015. The California Manufacturers & Technology Association analyzed the data and shared Colorado’s numbers with us. (California ranked 50th, a downer for an economy that boasts nearly 40,000 manufacturers.)

There’s so much to consider here, but let’s stay high-level and try and sort out some straightforward implications.

An easy path would be to simply discount the Conexus methodology and by all means, there’s plenty to work with if Colorado economic officials cared enough to respond. Tom Bugnitz, CEO of Manufacturer’s Edge, didn’t have to work hard to determine the Conexus report was based on 2014 data, or that data sometimes worked at cross-purposes. “We get high marks for productivity and innovation,” Bugnitz told me, “which means we need less workers, which gets us lower marks for overall health because it lowers the number of manufacturing employees as a percent of total employment.”

Indeed, the Manufacturing Industry Health grade — D — is measured by “the share of total income earned by manufacturing employees in each state, the wage premium paid to manufacturing workers relative to the other states’ employees, and the share of manufacturing employment per capita.”

Colorado’s other D grade among the eight categories was in Global Reach, or the “export-related measures of per capita exported manufacturing goods and the growth of manufacturing exports.” I’ll leave others more informed on export trends to determine whether a near-flunking grade is warranted, but Colorado seems well positioned to grow exports. But then again we consider agricultural goods part of the maker economy, and Colorado’s a national ag export leader, so I object from the get-go.

Colorado gets a C in Sector Diversification based on 2014 data. It’s already a dated statistic. Diversification is the state’s manufacturing calling card, from high-tech fabrication to device makers in bioscience to the craft food and beverage tsunami to a burgeoning lifestyle industry. Food and beverage has been the fastest growing manufacturing sector in the state since 2014.

All that said, it would be narrow-minded to assert that the Conexus report is flawed and therefore irrelevant. Data is data, and as a percent of GDP, or employment, Colorado’s manufacturing sector is underperforming compared to others states — states that would kill to have Colorado’s broader growth metrics. I’ve also chronicled the state’s challenge in developing a more robust supply chain and how the lack of a cohesive manufacturing development strategy is a drag on sector growth. Manufacturers are not without fault. Companies remain more comfortable operating in industry silos.

Yet manufacturing is thriving. We’ve profiled over 700 manufacturing and supply-chain companies since September 2013. We’ll profile 700 more in the next few years. It’s certainly entrepreneurial, and companies are scattered throughout different industries, which at times makes it hard to measure – and grade. Until growth companies and sectors mature and begin making a statistical difference that matters on a national scale, enduring bad grades or scores may be part of the program.

Like the aforementioned investment ranking. Colorado now ranks 47th in manufacturing investments per capita, an interesting stat that tracks manufacturing –related construction or expansion projects across the U.S. that involved over $1 million in capital or more than 20 new jobs investments. Of 2641 projects in 2015, Colorado hosted nine. Kentucky, a state with 4.3 million people, led the nation with 173. It’s a reminder how deep a manufacturing community other states lean on to attract new companies and expansions. The supply chains are long.

But how many companies do we need to shine a light on to get elected officials, economic developers, business groups and yes manufacturers, excited about what’s happening here? Who’s paying attention? California ranked 50th, a number that didn’t sit well. Its manufacturing trade association was quick to lament its status and challenge policy-makers.

We’ll gather July 27 in Denver for the 2nd annual Manufacturing Growth & Financing Conference. Increasing the level of investment in worthy manufacturing companies is the objective of the conference. Even if you’re not looking for money, it’s important you’re there. Investors need more awareness about companies shaping this sector.

Don’t be satisfied with a ‘D’, or being ranked 47th out of 50 states. I’m not. See you this July.

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

Colorado gets in the lifestyle manufacturing game

Earlier this year I wrote that manufacturing “can again become a jobs engine with the launch of thousands of new manufacturing businesses, a wave of middle-market companies across diverse industries. What we lack in large we’ll make up for in volume, in hot sectors like food and beverage, advanced contract manufacturing and lifestyle and consumer industries.”

Last month, CNBC featured CEO Paul Trible of Richmond, Virginia-based apparel maker Ledbury, who confirmed my sentiment under the headline, “Workshops, not factories, are US manufacturing’s future.” Trible described the new manufacturing economy this way: “Companies will bifurcate their product lines. Uniform-volume product will be made abroad, and highly personal, customizable goods will be created domestically.”

Indeed, large companies are rediscovering small-batch manufacturing here, domestically, even as overseas factories churn out volume products. The difference in methodology can be striking. Today U.S. operations are often informed by advanced technologies and processes that enable customization, speed time-to-market, and enable brands to follow changing consumer preferences in real time — not on schedules dictated by contract producers overseas. Superior quality is also a game changer. As Ledbury notes, “We are not going to be able to compete on price with other countries, but we can compete on craft. American-made will become a luxury brand.”

But small business will be the primary catalyst for 21st-century manufacturing, and for them, access to technology, advanced processes and money is more limited. That’s a why a subtle change being implemented by Colorado’s Office of Economic Development and International Trade (OEDIT) is an important development for regional makers and manufacturers.

Colorado’s growing cadre of lifestyle manufacturers including apparel and outdoor companies are now eligible to apply for Advanced Industry Accelerator Program grants, a program to this point reserved for early-stage companies developing high-tech products or those commercialized with the help of research entities or universities. In the state’s vernacular, ‘Advanced Manufacturing’ is one of 14 ‘Key Industry’ sectors identified in Governor Hickenlooper’s Colorado Blueprint, the administration’s guiding economic roadmap.

I’ve had issues with the Blueprint. For starters, ‘advanced manufacturing’ isn’t an industry, it’s a process. More problematic, it leaves companies not considered ‘advanced’ largely unconnected from a larger community of manufacturers and often without access to support, services, and money available to those, for example, considered tech-savvy enough for grants.

But technology is a catalyst for manufacturers operating in historically low-tech sectors — like apparel, where innovation lags. The type of small-batch customization envisioned by Trible and championed by Colorado’s own group of lifestyle companies will require advanced technology and processes. In this vein, ‘advanced manufacturing’ shouldn’t be a filter to disqualify worthy companies from financial aid; it should be viewed as an accelerator to spur growth and advance low-tech manufacturing.

With a push from Luis Benitez, director of Colorado’s outdoor industry office, and Katie Woslager, Advanced Industries’ senior grant manager, OEDIT finally agrees. Benitez tells me that today, OEDIT is accepting applications from “outdoor recreation, cut-and-sew, ski/snowboard, and bike manufacturing companies under Advanced Manufacturing applications”.

Apparel and outdoor recreation companies as Advanced Manufacturers! Not only does the change recognize that manufacturers in all sectors are increasingly ‘advanced’ and using technology to reshape markets and create opportunity, it’s a crucial component that’s been missing in the state’s outdoor and lifestyle promotional efforts.

Colorado, Utah, and others ‘tourist’ destinations will fully leverage their incredible lifestyle assets only with increased efforts to promote the region as a destination for lifestyle manufacturers. CompanyWeek has been beating this drum since September 2013, the same year the Colorado legislature passed the Advanced Industry Accelerator Program.

Welcome to the lifestyle game.

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

Note: Colorado’s Office of Economic Development and International Trade will summarize the Advanced Industry Accelerator Program grant application process at CompanyWeek’s 2nd annual Manufacturing Growth & Financing Conference, July 27, in Denver. Click here for details and to register.

Coming to a neighborhood near you: collaborative manufacturing spaces

Last week, Curtis Williams outlined the conventional approach cities adopt to entice manufacturing businesses. It’s a combination of smart selling, the opportunistic use of incentives, and here, in Colorado, a large dose of leveraging natural attributes. Today Denver’s the fastest growing city in the nation. The rest of the state’s not far behind. It’s a home field advantage to envy.

Out-of-the-box development, the kind that attracts industry’s best and brightest, is harder, the formula more elusive and for manufacturing, largely absent from today’s economic development playbook. The irony is that communities are increasingly enamored with modern manufacturing. Cities crave growing craft food and beverage firms, light manufacturing in lifestyle and consumer sectors and high-tech fabricating and assembly.

Yet new voices in industrial development are emerging, cognizant of the value of primary jobs and the opportunity to build around the sustaining trends driving manufacturing back onshore or growth fueled by new consumer preferences. Among the most intriguing ideas is the concept of multi-tenant facilities that house complimentary light-manufacturing companies.

The idea is grounded in two trends at work in the economy. Officing concepts like Denver’s Industry, Galvanize, and WeWork facilities tap a modern professional ethos that values collaboration, community, and social networks. For entrepreneurs, the collective delivery of support services in these facilities, often extending to funding and talent, has also been a catalyst.

The second is the profound change in manufacturing, manifest in both the industries driving growth and how technology is changing industrial processes.

On a national level, consider Faraday Future, the ‘mysterious’ car company poised to break ground on a $1B factory in Nevada. The company’s site is to be mindfully located “on 900 acres of land near Interstate 15, a major roadway to Southern California. This means the company could attract large crowds for tours to increase brand awareness.”

A manufacturing factory that doubles as a tourist destination? Why not. It’s not difficult to envision an open and airy facility, with tourists and prospective customers treated to a full-on display of robotics and automation, technology and systems management — a 21st century industrial iteration of Disneyland.

It’s happening today on a smaller scale here, in the Rockies. One of Fort Collins’ most popular consumer destinations is New Belgium Brewing — a manufacturing facility. Now broaden your view, and envision visiting your favorite craft brewery in a facility that’s also home to a distillery, a composite cycle or ski maker and an artisanal food company — treats to enjoy as you watch products from each company being made.

The Neenan Company was the architect on the original New Belgium tasting room and brewery in Fort Collins and Neenan VP Shawn Sullivan has no problem conjuring the image. In fact he’s an evangelist today for the concept along the Front Range.

“There’s a real opportunity to create a dynamic manufacturing and retail environment through shared infrastructure and common area that would lower occupancy costs,” Sullivan explains. But operational savings may only be part of the benefit. “We also see the upside of enhancing brand awareness through cross pollination of people and products,” he adds. “We’re in the early stages of creating custom, innovative designs that bring neighborhood manufacturing to Colorado.”

Ted Eynon, co-owner of Colorado-based Meier Skis, has already moved beyond concept and into a space he hopes will house a craft brewery and other like-minded craft manufacturers. He shares Sullivan’s sentiments about the benefits of collaboration.

“When you think of Colorado, skiing and beer are going to be at or near the top of everyone’s list so it’s only natural to bring the craft production of both under a single roof for an immersive brand experience that consumers can actively participate in,” Eynon says.

Eynon moved Meier from Glenwood Springs to a location in Denver, near West 8th Avenue and I-25. “The goal is to have a unique offering of Colorado active lifestyle craft products where someone can be sipping a cold beer or spirit while simultaneously picking out or designing their own skis or snowboards — an open concept with lots of glass that will open up sightlines and ensure that everyone is able to feel and experience the brands. We are in the process of looking for the right brewing or distilling partner to make this a reality.”

It’s no stretch to see cities and towns getting in the game, conceiving developments and facilities aligned with Sullivan and Eynon’s vision, and beyond. The combinations are intriguing, including design-to-manufacture clusters in growth sectors like aerospace and bioscience.

Is it out-of-the-box economic development thinking that might change the fabric of urban development? We may soon find out, in a neighborhood near you.

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

Elon Musk’s call to arms a jolt that manufacturing needs

Elon Musk’s very public recruiting pitch this week for manufacturing talent was a call to arms, not only for Tesla but for U.S. manufacturing. Let’s hope Musk not only finds the talent to replace his two recent high-profile departures, but that good things come from the publicity. As more innovators of Musk’s ilk run headlong into manufacturing’s U.S. talent gap, we’ll get closer to disassembling barriers that impede growth.

Reuters touched on one in the Musk article last week:

Putting aside the issue of capital requirements, auto experts point to a shortage of manufacturing engineers, whose ranks were thinning out even before the U.S. auto crisis hit in 2008.

As one source, Garth Motschenbacher, director of employer relations at Michigan State University’s College of Engineering, aptly described, “It’s a constant issue we have in this country. . . . For the longest time manufacturing was seen as the dirty end of engineering.”

Bingo. Manufacturers refer to the negative perception as the ‘four D’s’ — dirty, dumb, dangerous, and dying — descriptors that are largely inaccurate today but pervasive.

Yet Tesla may be the perfect company to change manufacturing’s public image. Auto companies are connected to American manufacturing like no other. As innovative and technology-inspired Tesla or Faraday Future are, their manufacturing DNA matters.

This can’t be said for tech giants like Apple or sporting goods stars Nike, both manufacturers, both who also carefully cultivate an image distinctly separate from the realities of where they make. Apple and Nike may be today’s brand equilvalent of the Ford Motor Company circa 1930, but they complicate Tesla’s challenge by exporting manufacturing jobs while keeping other integral elements here — design, engineering, brand development, and the like.

But today a Tesla Model 3 is every bit as appealing to modern consumers as an iPhone or Air Jordans. We revel in the design.

Fabricating or assembly? We don’t appreciate the manufacturing. Nor do many of America’s prominent brands. Manufacturing is something you do overseas, with U.S. designs.

But there’s more. The methodology has spilled over to the way promising ideas are funded. It’s a reality companies like Boulder Engineering Studio (BES) see every day. “So often [products] are prototyped without any considerations toward manufacturability and cost,” says Callie Wentling, director of business development for BES. “There’s a lot to be said for creating a proof of concept to demonstrate technical feasibility and generate interest among potential backers and users, but too often companies focus on the ‘pretty’ up front and don’t consider what can be a long road from functional to manufacturable.”

BES is trying to change the model. “We do challenge them to think through and characterize as much of their product as possible so we can begin laying a foundation for manufacturability as early as our first design push,” Wentling says. “If [an idea] is ultimately going to be scrapped, why allow your development team, marketers, or potential and test users fall in love with it in early revisions? Far better to provision for those elements up front, so you can plan your development strategy around a slick integration of otherwise problematic features.”

Manufacturability. Has Elon Musk lost site of the manufacturability challenge of producing 500,000 Model 3’s by 2020? We’ll find out if he fills the positions but still can’t deliver half a million cars.

If he does, Tesla’s engineers will have demonstrated the beautiful end of manufacturing.

I’m rooting for him to make the right hires.

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

A related note: Design-to-Manufacturing is the theme of the 3rd annual 2016 Apparel Manufacturing + Lifestyle Sourcing Summit. Save the date — Sept. 28 in Denver — and plan on attending as we pick up the challenge in apparel and lifestyle manufacturing.

Doubling down on defense a risky strategy for Colorado Springs

Colorado Springs is a city in search of a new economic brand. As solid as its bedrock industries are, there’s growing sentiment that defense and tourism alone shouldn’t define the city’s economic prospects, that there’s more here, and if Colorado Springs is to attract new industry, compete for skilled labor, and keep it’s best and brightest home, its identity must evolve.

Where the evolution should lead is an open question. An influential group of business leaders would double down on Colorado Springs’ connection to defense-related industry to become the nation’s preeminent cybersecurity outpost. Frank Backes, CEO of Braxton Science & Technology Group, frames it this way, “We need to talk about a brand for Colorado Springs like Silicon Mountain was in the ’80s and ’90s. We need to make sure that the headquarters of the industry is here.”

But for others, the issue isn’t just whether Colorado Springs should move to attract cybersecurity-related industry. Most agree it should. A bigger question is whether the city subordinates other economic opportunities in a push to attract more defense-related federal spending, dollars that already comprise “40 percent of the Pikes Peak region’s economy and about 50 cents of every paycheck dollar here.” Would deepening the connection to the town’s defense brand leave room to fully support other promising opportunities?

Certainly the cybersecurity opportunity is big, the outcomes critical to the nation, and Colorado Springs’ national security legacy an asset to establish significant operations here. In fact, it’s more of a statewide opportunity. It was noted last month at University of Denver’s cybersecurity summit that Colorado has 12,000 related job openings. DU has gone so far as to offer a one-year master’s degree in the field.

Cybersecurity industry employs “software engineers, network engineers, computer scientists” and other high-tech specialists, jobs that could change the city’s workforce composition. Jobs that will appeal to cadre of young, smart, talented professionals so critical to developing the vibrant and progressive economy town leaders crave.

There’s a private-sector outcome here; every data-intensive business will require more secure digital systems and processes. Think airlines, financial centers, and others.

Yet much of the billion dollar-plus opportunity is tied to national security contracts, government spending that companies here would pursue. Can the Springs muster resources to compete with a high-profile list of capable cities for this business, as it rallies a new brand strategy to promote homegrown private-sector opportunities?

If not, an underdeveloped but powerful lifestyle brand-in-waiting may suffer most. Colorado Springs, the self-proclaimed ‘City of Champions,’ boasts assets that put it on par with Boulder and others in the region as a destination not only for athletes and sports enthusiasts, but the outdoor industry. Like most every other Colorado city, the Springs is also incubating a progressive cadre of craft beverage and food businesses. Alongside the city’s impressive list of attractions and quality of life attributes, it’s a compelling lifestyle foundation.

But the city’s standout crop of established sports-minded businesses and organizations seem strangely unconnected — from each other or as a tight knit ecosystem used by city planners to attract related industry to the region. Craft lifestyle brands, also an asset, disconnected even more. Will a brand that reflects lifestyle industry gain favor and lead Colorado Springs to heights where Boulder, Ogden, and Portland reside? The idea’s not gained traction yet.

Parker, Colorado, up the road from Colorado Springs, has rolled out the following ad campaign.

Imagine the same from Colorado Springs. What would it convey? Cybersecurity…and lifestyle? Can both be the brand Colorado Springs grows by?

A second opportunity was envisioned in a DOE grant awarded Colorado, the ‘defense-industry adjustment program,’ renamed SMART, now FourFront. By whatever name, Colorado received $6.6 million to retrain defense-impacted contract manufacturers (CAMA, the Colorado Advanced Manufacturing Alliance, administers the grant on behalf of OEDIT); $6.6 million to wean industry off government’s spend. Colorado Springs was identified a location for a retraining center. Today a “Fuse Center” is located in the Catalyst Campus as a result.

One private-sector outcome would be aligned with a national trend to stand up advanced design-to-manufacturing facilities. San Francisco’s Lime Lab is a vertically integrated shop that marries industrial design with modern manufacturing capabilities. The concept is a catalyst for small-batch, customized manufacturing. New, inspired products and companies should follow. Boulder Engineering Studio is doing similar work.

Yet Lime Lab’s manufacturing facility is in China. Why not integrated centers in Colorado Springs? The pieces are here: a capable ecosystem of high-tech fabricators, engineers, and designers; facilities including space currently leased in the Catalyst Campus envisioned precisely for this type of activity; enthusiasm for a technology future (including cybersecurity); and a rich higher education community. New advanced design-to-manufacturing centers would also breathe life into a FourFront effort that today has progressed only as far as videoconferencing.

Catalyst Campus benefitted from a $750,000 taxpayer grant last year, launching with the tagline, ‘Where ideas converge.’ Watching the Campus become a center for cross-industry collaboration in pursuit of a new and more inclusive Colorado Springs business brand would be a fair backpack.

It’s no surprise I’m enthusiastic about manufacturing. But here, opportunity might coalesce around light manufacturing — gear, apparel, components, beer, food, and spirits on the lifestyle side — while showcasing a modern industrial capability centered around collaborative, high-tech, design-to-manufacturing capabilities and innovation.

Develop the cybersecurity opportunity, but redouble efforts to attract private-sector industry that better captures the creative undercurrent in this urban Colorado gem. As talent, money, and ideas flow into Colorado and the West, the city can emerge as an alternative to its high-flying but often frantic counterparts.

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