Growth paradox: Manufacturers’ search for capital intense in today’s growth economy

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Easily the most common feedback I get from readers of CompanyWeek is one of surprise, as in, ‘I had no idea so much stuff was being made here.’ Today’s eclectic mix will inspire similar sentiments. Profiles of a toymaker, sew shop, and precision machinist, along with a contract brewer and printer of advanced sensors should again interest business enthusiasts.

But regardless of industry, most companies we write about share similar challenges. We make a point to ask those we interview about barriers to growth, so every week it’s easy to pick out the issues that bedevil company leaders. The challenge most often cited the past 12 months is workforce, where about four in 10 companies mentioned difficulty in finding qualified labor.

Workforce challenges vary. Industrial manufacturers suffer most. Talk to most any fabricator, and a combination of factors is making it hard for them to find workers needed to support growth and replace retiring employees. The elephant in the room? The retiring generation valued a job in industrial manufacturing when growing up. This generation doesn’t.

Several of Colorado’s other high-profile manufacturing sectors are more appealing though. Boulder County has become a destination for talent for its high-flying natural and organic food industry. Companies are benefitting from a growing labor pool. The state’s reputation as a high-tech leader makes a difference for aerospace and precision manufacturers. And a stream of smart, motivated people is moving here to start maker businesses. (Much to the chagrin of those regions losing talent to the West.)

Managing growth including financing is the challenge we hear second most (not surprising in that we seek out growth companies to write about), and the issue seems to vex companies equally, regardless of industry sector. For manufacturers, it can cut to the core of why a company was launched in the first place. The choices companies have are often shaped by issues that relate to culture (there’s a high number of family-owned businesses in manufacturing) and the substantial capital investments that maker companies often require.

Take Colorado’s craft beer industry, lately its most high-profile manufacturing sector. To this point, brewers have generally avoided working with equity firms to fund growth. The rationale is straightforward: Entrepreneurs want to retain total independence, to be able to make what they want and maintain a culture unfettered by a profit motive. Equity partners expect returns, not seasonal ales.

It’s a motivation shared by manufacturers who’ve self-funded even to high-profile success. Culture is king in manufacturing businesses. It’s a wonderful attribute of the sector.

Of course for many companies, private equity can be a perfect fit. It can provide a scenario where owners can stay involved, even lessen the stress of long hours, while using an outside source of capital to fund growth. And to be fair, the last thing an equity partner wants is to upset the formula that’s delivered results.

But in today’s economy, a growth economy, there are more companies in earlier stages of development than money readily available to fund them. Friends and family only get an idea so far. Institutional lenders want healthy balance sheets (though Colorado’s lucky to have commercial bankers who understand and support manufacturers). Equity partners want more – including a stake.

That’s left many Colorado small- to medium-size companies scrambling. Alternative-funding options are numerous — but manufacturers tend to be focused on making things. And here, in a marketplace that’s busting out in multiple industries, each with its own finance attributes and challenges, the difference between securing a growth round — or not — can turn on the smallest of details.

It’s an issue we can’t hope to cover in a single column or features, so we’ll begin a series on financing manufacturing growth next month, both here and in the print companion of CompanyWeek, MFG magazine. We’re also hosting the first-ever regional manufacturing investor conference this summer in Denver. Here’s more information.

So much is happening in manufacturing — and it’s a sector poised for more growth. Keep it here to stay current on who’s making what and for information that may help your business succeed in an economy that’s ripe for growth.

Manufacturing’s modern brand will embrace old language and new faces

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Does the language of manufacturing matter? Should we care whether a food company is labeled a ‘processor,’ a craft beer company a ‘maker,’ or an industrial business utilizing automation to build things a ‘technology’ company?

The reality is that today, in business, we do care. We artfully avoid using the term manufacturing when another term will do. ‘Manufacturing’ still connotes a dirty and dying industry sector. It remains a pejorative, loaded descriptor.

It’s an important difference for those who believe manufacturing’s experiencing a broad-based revival despite barriers – like an outdated brand. One of two things will likely happen. We’ll develop new verbiage to describe the manufacturing economy. Or industry will embrace its past as it transforms from smokestacks to lasers, soot to barley hulls.

What industry’s not, in some cases, is comfortable with its own moniker. Manufacturers have taken to avoiding, well, ‘manufacturing.’

Take the news story last week involving Karcher North America’s new Denver location. The Denver Business Journal noted that “Kärcher North America — a subsidiary of Winnenden, Germany-based Kärcher Group — produces high-pressure cleaners for industrial and wholesale use, window vacuum cleaners, industrial sweepers, floor care scrubbers and more.” Apparently Karcher doesn’t manufacture. It produces. But the DBJ is like everyone else; we’ve come to favor ‘producer’ instead of manufacturer. Or ‘processor’ or ‘maker’ for that matter.

I visited the Kärcher website, to the About page, and to my surprise, couldn’t find the word ‘manufacture’ there either. (Likely the same experience as the DBJ‘s intrepid reporter.) They ‘produce’ stuff, too.

Yet the shorter path to a modern brand will be a fresh embrace of ‘manufacturing’ — no other word or phrase is as inclusive — one informed not by old stereotypes but by the people and companies shaping today’s sector. Like Bob Wolski’s Spire-EMS team, leading a new generation of precision engineered manufacturing solutions. Or, as fresh new faces of manufacturing go, Josh and Zora Tabin of Wild Zora. Both are profiled today.

The Tabins’ epic journey is equally a great story and parable of the modern sector, with most all the components that ultimately are redefining manufacturing: motivated entrepreneurs, inspired by place and local materials and suppliers, with lifestyle informing business decisions and growth (one hopes) enabled by a supportive community. Josh and Zora Tabin’s quest to find a place to raise a family and start a business is a portrait of the new sector. As Margaret Jackson writes, “They rented an RV and spent half a year driving over 18,000 miles around North America looking for ‘the best place in the world to raise a family,’ says Josh Tabin, co-founder of Wild Zora.”

“I think Zora and I approached the move in diametrically-opposed but completely complementary ways,” Josh told me. “I’m analytical and make decisions with my head; she’s intuitive and makes decisions with her heart. I did research and compiled spreadsheets filled with city data, including everything from population density, proximity to an international airport, cost of real estate, types and amount of industry, healthcare, education, weather, types and frequency of natural disasters! Zora, for her part, tolerated driving with me all over the country, city by city, and when we’d roll into town, she’d usually give a thumbs-up or thumbs-down within the first few minutes.

“I suppose it was almost comical that sometimes my spreadsheets told me about a fantastic place to live — but Zora was so quick to say, ‘Nope — next!’ Of course, there’s no perfect place for everyone — but we’re very thankful we had the opportunity to discover the perfect place for us in this stage of our lives.”

And we should be happy they’re the fresh new face of . . . manufacturing.

‘Most-popular’ articles speak to manufacturing’s new diversity—and upside

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This week, we take a quick break for Tax Day to look back at the most popular CompanyWeek profiles from Q1. Here’s the list:

1. Odell Brewing
2. Woodward
3. Icelantic Skis
4. Avery Brewing
5. NFT
6. Micro Metals
7. Colorado Cylinder Stoves
8. Wild Goose Canning
9. The Real Dill
10. Sticker Giant

The most popular industry sectors were craft beer, lifestyle, and industrial manufacturing, an eclectic mix but no surprise as today’s regional economy is more and more a showcase of a rejuvenated manufacturing prowess.

It also confirms that manufacturers are interested in different sectors and how others are managing growth — and challenges. Will it usher in a new era of collaboration? Too soon to say. But a new, broad manufacturing community is clearly developing across industries. The manufacturing supply chain is likely a common area of interest; a search for new, local partners is ongoing. There’s opportunity in new connections.

Throw in good news on the national manufacturing front, and the reader’s Top 10 takes on more meaning. The companies are part of a national business story: the steady comeback of American manufacturing.

Not all is rosy. Growth isn’t uniform across sectors. And we outsource and offshore a lot of stuff — most stuff. We’re rebuilding domestic manufacturing to levels from the past. We’re still eons away.

But overall, the list is a source of optimism. Diversity translates into sustainability. Colorado’s lifestyle category is diverse and growing. Aerospace and other ‘advanced manufacturing’ is a regional calling card. The natural and organic food sector is an international rock star. The future is exciting — a mix of satellites, precision components, food, gear, and beer.

A headline in the L.A. Times summed up manufacturing’s improving brand: GE casting off lending business in return to its industrial roots. When a conglomerate chooses manufacturing over finance, it bodes well for the sector. Or as the Times article quoted:

“We’re not going to become a manufacturing-led economy again,” said Jeff Madrick, a senior fellow at the New York think tank Century Foundation and author of Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. “But it is a re-balancing, a move away from the easy way toward making something useful.”

I’d be clearer: service (i.e. finance) can’t live on service alone. And in Colorado, manufacturing is alive and well. GE can take that to the bank.

Colorado Brewers Guild and CompanyWeek team up to launch BreweryWeek

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Craft beer is nothing new to Colorado. In fact, it has slowly worked its way into the state’s DNA. What oranges are to Florida or potatoes are to Idaho, Colorado is becoming for craft beer.

Today, Colorado holds five of the top 50 spots on the list of the nations largest craft brewers, well over 250 breweries in operation and dozens of brewpubs make up what we call “The State Of Craft Beer.”

Over the last year or so, the Colorado Brewers Guild (CBG) has been working with Bart Taylor’s CompanyWeek to showcase the stories of Colorado craft brewers. CompanyWeek is a website and e-newsletter that focuses on Colorado-based manufacturers and the stories of their success, challenges, and the ins and outs of everyday business.

Nearly every issue had at least one story about the business of craft beer. So when Bart approached me and proposed that CompanyWeek and the CBG to work together and create a brewery-specific newsletter called BreweryWeek, I quickly jumped on board.

We started by asking CBG member brewers to fill out a short online survey about they sort of information you would like to see in the new BreweryWeek newsletter. More than 35 brewers completed the survey and told us topics such as local trends and brewery profiles were of high interest. On the business side, manufacturing and supply chain issues got the highest marks.

We hope you find the coming issues of BreweryWeek informative and helpful, no matter what size brewer you may be. If there is a specific topic or story you would like us to cover, please let us know. We welcome your feedback.

Cheers,
Steve Kurowski
Colorado Brewers Guild

Colorado craft’s grocery conundrum

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Colorado craft beer makers are a collegial bunch. As heady and competitive the market has become, the cooperative vibe that its first-movers established has endured and been a catalyst for growth.

And so has Colorado liquor law, making it no surprise the sector is unified against a development many view as an existential threat to the industry: the prospect that grocery stores will be able to sell full-strength beer and wine. Many crafters believe grocery (and convenience store) sales will devastate local liquor stores and in turn do irreparable harm to the sector.

There’s reason to worry. The current system has been equal parts sales channel and industry incubator. Assured of a protected network of specialized retailers, craft entrepreneurs have been free to take risks, innovate, and experiment. The results have been breathtaking. Colorado now boasts more craft breweries per capita than any state in the nation, alongside a thriving specialized retail channel that serves local interests by preserving choice and promoting local industry.

Others argue that grocery sales would not hurt the industry but help build it by improving availability and convenience. The pesky reality is that today, consumers might agree. As a result advocates for expanded sales stand a better chance than ever of landing the issue on a statewide ballot and winning.

How good a chance? Numbers give the “convenience” vote a boost. Craft products comprise about 20 percent of total beer and wine purchases here, meaning that for most Colorado consumers, buying any full-strength beer at the same location where groceries and other consumer goods are purchased is a plus. Voters may also look to California and Oregon, thriving craft markets where full-strength beer and wine are sold alongside groceries, and assume Colorado’s robust industry would evolve and adjust.

That’s certainly the case. But at what cost?

For John Carlson, executive director of the Colorado Brewers Guild, access to market, for one. “Should the current regulatory structure change, smaller brewers will have a more difficult time getting their packaged beer on the shelf,” Carlson says. “Larger packaging brewers will likely see less of their portfolio make it to the shelf of a large out-of-state corporate grocer due to limited space.”

Kevin DeLange, co-owner of Dry Dock Brewing, agrees. “Smaller breweries who are just now starting to distribute will be significantly hindered growing their business because they won’t have access to market. Many of them are already curtailing capital investment and growth due to the uncertainty.” For a sector that’s grown up ensuring the next entrepreneur in line enjoys the freedom to innovate, with assurance that consumers can buy, it’s a big deal.

Not all small craft brewers agree. “I’m 100 percent in support of full strength beer sales in grocery stores across Colorado,” says Trinity Brewing’s creative founder Jason Yester. “Although some brewers oppose it, as a boutique brewer I see a huge opportunity with the continually increasing number of natural grocers opening and operating in our state.”

Dry Dock’s DeLange sees breweries like Trinity suffering most, with grocers tilting to volume beers from larger craft brands. “Larger breweries who are already in multiple states know how the system will change and already have relationships with the chain stores and will have less damage control to do,” he says.

For their part the Guild isn’t convinced a ballot measure is inevitable and seem only to have begun the fight. They’re part of a relatively new coalition called Keep Colorado Local, business leaders intent on winning the argument before an election, in part as a means to dissuade the opposition from spending big.

As a practical matter though, what steps could be taken to mitigate impact on small craft makers and the retail outlets that have long supported them, if advocates for expanded sales succeed?

Trinity’s Yester hints at one direction. “States like Oregon are selling full strength craft beer at all grocery and convenience stores and doing so with great success. Portland is the only city in America where over 50 percent of total pours are craft beer. It’s structures like this that prove availability drives both education and sales. This is something we all want.”

Using wider distribution as a springboard to educate consumers could drive overall market share for a sector that believes it has an unlimited ceiling.

Much also depends on what an actual election decides. A constitutional amendment, as we’ve seen, leaves much to be decided. Can industry and the voices who support them in this fight, like the Colorado Licensed Beverage Association, preempt an electoral battle and work with the “grocery lobby” to agree on a framework that’s also favored by lawmakers? Consensus seems a long way off.

What’s certain is that whoever decides to take on Colorado’s craft industry should be fully prepared. Collaboration Fest, a new Guild event inviting craft brewers to work together to conceive and pour new varieties, drew over 2,500 attendees last week at Sports Authority Field at Mile High.

Tugging on superman’s cape can be risky business.

Manufacturing growth in Colorado

Manufacturing growth in Colorado will pivot on the supply chain, and prospects are mixed

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Two weeks ago, the Denver Business Journal reported Gold Star Sausage Company was moving manufacturing operations to Nebraska to be “closer to its suppliers,” as president Rick Rue described it. For the DBJ, the news was a real estate story, understandable given the high anxiety around Denver’s commercial sector. Today there’s probably more interest in the resale value of Gold Star’s building than interest in why a manufacturer would transform its supply chain. At least for the DBJ.

We’ll speculate though and guess that for a sausage and hot dog maker, much is to be gained from moving manufacturing operations closer to its source of raw materials. For Gold Star that probably means the farms and ag operations in the midwest providing beef and pork. It’s a good bet that Gold’s volume business will be well-served by reducing what must be substantial shipping and handling fees required to move perishable materials from there to here. In short, it’s about supply chain efficiency.

Gold Star is a good example of how much manufacturing growth in Colorado will pivot on supply chain development. And here, some sectors are better served than others. It’s why manufacturing is developing unevenly across industries and why the economy will be well-served by efforts to shore up resources that will drive Colorado’s unique mix of manufacturing businesses.

Colorado agriculture is generally a good partner to food and beverage manufacturers here, if not ideal, apparently, for a company like Gold Star. Colorado’s the 10th largest cattle producer among U.S. states, its top ag product, followed by dairy products and corn. Nebraska ranks in the top ten for both hog and cattle production.

Colorado’s no stranger to the national ‘top ten’ list in ag commodities. If you’re a manufacturer utilizing any of the following raw materials supply is generally not an issue:

But is Colorado ag aligned with trends shaping the new food and beverage manufacturing opportunity?

Yes, if you’re one of the state’s innovative food makers utilizing organic millet, lamb, beef and barley. The supply of naturally raised meat is growing with increased demand. And while Colorado peach and apple growers can’t match the volume of states with longer seasons, Western Slope farmers are providing a steady stream of fruit to small and mid-sized makers, including craft brewers who prize local produce that’s consistent with the brand-related objectives of the sector.

But Colorado’s natural and organic food manufacturing sector is nationally renowned and as companies continue to relocate or launch here to be part of the scene, many will source elsewhere for the products necessary to drive volume businesses. The reality is that a short growing season and extreme weather limit availability. Hops, grapes, peppers, tomatoes — natural and organic ingredients of many types and flavor — often must be sourced elsewhere. It means that companies in the state’s hot food and beverage sector must be, like Gold Star, adept at managing the supply chain.

With companies seeking more integrated operations this can be a challenge. This week’s profile of Utah’s Black Diamond, and Colorado’s global powerhouse Woodward, provide examples of how companies are seeking supply chain efficiencies by locating research and development, manufacturing, testing and shipping under one roof – or as much of the ‘value chain’ as possible.

Clearly not every business or sector will be able to fully ‘vertically integrate’ operations. Woodward relies on precision foundries in the midwest, an expertise developed over generations that will never be replicated here. But it can manage its supply of talent and deploy technology in support of global operations, with supply chain partners adept at providing those resources.

Colorado and other states pursuing manufacturing opportunity will do well to help align supply chain resources with unique manufacturing opportunities.

We’ll look at how supply chain issues are transforming other sectors in future editions.

American Nations: an emerging ‘Far West’ economic zone a boon to manufacturing?

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Next week Utah hosts its second-annual Outdoor Recreation Summit, a celebration and discussion of the state’s outdoor brand. I’ve written how Brad Peterson, the first director of the Outdoor Recreation Office, is smartly using Utah’s lifestyle attributes to attract companies who make lifestyle products, and the Summit will in part explore Utah’s future as a regional center for lifestyle manufacturing. Executives from ENVE, 4FRNT, Lifetime Products, and Chums will lead a discussion.

Each is committed to making things in the U.S. as are others in Utah, in Colorado, in Montana, and in Arizona. Across the West, we’ll see more locally made outdoor equipment and more locally made healthy and organic food and beverages, much of it fueled by cutting-edge technology that’s transforming manufacturing

The opportunities are regionwide, and though business is thriving more in some areas than others, similarities throughout the intermountain West ensure everyone’s in the game. Research universities dot the landscape. Climate and topography are a magnet. And shared opportunities in other sectors like aerospace provide incentive to cooperate.

As a result it’s easy to view the West as a distinct and unique economic zone. I’m not the first to see the West this way; Colin Woodward’s analysis of regional views on gun violence led him to a more profound conclusion, but his American Nations Today still neatly captures the concept of a unified West – or in Woodward’s case, a Far West.

He describes the Far West as:

‘The other “second-generation” nation, the Far West occupies the one part of the continent shaped more by environmental factors than ethnographic ones. High, dry, and remote, the Far West stopped migrating easterners in their tracks, and most of it could be made habitable only with the deployment of vast industrial resources: railroads, heavy mining equipment, ore smelters, dams, and irrigation systems. As a result, settlement was largely directed by corporations headquartered in distant New York, Boston, Chicago, or San Francisco, or by the federal government, which controlled much of the land. The Far West’s people are often resentful of their dependent status, feeling that they have been exploited as an internal colony for the benefit of the seaboard nations. Their senators led the fight against trusts in the mid-twentieth century. Of late, Far Westerners have focused their anger on the federal government, rather than their corporate masters.’

Of course, our views on things like government are evolving. A healthy skepticism for the federal government hasn’t stopped Colorado residents from embracing local government; in fact, it’s the state’s number one employer. Or using elections to control the social agenda.

But economic opportunities like outdoor recreation provide a compelling and more modern lens to view the Far West’s collective opportunities, as will regional responses to development challenges once local actors understand the upside of moving collaboratively.

Including calculated efforts to support the growth of maker and manufacturing business well-matched to regional attributes and assets – -like lifestyle. Join us next week to hear how several companies are doing just that.

Reach Bart Taylor at btaylor@companyweek.com.

Big Beer has lost the Craft War. What’s Next?

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No doubt the executives at Anheuser-Busch Inc. who greenlighted the now-infamous craft-beer-bashing ad hope they’ve heard the last of it. But if history is a guide, the ad was only the start of what may become a very public retreat for Big Beer’s most influential brands.

Successful companies reach a point where high-profile, public attacks seem a good approach to redress competitive shifts the market appears to be making. Many choose, wisely, to abandon the idea. Others can’t help themselves, and in many cases we can look back on the decision as beginning of the end an era of success, a brand or corporation.

I witnessed it firsthand in the technology space. Executives at both IBM and Sun Microsystems decided to deal with Microsoft’s upstart business operating system, Windows NT, by publicly trashing it. Sun’s CEO at the time, Scott McNealy, was especially vitriolic, taking shots at NT but also disparaging Bill Gates personally. It became an ugly, recurring spectacle. McNealy’s protests only emboldened a generation of IT professionals to embrace Microsoft. Sun didn’t see it yet, but the game was over.

Amazingly, the lessons were lost on Microsoft executives. A few years later Steve Ballmer could be heard throwing water on a list of Apple innovations from Macintosh to iPod and — most famously — the iPhone. Ballmer raged at Jobs and Apple publicly. We look back and realize the war had already been lost.

ABI’s antics are similar, and its public cheap shots directed at the upstart craft sector seem a sure sign that Big Beer has already lost the Craft War.

The question for beer’s big brands is how to regain momentum in the market, incorporating lessons from the craft boom. ABI makes a lot of beer in Colorado, but — given the historic connection to the state — it’s perhaps more interesting to speculate about the future of Coors. (Plus, I’m a Banquet guy.)

Coors certainly values the attributes of the craft sector. Its namesake, Adolph, was the first crafter in Colorado. But the company seems miles away from any meaningful connection to the crafting ethos. Foremost, Coors values profits. It’s lost a meaningful connection to place. And the company’s public pronouncements can leave an aloof, big-company impression that’s actually at odds with the affable, approachable nature of Peter Coors, who’s often quoted.

Coors said the following last month in announcing the retirement of the company’s CEO, Tom Long, while also acknowledging falling sales for its flagship Coors and Miller brands. “Under Tom’s leadership, the company consistently delivered profit growth, pricing growth and cost savings, while dramatically improving capabilities in key areas like innovation, chain sales, revenue management, learning and development, and beer knowledge and appreciation.” Whatever that is.

To be fair, Coors would probably argue that, while the craft sector is nice, it’s entirely separate from the brand strategies driving Miller, Molson, and Coors products.

But should it be? Selling 25 million barrels of Coors Light every year (and falling) makes it easy to say no, that in the foreseeable future the modern Coors mission remains with mass-produced beer.

Consider the possibilities of a complementary plan that seeks to rediscover the brand’s historic connection to people and place, as a way of recapturing its craft heritage. Establish an annual award that funds a craft startup. Reconnect Coors executives with the local beer scene. Generally, reconnect with local industry. Make the Coors brand relevant again as a force for change that supports local makers.

The great people at Coors will remind me all this being done in some fashion. The market disagrees.

While Anheuser-Busch is busy with its own messaging, consider an alternative. A resurgent Coors would be a win for everyone.

Manufacturer’s Edge Department of Commerce grant the latest win for Colorado manufacturing

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Last week, Colorado Senator Michael Bennet announced that Manufacturer’s Edge (formerly Colorado Association of Manufacturing and Technology) is the recipient of a five-year, $8.34 million grant from the U.S. Department of Commerce’s (DOC) National Institute of Standards and Technology (NIST). As Bennet’s release outlined, “Manufacturer’s Edge was one of 10 state MEP centers selected for funding in a nationwide competition. NIST awarded a total of $130 million in funding to help MEP centers increase their services and customer base. The new cooperative agreements are for five years, subject to availability of funding and successful annual reviews.”

I asked Tom Bugnitz, CEO of Manufacturer’s Edge (ME) and occasional columnist for CompanyWeek, to elaborate on the award and assess Colorado’s manufacturing landscape.

Q: Tom, congratulations on the $8.34 million Department of Commerce grant. In announcing the award Senator Bennet said, “These additional resources will allow the organization to expand their current services, reach new customers, and continue their great work in Colorado.” To be clear, are these additional funds or does the money comprise ME’s annual operating budget?

A: Thank you, Bart, and thanks for the opportunity to talk about this. As you can imagine we’re excited about being selected as the MEP center of the next five years.

The short answer to your question is that NIST has increased our funding by two and a half times.

Since the local Manufacturing Extension Partnership center (MEP) was established in Colorado, NIST has provided $665,201 per year to support the center, subject to our finding a 2:1 match of those funds, or $1.3 million. (We did that by selling consulting and training services each year.) This award increases that annual amount by over a million dollars per year, and reduces the match to 1:1. Not only will there be more money coming into Colorado to help manufacturers, they have made it easier for us to use that money.

Q: Explain the process: ME was asked to prove its worth in a lengthy process last fall known as a ‘re-compete’ to qualify for the federal funds. Who were you competing with, and is this process common across the country?

Being chosen as a state’s MEP center is the result of a competitive process in which any nonprofit organization, university, community college, or state agency can apply to be the center. The result of that competition is a contract and financial award to operate as the state’s MEP center and receive NIST funding. Currently there are 60 MEP centers in the U.S., with at least one in each state and Puerto Rico.

As part of a larger review of the national MEP system, the MEP centers in all 50 states and Puerto Rico will be opened up for re-competition over a 4 year period, which started with a first round in August of 2014. During that round 10 MEP centers, including Colorado, were opened for competition.

Our previous contract was in its third year of five when we agreed to open up the MEP contract for an open competition with any other organization in the state. By doing this, we guaranteed the $1 million increase in federal funding to Colorado, regardless of who was ultimately awarded the contract.

We don’t know how many other proposals were received by NIST or who the proposers were, and NIST will likely not reveal that information.

Q: The federal government is focused on manufacturing. In addition to ME’s grant, Colorado and other states have been the beneficiary of significant financial support, awards designed to shore up U.S manufacturing. Can you provide some national context to ME’s award?

The Obama administration has consistently focused on building, re-building, and advancing manufacturing and manufacturing methods. The MEP system represent the “boots on the ground” of that effort, and funding for the system as a whole has remained stable or increased in the last few years, going against the trend of most federal programs. Overall the MEP system is a $140 million program.

The 800-pound gorilla in federal and state manufacturing efforts is the federal government’s National Network for Manufacturing Innovation Institutes. In 2013 the President proposed $1 billion be invested in 15 Innovation Institutes. To date, five have been started (with initial investments of $120 million and expected investments this year of another $150 milliob), including three in which Colorado participates: Digital Manufacturing and Design, Lightweight Metals and Materials Manufacturing, and Advanced Composites Innovation.

Q: A notable difference that you reference in Senator Bennet’s release is ME’s broad charter, to provide resources and assistance to manufacturers across industry sectors. How does ME’s charter differ from or complement other federal or regional efforts?

The main difference is our singular focus on helping individual companies grow and create jobs. As I mentioned before, we are the boots on the ground, applying resources directly to companies based on their needs and particular circumstances. We’re out every day with manufacturers listening to their concerns and developing programs to address them.

That said, there are a large number of programs aimed at manufacturers in Colorado. We look at all of those programs and ask one question: How can we use our resources to leverage those programs and create better results for manufacturers?

As an MEP center, NIST allows wide latitude about what programs or services we offer, but also expects us to not only respond to the direct needs of Colorado manufacturers but also support state initiatives that help manufacturers over the longer term. As examples, we have used the Colorado Blueprint as part of our plans, and have supported the SMART initiative from OEDIT since day one.

If a program helps manufacturers, we want to help that program.

Q: You’ve written in CompanyWeek about the need to get resources directly to manufacturers. Describe the state of Colorado manufacturing?

To be as blunt and direct as possible, Colorado manufacturing is diverse, it’s strong, and it’s growing. But not all manufacturing sectors are sharing in the growth. Some industry sectors and individual manufacturers that are hurting, and the workforce shortage is constraining manufacturers all across the state.

We can describe Colorado manufacturing by numbers that tell part of the story. There are roughly 5,600 manufacturing companies in Colorado employing about 133,000 workers in 21 different manufacturing sectors. 64 percent of those companies employ less than 10 people, and only 10 percent employ over 50 people.

That means we must do things that directly help small manufacturers hire new people, find new markets, and develop new products and capabilities. Right now, manufacturers across the state are creating regional organizations to help define the regional needs that companies like MEP can address and to create formal and informal networks of suppliers and customers within the state to grow local businesses. Individual companies are standing up and leading the charge for workforce development and capital access. We have the potential and foundation to do much more, and people all over the state are beginning to act on that potential.

We have a chance to do great things in manufacturing in the next 10-20 years, and we can establish Colorado as a leader in manufacturing technology and innovation.

Reach Tom Bugnitz at tbugnitz@manufacturersedge.com.

Award-winning KOTA Longboards is only one bright spot in Denver’s promising urban MFG landscape

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KOTA Longboard’s Mike Maloney doesn’t lack for confidence. Winner of the JP Morgan Chase Main Street Grant and $150,000, Maloney told me in September 2013, “We offer a product of high performance and high value, and I am living proof you can start a manufacturing company in the United States.”

It was music to my ears. We featured KOTA in just our second issue, and finding Mike was not only a revelation — my kids ride KOTA — but an affirmation. He’s in the leading edge of a tidal wave of inspired and modern manufacturing reshaping our economy. He’s a poster child for CompanyWeek.

The wave isn’t lost on city officials in Denver, who deservedly were included in the Denver Post story about KOTA’s award. Not only was Paul Washington’s industry team supportive of KOTA from the beginning — I saw — they’re proving to understand the opportunity of light manufacturing in the city’s future.

Denver’s already the beneficiary of one high-profile lifestyle-manufacturing boom – its craft beer scene is nationally renowned. The Post mentioned a new initiative from the City called “Create Active Denver,” conceived to lure ‘sports action lifestyle’ companies to the city. Denver co-hosted the inaugural Colorado Apparel Manufacturing Summit this past fall (with CompanyWeek). Denver’s industry pros also work hand-in-hand with groups like Manufacturers Edge, to host other events like Beers-and-Gears.

Lifestyle’s only one of a several high-potential manufacturing opportunities for the city. Another may be the technology-fueled Supply Chain — small design and tech-shops armed with tools to enable prototyping and small-batch manufacturing. Growth here should not only inspire start-ups but also fuel a new era of big-company engagement with local suppliers and contract manufacturers.

It’s an exciting prospect for Denver — and others increasingly tuning in: an urban economy profoundly changed by its city producers.

If there’s a quibble with Denver’s approach, it’s that its gaze may not yet extend far enough. In the future, it’s easy to see the City (and State of Colorado for that matter) inviting all manufacturing into a ‘key’ economic sector, to better align resources and promote the community. The numbers convey the breadth of opportunity. As CU’s Brian Lewandowski writes, in the second half of 2014, “Colorado ranked 3rd for manufacturing employment growth; over the past three years Colorado ranked 7th; and over the past five years, Colorado ranked 8th, even though Colorado ranks 30th overall for manufacturing jobs.” The entire sector’s booming. And Denver’s in the middle of it.

But for now it’s easy to celebrate the accomplishments of one of manufacturing’s inspirational leaders and a community of supporters who’ve helped get him and the KOTA team this far. There’s a journey ahead for everyone.