Why the effort to rebrand manufacturing continues to miss the mark

A Washington Post business article published last week, headlined, There are some jobs now in manufacturing. Kids just aren’t interested in taking them”, was noteworthy on two counts. For one it summed up the workforce challenge in manufacturing without losing sight of the sector’s albatross: a more qualified workforce may be slow to materialize unless the perception of a manufacturing career profoundly changes.

Also of note was that mainstream business media covered the story at all. Certainly in Denver, in Colorado, one’s hard pressed to find any coverage of manufacturing issues.

The irony is that for the manufacturing economy to make a comeback that some forecast, the sector would benefit from more media visibility. Today’s maker economy is a couple generations removed from industrial-only sector of the mid-to-late 1900’s, but for some the imagery of hard hats and welders continues to define the sector. The challenge is how to change the public’s perception of manufacturing.

Two features published in today’s CompanyWeek convey a different look. Eldon James and Hope Foods, companies in different market sectors, are compelling examples of the tech-driven, modern manufacturers who are less often seen but very prevalent. It’s become conventional wisdom that to change the manufacturing brand, images of bending, shaping, fabricating and cutting must fade away.

But it’s a mistake to tell only part of the manufacturing story or demean the blue-collar component that’s built-in to the fabric of the maker economy. Some of the most compelling stories we publish are of companies that build stuff, big stuff. Check out today’s Wazee Companies profile.

Certainly technology has changed manufacturing. Jobs are less dangerous, less dirty. But other differences are more meaningful and inform today’s manufacturing brand in a positive way, including the breadth of the what’s now being made in the U.S., the growing prospects for collaboration between makers as a result, and the shifting perceptions of the value of today’s university degree. Young, smart people are beginning to realize that launching and owning a business, for example, is a fantastic option. Entrepreneurship is again cool – especially in those sectors at the intersection of lifestyle and business. (Or as my friend Chuck Sullivan likes to say, “of lifestyle and commerce.”)

Manufacturers are also connecting in surprising ways, borrowing products and processes for use in new applications. Eldon James is leveraging technology and products perfected in bioscience for use in making beer. “What we found is that our antimicrobial tubing that has been accepted very well in medical…is very effective at inhibiting bacteria that spoils beer, and also wine spoiling bacteria, “ says Marcia Coulson, president and co-founder of the company. An EJ beverage division was launched this year.

Hope Foods is likewise managing bacterial contamination – with technology that’s been around for decades but just know becoming mainstream in food preparation.

We may be aspiring to rebrand the wrong stuff. The tale of manufacturing today is one of large and small companies, of brewmasters, designers, and organic growers alongside machinists, welders and equipment operators, fueled by technology and inspired by innovation that’s jumping from one industry sector to another.

This isn’t necessarily how industry, its trade groups or government or media, tend to view the issue. Here, maker groups and government efforts tend to align vertically, by industry. Or, by company size: larger businesses able to buy memberships or pay for lobbying. Or, by geography.

For their part media are in a strategic retreat, limiting not expanding their gaze and largely incapable of rebranding anything that’s not to do with the service-related advertising dollars we incessantly chase.

A more practical plan to rebrand manufacturing would be to bring together companies and visionaries from different industries, in media and in person, to share ideas that will drive more innovation and collaboration. The companies that benefit will be a magnet for kids who want high- paying jobs out of college, not an extended stay in the parent’s basement.

Let’s showcase the entire breadth and impact of the new maker economy – hardhats, kitchens, cleanrooms and cranes.

And read about in the Washington Post.

CompanyWeek turns 100. What’s been learned – and what role maker-media?

CompanyWeek began reporting on regional makers and manufacturers last September. We’ve profiled 100 companies since then – writing about their products, leadership, business strategy, challenges, needs, and more.

What’s been learned, and importantly, has the hype of CompanyWeek been warranted? Does the market need maker-economy media?

It’s clear the factors driving a manufacturing surge are real and Rocky Mountain makers are benefitting. As Brian Burney, CEO of Oliver Manufacturing in told me, “it’s a good time to be a manufacturer.”

Colorado’s maker community is booming, in high-profile categories like technology, software and media, craft beer, distilling, natural foods, and aerospace. Metrics and anecdotes bear this out. Catalysts for offshoring — among them cheap labor and lower operating costs — are also giving way to equally compelling reasons to reshore jobs and build more stuff here here, in the U.S.

Economic interests supporting business also favor maker jobs. The build wealth, as the adage goes. They return dollars to the region from products sales around the world. There’s also a discernable, positive cultural impact. Communities home to companies that make stuff seem inherently more stable, more cycle-resistant. And they demonstrably enhance middle-class prosperity. They pay more.

But will all this translate into a so-called manufacturing renaissance?

Maybe.

By some measures manufacturing continues to lag relative to other sectors in the economy. There’s nothing meteoric about job growth in the sector. Macro-industrial output is sluggish. In relative terms, manufacturing is still in recovery mode.

Industry, conversely, points to an acute workforce need, and fully a third of the 100 growth companies we profiled struggle to find qualified workers, a finding underscored by state-gathered data that indicates over 15,000 manufacturing jobs went unfilled last year for want of qualified candidates. And in potential high-growth sectors like apparel and consumer-goods manufacturing, domestic labor remains overpriced relative to what’s available offshore.

Moreover, if manufacturers are to replace offshore suppliers or producers with local business partners, they need to locate them. It may not sound like much, but it’s a significant barrier to expansion of the sector. If manufacturers were effective self-promoters, they wouldn’t be manufacturers.

It’s unclear whether public-private partnerships designed to improve workforce readiness are getting traction. We’ll know a lot more soon. The coalition of industry, higher-education and government brought together last year by House Bill 1165, known as “career pathway legislation”, is beginning to report on outcomes from the five regional ‘summits’ convened to date. Jo O’Brien, an ‘industry pathway leader’ with the Colorado Community College System, briefed me recently on initial feedback from participants. (We’ll have much more on the outcomes of 1165-related processes in following weeks). The upshot is positive, in no small part because those who can make a difference are (finally) sitting around the same table.

When industry and higher-ed align, and a new generation of manufacturing employees begins to stream into the economy, can the manufacturing economy produce jobs at a higher rate?

In addition to workforce, growth may pivot on our ability to support entrepreneurs. Despite a generally positive spin here, in Colorado, about our collective exploits in birthing new companies, a recent study by the Brookings Institute suggests we’re struggling to keep them in business. From 1978 to 2011, the number of companies less than a year old in Colorado, as a percent of the total, dropped 51%, near the bottom of national rankings. Or as the Washington Post put it, “U.S. businesses are being destroyed faster than they’re being created”.

The findings track roughly with the steep drop in U.S. manufacturing jobs, and with financing woes related to the recession. Money’s needed to keep the small business in business.

What does all this mean for CompanyWeek? For one, storytelling has never been more important, if workforce and a more connected business community are keys to sustainability. Changing the perception of manufacturing is best done by reporting on those doing it; and media, at it’s best, connects people and companies to facilitate new business partnerships including those involving money.

Would this happen without a manufacturing-centric media voice?

In a hyper-local way, yes. But if broad outreach is what’s needed, and clearly the maker-economy will benefit from a thousand new business relationships, then CompanyWeek will play the important role of regional community-building. And compliment, not compete, with other storytellers.

We’ll revisit the proposition after the next 100. Stay tuned.

Forney Industries’ next chapter may pivot on a new MFG workforce – and higher-ed’s role

America’s manufacturing evolution is also the story of Ft. Collins-based Forney Industries. Founded in 1932 by James Forney, the company has evolved from primary manufacturer to a distributor of goods made by others, much of it offshore. Today Forney sells industrial goods procured from a global supply chain to thousands of U.S. retail outlets like Ace Hardware.

That Forney successfully adapted where others did not is noteworthy. Hundreds of manufacturers weren’t as fortunate, or skilled, in dealing with the offshoring wave.

Yet Steve Anderson, Forney’s grandson and President and CEO today, is looking forward, and like many, sees opportunity again for U.S. manufacturing and related business. He and chief operating officer Kyle Pettine have a clear view of the factors driving manufacturing back to the U.S., like rising overseas wages, lower domestic energy costs, quality-control, and simply a desire to do more business locally. Manufacturing has momentum.

For Forney Industries, a growth surge might translate into a growing industrial business as manufacturers increasingly look for locally made products and goods, for raw materials, fashioned parts and high-tech components. Goods that Forney will distribute in the U.S. market.

“The industrial market is one we’re starting to pay attention to,” Anderson says. “It’s a $400-$450 billion market, and we’d like to be a bigger part of that. To do that we have to go out and get involved with manufacturers and the distributors who sell to manufacturers. We’re going to start in Ft. Collins and branch out from there.”

Forney’s experience gives Anderson a unique perspective, though, and he and Pettine see nothing inevitable about a flood of new manufactured products changing the U.S. economy overnight. The challenge? Workforce. For U.S. industry to bounce-back and power innovation and development in a bigger way, a new generation of industrial employees must begin to materialize to power America’s new ‘maker economy’.

‘We’re almost starting over,” Anderson, says, drawing on the firm’s manufacturing roots but also its front row seat to a sector that changed radically in the last half of the 20th century. “For the past decades we’ve asked others to do the work for us. That means we have to start educating kids now – we’re behind.”

Pettine adds, “From my perspective we’re getting to a critical point – we’ve got a gap in our workforce as the baby-boom generation is retiring. There isn’t a next-generation manufacturing workforce.”

He puts a sharp point on what’s at stake. “Would we buy American if we had the option? Of course,” Pettine says. “So would our customers.”

So a generation or so removed from manufacturing but committed again to filling more orders with American-made products, leadership at Forney is working to fill the labor pipeline that would juice a new manufacturing surge. A new manufacturing coalition has formed in northern Colorado. Anderson’s on an education committee. He’s honest about the scale of the challenge, of labor enabling the next iteration of his family business.

“The baby-boomers want their kids to be doctors and lawyers – but unfortunately doctors and lawyers represent a small percentage of our workforce. Few parents today see their kids working on a CNC machine (basically, computer-guided machine tools), and that’s wrong. But we’ve done it to ourselves. We’ve taken shops of out the high schools; kids don’t have to work with their hands.

“Our goal on the manufacturing side of things today is to get kids back to having some interest in what a manufacturing career would be,” Anderson says, “and what’s happening here is that manufacturers are creating that curriculum that should be taught in the schools but don’t have any way to share it. We’re trying to get that knowledge off the shop floor and to educators at the community college level.”

What Anderson and others would acknowledge though is that community colleges aren’t enough. For one, some community colleges are overwhelmed today with vocational demand. It’s not uncommon for colleges to have wait lists for classes like welding.

But even if the community college talent pool improves – and grant money pouring into the system and legislative focus can’t help but improve the system’s poor showing in manufacturing – Anderson believes universities will have to play a bigger role.

“At Forney we support the supply-chain management program at Colorado State University, but there aren’t a lot if any courses in how to control process or manufacture goods today. Or what it’s like for a business to be ‘lean’ (a manufacturing production practice). We’re pulling a lot of kids from the supply-chain track at CSU – but have they had any exposure at all to what it takes to manufacture? Probably very little. We need more kids exposed to the possibilities of a manufacturing career.”

In the end, industry – manufacturers – will have to lead the way. As Anderson and Pettine point out, industry knows best which jobs-of-the-future will materialize. In many cases they are leading. Wolf Robotics, a Forney neighbor in Ft. Collins, runs a 30-intern program with CSU that continually develops the talent Wolf needs. Others operate similarly.

Even so, according to Anderson, universities can play a more active role. “CSU should really be reaching out…to manufacturers, to say, ‘tell us about your story; tell us about what you need.’ That would help tremendously.’

Will a U.S. manufacturing resurgence write a new chapter for the company? For Kyle Pettine, it would be mean less flights to China and more to San Diego, or Michigan, a prospect that seems to appeal to him primary because it would be mean more dollars staying in the U.S.

Whatever the case, Forney Industries seems capable of adapting to whatever the future holds.

Contact Steve Anderson at (970) 494-6806, and Kyle Pettine at (970) 494-6839.

Mesa County’s Western Colorado Manufacturing Alliance off to a fast start

The drive east on I-70 from Grand Junction, at 6:15 a.m. on a Friday morning, is more stock car race than commute. The highway’s packed with mud-caked pickups and dualies, all in a mad dash to the oil and gas rigs around De Beque, Parachute then Rifle. The frantic pace seems an apt metaphor for the sector.

I’m heading back to the Front Range after attending the first Western Colorado Manufacturing Alliance Summit, and guessing the surging pack on I-70 is welcome but also a reason to pause for the farsighted leaders who’ve worked to pull this industry group together. Oil and gas have been great for Mesa County, but diversifying the economy’s an objective here. Energy’s boom pace is hard to sustain, at the expense of related sectors in down times.

The rush is also a reminder of the workforce challenge here for non-energy manufacturers. Oil and gas producers tap deeply into the labor pool. Wages are high. It makes it tough on companies who would hire and train a new generation of tech-savvy machinists and equipment operators, welders and brewmasters.

Of course energy producers are manufacturers of the first order, but WCMA has gathered a group of light industry firms, primarily, to network and determine what can be gained from building a more connected maker economy. It’s a mix of established industry players and smaller process and component manufacturers.

It’s a good showing – it’s the group’s first event – but it’s who’s not here that also makes this event and initiative promising. When they’re engaged WCMA will grow.

Only one winery from Colorado’s jewel of a maker sector attended the summit – Talon. It’s not a slight; the vision for a truly integrated maker community, with disparate industries collaborating to advance their interests, is relatively new. Plus some wineries need to be reminded they’re manufacturers.

Also in the building stages is a community of small tech-shop startups and entrepreneurs armed with 3D printers and CAD-enabled means just beginning to provide component prototypes, and increasing production-ready parts that enable small batch manufacturing. The foundation is here; Jon Maraschin’s Business Incubator Center is collaborating with others like Colorado Mesa University and Colorado SBDC to build from the ground up. Meaningful collaboration with Mesa County’s maker community should only grow.

I was one of the few east-slopers who made the trip west to the Summit without a bike. Attendees were peeling off after the last session to ride the Monument, or Rustler’s Loop or planning trail rides the following day. Mesa County’s an outdoor mecca. A push to attract light industrial makers in the lifestyle sector, to leverage and shape fitness tourism into a true cluster strategy with industry a core component seems here for the taking. Companies like Mountain Racing Products (profiled in CompanyWeek) and Loki are vanguards.

The event’s grassroots feel seems the right track here. It’s unclear though whether it’s aligned with the state’s economic development efforts. OEDIT, Colorado’s Office of Economic Development, and CAMA, the Colorado Advanced Manufacturing Alliance, were here, outlining efforts to support manufacturers, mainly from programs in pursuit of federal dollars aligned with national advanced manufacturing initiatives. Colorado’s well-positioned, to OEDIT’s credit. But it’s a high-stakes game with uncertain outcomes, often with long-lead times involving myriad grant applications and lot’s of moving parts.

The top-down push is also expensive. Karla Tartz, Deputy Director at OEDIT, mentioned here that two new deputy directors are being hired to manage program development in advanced manufacturing. Governor Hickenlooper’s economic development bureaucracy is already big; it’s nearly doubled in size since FY 2011-12. And it’s getting bigger.

It’s worthwhile if a payoff follows, if initiatives OEDIT’s pursuing such as the Colorado Acceleration Agenda, or COAA, bear fruit. The ‘Manufacturing Corridor’ envisioned in COAA would first be established along the Front Range, from Larimer County to Pueblo, but eventually include Mesa County and more regional destinations.

Next to this complex and ‘advanced’ approach to advance development, Mesa County’s support of entrepreneurship, of connecting business to enhance collaboration, and tapping its lifestyle attributes might sound inadequate. And Reynolds Polymer and other established industry players here must see also see the benefits of being part of a cross-industry maker community that pulls the same direction.

But if the maker economy here engages, if entrepreneurship is nurtured, and municipalities widen their view to the possibilities, WCMA’s first summit will be a preview of great things to come.

Along with a more casual morning drive along the Colorado River.

Side with the little guy in Cider Fight

Who best represents the interests of industry, upstart entrepreneurs who innovate and force change but often flame out, or established voices who’ve paved the way for those to follow?

The question frames not only the dust up between Tesla and the powerful dealer network that control auto sales in the U.S. (read Jeff Rundles overview from last week), but the fight that’s brewing locally between craft cider makers and national beer brands who see opportunity in the fast-growing, hip new beverage sector.

I’ll leave it to Ed Sealover of the Denver Business Journal to report the details, but the upshot of the cider kerfuffle is this: MillerCoors and Anheuser Busch have convinced two state representatives, Dan Pabon (D, Denver) and Frank McNulty (R, Highlands Ranch), to introduce legislation to eliminate a regulatory step that as a practical matter would lower the price consumers pay for MillerCoors and AB cider. Local makers would be strapped to meet the price break. Quoted in the DBJ, Brad Page of Colorado Cider (read the CompanyWeek profile here) sees it as a death-knell for small producers in the sector.

The Tesla situation is relevant and instructive here. Influencers from the powerful established auto dealer network are forcing Tesla, the most innovative, disruptive U.S. automaker in decades, to conform to a decades-old sales methodology, against its will. On the surface it seems self-defeating for an industry seeking to improve its global competitiveness to undermine a smaller, more innovative operator. Tesla strengthens America’s global auto brand.

Fortunately it looks like the sides are working toward a resolution. No surprise, Tesla may be leading the way. In New York, the automaker’s agreed that in the in future, dealerships will be the point of sale. And states who’ve been convinced to tell Tesla how to run its business, like New Jersey, seem to be coming to their senses.

Or more accurately, lawmakers lobbied into action may be coming to their senses. Those who would intervene on behalf of Coors and Anheuser Busch to the detriment of the small guy should think long and hard about the impacts. The craft beverage sector is a proven winner for Colorado and the region. If the bill hurts growth companies in the space, it’s bad policy.

The premise for reform is not without merit. Colorado’s liquor laws are outdated. Reforming the way beer, wine, cider (and the next beverage) are distributed and sold seems a worthy endeavor.

But as with craft beer, this fledgling maker sector can do great things for the economy if nurtured. So many positive things happen as a result of successful risk-taking and entrepreneurship in the maker economy – jobs, innovation, branding for the state, wealth-building – that it’s critical to support, not undermine, promising businesses like Colorado Cider. Or Tesla.

MillerCoors and AB might argue the point. The regulation may be onerous. There’s a good case to be made for regulatory reform.

But did Colorado state representatives Pabon and McNulty wake up one morning and decide that providing MillerCoors and Anheuser Busch regulatory relief to help them sell more cider should be a legislative priority? Of course not.

Colorado’s business community must rally around the little guys at a time when the economy really needs them. Colorado legislators should slough off intervention and scuttle narrow reform in favor a well-planned and fully-vetted regulatory rework. Let’s send the right message at a pivotal time. Support new makers and manufacturers. Support the little guy.

Brad Peterson on Castleton Tower

When industry comes to play: Utah’s recreation ‘brand’ getting a business push

Brad Peterson, director of the Utah Office of Outdoor Recreation, seems the right person for the job. “When I’m working around the Wasatch Front [in Salt Lake City and vicinity], I try to mountain bike the Wasatch Crest, rock climb up Big Cottonwood Canyon, ice climb up Little Cottonwood Canyon, or do a dawn patrol ski tour before putting on my suit and heading to the capitol by 8:30 a.m.”

Peterson describes his morning regimen to me without a hint of pretentiousness, almost apologetically. There’s nothing modest though about Utah’s efforts to promote its outdoor brand. Peterson was hired after the Utah legislature established the position to support the state’s growing recreation-related economy.

Industry is at the heart of the effort, and it’s here that Utah’s program crosses over from just another tourism promotion to meaningful economic development initiative, one that Colorado and other western states with lifestyle-related business ambitions should watch.

“The recreation economy is one of six key industries that drive our economy, to the tune of about $5.8 billion dollars,” Peterson says. “Per capita, Utah has more recreation-related jobs than any other state in the country and we are continuing to expand that base every year.”

A push to attract recreation businesses is a part of the plan. “It’s hard to economically measure the number of people and companies who have moved to Utah as a result of our extensive recreational opportunities, but we know that as major companies like Black Diamond, Backcountry.com, Petzl, QBP, Skullcandy, and Hoyt Archery have moved their headquarters to Utah, other companies have followed,” he says, adding, “plus we know there’s a “halo” effect of non-outdoor related companies moving to Utah following the actions of outdoor related companies.”

Peterson was part of a Utah delegation that traveled to Taiwan in March to the Taipei International Cycle Show to recruit companies and promote the state’s cycling-related economy. Bicycle Retailer reported on the trip, including Ogden’s noteworthy push to develop a cycling business brand. Ogden’s bike-friendly mayor, Mike Caldwell, is leading a charge to support and attract companies to the area, including an event last September when the city hosted 25 Taiwanese executives from cycling firms on a multi-day bicycle tour of Utah’s national and state parks.

Peterson lauds Caldwell’s efforts. “He’s an enormous advocate to recruit cycling based companies to the state. And he’s doing it the right way. It’s about quality of life and the state’s recreational opportunities but the synergies from being clustered together in the outdoor industry are huge. We’re trying to recruit a large number of Taiwanese companies to headquarter along the Wasatch Front. Ogden’s a great indicator of how it can work.”

Sarah Lehman, CEO of ENVE, one of Utah’s signature cycling firms based in Ogden and global leader in carbon-frame technologies, agrees. “Utah is favorable from a business standpoint, but it’s also favorable in terms of the outdoor recreational focus,” she says. “We’re a bike company. It makes a lot of sense to be here surrounded by our peers.”

The idea of industry clusters isn’t new but the notion of building around recreation (to leverage a region’s world-class natural resources) and the momentum in the lifestyle ‘maker economy’ is, and it’s gaining momentum. In Bozeman, Montana, a group of city officials, manufacturers, and outdoor industry players have launched the Montana Outdoor Alliance to promote the state’s recreation business opportunities and attract lifestyle manufacturers. Montana State University is also at the table.

In Colorado, pockets of recreation industry have developed around the local inspiration of visionary athletes and entrepreneurs. Boulder’s lifestyle business community has long birthed world-class ski, running, and cycling businesses. In Colorado Springs, there’s a growing push to include industry in a possible brand campaign around its Olympic facilities — a ‘City of Champions’ moniker. In Steamboat Springs, the founders of Honey Stinger, Big Agnes, and Moots Cycling have laid a foundation.

Yet Colorado has failed to tightly integrate an industry cluster message with its international tourism push, and moving an inclusive initiative through the state’s painfully large development bureaucracy and polarized political landscape seems daunting. Efforts are still underway in the legislature to fight Governor Hickenlooper’s byCOLORADO program. If the lifestyle cluster strategy is to work here, it likely will be driven, supported, and promoted by local entities.

The benefit of consensus and a streamlined process at a high level isn’t lost on businesses in Utah. “There’s no bureaucracy,” ENVE’s Sarah Lehman says. “There’s no red tape. There’s just a group of individuals who are here trying to improve the workforce and the economic conditions that allow businesses such as ENVE to thrive.”

Brad Peterson of course agrees, and he is committed to keeping the Office of Outdoor Recreation out of political fights that might sidetrack his efforts. Asked about SkiLink, a proposal to connect Canyons with Solitude via a chairlift on Forest Service land that’s ruffling feathers, he said, “The Office of Outdoor Recreation does not and will not own those issues.”

Given the growing competition to attract new lifestyle industry it’s a commendable approach. Utah seems intent on wresting regional lifestyle leadership from its rival to the east. Yet as things are going, and Peterson might agree, how one state goes so goes the region. And if Utah, Colorado and Montana can each build dynamic and growing maker economies in the lifestyle and recreation space, the region as a whole will benefit.

‘Where Industry Comes to Play’. The Rocky Mountains, that is.

(Thanks to Bicycle Retailer, the ParkRecord, and Utah Governor’s Office of Economic Development for quotes in this story.)

Top of Jahman on Sister Superior

Jobs, prosperity at stake as Colorado manufacturers organize to advance their interests

New economic realities are bringing manufacturers together across Colorado. Unlike the employee-driven efforts of an earlier generation, today’s organizers are business leaders facing new challenges to growth but who also see opportunity as the post-recession manufacturing economy takes shape.

On Colorado’s western slope, industry has led the formation of the Western Colorado Manufacturing Alliance. The WCMA is hosting the Western Colorado Manufacturers Summit April 10 in Grand Junction. Eric Goertz, VP of Operations at Capco, Inc., a western slope manufacturer, is acting chairman of the Alliance.

Goertz, an engineer by trade, is as pragmatic as he is optimistic about what’s to be gained from organizing.

“I am sure the reasons for ‘why’ we are working to put together manufacturing alliances may differ, but the end results should be very similar,” Goertz says. “Obviously if manufacturers band together, we can avoid duplication of efforts in a wide array of topics, from changing health care regulations to employee training programs. We can also learn best practices from each other, work to buy locally which helps bolster the local economy and workforce, speak with a unified voice and make policy changes happen if needed.”

He’s also aware of the limitations of trade groups and cautions against unrealistic expectations. “The question in my mind was, given some investment of time and talent into the local economy, specifically manufacturing, could I see an ROI from these efforts? Thus far, I will say that I have become more connected with the types of manufacturing that takes place locally, and we (Capco) are starting to use suppliers from our local market a little more than we did a year ago. I am pleased with our progress; we’re hoping the Summit is successful.”

Similar efforts are taking shape along Colorado’s Front Range. A northern Colorado manufacturing ‘partnership’ is building, as is a new alliance stretching south from Castle Rock to the New Mexico border. Led by Springs Fabrications’ founder and CEO Tom Neppl, who’s also now the industry chair for the Colorado Springs Regional Business Alliance, the Southern Colorado Regional Manufacturing Initiative will host a kick-off reception April 30 in Colorado Springs (details are being finalized), with an expo and week-long event in the works for late summer.

Neppl’s company has enjoyed strong growth the past few years including a high-profile role in Japan’s Fukushima nuclear accident. But he’s also keenly aware of the hard hit manufacturing endured in southern Colorado the late 2000’s, and is optimistic as to what can be gained from building closer ties throughout the community.

“The February 2014 economic report prepared for the Southern Colorado Economic Forum noted that El Paso County has lost some 13,000 manufacturing jobs since 2000,” Neppl says. “Most can be attributed to the exodus of our semi-conductor industry. Real job losses probably exceeded that. This is reason enough to increase the focus on manufacturing in our region.”

But Neppl’s also an energetic promoter of manufacturing. For him, coming together as a sector has everything to do with the opportunity – and the promise of a new manufacturing economy.

“Manufacturers typically provide above average wages and benefits. They’re also more likely to teach people technical skills that are transferable. Learning a skilled trade increases the likelihood of earning a stable paycheck and often provides opportunity for personal and professional growth.”

He adds, “Manufacturing is once again in the spotlight, and nearly every region in the world is focused on growing its manufacturing base. We should be no different. Today’s industry is a modern, tech-driven sector that provides a more stable economic base than service jobs. Manufacturing creates wealth.”

It’s hard to argue the point, and Colorado’s economic leadership certainly wouldn’t. With each month the Office of Economic Development and International Trade seems to announce a new manufacturing initiative, grant, or opportunity emanating from policy-makers or public-sector sources. Earlier this month OEDIT announced a multi-faceted initiative called the Colorado Acceleration Agenda, or COAA, that would in part establish a Technology Commercialization and Manufacturing Corridor along the Front Range from Larimer County to Pueblo. This in addition to the myriad programs coursing through economic development circles to develop workforce, procure federal dollars and generally promote ‘advanced manufacturing’.

In the end, industry’s own grassroots efforts may be as effective as government’s well-intentioned (and well-funded) top-down programs. Both should work to improve economic prospects for the region.

Colorado’s health-care service economy is booming. But at what cost?

Is it too early to roll out the next iteration of the Colorado ‘brand’? A just-released economic report from CSU’s Regional Economics Institute provides some direction.

‘Colorado: Sick and Getting Sicker. And Older’, doesn’t have quite the same ring as ‘It’s our Nature’, but since the Great Recession, Colorado’s ‘Health-care and Social Assistance’ service sector has added more jobs than any in the state. By a lot.

The Regional Economics Institute’s report quantified the trend:

‘Health care and social assistance is the state’s largest sector and has steadily added jobs over the past decade.

Since the start of the millennium the nation’s job growth has been driven largely by the expanding health care sector and Colorado is no different. In the third quarter of 2013 Health care and social assistance was the state’s largest sector in terms of employment, with more than 286,400 workers.’

And in the past five years, the sector’s taken on a life of it’s own.

‘Health care and social assistance added more than 50,200 jobs over the timeframe, more than the combined total of the next two largest growth sectors (Professional and technical services and Accommodation and food services).’

Of course we’re not that sick. But the data tell a story of how rising insurance premiums, medical fees and prescription drug prices aren’t just funding our care but a significant expansion of the health-service complex. We’re building a private-sector behemoth to maintain and monitor our health. The business of social assistance is booming.
The downsides seem straightforward enough. Our care hasn’t improved to the degree our rates have risen the past decade or so. And consumers should prepare to pay more. It will be increasingly hard to roll back fees or slow down a service sector that’s creating new ways to generate revenue. For Coloradans who live the healthy lifestyle that was in part invented here, it’s an especially tough pill to swallow.

Service jobs including those in health-care also pay less than those they’re replacing. As a result household wages continue to fall from their pre-recession highs. As the reports states:

‘…although the state is adding jobs, much of the growth is concentrated in industries with average wages below the state average.’

REI’s report does shed some positive light on job growth:

‘The Great Recession was hard on Colorado, wiping out more than 146,000 jobs in 18 months. Since bottoming out in 2010, the state’s employment totals have steadily grown, and today Colorado has more jobs than ever before.’

Unemployment remains stubbornly high, though, and a recovery varies greatly from metro area to metro area. Grand Junction and Colorado Springs, for example, haven’t added jobs at the same rate northern Colorado, or the Denver Metro area have.

But Colorado’s labor force is growing and sectors that would diversify the economy and pay higher wages have huge potential here. The state continues to churn out or attract an educated, risk-taking workforce. And companies and eco-devo entities are powering a regional surge in entrepreneurship.

But how to support these sectors – including manufacturing – is a challenge. CSU’s news release promoting the report summed it up this way:

“The varied economic progress across Colorado shows the diversity of the state’s economy. Yet it also highlights the need for more geographically targeted economic development policy. What works in one region will not necessarily work elsewhere.”

We’ll explore Colorado’s regional economic realities as reported by REI, and the diverse set of economic development needs, in the coming weeks.

Are manufacturing jobs Cory Gardner’s path to the Senate?

Can Cory Gardner defeat Mark Udall and become Senator? Dick Wadhams thinks so. But as much credit the Colorado GOP is also receiving nationally for nominating a more ‘electable’ candidate, a win against Udall would still be a surprise.

A Republican hasn’t won a statewide election for Colorado Governor or U.S. Senate since Bill Owens in 2002. Dems control the legislature and Governor’s office, and as GOP operative Wadhams and others have noted, a candidate has yet to emerge who can seriously challenge John Hickenlooper. The Governor casts a large shadow on the ticket. He’s assembled a formidable electoral coalition. In Udall’s case, Democratic incumbency is a plus.

Gardner’s yet to articulate a platform but early pronouncements from the gubernatorial field provide strong clues. They suggest the GOP ticket will run on the repeal of Obamacare, Dem overreach on gun legislation, opposition to same-sex marriage and economic sluggishness – a slow recovery.

Will this platform appeal to young voters, women and minorities and social moderates in Colorado who increasingly decide elections? It’s principled. It also similar to what’s been defeated here before. And Gardner’s ‘Battle for the Future of America’ theme runs headlong against a few economic realities.

Contrary to the gloomy tone the of the GOP’s economic assertions, growth and vitality are on display here. Energy is feeding an industrial comeback. Entrepreneurship is thriving. Yes, the western slope is lagging. But on balance the Colorado economy is a formidable engine and compelling story, a national model in some respects. As Brian Burney, CEO of Oliver Manufacturing (profiled in today’s issue) told me, “It’s a good time to be a manufacturer.”

Manufacturing may provide an opening for any candidate willing to make it a campaign issue. Last week Manufacturing & Technology News summarized research that according to the publication, concludes “There is a wide disconnect between the American public and policymakers in Washington, D.C., on the importance of manufacturing to the U.S. economy and the need for action to restore American industrial competitiveness.” Or more succinctly, “Americans Want Washington To Deal With Manufacturing, But Washington Is Not Responding.”

Run on manufacturing!

M&T News reported on some of the findings:

– When asked, “which of the following industries is the most important to the strength of the American economy?” 32 percent of Americans said “manufacturing,” followed by 19 percent saying “high tech and knowledge industries,” 12 percent saying health care, 11 percent saying agriculture, 8 percent saying housing and construction, 6 percent saying finance, and 4 percent saying services and retail.

– Voters reject the idea that other sectors like high tech or services can replace manufacturing. Only 34 percent of Americans agreed with the statement that “the strength of the American economy is innovation and competition — and if manufacturing leaves, we will move into new areas like high tech or services which will take its place in the future”.

– With 88 percent of Americans agreeing with the statement that “American manufacturing means American jobs,” the survey found that “support for American manufacturing and manufacturers is nearly universal.”

– Most Americans (84 percent) support the adoption of a national manufacturing strategy that is focused on tax, education and trade policies (with 7 percent opposed to such a policy).

Ah, the elusive national manufacturing strategy. Another finding strikes close to home. “Most Americans “don’t want to hear about ‘advanced manufacturing,’ ” the survey found, with 44 percent agreeing with the statement: “All manufacturing is advanced — they need to stop trying to come up with new language and focus on strengthening all of manufacturing.”

Colorado policy-makers are tangled up promoting ‘advanced manufacturing’. Even those paying attention are confused. Word is out that ‘advanced industries’ is the new catchword. One wonders where craft brewers, burrito makers, or sew shops fit in this nomenclature.

They’re all important. Congressman Gardner may do well to glance nearly straight south from Yuma, his hometown, to LaJunta, where Oliver Manufacturing’s gravity separators are a global hit.

Campaign inspiration awaits.

Taber Sweet, left, and Trae Rigby

Building CO’s maker spaces: developers, industry, cities partner to drive new MFG

Builders and manufacturers share space in the economy. They’re makers. They create things. It’s interesting then that circumstances are bringing them together in a meaningful collaboration.

Developers are increasingly motivated to build new mixed-use projects with light industry a key component. City planners favor the mix. Industry brings jobs and tax revenue. It pays for itself and more.

The industry of choice is increasingly maker and manufacturing businesses. Despite a lingering stereotype, today’s manufacturing surge looks different, more appealing. It’s advanced, clean, tech-driven, green and growing in lifestyle sectors that communities want to highlight – not hide.

It’s a fortuitous alignment. The result may be the development of a new generation of mixed-use, industry-and-family friendly spaces that literally reshape our city landscapes. Colorado’s award of a national digital manufacturing hub will only help.

McWhinney, a prominent real-estate company, developer and builder, sees the convergence of interests and is an advocate.

“For so many years our development pattern has been that industrial is dirty, and needs to put in the backyard, so to speak”, says Taber Sweet, McWhinney’s director of development. “I could show you the spaces we’re contemplating today – light, energy efficient, simple construction techniques. In the past when people say ‘mixed-use’, industrial was the piece that got left out – but going forward I think it’s the piece that gets integrated.

“If you go up to (Denver’s) River North, on Brighton Boulevard , you have The Source (eateries, office) next to these great craftsman and artisans, welders or carbon fiber guys; and that’s what makes River North really tick now…It’s interesting to see how that use (industry) is being integrated.”

The integration also makes financial sense, says Trae Rigby, chief development officer at McWhinney. “As an integrated real estate/development company, we’re trying to be ‘evergreen’ – profitable in all cycles. These types of projects can accomplish that for us, where we own everything long-term, where we tend to ‘asset-manage’ our own buildings so that when things slow down, and we don’t build anything in the next 3 or 4 years, income will come in from a variety of sources and give us a lot of flexibility.”

Colorado’s at the epicenter of the trend, says Sweet. “There’s no mystery why we’re (McWhinney) here. Colorado is incredibly well positioned nationally from a geographical standpoint – we’re central, with transportation infrastructure. And Denver has this incredible industrial core based on a rich history of energy and mineral rights.

“But I think more than anything, we have such a highly educated populace that Colorado is really the next big logical spot for incubation”, says Sweet. “And for us, I believe we’re talking about a product that’s a blend of office, R&D, lab, advanced manufacturing, and light industrial. It’s a great opportunity for the state.”

Other developer/builders see similar opportunity in light industry and manufacturing. Shawn Sullivan, vice president for business development at The Neenan Company, is focused on the craft-brewing segment. “Most successful brewers quickly outgrow their space”, Sullivan says. “As they get a foothold in the market, they make more beer, and to do that they need more equipment and a larger facility.”

Sullivan works with brewers to build new space, but he’s also a cheerleader for the sector. “We’re helping brewers understand how much space they’ll need and when – and how to manage that growth financially. But we’re excited about what’s happening here, with craft brewing and other parts of the maker and manufacturing economy. We view this as a partnership with industry.”

It’s a collaborative approach playing out to mutual benefit for all involved – foremost the communities prescient enough to drive the public-private partnerships required for the large, integrated developments that Sweet and Rigby are enthused about.

Colorado only stands to gain in the regional competition for a new and modern industrial base.