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

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

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

So what’s it mean?

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

But my full-throated defense from past years seems, well, out of date.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

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

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

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

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

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

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

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

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

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

So what’s a fair grade?

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

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

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