Here are seven manufacturing stories we’ll be following closely in 2016:
1. Craft beer’s pivotal year. Two key ingredients of Colorado craft’s successful formula — its specialty sales channel and local ownership — may be tipped over in 2016. How will the sector respond? In November voters will likely decide whether grocery stores and other retail outlets can sell craft beer and wine, a move opposed by much of the craft ecosystem including the state’s network of thriving small liquor stores. The craft sector may have lost an important ally in the debate with the sale of Breckenridge Brewery to Anheuser-Busch, and may lose more. With rumors of a billion-dollar sale of New Belgium swirling, 2016 may be the year that Colorado craft’s united front against ‘big beer’ finally cracks. To what end?
2. Welcome to the (food) revolution. Food brands and manufacturers here are leading a sea change in what we eat and how we grow, make, and distribute our food. Brands flock here to be part of the scene and local companies are targets for takeovers. It’s a poster-child for the new manufacturing economy – entrepreneurial, innovative, ‘Made in America’ — and a model other states emulate. It’s also the fastest-growing manufacturing sector in Colorado. Storylines should be plentiful in 2016.
3. Will McCain’s antics derail one of Colorado’s signature aerospace manufacturers? In a pique over Ukraine, Arizona Senator John McCain led a congressional effort to ban the use of Russian RD-180 rocket engines used by Colorado aerospace manufacturer United Launch Alliance. As the company maneuvered around the politics McCain made it his personal mission to vilify ULA, one of Colorado’s signature companies. Alabama senator Richard Shelby fought back (ULA assembles its launch platforms in Alabama), securing more RD-180s as part of the 2016 federal budget. But is damage done? With dozens of government-funded launches planned in the near future, and ULA competitor SpaceX seemingly more viable than ever, it’s a good bet McCain will do everything he can to undermine ULA. Will Colorado senators, silent to this point, join the battle on behalf of a Colorado manufacturer?
4. Local sourcing: a new supply chain may light a fire under lifestyle manufacturing. Quiet but important grassroots efforts are underway to develop new supply-chain options for lifestyle and consumer brands — like a rural network of cut-and-sew centers. And why not? The region is a magnet for outdoor gear and apparel companies, for smart, visionary entrepreneurs with ambitions to launch and develop lifestyle companies. We seem far away, though, from a world-class supply chain that might actually begin attracting gear, apparel, or other consumer OEMs to Colorado. But small steps are important. And people are starting to get it.
5. What return on taxpayer investments in manufacturing? In addition to the space program, federal taxpayer dollars are flowing into the state to fund other programs designed to benefit manufacturers. Millions have already been spent on workforce development. CAMA’s FourFront initiative will spend $6.6 million in support of defense diversification and innovation. The City of Loveland, Colorado School of Mines, Manufacturer’s Edge and others will be investing taxpayer dollars in support of manufacturing. The initiatives hold promise but more government spending means higher taxes and with business over-regulated as it is, manufacturers reasonably expect to see tangible benefits in 2016 from the spend. (John Tamney’s brilliant Forbes column provides the backdrop.)
6. Pot’s impact on manufacturing. It almost goes without saying, but Denver’s future as a modern urban manufacturing center may hinge on the availability of affordable commercial real estate. Pot grows have radically changed the market. It’s bad form to root for the real estate bubble to burst, so instead, let’s hope the price of marijuana goes the way of oil and crashes, leaving pot businesses less well-heeled and the market less inflationary. It’s actually a good bet. If it happens we’ll remind you we told you so.
7. The rehabilitation of manufacturing’s brand — or not. Last year we chronicled the national debate regarding a U.S. manufacturing ‘renaissance’. By year’s end, the dialogue was less a lively back and forth and more a rout: Most business writers, like Jon Talton of the Seattle Times, had effectively buried the idea of a manufacturing ‘comeback’ in the bottom of a $40 barrel of oil, alongside a strong dollar hammering U.S. exports, or relative to manufacturing employment numbers from circa 2007, before a recession bludgeoned a sector already reeling from a wholesale offshoring of jobs.
To be fair, the reimagining of manufacturing is lost on local media as well; Colorado scribes often can’t identify a manufacturing company when they see one. It’s also hard to be critical of critics when manufacturing’s own advocates lose sight of the issue. ‘Re-branding’ was once a stated objective of manufacturing trade efforts. Today, not so much.
Our story is that manufacturing employment has returned to pre-recession levels in places like Colorado and Utah and that jobs are being created in a sector reinventing itself with technology and driven by consumer and business trends that today favor more locally produced goods. High-tech fabricators in aerospace and biomedical and food and beverage manufacturers will blaze a way forward. The future’s bright.
We’ll stick to it in 2016.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
