We've reported how Colorado lags in large manufacturing-related infrastructure investments, but despite another subpar year relative to other states, a flurry of recent activity lately demonstrates how things could be changing.
Last week alone, three significant new factories were announced, in three growth industries powering Colorado manufacturing. York Space Systems' new "mega-center" in Denver, Meati's 76,000-square-foot production facility, and Eldon James' sprawling new 100,000-square-foot medical-device factory are all eye-opening additions to the region's manufacturing ecosystem.
I caught up with Eldon James President and 2019 Colorado Manufacturing Woman of the Year Marcia Coulson for a brief conservation last week.
CompanyWeek: You've been busy! Can you provide an update?
Marcia Coulson: Well, the pandemic has been a catalyst for us. We never anticipated this, but beginning last spring we started supplying millions of parts for the ventilator project. We pulled out all our stock and began manufacturing as fast as we could to keep up with the demand. We got to work with ventilator companies throughout the world building ventilators. Ford actually wrote us a really nice letter thanking us for being part of their ventilator project. That felt really good for our company.
Then it shifted to producing the vaccines, and we supply a lot of components for the single-use systems that they use for vaccines, including the large plastic bags that they grow drugs in, instead of the stainless-steel systems. They migrated from stainless steel because it takes about a week to clean between different drug lots, and they're always concerned about cross-contamination from one lot to the next.
So they've migrated to these large plastic bags, and we make connectors that are welded into the bags, the tubing that's connected to those fittings, and all the fittings downstream, including our new SeriesLock quick-disconnect product, that are used in the pharmaceutical industry as well.
We were able to supply components for Pfizer, Moderna, and J&J, and now we're working on the Sputnik project and supplying a lot of parts for their vaccine program. It's been exciting to play a small part in such an important initiative.
CW: Or a large part, as it were. I'm curious: You seemed so well-positioned, with a network in place, to plug right in to a national vaccine effort. How did that come about?
MC: We've been working more with pharmaceutical companies the past 15 years. When we built our first clean room, it was to manufacture products for that market. So it didn't happen overnight; we've been working with these companies for that amount of time, building products for that industry. We've actually migrated to where 85 percent of our sales today goes to the pharmaceutical, medical device, and laboratory supply markets. We actually changed our business, as we were once also focused on automotive and industrial products. Thankfully, now 85 percent of what we manufacture goes to those three markets.
CW: Do you see that mix sustaining? I know there was interest in the beverage industry.
MC: Yeah, we're not putting as much emphasis on the beverage industry. The pharma market requires quality, so they don't necessarily beat you up on price. The beverage industry is very competitive, and there's not as much margin in the products. It's a fun industry! Just not one we're putting a lot of focus on.
CW: Speaking of price, I picked up on something in our last conversation that stuck with me, that of the need, in your view, for targeted tariffs, or VATs, to enable domestic manufacturers to compete with Asian imports on price. Given what's happened the past year, do you still see a need for measures to level the playing field?
MC: Well, we still need support with tariffs. However, one thing I think the pandemic has pointed out is that hospitals are starting to realize that maybe we don't want all of our drugs and medical devices made in China. And they've finally caught on to that!
Take ventilators: Companies were manufacturing ventilators like crazy, but providers didn't realize that every ventilator that was being used needed two filters -- one to protect the ventilator and one to protect the patient -- and those have to be changed on a daily basis. I had hospitals in New Jersey that were basically in tears because New York absorbed all the filters that were available in the market for the ventilators. There were none left for hospitals in New Jersey.
We realized that all of the filter media was made in China. We were done when we ran through the inventory. Add to that, for the manufacturers of the filters, the Chinese market was the top priority. I'm sure we lost some people because we couldn't replace the filters on the ventilators. There's no statistics to prove it, but it's a scary thing, that all the filter media manufacturing went to China, and we couldn't get it when we needed it.
We actually had a filter we were trying to get through the FDA so that we could manufacture filters here, but we just couldn't get any traction as they were giving all their attention to approving ventilator manufacturers. Fortunately, as providers realized that fewer patients need to be on ventilators, things quieted down a little bit.
CW: But hospitals got the message?
MC: I do think it was a huge red flag for hospitals: "Maybe we oughta break this up and not buy the least expensive product."
And as manufacturers, we can't compete with China. There's no way we can offer the same product at the same price. Medical devices do take humans to build and assemble and package and label and work in the regulatory side.
And something interesting has also come to light: We sell to China, and I know there are companies there that do what we do. To my customers, I'm like, "Why aren't you buying Chinese products?" We've been told, "Well, we prefer in China for our medical devices to buy the higher-quality products made in the U.S., and we sell the U.S. our lower-quality products."
What they're saying is: "What we manufacture in China isn't good enough for us, but it is for the U.S."
We need more help from the government to equal out the playing field, to encourage hospitals to buy American-manufactured products, whether it's a bonus program, or a tax-credit program to where they're incentivized to to buy. Hospitals are under great pressure to make a profit; they're going to be encouraged to buy the least expensive products.
CW: National policy issues aside, what can be done at a local level to encourage more manufacturing?
MC: We have a hard time hiring employees, so we need to encourage people to go to work, to go back to work. I'm not sure what we've created here -- it should be interesting to see how it plays out. But we're incredibly thankful to our great team.
CW: How many employees do you currently have?
CW: You're doing a lot with 100 employees.
MC: Keep in mind we automate just as much as we possibly can so that we can compete on a global basis. We're working really hard to automate. The new facility will be highly automated -- but we still need people! They just don't have to do the work equipment can do.
CW: Again, congratulations -- and we'll see you in September at the Colorado Manufacturing Awards Alumni gathering!
Bart Taylor is publisher of CompanyWeek. Reach him at email@example.com.