CompanyWeek at two years: Six takeaways as manufacturing surges

By Bart Taylor | Sep 02, 2015

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Since CompanyWeek debuted two years ago this week, we've shined a light on 400 or so manufacturers, chronicled the policy efforts to support them (some good, some bad), and served as an advocate for manufacturing even as business voices debate the so-called manufacturing renaissance.

Here's six takeaways from two years in business that also shape the journey ahead -- for us and for the manufacturing community:

1. Manufacturing's cross-industry comeback continues unabated. I said last year at this time that manufacturers were the story. Today, it's the collective momentum in the sector. It's not creating a tsunami of jobs, a reality that fuels manufacturing's doubters, but employment growth is nonetheless impressive. Consider Colorado: CU Leeds' always useful Colorado Business Review notes in its mid-year report:

"Employment in this sector continues to make gains, increasing 2.9% in 2014 and 2.9% year-over-year in 2015 for a total of 139,800 Manufacturing employees in the state. Manufacturing employment surpassed committee estimates by 600 jobs in 2014, and is continuing the trend by adding 2,200 more jobs than projected based on growth rates through May 2015. Higher growth in the durables subsector (3.9%) is offsetting lower growth in nondurable goods (1.2%) so far in 2015 year-over-year. Gains in Manufacturing have now occurred for four and a half consecutive years following a decade of employment losses."

The Review seems almost surprised at the level of activity.

But 'jobs' isn't the takeaway. Manufacturing's multi-industry growth is. Whether food and beer, aerospace and bioscience, consumer products and advanced, engineered design and manufacture, the maker economy is surging. Louisville's brilliant co-packer Fresca Foods gets 500 requests a year from emerging brands to manufacture product. Growth market, or not?

2. Public and private sector support isn't keeping pace with manufacturing's advance. There's dissonance and a lack of uniformity about how to measure and track manufacturing, which leads to confusion about how to support it.

CU's efforts, as good as they are, nevertheless track the design of some manufactured products -- like satellites -- as Professional and Business Services, a NAICS-driven methodology that works to under-report the impact of manufacturing. To measure only the build of a satellite as a manufacturing activity and not its design underserves the sector.

As I've noted before, manufacturing is scattered throughout Colorado's economic development "Key Industry" framework. It results in uneven support. "Advanced manufacturers" using high-tech processes are the beneficiaries of recognition and money. Sew a jacket or backpack or make organic soup and support is spotty. Ergo:

3. Manufacturing should be a 'Key Industry' in a simplified economic Blueprint. OEDIT should dispense with the 'advanced processes' criteria and classify every company that makes something as "Manufacturing." It would simplify the support ecosystem and work to provide needed resources to manufacturers across industries in a simpler, fairer way.

It would also make it harder for elected official to avoid responsibility.

4. Congressional inaction in support of manufacturing is a travesty. Today it's easy for Colorado Congressman Ken Buck to rationalize his decision to ditch the Export-Import Bank, an entity that provided support to manufacturers.

“It is a type of corporate welfare,” Buck said, quoted last week in the Denver Business Journal. “And when we have $18 trillion in debt and we need to find places to cut, the Export-Import Bank is one area.”

Buck had no such compunction about the welfare-laden ag bill. But without a unified industry voice pushing back on the issue, as no doubt Ag interests do, Buck tacked away cleanly. That it happened at a CACI event -- the Colorado Chamber of Commerce, sponsor of the long-standing ''Manufacturing Initiative' -- was disappointing.

Congress has also refused to play from strength and negotiate with the Obama administration to eliminate the onerous 5% device tax on bio-manufacturers or the confusing employer mandate in Obamacare, instead pursuing the dead-end strategy to repeal. 50 times. No relief, no accountability, no support.

5. Where robust support has developed, it now must evolve. We've spent millions of dollars to repair a staggering skills gap in manufacturing -- a vestige of decades of offshoring. It's time to let the programs work and now focus on competitiveness and business development.

I asked Dale Denning, vice president of sales for Shop Tools, Inc., about business prospects for contract manufacturers. "If you're in aerospace or medical, it's great. If you're a job shop not working in those sectors, not so much," he said.

Industry and the public-private partnerships should rally around a new Manufacturing sector to promote Colorado as a destination for maker businesses. Time to feed the business pipeline and let workforce development efforts do their stuff.

6. Manufacturers must agree on the way forward -- one that involves a bigger tent. Efforts by manufacturers and entities that support them to come together and rally the sector have been commendable -- but they remain industrial-centric. Walls still divide sectors and cross-industry collaboration remains low. (see point 3, above.)

Industrial manufacturing may never capture the public's imagination as it once did. The clean rooms of bioscience and organic-food manufacturing and lifestyle shops churning out cycle parts and skis, can. Everyone benefits.

Manufacturing has never been more compelling. Its leaders and supporters should evolve and change the way it's marketed to the public.

Follow their progress in year three at CompanyWeek.

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