Aug 03, 2021
Manufacturing clusters don't happen by accident. They're typically the result of years -- or, likelier, decades -- of ever-larger economies of scale, sustained investments, and public-private partnership.
They're also not a new idea. Legendary English economist Alfred Marshall studied what he termed "industrial districts" in the late 1800s. The
common threads: a high degree of specialization, access to raw materials or natural resources, a skilled workforce, and higher education. A manufacturing cluster supports a network of numerous small manufacturers, nimble, competitive, and focused on a single area of the supply chain, that can scale and adapt quickly to market trends.
Clusters in China tend to get a lot of press: Songxia supports more than 1,000 manufacturers in the umbrella industry. Taizhou has more than 12,000 plastics factories. A full 40 percent of the world's golf products are made in Dongguan. There are major local economies built around lighters, locks, zippers, and just about every other category on the mass market.
Manufacturing clusters still exist outside China. Think Detroit and cars. The Dutch flower cluster has dominated the global market for centuries. There are 7,000 textile businesses in Prato, Italy.
In the U.S., certain clusters aren't going anywhere; think winemaking in Napa Valley, California, for instance, or natural foods in Boulder, Colorado. In these industries, local isn't a perk, it's a prerequisite.
When it comes to outdoor gear, local is often the exception to the norm. For sewn goods, the favored technical fabrics and skill sets are in short supply domestically -- but plentiful in clusters overseas. Other product categories are a better fit for domestic manufacturing, and it's usually based on access to materials and workers.
As the outdoor industry (OI) continues to rise -- the Outdoor Industry Association (OIA) estimates it generates about $800 billion in consumer spending annually -- communities across the West are looking to leverage their existing industrial base to recruit and support outdoor brands.
Simply by virtue of a location in a manufacturing cluster, small businesses can often cost-effectively "draft" off of existing companies' excess capacity, workforce, and supply chain, ultimately reducing costs, building redundancy and resiliency, and tapping into a broader labor pool. In a perfect situation, this growth kicks off a virtuous cycle, strengthening the cluster in turn.
Western OI manufacturing clusters
On the Wasatch Front in Utah, a strong composites sector led by ENVE Composites supports a number of bicycle manufacturers and other OI companies. They all benefit from a broader composites industry that also supports aerospace, defense, robotics, and other sectors.
All of the boxes are checked: a workforce that knows composites, local higher education in the Utah Composites Laboratory at the University of Utah, and a critical mass of composites manufacturers to support a supply chain.
In California, legacy cut-and-sew clusters in both Los Angeles and the Bay Area has withered, but a strong talent pool and other infrastructure remain, and many shops support OI manufacturers.
However, there's often a mismatch when it comes to mindset, and the supply chain can't compete with China's. Tony Vontz, founder of San Francisco-based clothing brand Edgevale, says the legacy cut-and-sew shops have had trouble adapting to the realities of globalization in order to differentiate from overseas competition and survive.
Vontz says he's moved about half of Edgevale's production from California to Asia -- a fraction that will increase to 80 percent in fall 2021 -- but it isn't related to costs. It's about supply chain and workforce. As the brand moves into more technical fabrics and designs, the raw materials and skill sets simply aren't readily available in the U.S. For these reasons, he says he keeps it simple when manufacturing domestically.
Anchor companies are critical for the entire manufacturing ecosystem to develop and flourish. "There has to be a vertical business like an American Giant," Vontz notes. The presence of big tentpole cut-and-sew manufacturers allows smaller companies to draft off of their supply chains. Other brands are able to draft off of existing military and law-enforcement supply chains.
"There's always a niche group for made-in-USA products," says Vontz. But the legacy cut-and-sew shops need to adapt to doing smaller runs and quick turnarounds to allow brands to better capitalize on fast-moving trends.
These two issues are on opposite ends of the feasibility spectrum. A new mindset is free and immediate; building (or rebuilding) a supply chain might require decades and millions -- or billions -- of dollars of investments.
Case Study: Colorado's Western Slope
On the Western Slope of Colorado, there's a strong base of contract manufacturers and machine shops that traditionally support resource extraction -- led by natural gas and uranium -- and many have diversified by offering contract manufacturing to other brands or launching their own products.
Take All Metals Welding & Fabrication in Grand Junction. Founded in 1969 to make the tools for the shale boom, owner Chris Muhr purposely diversified into the outdoor recreation business and has made parts for Leitner-Poma ski lifts, Seek Outside backpacks, Vintage Overland trailers, and Bonsai Designs zip-line parks.
But it's not just All Metals. South of Grand Junction in Delta, Doughty Steel has moved into parts for 4X4 vehicles. Welfelt Fabrication has diversified into raft frames and other river gear after getting its start in the geophysical industry in the late 1970s.
Founder John Welfelt says he fabricated metal for clientele in food processing, utilities, and other industries for 30 years before diversifying into OI. In 2009, he made a frame for a friend's raft, which led to more and more frames and other outdoor-oriented fabrication jobs. "When I started [the company], it was a lot of industrial work," says Welfelt. "There's a lot less of that going on now."
Welfelt says outdoor recreation has been going the opposite direction. "In a lot of ways, that's a bigger industry," says Welfelt. "The outdoor industry is sort of the new industrial stuff."
In Montrose, Claude Rocchia, owner of Swiss-O-Matic says he's seen an increasing amount of work for his Swiss-style and CNC machine shop. Specializing in small parts made of stainless steel, Swiss-O-Matic has worked on everything from fishing reels and archery products to components for ski lifts and shock absorbers for mountain bikes since Rocchia moved the company from New Jersey in 2000.
For customers, it's about quality, but it's also about being more involved in the manufacturing process. "They can come here and actually watch it being made," says Rocchia. "That's a luxury."
Then there are the benefits relating to lifestyle and easy access to the outdoors -- and Rocchia says he's a prime example. "We're not here by accident," he says. "If a company moves in, they will attract people from other states who want to be here."
For Rocchia, access to public land is the biggest draw -- and that's a meaningful distinction for outdoor brands large and small. "It's in abundance here," says Rocchia. "Montrose County is 70 percent public land."
There's also a higher education component in the form of a manufacturing/machining technology curriculum available at Western Colorado Community College in Montrose, a division of Colorado Mesa University in Grand Junction.
How to build (or rebuild) a manufacturing cluster
Sandy Head, executive director of the Montrose Economic Development Corporation in Colorado, calls manufacturing clusters "something economic developers strive for" and says Montrose is a work in progress -- progress being the key word. "I think that's on the horizon [in the Montrose area]," says Head.
She cites capabilities at machine shops like Swiss-O-Matic and Avient's advanced composites facility in Montrose that can be leveraged by outdoor brands that come to town and want to source locally. "We have several local manufacturers that have the ability to tool up and assist with parts for various outdoor recreation items," says Head.
In Grand Junction, the economy traditionally ebbed and flowed with oil and gas prices, but a concerted push to diversify is bearing fruit. "Our legacy industry is the energy industry," says Steve Jozefczyk, deputy director of the Grand Junction Economic Partnership (GJEP).
When energy prices crashed in 2008, local leaders recognized that outdoor recreation was driving economic growth. About 40 percent of leads that the GJEP pursues are related to the outdoor industry. "A lot of that has to do with our existing workforce," says Jozefczyk. "Manufacturing does very well in Mesa County."
The crash of 2008 led numerous "displaced workers" in oil and gas to look for other opportunities, and the outdoor industry proved a good fit. "Their skill set shifts perfectly," says Jozefczyk.
A vision for growth
The budding Colorado Outdoors development on the Uncompahgre River could provide the Western Slope with a coveted OI anchor. The 164-acre site is currently home to Mayfly Outdoors (parent of Ross Reels, Abel Reels, and Airflo), and a number of projects with tenants are in the pipeline.
Colorado Yurt Company, for one, is planning a new 30,000-square-foot manufacturing facility at Colorado Outdoors. John Gibson, owner and CEO of Colorado Yurt Company, bought the 45-year-old company in early 2020 and grew the company's sales by 45 percent in his first year at the helm. "We're in this age of innovation developing new products," he says. "That's going to bring in new vendors, new opportunities for equipment. It's a really exciting time."
"We wouldn't be investing our time and our money in Colorado Outdoors and on the Western Slope if I didn't feel there was a huge opportunity to recruit there -- and utilize the skill sets that are in the community already," says Gibson. "The work we're doing at Colorado Outdoors is to try and recruit people. The more jobs we create, the more energy we create when people move here, it creates more opportunities to hire and grow."
David Dragoo, president and founder of Colorado Outdoors, says the seeds have been planted for a local OI manufacturing cluster. "We are trying to build an ecosystem where relationships stay local or regional," he notes. "If they can't for some reason, we are usually a phone call away from finding the right person or business domestically who can."
Adds Dragoo: "Many partners want and need local production, and we are learning through COVID how important that is to the supply chain and ongoing operations. In some cases, it's been the only way to pivot and survive."