By Eric Peterson | Mar 27, 2017
Manufacturing has long been a staple of political lingo, but it's risen to new heights as a buzzword as of 2017.
CompanyWeek Editor Eric Peterson recently asked the mayors of three of Colorado's largest cities about what manufacturing means to the local economy, the best strategies to foster manufacturing jobs and industries, and some recent wins for their cities.
What part does manufacturing play in Denver's economic development strategy and why?
It's a major component of our economic development strategy, and we recognize it's a major component of our economy. We still have about 20,000 employees throughout 1,000 manufacturing companies here in Denver.
We also recognize as part of our JumpStart initiative, the manufacturing industry is evolving. And while we still have a great presence, it is changing, becoming highly digital, and requiring us to think differently and more broadly about the talent pipeline that feeds into it.
So we have a tremendous partnership with the manufacturing industry. While we look at it, we want to continue to focus on helping it evolve but also attract the best workers that are prepared quite frankly to handle the sophisticated digital technology now operating within the facilities.
Why is it a key industry for Denver? Do manufacturing jobs bring more to the city's economy than service jobs, for instance?
Let me take you back to a critical conversation that the director of the Office of Economic Development, Paul Washington, and I had probably in about 2012 or 2013 when the Brookings Institute did an analysis on Denver's presence in the global marketplace.
One of the things that caught our attention was Denver was considered "globally competent." The next rung would be "globally fluent," where you get cities like Chicago, San Francisco, Seattle. Basically meaning Denver had most of the tools to be a globally fluent city but wasn't competitive because you were missing one major component: a stronger presence of manufacturing jobs.
Nothing really attracts you to Denver in terms of the global business community. You've got to create things to do that. So we set out to expand manufacturing as a key component of our economic efforts here in Denver. We've been successful in helping to attract some key manufacturing and logistics companies to our city. That has been very intentional to make us more globally competitive.
Are there specific programs and incentives for manufacturers?
The talent pipeline is first and foremost. Manufacturers need to know they can bring in the skilled employees who can help them with the new technologies necessary to advance their companies and help them to be successful.
That was the first thing: to have a workforce development strategy married very closely and aligned very well with the needs of manufacturers today.
It's all pretty basic and academic from that point. It is about our taxes and regulations, our business environment we try to foster here in Denver. It is about our connectivity around the world. You need to move people and product in a very efficient and cost-effective manner. So our drive to reach around the world has been enormously successful in our ability to attract companies like Panasonic into Denver.
Are there key sectors you prioritize, such as high-tech, food and beverage, et cetera?
It's not so much that we target them, but we have noticed that advanced manufacturing and outdoor equipment and tools have been attracted to Denver. We also have high-tech. I just spoke to a room full of high-tech manufacturers last night. They have played a tremendous role.
What are some of the city's big recent wins?
Panasonic was the big one. There were other cities that were further along in the process when Denver finally entered into the competition to land Panasonic. The presence of our airport and the efforts to build around our airport, called the Aerotropolis, and the connectivity to global marketplaces like Japan were huge for us in helping to win that.
We also have NAMJet. They build boats and things of that nature -- pretty cool. I remember talking to the CEO and saying, "You build ships. What are you doing in Denver, Colorado?" Not that we didn't want them, but again it goes to our global reach and our ability to bring in logistics and products and people in a very affordable and efficient manner for them. And our quality of life doesn't hurt.
Another smaller company is BOARDLife, a startup manufacturer of custom pro skateboards that got started here and is doing very well. Never Summer Snowboards as well -- they build snowboarding equipment right here in Denver and they are flown all over the world.
It's really the ecosystem that we've nurtured since 2011 in partnership with a lot of startups as well as major companies that are coming in that help create a very attractive space for companies here in Denver.
Looking ahead, why is manufacturing key for Denver's continued economic growth?
It's a sign of the times. We're moving into a more advanced, digital-driven manufacturing economy. With the high-skilled and middle-skilled workforce we have here, talent is coming from all over the country to Denver, Colorado. The fact is that the jobs are following the talent.
Secondly, we'll continue to create that hub. We're creating makerspaces that advance our commitment to STEM and advance our commitment to being a magnet for these kind of jobs.
Companies like to be around like companies, and the more we can attract and they can share ideas and compete for talent. That's the kind of ecosystem that helps them thrive.
It's really Denver's commitment. You can look at our commitment to building Aerotropolis, creating that hub of manufacturers and distributors and high-tech companies out by the airport, as well as our commitment to the National Western Center. We're going to become the agribusiness center of the world as we look to how we feed 7 billion people around the world. It's those kind of commitments that are driving and attracting companies here because they want to be a part of that and simply say, "We're in the space where these things are happening."
What does manufacturing mean to the Fort Collins economy?
Manufacturing is a key, cross-cutting of what we call our "economic health strategy" in Fort Collins. We say cross-cutting because if you look at manufacturing by itself, it cuts across so many sectors. Whether it's aerospace or food and beverage or transportation or water, all of these are part of our economic health strategy in Fort Collins, and manufacturing is involved in all of them.
There's the overall system design. That's what Fort Collins is known for, particularly in integrated circuits but other spaces as well. But where do you manufacture? Anymore, there isn't a full industry that does everything by itself. That's where we find ourselves.
Woodward is a perfect example. They're literally in everything that produces energy from a fuel. They've onshored a lot of the manufacturing capacity.
Where Fort Collins and Northern Colorado is well placed is additive manufacturing. That's a game changer: mass production of units of one.
What's the recipe for economic development in manufacturing?
We're really a convener and a collaborator. Small- to medium-sized manufacturers are busy; we can help manufacturers keep their head down and create a cohesive voice.
We're not going to go out and buy a company with taxes and incentives. Part of the strategy is creating the cluster model, where you basically share workforce issues, supply chain, partners, and that sort of thing.
What are some examples of local clusters?
Brewing is one. Because of the density of the brewing industry, we see a lot of complementary businesses being formed and investments being made. An East Coast investor is looking at a three-acre greenhouse with CSU to allow for hop harvests to speed up. It helps break the Northwest cartel of hops. That's a technology play more than anything else.
It's not only breweries. It's in the high-tech space with Intel, HP, Nvidia, and Broadcom as well, and energy, with Woodward and Spirae, and water.
Tell me about the Smithsonian exhibit, "Cities of Invention," that includes Fort Collins.
Fort Collins is one of six cities. We're the 2010s -- the other cities are in the past -- for clean energy. It shines a light on Fort Collins as a difference maker.
You have this strong dynamic that catalyzes innovation with the university and private sector, and government can play a role in that flywheel effect. It's the "triple helix" of public sector, private sector, and a research university. . . . The city as a platform can help demonstrate early-stage technologies.
With a population of about 160,000, Fort Collins seems like a good fit for a testing ground. Not too big, not too small.
There's a sweet spot. People know each other, but there's also enough capital and that sort of thing.
A key element for Fort Collins is we're not an elite community. We have a diversity of jobs within our community. We're not a bedroom community, or a community with a population stuck at one income level. Manufacturing is key in that spectrum. Manufacturing has a wide diversity of jobs at different income levels.
What place does manufacturing have in Colorado Springs economic development strategy? Why is it a key target?
High-tech manufacturing is a highly targeted industry in the Colorado Springs economic development strategy. High-tech manufacturing plays into the city's strengths including a quality high tech workforce and low electric utility rates for large users. Manufacturing is an important sector due to its large multiplier effect in job creation.
What manufacturing sectors are strong and what are a few targets economic development officials want to foster?
Any manufacturing processes that are complex, highly technical, and where the cost of failure is high are good targets for growth. For the most part, products that are cheap and easy to produce with little or no expertise will continue to be made outside of the U.S. However, items such as medical devices that are expensive and have a large cost and/or liability for defective products have good potential for onshoring.
What are some of the city's pro-manufacturing programs or initiatives? Can you highlight any success stories in terms of growing manufacturing jobs or investment?
The city has utilized certain performance based incentives to encourage investment and job creation in manufacturing: an alternative rate of sales and use tax on manufacturing equipment; sales and use tax rebates on business personal property; sales and use tax rebate o construction materials; elimination of the business personal property tax; expedited review and approval of building permits and land use applications
Here's a recent success story: The city entered into an Economic Development Agreement which provided some of these incentives to Bal Seal Engineering. Bal Seal invested tens of millions of dollars in a new manufacturing facility in Colorado Springs and created hundreds of new jobs.
Why is diversification of manufacturing critical in Colorado Springs? I know there's a push to foster new industries. How does manufacturing fit into that?
While the city greatly values our military and we continually seek to support and grow the military presence in our community, we realize that too large a percentage of our economy is dependent on the military. The city will continue its efforts to further diversify our local economy in several sectors including high tech manufacturing. Opportunities for growth and diversification also exist in information technology (including cybersecurity), health and wellness, and the sports economy.
Has there been job growth in manufacturing in Colorado Springs in recent years?
The city has experienced a net job loss in manufacturing in recent years. This is a result of job losses in traditional manufacturing not being offset by modest job gains in high-tech manufacturing. Opportunities will continue to exist in high-tech manufacturing.