California gets a C in Conexus’ annual manufacturing scorecard. Here’s a better measuring stick.

For the 10th consecutive year the Conexus Indiana 2018 Manufacturing and Logistics National Report graded California's manufacturing economy a C. It's cause for less concern than states like Colorado, where a 10th straight D leaves that state closer to Conexus flunkies in New Mexico and Alaska.

At the same time, it leaves America's largest manufacturing economy stuck in average, looking up at Conexus' annual favorites like Indiana, Kentucky, Iowa, and Michigan, who again led a Midwest sweep of the top scores, all As.

Here's the grid:

I've taken issue with Conexus before. I think the methodology favors labor and industry statistics that underreport the reach of manufacturing's value chain in industries like aerospace, food and beverage, and, in a modern twist, cannabis. How a state like California scores a D in Sector Diversification is also confounding.

Other studies have also emerged that seem a better benchmark to evaluate the health of manufacturing economies. Much has changed since Conexus began ranking states. Sridhar Kota and Thomas Mahoney's brilliant but worrisome new report, Manufacturing Prosperity, A Bold Strategy for National Wealth and Security, is one.

The report's a must-read, but it pointed to three grand challenges of American manufacturing:

1. Rebuild the "Industrial Commons," the set of knowledge and practical skills, supply chains and production capacity, materials and equipment, and overall industrial ecosystems that enable manufacturing across multiple industries.
2. Convert national R&D to national wealth and security. The study concluded that technologies invented here are being licensed, sold, or given away to manufacture overseas, which, in effect, is subsidizing R&D for other countries.
3. Lead emerging industries. The United States must have a leadership position in emerging industries such as autonomous vehicles, robotics, multi-material additive manufacturing, bio-manufacturing, energy storage, advanced materials, and quantum computing, to name a few.

The report cites these critical next steps to address the challenges.

1. Invest in translational research and manufacturing innovation. Including, funding for the translational research needed to develop operational prototypes, demonstrate manufacturability, and identify viable markets is frequently unavailable.
2. Encourage pilot production and scale-up, to restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
3. Empower small and medium-sized manufacturers.
4. Grow domestic engineering and technical talent.

Are Kota and Mahoney's challenges and prescriptions a better benchmark for success? I'll say yes. California manufacturers are focused on these issues.

At minimum, a new scale provides room to move up the ranking system if progress can be made, something the Conexus model seems unable to provide.

We'll track that progress throughout the year.

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