Colorado is flunking manufacturing. Or is it?

By Bart Taylor | Jun 13, 2016

Like a left-right combination from Muhammad Ali, Colorado manufacturing was staggered this month by two reports that portray a struggling sector. What to make of the news?

Conexus Indiana's 2016 Manufacturing & Logistics Report Card for the United States gave Colorado a 'D' grade for overall manufacturing sector health. The report grades states in eight categories, from sector diversification to global reach to human capital. Only New Mexico, Hawaii, and Alaska fared worse, with F's.

Misery loves company, and based on data compiled by Conway Data Analytics for Site Selection magazine, Colorado ranked 47th in per capita manufacturing investments in 2015. The California Manufacturers & Technology Association analyzed the data and shared Colorado’s numbers with us. (California ranked 50th, a downer for an economy that boasts nearly 40,000 manufacturers.)

There's so much to consider here, but let's stay high-level and try and sort out some straightforward implications.

An easy path would be to simply discount the Conexus methodology and by all means, there's plenty to work with if Colorado economic officials cared enough to respond. Tom Bugnitz, CEO of Manufacturer's Edge, didn't have to work hard to determine the Conexus report was based on 2014 data, or that data sometimes worked at cross-purposes. "We get high marks for productivity and innovation," Bugnitz told me, "which means we need less workers, which gets us lower marks for overall health because it lowers the number of manufacturing employees as a percent of total employment."

Indeed, the Manufacturing Industry Health grade -- D -- is measured by "the share of total income earned by manufacturing employees in each state, the wage premium paid to manufacturing workers relative to the other states' employees, and the share of manufacturing employment per capita."

Colorado's other D grade among the eight categories was in Global Reach, or the "export-related measures of per capita exported manufacturing goods and the growth of manufacturing exports." I'll leave others more informed on export trends to determine whether a near-flunking grade is warranted, but Colorado seems well positioned to grow exports. But then again we consider agricultural goods part of the maker economy, and Colorado's a national ag export leader, so I object from the get-go.

Colorado gets a C in Sector Diversification based on 2014 data. It's already a dated statistic. Diversification is the state's manufacturing calling card, from high-tech fabrication to device makers in bioscience to the craft food and beverage tsunami to a burgeoning lifestyle industry. Food and beverage has been the fastest growing manufacturing sector in the state since 2014.

All that said, it would be narrow-minded to assert that the Conexus report is flawed and therefore irrelevant. Data is data, and as a percent of GDP, or employment, Colorado's manufacturing sector is underperforming compared to others states -- states that would kill to have Colorado's broader growth metrics. I've also chronicled the state's challenge in developing a more robust supply chain and how the lack of a cohesive manufacturing development strategy is a drag on sector growth. Manufacturers are not without fault. Companies remain more comfortable operating in industry silos.

Yet manufacturing is thriving. We’ve profiled over 700 manufacturing and supply-chain companies since September 2013. We'll profile 700 more in the next few years. It’s certainly entrepreneurial, and companies are scattered throughout different industries, which at times makes it hard to measure – and grade. Until growth companies and sectors mature and begin making a statistical difference that matters on a national scale, enduring bad grades or scores may be part of the program.

Like the aforementioned investment ranking. Colorado now ranks 47th in manufacturing investments per capita, an interesting stat that tracks manufacturing –related construction or expansion projects across the U.S. that involved over $1 million in capital or more than 20 new jobs investments. Of 2641 projects in 2015, Colorado hosted nine. Kentucky, a state with 4.3 million people, led the nation with 173. It’s a reminder how deep a manufacturing community other states lean on to attract new companies and expansions. The supply chains are long.

But how many companies do we need to shine a light on to get elected officials, economic developers, business groups and yes manufacturers, excited about what's happening here? Who's paying attention? California ranked 50th, a number that didn’t sit well. Its manufacturing trade association was quick to lament its status and challenge policy-makers.

We'll gather July 27 in Denver for the 2nd annual Manufacturing Growth & Financing Conference. Increasing the level of investment in worthy manufacturing companies is the objective of the conference. Even if you're not looking for money, it's important you're there. Investors need more awareness about companies shaping this sector.

Don't be satisfied with a 'D', or being ranked 47th out of 50 states. I'm not. See you this July.

Bart Taylor is publisher of CompanyWeek. Email him at