Manufacturing by the numbers: Takeaways from 2018 and a peek at 2019

I've been fortunate to participate in CU Leeds' excellent Colorado Business Economic Outlook the past two years, parsing manufacturing data with capable economists and business stakeholders lined up by Richard Wobbekind's team at the Business Research Division. The 54th annual Report will be presented December 10 at the Grand Hyatt in Denver.

Here's a first look at where manufacturing is forecast to end up in 2018 with a peek at '19, and what the numbers say about the state of Colorado manufacturing as this incredible economic year winds down. (The primary source of the following data is the Colorado Department of Labor and Employment.)

• Manufacturing is growing modestly in 2018 but faster than forecast in the report last year, with total employment expected to rise 2.8% by year's end to 147,000 jobs, adjusted from a near-flat projection of 1.1%. The initial forward-looking forecast calls for 2% growth in 2019, to roughly 150,000 jobs.
• The 2018 employment numbers are on track to be the highest since 2006, basically reaching pre-Great Recession numbers. But even at that point, manufacturing was on a long and precipitous employment fall, bottoming out in 2010 at 124,000.
• In 2000, manufacturing sustained nearly 188,000 jobs in Colorado, fueled by a lively Computer & Electronics category (recall the technology corridor in Boulder/Broomfield) that alone supported nearly 47,000 employees. Today, Computer & Electronics is enjoying a comeback of sorts in Colorado, growing to 22,500 jobs and forecast to exceed 23,000 total jobs in 2019, second only to food manufacturing as the top manufacturing industry.
• Readers have asked why we feature so many food and beverage companies, and growth in these industries reveals why. Food is today the single largest manufacturing industry in Colorado supporting just over 23,000 jobs. We track the sector as Food & Beverage, and total employment in those two sectors exceeds 30,000.
• Manufacturing industries outpacing the overall sector's steady but modest growth in 2018 include Transportation Equipment at 2.8% -- a category that includes Colorado's robust aviation and aerospace industries; Beverage and Tobacco manufacturing (not be to confused with cannabis) at 3.6%; and the aforementioned Computer & Electronics sector at 3.6%. Industries that underperformed include Non-metallic Mineral manufacturing, 1.7%; Fabricated Metals, 0.7%; and Printing & Related Services, down 1% in 2018. It seems a strong overall economy is helping print media hold on: a 1% dip seems relatively healthy given the disruptions in media.

Cannabis is the outlier. Chemical Manufacturing has jumped 9.8% to 7550 jobs and is forecast to add another 5% in 2019, growth likely attributable to cannabis manufacturing. Growth in Food Manufacturing may also be benefitting from an influx of cannabis companies.

If cannabis data seems anomalous, so too does the state of industry reporting overall, not just here but across the U.S. Is manufacturing an industry, or a sector? Are energy extraction companies manufacturers? Are companies based here yet manufacture offshore, manufacturers at all? We've visited these questions before. In Colorado, it's also challenging to track apparel brands, medical device manufacturers, and aerospace companies, as employment categories aren't always a clean fit.

Anomalies aside, the 2018 numbers tell a fascinating story. For starters, while Colorado's manufacturing standalone contribution is relatively modest (just under $25 billion, or about 7% of state GDP), contrary to a prevalent narrative, it's growing. Jobs were to have been replaced by automated operations by now. But as CU's Brian Lewandowski has noted in CompanyWeek, "With the multiplier effect, direct industry activity supports a total of 441,000 jobs in the state, and contributes approximately $47 billion to state GDP." And only this week, the Economic Development Council of Colorado pointed to a new study and suggested the state is "poised to grow its manufacturing industry." (Also check out Oregon's sector -- today comprising 20% of the state's GDP.)

But it's growth industries here that hold so much promise, not only in leading employment gains, but in redefining the narrative around manufacturing. This is not your grandfather's sector. Manufacturing today is a mix of disruptive food and beverage brands; of advanced fabrication sending satellites into orbit, fashioning electric motors, and developing the next wave of U.S.-made medical devices and bio-products; and of aspirational brands across the catch-all "Other" category in the language of economists.

It's also a sector underpinned by a solid foundation -- a cadre of welders, benders, and cutters in such high demand that RK, a regional infrastructure giant, today has 300 apprentices in its four-year program, with plans to hire them all. 300!

Underestimated, the manufacturing economy soldiers on.

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