Manufacturing's comeback is a hot national topic. It's also a contrast to the post-recession narrative, when manufacturing had lost hundreds of thousands of jobs and was declared dead and buried.
Today the numbers tell a different story:
- Four years ago, pundits cited sub-50 PMI levels (Purchasing Managers' Index, a measure of manufacturing health) as evidence that manufacturing was dead. Today the PMI hovers around 60, and the overall economy grew for the 107th consecutive month. The economy goes as manufacturing goes.
- New data measures the power of manufacturing's multiplier effect and the widening impact of the manufacturing supply chain. Brian Lewandowski and Michael Hansen's CompanyWeek column outlined that Colorado manufacturing activity "supports a total of 441,000 jobs in the state, and contributes approximately $47 billion to state GDP." It's powerful stuff. The state's top employment sector -- trade, transportation, and utilities -- supports about 470,000 jobs. Almost as many are touched by manufacturing.
- Harry Moser's Reshoring Initiative, an early mover in forecasting a return of American manufacturing, just released its 2017 data report, and the numbers are again eye opening. The press release reads, "Including upward revisions of 67,000 jobs in prior years, the total number of manufacturing jobs brought to the U.S. from offshore is over 576,000 since the .. manufacturing employment low of 2010. The 171,000 reshoring and FDI jobs announced equal 90 percent of the 189,000 total manufacturing jobs added in 2017." The release adds, "Combined reshoring and FDI jobs were up 122 percent compared to unrevised 2016 totals and 52 percent compared to revised 2016 totals." If Moser's right, U.S. firms are repatriating jobs. It means the economics of manufacturing in America is compelling brands to make things here for the first time in decades.
- OEDIT's Luis Benitez uses the term "connected economies" to describe cross-sector collaboration, and it's an apt description of what's happening today, companies discovering shared interests and opportunities across the industry silos that have defined them. For example, brands in natural products and outdoor industries are realizing they have a lot in common -- including customers. And they're collaborating to advance their shared interests. It's a big opportunity: consumers spend $887 billion annually on outdoor recreation, and another $190 billion or so on natural products. As technology, processes, people, and best practices bleed across industries, the outcomes will be seismic, as in a $1T opportuntity in this example alone. It's the tip of the iceberg.
- The renewed influence of the sector was on full display at two regional events this April -- the Colorado Manufacturing Awards and the Northern Colorado Manufacturing Partnership trade show and expo -- NOCOM. Both were harbingers of things to come, showcasing the state as a manufacturing laboratory and an engine of innovation and growth.
Does all of this translate into a more resilient sector? The answer is less clear.
Manufacturers cite workforce challenges as a barrier to growth. Can it stop sector development cold?
Maybe. It's a multi-faceted challenge. Re-training a new manufacturing workforce to meet the needs of a modern sector is challenge one.
Affordable housing is a close second. I've written how Naturally Bay Area, formed to model Naturally Boulder's success, might incubate and accelerate companies only to see them move for lack of manufacturing infrastructure and employees.
Even as business finds a way, economic developers still lack a playbook, a blueprint, to guide the development of the manufacturing supply chain. What are the ingredients for success, and for which industries? Build it and they will come, but how to determine what's lacking? Today the regional manufacturing supply chain is more spotty than complete.
Cohesive, pro-manufacturing public policy is as elusive. Do tariffs serve the collective interests of manufacturers? How will immigrant-reliant industries like food and ag manage growth with fewer employees? Tax cuts are great. Trillion-dollar deficits increase uncertainty.
Benitez's "connected economies" are still unconnected, largely.
But the next exponential leap in industry development -- and resiliency -- will occur when brands are clustered with their means of production and with others outside their current sphere of influence, companies that share common opportunities and challenges.
Exhibit A: How powerful would Colorado's outdoor industry be if it were better aligned with regional manufacturers building its toys and with the state's tourism juggernaut? We'll dig deeper into the concept in the coming months.
In the end the American West has the upper hand. Net in-migration and positive outcomes of well-funded workforce initiatives will rebuild the talent pipeline. Industries will get connected.
Until then, the revolution is being televised. Don't miss it.
Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.
