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2018 Manufacturing Market Report Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

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We’re pleased to publish this annual Report on manufacturing in Colorado, compiled from in-depth interviews and business profiles of over 230 manufacturing companies. Interviews are conducted as part of the editorial mission of CompanyWeek, digital media and events chronicling the development of America’s modern manufacturing economy.

As you’ll find in the following pages, Colorado’s manufacturing sector has regained footing across a wide array of industries like food & beverage, aerospace, and bioscience – as well as up and coming manufacturing sectors like craft brewing and distilling, and consumer and lifestyle manufacturing. The following data tells the story of a sector enjoying growth pains. The most often cited challenges are “managing growth” and “workforce”, signs that manufacturing companies are healthy and expanding. The summary of data captures Challenges, Opportunities, and Needs in 2018 and compares them to 2016 and 2017 -- a unique look not only at factors that shaped manufacturing businesses last year, but how those same issues are trending in a three year window. The conclusions speak to a sector that’s again alive with possibilities. A cross all industries, Managing Growth was the top challenge, reflecting positive underlying trends in a sector that’s made a startling comeback from the “dog days” of the 2000’s. W orkforce, again, is a pervasive challenge across most all manufacturing industries. The deep systemic challenges that attend to retraining an entire generation of manufacturing employees, in fast-changing production environments, continue to be manifest in the data.

C ompetition has emerged as a significant challenge for companies, as is Market Awareness, reflecting a more competitive marketplace for the products of U.S. manufacturers. E xpanding Opportunities for manufacturers is also reflected in high-water three-year marks for New Markets, Growing Markets, and New Products, cited by fully one-third of all companies interviewed. R eal Estate has emerged as the top need for manufacturing companies, second only to workforce. It’s an additional sign of expansion across manufacturing industries. We think you’ll find the Opportunities, Challenges, and Needs communicated by manufacturing executives in specific industries equally informative. Enjoy, and as always, a Manufacturers Edge expert is ready to respond to questions you may have, or with more information, as you assess your own companies challenges and opportunities in the year ahead.

Bart Taylor

Tom Bugnitz

Founder & Publisher CompanyWeek

President & CEO Manufacturers Edge

2018 Manufacturing Market Report


INTRODUCTION Total data set = 343

(In some cases, companies profiled fit into more than one industry subset, increasing our total number of data sources to 343)

To say that the manufacturing industry—and the various

Forbes’ list of thriving manufacturing cities in 2018, while Oakland-

subsets that comprise it—play a vital role in the U.S.

Hayward-Berkeley was listed second.

economic landscape would be an understatement. According to Trading Economics, an organization that tracks and analyzes economic indicators, GDP from manufacturing in the U.S. is expected to reach $2041 billion by the end of first quarter 2019 and increase to $2054 billion in 12 months’ time. Total domestic employment within manufacturing, as measured by the U.S. Bureau of Labor Statistics, is upwards of 12.8 million employees. In Colorado, manufacturing is a $23 billion industry. According to the Colorado Business Economic Outlook 2019 Report, published by the Business Research Division of the University of Colorado Boulder Leeds School of Business, Colorado is home to more than 5,800 manufacturing establishments, which employ 146,700 workers representing 5.4% of the state’s total employment base. After growing 0.9% in 2017 and 1.9% in 2018, manufacturing in Colorado is forecast to grow 1.2% in 2019, an addition of 1,700 jobs.

From January 1 to December 31, 2018, CompanyWeek took an in-depth look at 235 of the region’s manufacturing entities. The companies profiled each represented one of more industry subsets including bioscience and medical, brewing and distilling, built environment, cannabis, consumer and lifestyle, contract manufacturing, electronics and aerospace, energy and environment, food and beverage, industrial and equipment, and supply chain manufacturers. In some cases, the companies profiled fit into more than one industry subset, which increased our total 2018 data points to 343. We’ve analyzed the data gleaned from the companies we’ve profiled to create this snapshot of the region’s manufacturing industry over the last 12 months. In the process, we uncovered a number of interesting trends around the most common

In California, the manufacturing industry is $300.35 billion strong. Manufacturing accounts for 10.9% of California’s total output while employing 1,299,000 workers according to the National

challenges, opportunities, and needs reported by manufacturers within each industry subset. We’ll take a look at those in detail in the report sections that follow.

Association of Manufacturers. San Diego-Carlsbad was tenth on

Table of Contents Challenges: All Sectors. . . . . . . . . 4

Cannabis. . . . . . . . . . . . . . . . . . . . . 12

Energy and Environment . . . . . . . 20

Bioscience and Medical. . . . . . . . . 6

Consumer and Lifestyle . . . . . . . . 14

Food and Beverage. . . . . . . . . . . . 22

Brewing and Distilling . . . . . . . . . 8

Contract Manufacturing . . . . . . . . 16

Industrial and Equipment . . . . . . 24

Built Environment. . . . . . . . . . . . . 10

Electronics and Aerospace . . . . . . 18

Supply Chain. . . . . . . . . . . . . . . . . 26

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

3


TOP CHALLENGES – ALL SECTORS

From January 1 to December 31, 2018, CompanyWeek took an indepth look at 235 of the region’s manufacturing entities.

TOP 10 CHALLENGES MANAGING GROWTH 2018

# COMPANIES REPORTING4 38

2017

The companies profiled each represented one of more industry subsets including bioscience and medical, brewing and distilling, built environment, cannabis, consumer and lifestyle, contract manufacturing, electronics and aerospace, energy and environment, food and beverage, industrial and equipment, and supply chain manufacturers.

18 23

2016 0

10

Brewing and Distilling

44

Built Environment

24

Cannabis

9

40

20

30

40

20

30

40

20

30

40

20

30

40

20

30

40

20

30

40

20

30

40

20

30

40

20

30

40

WORKFORCE 23

2017

14

2016

14

0

10

GOVERNMENT REGULATIONS 2018

14

2017

10

2016

8

0

10

MARKET AWARENESS 2018

14 9

2016

20

30

2018

2017

Bioscience and Medical

20

9

0

10

COMPETITION 2018

14

2017

8

2016

6

0

10

SUPPLY CHAIN 2018

11

2017

Consumer and Lifestyle

61

Contract Manufacturing

42

6

2016

3

0

MARKET EDUCATION 2018

Electronics & Aerospace

22

Energy and Environment

7

10

4

2017

10

2016

6

0

10

FINANCE / FUNDING 2018

5

2017

6

2016

7

0

Food and Beverage

37

10

REAL ESTATE / SPACE 2018

Industrial & Equipment

38

6

2017

6

2016

5

0

Supply Chain

10

39 KEEPING PACE WITH INNOVATION

Total Data Set

343

2018

4

2017

4

2016

5

0

4

2018 Manufacturing Market Report

10


TOP 10 NEEDS

TOP 10 OPPORTUNITIES

WORKFORCE / LABOR / NEW EMPLOYEES

NEW MARKETS

2018

32

2018

2017

32

2017 36

2016 0

10

20

30

0

2016

20

30

40

2017 2016 10

30

40

40

50

20

30

40

50

20

30

40

50

20

30

40

50

10

20

30

40

50

10

20

30

40

50

20

30

40

50

18

2017

2016

14

2016

11

0

10

20

30

40

16

0

EQUIPMENT

10

2018

11

2017

17

2017

12

14

2016

8

0

10

20

30

40

10

0

MARKETING

10

NEW CHANNELS

2018

2018

11

2

2017

8

2016 0

17

2016

10

10

20

30

40

7

0

NEW CUSTOMERS

10

MANAGING GROWTH

2018

9

2018

2017

9

2017

3 6

2016

3

10

20

30

40

12

0

TRAINING / EDUCATION

10

NEW PARTNERS 2018

1

10

20

30

40

LOCATION 2018

7

2017

4

0

NEW SUPPLIERS / SERVICE PARTNERS 2018

7

2016

7

0

8

2017

7

2016

3

2017

5

4

2016

3

0

20

TECHNOLOGY / INNOVATION

2018

2017

20

MARKET OR PRODUCT LEADERSHIP

8

10

20

30

40

4

0

NEW SALES AND DISTRIBUTION CHANNELS

CUSTOMER LOYALTY 2018

3

6

2017

4

3

2016

4

0

30

16

10

2018

16

2016

50

31

0

EFFICIENCY

2017

40

30

19

2016 20

2018

2018

30

20

2017 19

2016

50

22

10

NEW PRODUCTS

16

2018

40

36

2018

23

0

30

11

0

REAL ESTATE / SPACE 2018

2016

50

2016

21

10

2017

40

2017

19

2016

20

GROWING MARKET

2017

2017

10

2018

18

0

34

2016 40

FINANCE / FUNDING 2018

0

43 41

10

20

30

40

3

0

10

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

5


BIOSCIENCE AND MEDICAL

Page !1

The 20 companies within the bioscience and medical industry subset profiled by CompanyWeek ranged in size from three to 485 employees. Five of these companies were located in California and 15 called Colorado home. The products produced by the companies ranged from contact lenses and eyeglasses to medical carts and components for MRI and ultrasound.

Top Reported:

Bioscience & Medical

4 BUSINESS CHALLENGES When asked about their biggest business challenges, the bioscience and medical companies profiled in 2018 cited managing growth (50%), government regulations (30%), and workforce

50

Managing Growth Workforce

30

Government Regulations

30 10

Competition Market Awareness

5

ing managing growth as a challenge increased

New Technology

30% from 2017, the number citing government

5

Market Perception

5

Finance/Funding

5

Pricing

5

Maintaining Culture

5

(30%) as the top three. While the number report-

regulations fell 30% year-over-year.

% Page 11

Bioscience & Medical

4 BUSINESS NEEDS Thirty-five percent of the bioscience and medical

Marketing

20

New Customers

20

workforce/labor/new employees as their greatest (20%), and new customers (20%).

30

EďŹƒciency

companies CompanyWeek profiled in 2018 cited need, followed by efficiency (30%), marketing

35

Workforce/Labor/New Employees

15

Real Estate/Space Finance/Funding

10

New suppliers/service partners

10

5Page !11

Equipment

5

Government Regulations

Bioscience & Medical

4 BUSINESS OPPORTUNITIES The bioscience and medical companies in our 2018 data group were most optimistic about the opportunities presented by a growing market (50%), new markets (40%), and new products (40%). Growing market and new product opportunities were reported by this industry subset more often than in any others.

6

%

50

Growing Market New markets

40

New products

40 20

Technology/Innovation

15

Market or product leadership

10

Customer Loyalty Location

5

Value/Pricing

5

2018 Manufacturing Market Report

%


COMMENTS: “There’s so much cost pressure in healthcare, it’s difficult

“It’s human capital. Right now, that is one of the biggest dif-

to differentiate through performance. We’re focused on

ficulties. The large-scale manufacturers, they’re busy, too.”

investing in automation and cost reduction, because we’re not able to sell the benefits of higher performance.”

Jim Kasic CEO Boulder iQ

Troy Rhudy CEO Molecular Products

“I think we can continue to grow because we have our brand out there, but I think we have to be innovative in

“We have a need to sharpen our marketing and tell our

the products that we are selling and how we get them to

story better. We really do a good job at putting the steak

our customers. A lot of the companies are not adding new

out there but selling is also about the sizzle. And we need

vendors because there are so many similar products. You

to do a better job of selling the sizzle at Harloff.”

really need to get out there and have something that sets

John Sweetland President The Harloff Company

you apart, and that’s what we’re trying to do.” Lance Ferrin President Allison Medical

“The market in Denver has been very tight for manufacturing-type workers and I think that will continue to be challenging. The flip side is Denver is very rich in engineering and quality talent.” Michael Labree CTO Innovatus Imaging

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

7


BREWING AND DISTILLING

The 44 companies in the brewing and distilling manufacturing industry subset profiled by CompanyWeek in 2018 Page !11

ranged in size from one to 241 employees. Primarily located in Colorado (35), this subset also included manufacturers in California (7), Oregon (1), and Wyoming (1). The products they produce included beer, spirits, yeast and grain.

Top Reported:

Brewing & Distilling

4 BUSINESS CHALLENGES While government regulations were cited as a major challenge in 2017, the number of companies reporting the same this year fell 12%. Though only 14% of the brewing and distilling companies we profiled reported that real estate/ space was challenging, that percentage is higher than any other industry subset. Managing quality was also a bigger challenge (at 5%) than reported by any other industry subset.

39

Managing Growth Workforce

18

Market Awareness

18 16

Competition

%

14

Real Estate/Space Supply Chain

9

Finance/Funding

9 7

Location Government Regulations

5

Keeping pace w/ innovation

5

Page 10

Brewing & Distilling

4 BUSINESS NEEDS

34

Real Estate/Space

While equipment was cited as a major need in 2017, the number of companies reporting the same this year fell 6%. The number reporting new suppliers/service partners as a need increased

20

Finance/Funding

16

Workforce/Labor/New Employees

14

New suppliers/service partners

8% year-over-year, and real estate/space as a need increased 9%. Workforce/labor/new employees as a need fell 11%.

Marketing

11

EďŹƒciency

11

Equipment

11

%

Page !109

New Customers

5

New sales and distribution channels

2

Government Regulations

Brewing & Distilling

4 BUSINESS OPPORTUNITIES

41

New markets

Though managing growth was seen as a big opportunity in 2017, the number of companies reporting the same this year fell 12%.

36

New products

30

Growing Market

Market or product leadership

16 11

Location Technology/Innovation

9

Customer Loyalty

9 7

New Partners

8

Managing Growth

5

New channels

5

2018 Manufacturing Market Report

%


COMMENTS: “I need lots of people to pony up and become an owner. I

“I think the biggest challenge for craft distilleries is that you

need help with my job. I need to produce more rum, which

can have a great whiskey in a year, but nobody will buy it

is both infrastructure and labor. And I need to continue

because of the age. We can’t do an eight-year like Tennes-

our brand development efforts in more markets. That takes

see, or a 15-year like Scotland, where it’s always cold and

money, it takes time, and it takes showing up with rum

wet.”

and making cocktails.” Karen Hoskin

Jason Riley Founder J. Riley Distillery

CEO Montanya Distillers “You cannot put a beer on tap that isn’t stellar. Trying to “There’s a demand for us to grow and get bigger and start

brew such a large variety of styles means that sometimes

distributing and canning but trying to come up with the

beers don’t turn out the way we need them to and they get

capital to make that play is one of the hardest things we’re

dumped down the drain.”

coming across right now.” Derek Heersink,

Davin Helden CEO Liquid Mechanics Brewing Co.

Co-founder Square Peg Brewerks “There’s some capability that I would like to add. Right now, our equipment limits us in being able to do bourbons which are of course one of the most popular whiskeys in the United States. And in order to do bourbons, I have to kind of get some different kinds of equipment.” Jason Hevelone Founder CopperMuse Distillery “It’s really fun to address the demand in new territories, but how we grow is the thing that keeps me up at night. We need to continue to play to our strengths with being really high-touch and focusing on who it is that we think will really enjoy our promise and our product. I want to make sure we maintain the ability to represent our brand consistently.” Caitlin Landesberg Founder Sufferfest Beer Company

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

9


BUILT ENVIRONMENT

The 24 companies in the built environment subset of our data group ranged in size from five to 100 employees and Page !10 were located in Colorado (15) and California (9). The products they manufacture ranged from lighting fixtures and skylights to panels, furniture and tiny homes.

Top Reported:

Built Environment

4 BUSINESS CHALLENGES The number of companies citing competition and pricing as challenges was higher than any other subset. This subset was also most challenged by niche market (13%). While market education was cited as a major challenge in 2017, the number of companies reporting the same this year fell 15%. The number reporting competition as a challenge increased 20% year-over-year, while supply chain challenges increased 8%.

Competition

25

Workforce

25 21

Managing Growth Government Regulations

17

Market Awareness

17

Pricing

17

Supply Chain

13

Niche Market

13

Location

4

Market Education

4

%

Page 9

Built Environment

4 BUSINESS NEEDS While equipment was cited as a major need in 2017, the number of companies reporting the same this year fell 10%. The number reporting new customers as a need also fell 10%, while the need for marketing increased 7% and the need for real estate/space increased 15%.

29

Workforce/Labor/New Employees

29

Real Estate/Space

17

Marketing

13

Finance/Funding Government Regulations

8

EďŹƒciency New Customers

4

Innovation/Ideas

4

Equipment

4

13

%

Page !9

Built Environment

4 BUSINESS OPPORTUNITIES While new partners and new channels were cited as areas of opportunity in 2017, the number of companies reporting the same this year fell 6% for each. However, the number of companies reporting growing market as an opportunity increased 32% year-over-year, and the number

10

46

Growing Market

38

New markets

29

New products Market or product leadership

21

Technology/Innovation

21 8

New Partners

reporting market or product leadership as an

Managing Growth

opportunity increased 11%.

4

Customer Loyalty

4

New channels

4

2018 Manufacturing Market Report

%


COMMENTS: “We need to break out of our current sales pattern into

“Hiring, like any other company, is difficult. The upholstery

market verticals, where we have done business almost by

side is especially hard to find. It’s a dying art. We’ll run an

happenstance and not design. We need to evolve from a

ad for a month and get two applications.”

happenstance type of opportunity to actually going out and making our own opportunities.”

Josh Romig Co-owner Sedita Manufacturing

David Barnes CEO Isotec Security

“We’re continuing to enable our distributors in expanding online sales, and we’re looking at more third-party prod-

“While most of the industry manufactures overseas, we

ucts and more automation to increase our revenue. One

choose to manufacture here in the United States. This

thing we do here is always be innovative with production.

means our production volume is much lower. There simply

We try to keep our competitors on their toes by constantly

isn’t a wealth of trained people in the job pool. We’re up to

putting out new products. It’s fun and part of our culture,

the challenge, though. We are committed to manufacturing

and, at the same time, it’s good in the marketplace.”

in the U.S. and are willing to invest in training the right people.”

Vod Alajian Operations manager ARTO Brick

David Winston Co-founder Scale 1:1 “With so much going on, we really need to find more good workers and outside vendors. We don’t want to take on a lot of debt. We just want to keep the ball rolling and get to the next level. We need more connections and have more ideas to talk about and share our perspective.” David Pierce Founder OHIO Design

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

11


CANNABIS

The nine companies in the cannabis subset of our 2018 data group ranged in size from five to 150 employees and Page !9 were headquartered in Colorado (7) and California (2). The products manufactured by these companies included cannabis and CBD extracts and edibles, topicals and seeds as well as contract manufacturing and testing services.

Top Reported:

Cannabis

4 BUSINESS CHALLENGES

89

Government Regulations

Not surprisingly, government regulations (89%) topped the list of biggest business challenges for

22

Managing Growth

companies within this industry subset. Though

Supply Chain

11

finance/funding was an often-cited challenge in

Competition

11

Market Perception

11

2017, the number of companies in this industry subset reporting the same this year fell 43%. Other notable changes included keeping pace

% Page 8

with innovation (down 14%), market awareness (down 14%), and new technology (down 14%).

Cannabis

4 BUSINESS NEEDS When asked about their biggest business needs, 56% of the companies profiled reported finance/ funding as the largest. This was followed by government regulations (33%) and new suppliers/

33

Government Regulations

22

New suppliers/service partners Workforce/Labor/New Employees

11

government regulation needs were higher in this

EďŹƒciency

11

industry subset than in any other.

Marketing

11

service partners (22%). Finance/funding and

New Customers

11 !8 Page

Innovation/Ideas

11

%

Cannabis

4 BUSINESS OPPORTUNITIES New markets

56

were the top two sources of opportunity cited by

Growing Market

56

the manufacturers in this industry subset. In fact,

New products

11

Market or product leadership

11

Managing Growth

11

Growing market (56%) and new markets (56%)

the percentage recognizing opportunity due to a growing market was higher in the cannabis subset than in any other. While new products were an often-cited opportunity in 2017, the number of companies reporting the same this year fell 18%.

12

56

Finance/Funding

2018 Manufacturing Market Report

%


COMMENTS: “Banking is by far the number one need of the industry,

“It’s always interesting marketing in a highly-regulated

right now. Once you have proper banking, it’s easier to get

environment. We have to be very careful about how we

insurance, it’s easier to get lines of credit, stuff like that. It’s

present ourselves. We’re definitely ahead of the times from

getting harder -- and more risky -- to carry all this cash and

the true medical application of this product.”

move it all around the state. Not having a banking setup has been a huge hurdle for us, and a lot of other companies.” Nathan Ferguson Chief production officer Jetty Extracts

Peter Calfee CEO GoFire “Except for a truly huge potential market like a California, by and large, you can’t cost-justify buying plant-level equipment. So, you end up doing things by hand more

“It sure would be nice to have easier financing for some

than you want, or sort of medium levels of automation, be-

of our expansion efforts, as well as things we would like

cause you can’t ship it across state lines [due to the federal

to do here. So, for instance, we’re working up a beverage

illegality of cannabis]. So, it really ends up being the tail

line. We’ve reached out to friends and family for financing

that wags the dog.”

there, [because] we really don’t have complete access to traditional financing at all.”

Nancy Whiteman CEO Wana Brands

Peggy Moore CEO Love’s Oven

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

13


CONSUMER AND LIFESTYLE

The 61 companies in our consumer and lifestyle product manufacturing industry subset ranged in size from one to 180 Page !8 employees. These companies were primarily located in Colorado (34) and California (21), but organizations in Utah (6) were also represented. The products they manufacture ranged from beauty and apparel to guitars, knives, skis and snowboards.

Top Reported:

Consumer & Lifestyle

4 BUSINESS CHALLENGES

36

Managing Growth

Though market education was often cited as a challenge in 2017, the number of companies reporting the same this year fell 5%. The number of companies reporting workforce as a challenge increased 8%. Other significant increases included supply chain (up 9%), market awareness (up 14%), and managing growth (up 18%).

Workforce

18

Market Awareness

18 13

Supply Chain

11

Government Regulations

%

11

Competition

7 Page 7

Location

7

Market Education Pricing

5

Finance/Funding

5 Consumer & Lifestyle

4 BUSINESS NEEDS Though new customers were often cited as a need by companies profiled in 2017, the number reporting the same this year fell 10%. The number of companies citing efficiency as a need increased

estate/space (up 15%).

23

Real Estate/Space

20

EďŹƒciency

18

Finance/Funding

13

Marketing

10%. Other significant increases included equipment (up 8%), marketing (up 7%), and real

28

Workforce/Labor/New Employees

Equipment

10

New suppliers/service partners

10

%

Page !7 8

New Customers

5

Innovation/Ideas

2

Government Regulations

Consumer & Lifestyle

4 BUSINESS OPPORTUNITIES While new channels were frequently cited as an area of opportunity by companies profiled in 2017, the number reporting the same this year fell 23%. of companies reporting growing market (up 17%),

Technology/Innovation

18 11 10

New Partners

5

Customer Loyalty Managing Growth

14

30

New products Market or product leadership

10%) as opportunities.

33

Growing Market

However, there were big increases in the number new markets (up 13%), and new products (up

48

New markets

3

New channels

2

Charity/NonproďŹ t/Socially Conscious

2

2018 Manufacturing Market Report

%


COMMENTS: “Taxes and insurance really take their toll. We’re a very

“The biggest challenge for SaraBella right now is shaping

small business, but we’re paying the same for our insur-

the fly-fishing industry for something that is unique and

ance policy as a large business would. I suppose our needs

different. There hasn’t been a mainstream fly-fishing com-

are the same as for any small retail business. It can be

pany that’s also a custom manufacturer that targets female

tough out there.”

anglers. We’re trying to strike a balance of steady growth

Karen Morrison Co-owner Victor Trading Co. & Manufacturing Works

with constant education while gaining strength in fly-fishing market spaces.” April Archer

“We come out with new designs every year. It’s

CEO SaraBella Fishing

nerve-wracking because you just have to hope it sells. We have picked designs that were not as hot as we hoped,

“The beauty of the position that we’re in, is that we’re living

and we’ve been surprised that the designs we started with

in a time when we don’t need retail accounts in order for

continue to be our top sellers.”

our business to survive. While we’d love to be on more

Betsy Mikesell Founder Beddy’s “The challenge is always going to be competition. The economy is better, people are buying more, and what that

retail store shelves, we don’t need them to survive. If more come along, that would be really great, but right now we’re focusing on the online channels that do well for us.” Cassy Burnvoth CEO Fatco

means is that you get more players jumping in.” Jeff Straubel CEO Summerset Grills “Because of our location, filling jobs has been difficult. Unemployment is really low in Denver and it is tough for us to get qualified employees, especially for second and third shift manufacturing.” Tom Koenig Manufacturing manager Spyderco

“Our story resonates with our retail partners and more consumers are wanting to purchase products that they know make a difference. People are looking for brands with authenticity and we’re both authentic and unique. We try to be as transparent as possible and our story is resonating through several different markets. We’re not limiting ourselves to just outdoor apparel and appreciate that this is an important step in finding more opportunities.” Tsedo Sherpa COO Sherpa Adventure Gear

“We’re vetting the manufacturing process right now. We’ve prototyped domestically, but a lot of manufacturing happens overseas. We want to manufacture in the United States. It’s not a lack of interest from brands. We’ve had a lot of people very interested.” Meghan Marsden Co-founder Veil Intimates

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

15


CONTRACT MANUFACTURING

The 42 companies in the contract manufacturing subset of our data group ranged in size from one to 150 employees Page !7 and were headquartered in Colorado (28) and California (14). Products manufactured by the companies in this subset ranged from aerospace components and automation equipment to machined parts and circuit boards.

Top Reported:

Contract Manufacturing

4 BUSINESS CHALLENGES

50

Workforce

Though market education was a commonly cited challenge among the contract manufacturing companies profiled in 2017, the number reporting the same this year fell 23%. Other big changes were seen in the number challenged by packaging (down 15%), expanding distribution/sales (down 8%), and finance/funding (down 8%).

26

Managing Growth Government Regulations

12

Competition

12 10

Supply Chain

%

7

Keeping pace w/ innovation

7Page 6

Location Market Perception

5

Pricing

5

Market Awareness

5 Contract Manufacturing

4 BUSINESS NEEDS Fifty percent of the companies in the contract manufacturing subset reported workforce/labor/ new employees as their biggest need. Real

50

Workforce/Labor/New Employees

36

Real Estate/Space

19

Equipment Finance/Funding

12

also often mentioned. This industry subset had

EďŹƒciency

12

the highest percentage of companies reporting

Marketing

estate/space (36%) and equipment (19%) were

equipment and real estate/space needs.

%

10 7

New Customers

Page !6

5

Government Regulations Innovation/Ideas

2

Training/Education

2

Contract Manufacturing

4 BUSINESS OPPORTUNITIES Though new channels and new partners were frequently cited as opportunities by the companies profiled in 2018, the number reporting the same

40

Growing Market

40

New products

increases were seen in contract manufacturers

Market or product leadership

new products (up 26%), and technology/innovation (up 18%).

33

Technology/Innovation

this year fell 23% for each. However, significant reporting opportunities in new markets (up 17%),

16

New markets

26 19 7

Customer Loyalty

5

Location Lack of Competition

2

Managing Growth

2

Value/Pricing

2

2018 Manufacturing Market Report

%


COMMENTS: “Right now [the challenge is] hiring people, especially factory workers. It’s really hard to find semi-skilled labor.” Jonathan Hollander CEO Seriforge

“It’s difficult to find people in the sheet metal and machining areas. The number of people has dwindled in these areas. We’re looking for bright young people we can train.” Mike Beam COO Dynamic Design & Manufacturing

“Our pricing is changing because of the tariffs. When they slap tariffs on imports, everybody raised prices. Nobody

“We like to train people the way we want them to work. We

wins in a tariff war.”

like to teach set-up and machining our way. That makes us

Chris Muhr

more efficient, rather than someone coming in and saying,

Owner All Metals Welding & Fabrication “We aren’t a large firm, so there is a limit to the number of

‘this how I’ve always done it.’ We will learn from them, and incorporate their knowledge, but we have our own way of doing things.”

programs we can run. Firms like us go in and out of being

Timo Lunceford

in a marketing phase. I’ve spoken with friends who own

GM Swiss Productions

similar firms who agree that at times, you get too busy to take anything else on. You start finishing programs, then you are back to marketing again. We are working to improve in this area.” Jon Schmidt GM HAD Technology

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

17


ELECTRONICS AND AEROSPACE

The 22 companies in the electronics and aerospace industry subset profiled by CompanyWeek in 2018 ranged in size Page from three to 150 employees. Primarily headquartered in Colorado (15) and California (6), Utah (1) was also!5represented. The products they manufacture ranged from computers and access control systems to electric aircraft and robotics.

Top Reported:

Electronics & Aerospace

4 BUSINESS CHALLENGES While government regulations were an oftencited challenge in 2017, the number of companies reporting the same this year fell 13%. Other significant changes included market perception (down 13%), niche market (down 8%), and pricing

23

Workforce Competition

14

Keeping pace w/ innovation

14

New Technology

14

%

9

Market Awareness

(down 8%).

Page 5 9

Product Cycle

9

Finance/Funding Supply Chain

5

Market Education

5 Electronics & Aerospace

4 BUSINESS NEEDS While training/education was an often-cited need in 2017, the number of companies reporting the same this year fell 17%. Other significant changes workforce/labor/new employees (up 17%). .

23

Finance/Funding

18

Real Estate/Space Marketing

14

New Customers

14

Government Regulations

14

EďŹƒciency

5

Equipment

5

New suppliers/service partners

5

%

Page !5

Electronics & Aerospace

4 BUSINESS OPPORTUNITIES While new channels were a frequently reported source of opportunity in 2017, the number of companies reporting the same this year fell 13%. Other notable changes included growing market (up 25%), market or product leadership (down 12%), new markets (up 26%), and new products (up 28%).

55

Workforce/Labor/New Employees

included government regulations (up 14%), and

18

50

Managing Growth

64

New markets

50

Growing Market

36

New products

32

Technology/Innovation

9

Market or product leadership Lack of Competition

5

New Partners

5

2018 Manufacturing Market Report

%


COMMENTS: “It really is all about people. It’s almost 100 percent about

“Skilled labor is very difficult to find. How do we reach

the people. The technology is neat, the hardware is neat,

some younger kids to do this? Right now, we’re blessed to

but without people to breathe life into that, you don’t have

have a pretty young workforce, but I worry about competi-

anything.”

tors snagging them.”

Steve Bailey

Bruce Page

Founder Deep Space Systems

CEO Manes Machine & Engineering

“The next generations of the product will be complemen-

“The theory of efficient markets is when there’s profit to be

tary to many of the other industries we’re getting into.

had, there’s more competition. You have more innovation

Our next step is starting to build solutions that are more

in the market you have to compete with.”

application-specific. We’re creating peripherals that are helping us get closer to the applications that we’re now only exposed to at the lowest level. We’re also excited that the latest generation of chip technology we’re using is well-suited for higher-end applications. We’re taking advantage of new and existing partnerships and getting closer to what people will do with it.” Ryan Cousins CEO krtkl

Jonathan Fitzhugh CEO ConcealFab Corporation “Ten years ago, as the economy was churning, we could pick up employees at the drop of a hat. There were people begging us to work and today that’s no longer the case.” Christophe Febvre CEO Dynamic Group Circuit Design

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

19


ENERGY AND ENVIRONMENTAL

The seven companies in the energy and environment manufacturing industry subset ranged in size from six to 25 Page !6 employees and were all located in Colorado. The products manufactured by these companies ranged from mining and drilling tools to solar control systems and solid-state batteries.

Top Reported:

Energy & Enviro

4 BUSINESS CHALLENGES Government regulations (29%) and managing growth (29%) were the biggest business

Managing Growth

29

Government Regulations

29

Competition

14

Keeping pace w/ innovation

14

competition (14%), expanding distribution/

New Technology

14

sales (14%), finance/funding (14%), and keeping

Finance/Funding

14

Supply Chain

14

challenges reported by industries in this subset. Other commonly-cited challenges included

pace with innovation (14%). Keeping pace with innovation was a bigger challenge for this industry subset than almost any other (tied with electronics and aerospace).

Page 4

Market Education

%

14

Expanding Distribution/Sales

14

Market Perception

14

Energy & Enviro

4 BUSINESS NEEDS

43

While new customers were an often-cited need

Workforce/Labor/New Employees

in 2017, the number of companies reporting the

Finance/Funding

29

EďŹƒciency

29

Real Estate/Space

29

same this year fell 22%. Other notable changes included efficiency (up 29%), equipment (down 11%), finance/funding (down 15%), new sales and distribution channels (down 11%), training/

14

New suppliers/service partners

education (down 11%), and real estate/space Page !4

(up 18%).

%

Energy & Enviro

4 BUSINESS OPPORTUNITIES While new channels and technology/innovation were often-cited opportunities in 2018, the number of companies reporting the same this year fell 22% for each.

71

New markets

43

Growing Market New products

14

Market or product leadership

14

Lack of Competition

14

% % 20

2018 Manufacturing Market Report


COMMENTS: “This industry is the wild, wild west. We’re a reputable

“Schedule is probably our biggest risk. Can we do things

company making a high-quality product. We’re the only

quick enough? Can we get our equipment fast enough?

company that has federal government approval to be

Can we get things qualified? Can we get our partners lined

doing what we’re doing and releasing the product into our

up? In many cases, the supply chain is somewhat undevel-

environment.”

oped because there are some new material components

James Gaspard CEO Biochar Now

in what we’re working with, so being able to get those developed as quickly as possible.” Doug Campbell

“I think if we want to achieve our growth strategy, capital at

CEO Solid Power

the right cost is going to be critical.” Mark Mathis CEO Confluence Energy

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

21


FOOD AND BEVERAGE

The 37 companies in the 2018 food and beverage manufacturing industry subset ranged in size from one to 800 Page !4 employees. While primarily located in Colorado (21) and California (12), Utah was also represented (4). The products these companies manufacture included candy, coffee, honey, salsa and packaged snacks.

Top Reported:

Food & Beverage

4 BUSINESS CHALLENGES

51

Managing Growth

While market education was an often-reported challenge in 2017, the number of companies reporting the same this year fell 10%. Other

22

Market Awareness

14

Supply Chain Workforce

11

Competition

11

managing growth (up 30%), market awareness

Market Perception

11

(up 14%), market perception (up 8%), and supply

Real Estate/Space

11

notable changes included competition (up 8%), expanding distribution/sales (down 7%),

chain (up 9%).

%

Page 3

Government Regulations

8

Shipping/Transportation

8

Market Education

8 Food & Beverage

4 BUSINESS NEEDS Workforce/labor/new employees were the dominant need for 30 percent of the companies

(22%), and equipment (11%). Though only 5%,

other (tied with brewing and distilling).

22

EďŹƒciency

11

Equipment Real Estate/Space

8

Marketing

8

New suppliers/service partners

8

new sales and distribution channels were a bigger need for this industry subset than almost any

24

Finance/Funding

in the food and beverage industry subset. Other needs included finance/funding (24%), efficiency

30

Workforce/Labor/New Employees

%

5 Page !3

New sales and distribution channels New Customers

3

Government Regulations

3 Food & Beverage

4 BUSINESS OPPORTUNITIES Though new channels were an often-cited source of opportunity in 2017, the number of companies reporting the same this year fell 30%. Other notable changes included growing market (up 28%), new markets (up 20%), and new products (up 20%).

22

Growing Market

41

New markets

41 35

New products

22

Market or product leadership

19

New Partners

11

Technology/Innovation Customer Loyalty

3

Location

3

Managing Growth

3

New channels

3

2018 Manufacturing Market Report

%


COMMENTS: Once I have a customer, I have a customer for life. But I need help finding that customer.” Wendy Butters Owner Polka Bean Foods

“We started off as two people working all the time. In the past 12 months, we’ve hired our first three employees. We need to manage that growth effectively. It’s a good challenge to have, but it’s definitely a challenge.” John Huber

“I think our biggest challenge is that we’re a small mom-

Co-founder Nutista

and-pop shop. We’re still just getting our feet on the ground. It’s always a challenge to divide up the little bit of

“As we continue to invest in automation, we need skilled

profit that you have between building the shop internally

mechanics and journeymen to maintain the equipment. We

as well as paying for some marketing and getting your

have found that many of our friends in the industry face

name out there so that you can gain enough customer

the same need for qualified mechanics. It is an in-demand

base to continue to grow and add new products.”

skill.”

John Buoniconti

Lisa Brasher

Owner Colorado Candy Company

CEO Jelly Belly Candy Company

“I want more people that are like me: hardworking, that want to see the company succeed and be innovative. The people we’re trying to find, they’re just hard to come by.”

“As a small, craft-focused company, our competition includes very large, well-established beverage manufacturers. That can be a tough market. We don’t really have the same means as far as advertising or discounting that these

Bill Sabo Founder Nature’s Flavors

larger companies have available to them.” John J. Kure

“We have tons of opportunities and need to prioritize them.

Co-founder Kure’s Ginger Beer

We’re thinking about adding another product along the lines of the whiskey-barrel aged honey. CBD is also a huge market. And we have a lot of ethnic markets that we haven’t yet tapped into. It just goes on and on. There are millions of dollars of unmet demand.” Beth Conrey Founder Bee Squared Apiaries “One of our biggest challenges is that many people don’t know what an empanada is or that they can find them in their grocer’s freezer. It’s also tough to juggle our wholesale growth with our retail business. My dream has always been to be a wholesaler, but the retail side has been paying the bills.” Judy Giampieri Founder Gaucho de Argentina

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

23


INDUSTRIAL AND EQUIPMENT

The 38 companies within the industrial and equipment industry subset profiled by CompanyWeek ranged in size from one to 150 employees. Primarily headquartered in Colorado (22) and California (13), Utah was also represented (3). The products these Page !3 companies manufacture included automated agricultural equipment, autonomous marine vessels, customized camper vans, tanks, and brewing systems.

Top Reported:

Industrial & Equipment

4 BUSINESS CHALLENGES This industry subset was the most challenged by supply chain.

Managing Growth

29

Workforce

29 18

Government Regulations

While market education was a commonly cited

16

Supply Chain

challenge in 2017, the number of companies

Market Awareness

13

reporting the same this year fell 12%. Other

Competition

13

significant changes included market perception (down 8%), real estate/space (down 8%), and keeping pace with innovation (down 8%).

%

11

New Technology Location

8

Pricing

8

Page 2

5

Finance/Funding

Industrial & Equipment

4 BUSINESS NEEDS When asked about business needs, 47% of the industrial and equipment companies in the data set reported workforce/labor/new employees as their largest. This was followed by real estate/ space (29%), equipment (18%), and efficiency (16%). This industry subset is among the most

47

Workforce/Labor/New Employees

29

Real Estate/Space

18

Equipment

16

EďŹƒciency

13

Finance/Funding

challenged by equipment needs.

%

8

Marketing

5

New Customers Government Regulations

3

New sales and distribution channels

3

Page !2

Industrial & Equipment

4 BUSINESS OPPORTUNITIES The greatest source of business opportunity reported by companies in this industry subset

Growing Market

was new markets (45%), followed by growing

New products

market (42%), new products (26%), and technology/innovation (24%). Though new channels were an often-cited source of opportunity in 2017, the number of companies reporting the same this year fell 15%.

24

45

New markets

42 26 24

Technology/Innovation

16

Market or product leadership Customer Loyalty

5

Location

5

Managing Growth

5

2018 Manufacturing Market Report

%


COMMENTS: “The immediate challenge we have right now is some of

“We need a CNC plasma cutter guy, a machinist, and a

the tariffs. We’ve been buying American sheet steel for a

serviceman to go work on sprinklers. If we think they have

long time. Suppliers of screws to motors and metal knobs

potential, we train them. It’s difficult. We don’t have the

have raised their prices. I hope it doesn’t escalate too

pool to pull from that a lot of people do.”

much.”

Duane Hitchcock

Peter Spenuzza

President Hitchcock Inc.

CEO Imperial Commercial Cooking Equipment “There’s a strong market for robotics and as the price “There’s a shrinking workforce and a rising cost of labor

continues to come down, so will the barrier of entry for the

that is getting more companies to look at the robotic

many small businesses that can benefit from this technol-

automation we provide. Advances with end-of-arm tooling

ogy. Machine vision is also a part of it, and that’s where we

is allowing us to add more dexterity to robotic systems.

can find opportunities. Manufacturers will often need a

Manufacturers of high-volume products can benefit from

machine vision system for their automation solutions and

advancements in robots, especially in the food, consumer

these systems have typically been more complicated to in-

products, and construction material industries.”

tegrate with the robot. Our big push is to bring the design,

Phillip Meilbeck President TransAutomation Technologies “One of the challenges we’re facing is because we’re growing very fast in workforce, it’s very hard, especially in

robotics, and vision systems together to make integration as easy as possible. We are trying to be responsive and stay ahead of the game.” Dave Kush Founder Axis Robotics

today’s market, to find good, knowledgeable people” Bogomil Banchev President IP Automation

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

25


SUPPLY CHAIN

The 39 companies in the 2018 supply chain subset of our data group ranged in size from two to 1,400 employees. Page !2 While most were headquartered in Colorado (26) or California (12), this subset also included Oregon (1). The products manufactured included barrels, brewers’ malt, flavors and extracts, grain, packing paperboard, pallets, and springs.

Top Reported:

Supply Chain

4 BUSINESS CHALLENGES

Managing Growth

Market awareness was a bigger challenge for this industry subset than almost any other. While real estate/space was an often-cited

21

Market Awareness

15

Competition

10

New Technology

reporting the same this year fell 15%. Other

Government Regulations

8

Market Perception

8

Market Education

8

crowded market (down 8%), market perception (up 8%), new technology (up 10%), and supply chain (down 26%).

31

Workforce

challenge in 2017, the number of companies notable changes included competition (up 15%),

36

Page 1

Keeping pace w/ innovation

5

Location

5

%

Supply Chain

4 BUSINESS NEEDS Thirty-six percent of the supply chain manufacturers profiled by CompanyWeek in 2018 reported workforce/labor/new employees as their greatest need. Finance/funding (15%) and real estate/space (15%) were also frequently

Finance/Funding

Page !1 15

Real Estate/Space

15

EďŹƒciency

13

Equipment

13

Marketing

13

New Customers

13

mentioned.

8

Government Regulations Innovation/Ideas

4 BUSINESS OPPORTUNITIES

%

10

New suppliers/service partners

3

Supply Chain

36

Growing Market

While new markets were a big source of opportunity in 2017, the number of supply chain companies reporting the same this year fell 23%. Other notable changes included growing market (up 28%), market or product leadership (up 15%), new channels (down 8%), new partners (down 8%), and technology/innovation (up 23%).

26

36

Workforce/Labor/New Employees

New products

31

Technology/Innovation

31

Market or product leadership

15

New markets

15 5

Customer Loyalty Lack of Competition

3

Location

3

Managing Growth

3

New Partners

3

2018 Manufacturing Market Report

%


COMMENTS: “An open mind from brewers… is the biggest need we have,

“There’s always a need to be on the cutting edge with new

and it’s not easy. They all have suppliers today they’re

equipment. We’ve got a good array of equipment, but

comfortable with.”

every year we’re buying more equipment.”

Dale Wes

Alfonso Jaramillo

CEO Proximity Malt

Founder Acxess Spring

“When you’re growing at such an exponential speed,

“We really strive on finding the ingredients our customers

you’ve gone from running a lean ship with just a few peo-

need. They might ask us if we can get them this or that

ple to growing that team. It can be challenging to find peo-

and we’ll reach out to some of our partners to find it.

ple with the same passion and create that same culture.” Megan Smith CEO Symbia Logistics “We’re pioneering a new method of food production. We’re commercializing an invention. We’re this hybrid business

Ultimately, we want to make their jobs easier so that they can do what they do best, we can do what we do best, we all make a little money, and everyone goes home happy at night.” Nicholas Erker President Smirk’s

model.” Daniel Kurzrock Co-founder ReGrained “I think the biggest challenge is the compliance to the different bodies and standards. We have to prove that we don’t need certain aspects of a standard for our business, even though our customer might need it for theirs. The other big challenge is in expansion. If you want to expand here in California, you’re restricted, especially when it comes to manufacturing. The government just wants this to be a distribution state, and not a manufacturing state.” Jaz Manak CEO RDM Industries

Company and Industry Trends Shaping Manufacturing in the Rocky Mountain Region

27


Brought to you by

www.CompanyWeek.com btaylor@companyweek.com

www.manufacturersedge.com tbugnitz@manufacturersedge.com


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