July 13, 2001

Area manufacturers cope with flat demand; many remain optimistic

Managing EditorManufacturers in Boulder County that make products for advanced technology are ready to rock during the next six months.

Those that don’t, probably won’t. They’ll be working in a flat market, somewhat in the dark for advance orders, much like the rest of the state but still better off than manufacturers nationwide.

Advanced technology manufacturing has increased in importance in Colorado, according to the Colorado Economic Perspective report released in June. That rings even truer for Boulder County, which is heavy with makers of high-tech equipment who pay employees well. The county’s approximately 1,150 manufacturers account for 26 percent of wages paid here compared with the state manufacturers that account for about 14 percent of wages, according to the Colorado Business Economic Outlook Committee.

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Companies with cutting-edge technology or those making products that allow for more efficiency in the workplace are poised for a strong second half of the year.

Tucked away in Boulder’s Flatiron Park, Picosecond Pulse Labs Inc. is gearing up to manufacture next-generation, high-dollar opto-electronic components that will send data faster and clearer for greater distances along fiber systems. The products also will reduce bottlenecks at the on and off ramps of the information superhighway.

With $25 million in fresh funding from two photonics companies, Corning Inc. and Finisar Corp., and Barrington Partners, a venture firm, Chief Executive Scott Andrews said Picosecond is hiring more people, expecting to expand his crew from 100 to 200 workers by year-end. He’s also building a clean room to accommodate an automated machine that will mass produce these matchbox-sized components that will command as much as $15,000 a piece. Picosecond has 400 customers lined up led by IBM, Andrews said.

Over on Central Avenue in the park, SpectraLink Corp. is positioning itself to tap new markets with its wireless headset telephones for the workplace. It will target school districts, home-improvement centers and hospitals.

Despite the turmoil in the telecommunications industry, SpectraLink is making tools that allow workers to be more productive. Ben Guderian, director of marketing, said SpectraLink is building mostly to order, maintaining a small inventory of finished goods. “We are planning for a big upturn in the months and years to come,” he said.

And east of Longmont, Epocs Manufacturing is planning to build a 31,000-square-foot building where it will make metal stamping for the computer industry.

Then there’s big guns McData Corp. and Storage Technology Corp. that are expected to continue to ride the increasing demand for data-storage components.

McData, based in Broomfield, has launched four major switch and director products for storage networks in the last four quarters and recently has opened offices in Zurich, United Kingdom and Seoul. It also hired Bob Finley in June as vice president of manufacturing, replacing Dave Weishaar who is retiring.

The county’s largest manufacturer, StorageTek originally designed its Louisville campus as a manufacturing hub, but “now it’s 80 percent office, 20 percent manufacturing,´ said Cindy Bishop, staffing director. A good deal of StorageTek’s manufacturing has migrated offshore to Puerto Rico and France in recent years.

StorageTek has been continuing to hire quality control engineers and technicians to work in Louisville. Nonetheless, “there are more people to fill positions than positions to fill,” Bishop said, an indication of the number of technology layoffs that have hit Colorado this year.

But not all manufacturers in the county have that rosy of an outlook. The downturn in the economy nationwide is affecting others.

“This downturn has hit us,´ said Rick Strandlund, president and chief executive of Research Electro-optics in Boulder, which makes precision optics and thin-film coatings, optical assemblies and helium-neon lasers for the telecommunications, semiconductor, medical and laser-component markets.

” Right now we’re planning on orders being flat,” Strandlund said, referring to semiconductor and laser components. But telecommunications is a different scenario.

He said his telecommunications customers aren’t placing orders very far in advance. “Visibility is poor,´ said Strandlund, “OEMs (original equipment manufacturers) we would be selling to are refusing to give guidance beyond four to six weeks.” OEMs buy components and customize them for a particular application. They then sell the customized computer under their own name.

Julie Hart, senior economist in Colorado’s Office of Planning and Budgeting, said the national downturn is affecting Colorado and predicts manufacturing statewide will experience a less than 1 percent increase, but that stagnant growth could give the sector some breathing room. She said despite layoffs, including some in high-tech manufacturing, companies are facing a worker shortage. “There’s is a pent-up demand for skilled labor,” she said.

Gary Horvath, marketing analyst with the University of Colorado’s Business Research Division, said although it’s never a good thing when someone is laid off, some manufacturers will be able to fill positions with higher-quality employees. “Some are working in jobs who shouldn’t be working. They’re not qualified,” he said.

“The past 10 years, I’ve sat on the manufacturing committee for the Business Outlook Forum,´ said Horvath, outlining a long-term trend. “Every year, we read the obituaries of manufacturers who have gone out of business and closed their doors. We think, ‘Oh my gosh, the manufacturing economy’s going to hell in a hand basket.'”

Upon further study, however, the forum arrives at the same conclusion every year: “The small companies are adding employees and picking up employees that left the big companies.”

Why does this activity generally fly under the radar of the business masses? “It’s not exciting when a small company lays off three people,” Horvath said. “That’s not newsworthy. It’s newsworthy when StorageTek lays off 100 people or 200 people.”

Horvath, who keeps an eye on the NAPM Index (National Association of Purchasing Management), said manufacturing statewide has slowed a little bit, fitting the national trend. He said new orders were strong in April, but dropped a tiny bit in May. Although a backlog of product is still in the pipeline, people are beginning to order again. “Companies holding off buying at some point need to start buying again,” he said.

John Elms, vice president of operations at SpectraLink, sees small, niche manufacturers as the bedrock of Boulder County’s industry. SpectraLink and its neighbors in the park “are doing very well. I don’t think we (Boulder County manufacturers) are dominated by any one industry, so it’s not as cyclical. Detroit is autos, and the Northwest is Intel and chip fab. We’re more diversified.”

The importance of Boulder County’s manufacturing sector sidestepping a major downturn is not lost on CU’s Horvath. “Quite frankly, (manufacturing) gets lost behind IBM, the university and the federal labs. But this is a hotbed for entrepreneurship, and that’s one of the things that’s going to keep us strong.”Contact Doug Storum at (303) 440-4950 or e-mail dstorum@bcbr.com. Business Report Correspondent Eric Peterson contributed to this report.

Managing EditorManufacturers in Boulder County that make products for advanced technology are ready to rock during the next six months.

Those that don’t, probably won’t. They’ll be working in a flat market, somewhat in the dark for advance orders, much like the rest of the state but still better off than manufacturers nationwide.

Advanced technology manufacturing has increased in importance in Colorado, according to the Colorado Economic Perspective report released in June. That rings even truer for Boulder County, which is heavy with makers of high-tech equipment who pay employees well. The county’s approximately 1,150 manufacturers account for 26 percent of wages…

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