Manufacturing  June 13, 2023

CEO Roundtable: Manufacturers move more operations onshore

WINDSOR — Manufacturers in Northern Colorado are well aware of the hurdles that made doing their work a challenge beyond historic comparison during the pandemic. The solution: They’re moving more of their supply chains closer to home.

Supply-chain delays and product shortages during the pandemic became acute. They meant having to partially build commercial lawn mowers at Walker Manufacturing Co., for example, because not all the parts were available to complete the jobs. 

They meant having to wait months for shipping containers to be unloaded at the Port of Los Angeles for Envirotech Services Inc.

Manufacturing executives met with BizWest today at the Better Business Bureau Serving Northern Colorado and Wyoming offices for a CEO Roundtable discussion about issues affecting the industry.

While each of the manufacturers represented had challenges specific to their niche, several major themes surfaced.

Supply chain, product sourcing

For Vestas Blades America Inc. at Windsor, government programs that provide investment in green energy have “brought Vestas back to life,” said Wesley Patch, head of operations at Windsor. “We will start ramping up right now. We’re working on a new blade design,” he said.

Local sourcing — which Patch further defined as from the Northern Hemisphere, instead of China, Turkey and other places — is an issue that the company is trying to resolve.

Bob Walker, chairman of Walker Manufacturing Co. based in Timnath, said his company, now in its third generation of family ownership, has come through most of the supply-chain issues that it faced during the pandemic, although its engine manufacturer in Wisconsin has been having some issues. “We’re building complete machines. Our inventory at dealerships is back at pre-COVID levels. We’re running at peak labor,” he said, which is about 215 people. 

Walker is starting to evaluate — and has built a prototype — electrification of its mower fleet. “We’re certainly watching and will keep ourselves in the market. Eventually we’ll have something of that type,” he said.

Robert Thompson, vice president of operations for Envirotech, said the 120-employee company is starting to procure more materials from Canada and locally. “We’re also setting new expectations for customers. It takes longer to get some products, so customers need to order sooner,” he said.

Forney Industries Inc. of Fort Collins has begun to diversify its sourcing and has taken steps to have actual employees on hand for manufacturing that occurs in China. 

“I don’t like the tensions that are coming out of China,” said Steve Anderson, CEO. The company still has to rely upon Chinese manufacturing of some supplies, and has stationed a small staff there to make sure that what it orders is what is delivered. It has secondary sourcing of materials from Vietnam, the Philippines, India, “and we’re moving into Europe for supplies,” he said. 

While shipping was an issue during the pandemic when a container shipped from Asia cost $25,000 to get to the U.S., now that pricing has returned to $2,500 to $3,000, he said.

Anderson does not expect tariffs in China to go away and said that tariffs are less from Vietnam and India. 

Loveland manufacturer Tharp Cabinet Co. LP, while growing, has had to expand its market footprint in order to grow. 

“Our business is highly correlated with single-family home permits,” said Garth Rummery, president. “People don’t realize how far permits are down. We’ve been in a recession for 18 months. The curve looks a lot like 2008,” he said. “Growing throughout the state has allowed us to keep share,” Rummery said.

The company added 30 or 40 people last year and now has about 170 workers. 

Drew Akey, president of Vectis Automation LLC of Loveland, said the business of manufacturing robots has smoothed out and returned to a more-normal cycle than what existed during the pandemic.

There’s less panic-buying, he said. “We’re back to the typical capital approval process,” he said of his customer base. Customers are making sure the return on investment is there before sending a check for products. While customers are taking more care, they’re not pulling back. He said the defense industry has been an active sector for the company recently.

Dave McCarron, vice president of operations for In-Situ Inc. which produces equipment for monitoring and testing of water quality, said the Fort Collins-based company has doubled in size in the past three years and will double again. As a company that uses electronics, it has had semiconductor issues, the same as every other company in that sector. “We’re working our way through it,” he said, but said the company’s main issue is managing the growth that it has seen.

Semiconductors also are an issue for Broadcom Corp. (Nasdaq: AVGO), which just last month received a major, multiyear, multibillion dollar contract with Apple Inc. (Nasdaq: AAPL). Broadcom will need to ride the product release cycles of Apple, and other clients, which have periodic product releases that cause peaks in manufacturing activity. 

“Our supply chain is not just U.S. based,” said Carrie Pelton, vice president of operations for Broadcom in Fort Collins. She said the federal CHIPS and Science Act, which committed $52.7 billion for semiconductor research, development, manufacturing, and workforce development, will result in more semiconductor manufacturing being returned to the United States from overseas locations. In Broadcom’s case, a piece of the federal money will permit the company to upgrade cleanroom labs that, in some cases, are 45 years old. 

Meanwhile, Anheuser Busch is on the cusp of generational change, said Tim Seitz, general manager of the Fort Collins brewery.

“We’ve been here 35 years, and we’re nearly completing generational turnover. There are only 29 original employees left. A lot of the people who have replaced Gen 1 employees are their children. We want to have the right strategies and plans to build a culture that we want to have for the next 35 years,” he said.

The Fort Collins location, in addition to brewing the major Budweiser-labeled brews, also makes beer for craft brewers. “If you’re drinking a Kona Big Wave, and you’re not in Kona, then it was brewed here,” he said.

AB has 465 workers on site, with up to 700 when part time weekend and seasonal workers are included.

Reshoring

Northern Colorado manufacturers, like those all over the country, are looking to bring operations back to the U.S., a phenomenon called “reshoring.” 

“We’re a global company, looking to get the cheapest prices. Can we do it better, cheaper, faster elsewhere? If we do it on this side of the ocean, we can respond more quickly,” said Vestas’ Patch.

The challenge, said McCarron, is that the supply chain of young machinists is “much broader, deeper in Southwest Asia than in the U.S.”

Automation

Bringing work back to the U.S. in some ways is helped by use of automation, but that comes with pitfalls.

Akey of Vectis said he regularly talks with recent college graduates to see what universities are teaching and speaking about with regard to automation and artificial intelligence. AI has a role in software development, which Vectis regularly does in the production of its robotic systems, but Akey advises staff members not to rely upon it. Having access to online systems that AI might require can be an issue in other countries, for example, and knowing what is behind the software that is developed is important for customer relationships, he said. “Staff has to think for itself,” he said.

Automation in the production of cabinets is becoming more common, and Tharp is now of a size where it can justify investments in automation. He said the company is budgeting for large capital projects in the coming year, but the work of craftsmen at the company will be maintained.

Walker said his mower manufacturing company has not eliminated any jobs due to automation, but increasingly automation is enabling increased production without adding more workers. New laser cutters, he said, can do three times the work of old laser cutters. “We’re giving people the most productive tools that we can,” he said.

For Broadcom, automation enables the company to level out some of the peaks that it faces when its customers such as Apple launch new products. “We have a 185,000-square-foot campus with high ergonomic challenges to move materials,” she said, which automation and robotic material handling can help to ease.

Labor force

Janel Highfill, associate vice president of workforce development and strategic partnerships for Front Range Community College, is on the forefront of preparing workers for industries in Northern Colorado, including manufacturers. “We’re keeping our eye on the increased expectations of industry. We’re seeing steady enrollment and we’re thinking about increasing enrollment opportunities including evenings and weekends to meet the demand, she said.

“Usually, when the labor market is tight, enrollment goes down. But our enrollment is up,” she said. She also said that industries are showing increased interest in apprenticeships and other creative hiring approaches in order to help fill positions.

“We look at what are the competencies for the position and how we can align with that. We will put together training for employers. We try to open the aperture for how you bring people in and increase the diversity of the workforce, because people are looking at your jobs now and didn’t in the past because they didn’t have the skills,” she said. 

Anderson of Forney said the effort to bring production and jobs back to the U.S. has meant higher wages. Thompson of Envirotech echoed that. He said the lack of housing in Northern Colorado, and the high cost of housing, also is a factor on what the company needs to pay workers.

Thompson said Envirotech is being careful to find the right people for open positions, sometimes leaving positions open until the right person is found. 

Because of the high costs of housing, Forney said to some degree his company looks to east and west coasts, where cost of living costs are also high, to avoid sticker shock for job candidates from areas such as the Midwest.

Fortunately, turnover has been low in comparison to some other companies in the region, he said.

Vestas, which hasn’t engaged in widespread hiring since 2018, said it would be adding to its 350-member workforce, “maybe even tripling,” Patch said.

“We have raised wages. We’ve done some high-performance team wage growth. We use an apprenticeship program” and work with CareerWise and Weld County District 6 to attract workers, he said. The company is looking at job-sharing arrangements in which two people could split a 12-hour shift. 

He said that in addition to Windsor, the Vestas plant in Brighton will begin to ramp up in 2024. The Windsor plant builds windmill blades. The Brighton plant builds nacelles, or generators.

Vectis is working with universities to encourage a “fifth-year program” specializing in manufacturing. On the hiring front, it is seeking to attract and retain workers by pointing out that the company provides interesting work that is at the forefront of industry.

Broadcom is finding that categories of workers have interests in different things. Operators, for example, “appreciate extra time off and a pathway through the organization,” Pelton said. Technicians “are getting cold-called from elsewhere in the country with lower costs of living, and we’ve had to do a wage adjustment there.” Broadcom also offered equity in the company to retain workers.  

“We need to be a better employer than one that will grind people to a pulp,” she said.

CEO Roundtables in Northern Colorado are sponsored by accounting firm Plante Moran, lender Elevations Credit Union, and law firm Berg Hill Greenleaf Ruscitti LLP. They were represented Tuesday by Mike Grell, Darin Atteberry and Ashley Cawthorn, respectively. 

WINDSOR — Manufacturers in Northern Colorado are well aware of the hurdles that made doing their work a challenge beyond historic comparison during the pandemic. The solution: They’re moving more of their supply chains closer to home.

Supply-chain delays and product shortages during the pandemic became acute. They meant having to partially build commercial lawn mowers at Walker Manufacturing Co., for example, because not all the parts were available to complete the jobs. 

They meant having to wait months for shipping containers to be unloaded at the Port of Los Angeles for Envirotech Services Inc.

Manufacturing executives met with BizWest today at the…

Ken Amundson
Ken Amundson is managing editor of BizWest. He has lived in Loveland and reported on issues in the region since 1987. Prior to Colorado, he reported and edited for news organizations in Minnesota and Iowa. He's a parent of two and grandparent of four, all of whom make their homes on the Front Range. A news junkie at heart, he also enjoys competitive sports, especially the Rapids.
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