The COVID-19 pandemic has tested manufacturers’ flexibility and resilience as business closures, supply-chain disruptions and workforce limitations have presented significant challenges.
Impacts vary from business to business, depending on the types of products they manufacture and how they’ve pivoted during the pandemic. But many have so far managed to weather the worst of the storm.
The manufacturing sector is one of the biggest economic drivers in Colorado — studies from the National Association of Manufacturers say the industry accounted for nearly 7 percent of Colorado’s total economic output and employed more than 5 percent of its workforce in 2018. Manufacturing output topped $25 billion in 2018, according to NAM, when there were about 148,000 manufacturing employees in the Centennial State.
The Colorado Office of Economic Development and International Trade shows the state’s manufacturing industry accounted for $6.8 billion in annual wages for Coloradans in 2016, it’s most recent figure, with a total manufacturing output of more than $22 billion.
Gov. Jared Polis signed a proclamation Oct. 1 designating October as Colorado Manufacturing Month. Polis said “the economic future of Colorado depends on a strong, growing and competitive modern manufacturing industry.”
The Business Journal spoke with Colorado Springs manufacturers and the deputy director of Colorado OEDIT about how the industry has adapted during the pandemic.
ACROSS THE STATE
When the pandemic first impacted Colorado, manufacturers were eager to use their production capabilities to lend a hand.
“We saw many manufacturers were really wanting to lean in and help pivot,” said Michelle Hadwiger, deputy director of Colorado OEDIT, “and take advantage of the fact that, even while they were suffering, they had excess capacity and excess workforces. They wanted to maintain their employment levels as much as possible and also use that excess capacity for good.”
Hadwiger said manufacturers helped the state source personal protective equipment like face shields, and medical and non-medical masks, which provided several benefits for manufacturing businesses.
Some businesses were revenue-oriented, shifting production lines to PPE to generate money when core product sales were suffering; some were motivated by charity and just wanted to keep their staffs working and helping out in the crisis; and others, she said, were trying to help solve critical needs through innovation, research and development.
Many manufacturers have since transitioned back to their normal product lines and are navigating the challenges of running businesses in the current environment.
However, many sectors of Colorado manufacturing are not only surviving, they’re thriving.
“Bioscience and aerospace manufacturing in the state have increased employment and increased production opportunities,” Hadwiger said. “So we are seeing an uptick in certain areas of our manufacturing.”
Food and agriculture manufacturing have also seen an increased demand, as more people have been staying in and eating at home.
Some of the new manufacturing business in the state comes from new contracts with existing firms, but Hadwiger said several new companies have also been bringing business to Colorado.
“We’ve seen some Japanese and some Korean investment come to Colorado, which is excellent,” she said. “And I think because the supply chains that used to be so vertically integrated and dependent on the Asia Pacific, are becoming more distributed, they’re looking for on-shoring or U.S.-based locations.
“So if there are disruptions in the market in the future,” Hadwiger added, “they can still serve the U.S. market as well as overseas. So we’re actually seeing increased opportunities and increased volume in people looking to locate to Colorado … our pipeline is full.”
Westone Laboratories, a Colorado Springs manufacturer that produces a wide range of products for hearing health care and protection — including custom ear pieces and audiologist supplies — was allowed to stay open as an essential business when Colorado’s stay-at-home order went into effect.
Because most materials are sourced domestically, Ryan Lee, who works in marketing and communications for Westone, said they haven’t experienced any significant supply chain issues.
But because of business closures and peoples’ reluctance to leave their homes, Westone’s order volume has been highly impacted.
The company’s core business relies on audiologists who diagnose their patients’ hearing health needs, make impressions of their ears and then place orders for custom ear pieces through Westone.
And because many audiologists were closed in the early part of the pandemic, or only open to simple curb-side services, Westone’s order volume has suffered.
“Volume has definitely gone down with both ear-mold orders and supply orders,” Lee said. “Some people just aren’t going out. So it’s not that we’ve necessarily lost their business to competitors or others. People just aren’t going to see their audiologist, which, obviously, we’ve got to go get those impressions to get the orders.”
Lee said that around mid-April, orders “really just stopped” for about a month.
Lee said, because of demand uncertainties, the company has played it safe and taken a slow approach to ramping back operations.
“We let our orders stack up a little bit and we didn’t bring as many people back as maybe we should have from furlough right away, so we did get kind of backed up in our labs,” Lee said. “So once those began to pick back up we said, ‘OK, we at least have the incoming order volume to bring people in the labs back and we can still pay them with the incoming order volume that we do have.’”
Lee said Westone brought back most, if not all, of its lab technicians, but employees in other areas of operation — its warehouse, purchasing department, and marketing and design department — remain furloughed.
They likely won’t be brought back until order volume improves.
As a result, many Westone employees, Lee said, have been doing several jobs.
“We definitely have a lot of people wearing different hats,” Lee said. “During this time I’ve helped out with customer service a little bit and I’ve helped out in shipping … we have lab techs, too, who maybe only worked in one lab but now they’re bouncing back and forth between two, or maybe they’re helping now a little bit with our assembly team. So there’s definitely people doing more because certain people just still haven’t been brought back.”
When Colorado businesses began to close and events were canceled en masse, Nora LaMar, owner and CEO of Glassical Designs, saw business disappear overnight.
Since 1984, LaMar’s company has specialized in manufacturing corporate awards and recognition items, but for months on end, no banquets or awards ceremonies were taking place.
“We still do some [corporate awards] but as you can imagine with COVID-19, all large events have been canceled, so we had to pivot quite a bit,” LaMar said.
Like many Colorado manufacturers, Glassical Designs shifted to producing personal protective equipment, particularly sturdy, reusable face shields.
Many of their shields have gone to Adams School District 12 in Thornton, which has become one of their top customers in 2020.
They produced the face shields for about two or three months, LaMar said, and as time has gone on, the recognition and awards business has slowly picked back up.
To generate additional revenue, the company also has begun offering a new product specifically for companies to celebrate staff during the pandemic. The product, essentially an event in a box, contains an acrylic award along with confetti or a toasting flute and an invitation to a virtual event.
“We marketed that to a lot of our corporate clients, saying, ‘You don’t have to cancel your event. You can just create a virtual one,’” LaMar said. “And we’ve actually been creating a lot of those. So that’s been real nice to see that the organizations and companies that are doing well during the pandemic haven’t just thrown the budget for that out the window. They still want to recognize their people.”
Prior to the pandemic, LaMar said Glassical Designs was expecting a banner year, and was in the process of significant expansion.
“We were on trajectory to be buying a building this year two or three times the size of the one we were renting right now and we were hiring people left and right just to keep up with the volume of the growth we were experiencing,” LaMar said.
Heading into 2020, they were expecting about 25 percent revenue growth. And although their business was thrown for a loop, the adjustments they’ve made have kept them on track to achieve revenue totals similar to those they generated in 2019.
“It’s shocking,” LaMar said. “We were carried through the real hard time where everybody was scared and nobody knew what to do and nobody wanted to pull the trigger, by creating a face shield and produced those. So that was a huge help and now, people are understanding we live in a new world and are very open to the event-in-a-box. So I believe that also has really blessed us and everybody has jumped on board and helped us pull it off.”