Phil's Thoughts

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The Return of Manufacturing and the Infrastructure We Need to Succeed

By the year 2020, 74 percent of Colorado jobs will require post-secondary training, certificate courses, or other degrees. For Colorado to compete globally, we must either attract these skilled workers or train them ourselves. Colorado’s lifestyle attracts some of the country’s brightest young people. For the past six years Metro Denver has been among the top-five locations for 25-34 year old people to migrate. This is the key demographic that employers look to hire. Why? Employers feel they are more cost-effective from a salary standpoint and that they are in the peak, productive years of their careers.

Since World War II, Colorado and Metro Denver have been beneficiaries of this migration pattern. But in recent years, our success in educating our own young people for great careers has suffered. It is called the Colorado Paradox – the ability to attract great workers from other states, but the inability to train our own. 

The United States is undergoing a sea change in its economy as a result of the impacts of hydraulic fracturing and directional drilling. Colorado’s Niobara and a renewed Denver Julesburg Basin are two of the country’s most significant shale plays along with others in Pennsylvania, North Dakota, and Texas. By 2020, these oil and gas fields, along with others, will catapult the United States to the world’s top oil producer. The impacts on foreign policy, the economy, national defense, industrial production, and personal income will be dramatic.

For Colorado, the return of manufacturing opens another path to the middle class for those without-a college education. Today, the only direct path to the middle class is health care jobs. For immigrants, non-college bound students, and career changers, manufacturing jobs pay well and are readily available throughout the country.

At the Metro Denver EDC, we are already seeing this change. In the past two years, more than 30 percent of our active prospects are in the manufacturing sector, up from 12 percent in 2004.

As we move “back to the future” with plentiful energy and advanced manufacturing, it’s time to look at the infrastructure needs of this  re-emerging economic  sector. 

First, we need an energy delivery system that allows us to move energy resources across the country. In President Obama’s first term, he vowed to increase efficiency and reduce the of the East and West electric grids to attack, with little progress.

As high school budgets have declined, industrial skill training for teens has been phased out. Machine tools are expensive and they obsolesce quickly. Community colleges have filled portions of the gap, but can’t capture the disinterested high school student who might get excited about making “stuff.” If the predictions are correct, American schools will need to reconfigure their curricula and faculty to accommodate a great opportunity for the next generation.

Manufacturing requires long supply chains and basic materials. Our crumbling interstate highway systems, increasing congestion on our railroads, and the need for industrial steel will bring much needed infrastructure to the U.S. economy. Hang on. The next wave is coming.

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About Phil Kalin

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly Economic Indicators.

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About Pinnacol

Pinnacol Assurance is the Metro Denver EDC's Research Sponsor. Pinnacol is Colorado’s leading provider of workers’ compensation insurance. Pinnacol provides comprehensive, competitively priced coverage; immediate attention to claims; a highly qualified network of medical providers; and proactive safety programs to more than 55,000 Colorado businesses. Annually, Pinnacol supports nearly $500 million of Colorado’s economic activity, spends over 35,000 hours keeping Colorado worksites safe and provides compassionate care to over 40,000 Coloradans injured on the job.

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