By Bill Virgin
The very word manufacturing implies big – big mills, big factories, big assembly plants, with big payrolls encompassing hundreds or even thousands of workers.
Washington certainly has its share of big manufacturing operations – Boeing’s Everett assembly building, the largest in the world by volume, Paccar’s Kenworth truck manufacturing plant in Renton, the sprawling Weyerhaeuser complex in Longview, oil refineries near Anacortes and Ferndale.
So here’s a curious factoid about Washington manufacturing. Most of the companies in that sector aren’t very big. Impact Washington, a Mulkilteo-based non-profit organization providing consulting services to manufacturers, has reported that the average size of manufacturing companies in the state is about 44 employees. Of course, averages can be distorted by a few large employers, so here’s an even more telling statistic. More than half of the state’s manufacturers have fewer than 20 employees.
For every giant like Boeing, there are dozens, maybe hundreds of fabricators, machine shops, contract assemblers and makers of parts, many of them feeding those big concerns, but many others operating in their own specialized niches.
The biggest headlines may be generated by the biggest companies, but there’s lots of news to be found amongst those small operations.
Consider for example, a 50-year-old Vancouver company that makes accessories for the irrigation systems that are a common sight across the West – in fact that’s the company’s name, Irrigation Accessories. The company currently generates about $1 million in annual sales of its products – with three employees. Pre-recession, it had eight employees and $1.8 million in sales (and hopes to return to those levels).
If eight – or even three – employees feels overly large to you, consider the saga of Alexandra Abraham, who is a senior at Seattle University, or would be if she hadn’t suspended her studies to start her own product company. DripCatch makes interchangeable trays to collect water from racks of glasses that have been run through a commercial dishwasher, thus eliminating puddles on restaurant and event-venue kitchen floors that pose health and safety problems. Abraham landed an endorsement for DripCatch from noted restaurateur Tom Douglas, which gave the product entrée into restaurant suppliers.
DripCatch’s workforce? One.
That Washington manufacturing abounds with stories like these says several encouraging things about the sector.
First, entrepreneurialism is alive and well in manufacturing. That shouldn’t come as a surprise in a state where starting a company is an assumed part of its economic and cultural fabric. But the term entrepreneur itself comes pre-loaded with stereotypical images of software coders conjuring up the next mobile-phone app or social-networking site.
Manufacturing has a long tradition of start-ups, with some of the most venerable companies in the state – Boeing and Fluke, to name two – still bearing the founders’ names, even if their ownership structure has long since changed.
Second, and a corollary to the first point, manufacturing entrepreneurialism is possible because it doesn’t require loads of capital to accomplish.
The term “virtual company” was coined to denote an operation in which the founding entrepreneur’s ideas and drive are its only assets; the actual production work and support services are contracted out. The term was used prolifically in the high-tech realm but it works well in manufacturing too. To get DripCatch to market, Abraham first arranged to have a production tool made in China. Then she found a local contract manufacturer – Cashmere Molding in Woodinville – that could produce the DripCatch at a price cheaper than what she could get from China.
“What’s cool about the U.S. and how we do things is it’s set up for companies like us,” Abraham says. “We don’t have to go spend $10 million on a warehouse. You can lease someone’s warehouse. The old way of doing things is so out of date. People don’t know the system, and they assume, ‘I’ve got to go buy a manufacturing plant.’ They don’t realize how accessible it is.”
Third, and again related to the first two points, the interest and ability of entrepreneurs to get into manufacturing with little more than inspiration and determination has big implications for the health of the industry and for the growth potential for Washington’s economy and job generation. Innovation can come from big and small companies alike, but it’s the little companies that often have the flexibility to run with an idea and see how it develops. And it’s not just the new small companies that drive innovation. Irrigation Accessories, at the half-century mark, is developing new technologies and designs for pivot systems that get the right amount of water to the right places, reducing wasteful runoff.
Small companies that succeed at innovation become large companies, or they’re acquired by large companies to reinvigorate themselves. Washington companies that master innovation will be the ones to add sales and employees. American manufacturers that prove adept at innovation will be the survivors in increasingly competitive and unforgiving world markets.
None of this should be read as a “bigger is better” or “small is beautiful” either/or debate. Manufacturing needs both to succeed. But contrary to the notion that manufacturing is old, big and stodgy, it’s important to remember that big industries like aerospace and automobiles grew on the efforts of inventors, tinkerers and entrepreneurs. Whatever the companies, industries and technologies that will drive manufacturing in the next few decades are already being built and tested by thousands of companies too small to generate much notice – for the moment.
Bill Virgin is a veteran business journalist and the founder of the newsletters Washington Manufacturing Alert and Pacific Northwest Rail News. He is also a columnist for The News Tribune, Seattle Business Magazine and the energy newsletter Clearing Up.