80% leakage

“What percentage of the manufacturing spend by Colorado cleantech OEMs leaves the state?” was the question poised at a recent meeting of the Colorado Cleantech Supply Chain Advisory Board.

“80% leaks out” was the answer.

That’s a pretty big number.  It means that for every bracket bought from a Colorado supplier, four are bought out of state or out of the country. It also means that there is inherent savings to be had in logistics costs and lead time, risk avoidance and quality control, if our manufacturers could only source more of their supply chain locally.  Of course this is a complex question and the cost advantages of low labor rate countries can often overwhelm all other issues, but it is a question nonetheless worth asking.

And of course this is not just a cleantech issue; it’s a problem that cuts across all industry segments.  The solutions are as complex as the question, but include building up a strong, well focused supply chain locally; educating manufacturers on the cost of ownership and ROI advantages of sourcing locally; and working with government and labor to bring down the costs of manufacturing locally.  China Inc is not likely to start quaking in fear anytime soon, but we can do better. We can leak less.

Chuck

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