Earlier this month, the Journal of Business hosted Mark Norton, executive director of the Northwest I-90 Manufacturing Alliance, for its most recent Elevating The Conversation podcast about Aerospace & Innovation in the Inland Northwest.

The Elevating The Conversation podcast is available on Apple Podcasts, Amazon Music, Spotify, and elsewhere. Search for it on any of those platforms or the Journal's website to hear the entire conversation, but for now, here are five takeaways—edited for space and clarity—from the episode, which is about 30 minutes long.

1. The Pacific Northwest aerospace industry appears poised for better days. I think the sector is is doing pretty well here in the Northwest. Of course, Boeing has had its challenges the last two or three years, but the outlook is really good. Boeing is sitting in a backlog right now of, I think, about 6,000 aircraft on their order book, so there's plenty of demand.

I think some of the challenges with supply chain and then all the oversight from the Federal Aviation Administration with the quality issues have slowed things down, and they're still struggling to get back to the production levels that they'd like to be at. But I think that will come around. 

Most of the manufacturers in our region are doing more components and sub-assemblies. We're what they call tier-two or tier-three suppliers, but still very important. It's growing here. We're trying to continue to promote the visibility of this region and our supply chain that we have here. I think we're definitely in a growth mode, and we would still like to be doing more. We would like to attract more companies here.

2. Two lingering issues that vex manufacturers are supply-chain issues and labor shortages. I'd say they fall into two buckets. One would be supply chain, which would be both raw materials and components.

As an example, there are electronic components coming from China and elsewhere in the Far East with 12- to 16-month lead times. That obviously throws a wrench into your production cycle.

Workforce for us, just like with everybody, continues to be an issue, but I think manufacturing is particularly impacted. It wasn't just from COVID. I'd say it's that narrative over the last 30 years about everybody has to go to college, and what we've seen since the 1960s is a continual drop off of people in the skilled trades as a percentage of the population. We have an ongoing kind of crisis around those highly skilled positions.

A lot of the people that were skilled were of the baby boomer generation, and they left en masse during COVID. That left a huge gap, and there wasn't a cohort behind them to fill that kind of vacancy. That's gonna be an ongoing challenge.

If you asked just about any CEO of any manufacturing company here, or probably across the United States, they would say the same thing.

3. Many aerospace manufacturers have diversified. In my consulting work, I worked with some companies that have entered what I call adjacent markets, in terms of similar dynamics, with medical equipment being one of them.

Just like aerospace, it's highly regulated, so we have to have very good quality systems. All the things that an aerospace manufacturer already has, even though it's a different industry, is very similar in terms of infrastructure. You're well positioned, and you can pivot fairly quickly.

Medical manufacturing also has the advantage of being a pretty consistent, whereas aerospace, as we know, has its ups and downs over the long haul. Medical is a very inelastic market. People need medical stuff, and that doesn't vary a lot. It's a great market to diversify into to mitigate a risk of those ups and downs.

It's also similar to aerospace in that both those industries take time to get into, but the flip side is, that same barrier is there for competition.

You aren't going to just walk in and get an order because of the risk involved—again, just like aerospace. If something goes bad in an aircraft, people die. If a meter is bad in a medical device, that can cause a similar scenario. So people don't, they don't switch suppliers quickly in either of those industries. So once you're in, that investment of time to enter the market is usually a good investment.

4. The space/satellite market is prime for growth in the Inland Northwest. That's an industry segment I'm really high on. It's projected to be about a $10 billion market by 2030. And really the Puget Sound has emerged, particularly in the satellite side of that, as really one of the leading epicenters in the world for that right now. They've been growing about, in terms of employment base, almost 200% year over year for the last three years.

You've got the big guys, like SpaceX and Blue Origin, but there's a ton of smaller startups and early-stage companies there. They're doing things like satellite docking to transport satellites from lower earth orbit to full space orbit. Or they do repairs.

It's great for Spokane, because some aircraft components have to be huge, right? These satellites are not, they're not like the old 1960s-era satellites. These are maybe slight the size of a toaster.

They're small. They're portable. Freight cost is not a factor, so sourcing it over here versus Seattle, it's no big deal. That supply chain for the space industry in Seattle is starting to get tapped out, and they need other sources. So, I think that's a really significant growth market for us.

5. There's reason to be optimistic about the envisioned American Aerospace Materials Manufacturing Center, for which federal funding was recently pulled. A timeline, however, is unclear. I don't speak for the tech hub, of course. We're a member of the consortium, but not intimately involved in it. But I would be surprised if an initiative doesn't get going here within the year.

When that would be completed is hard to predict. The original application is 350 pages, so this is not a light undertaking. Fortunately, we don't have to rewrite the whole thing from scratch, however, so in the big scheme of things, it's fairly near term to reapply.

It seems like the narrative from the current administration has been that once we make a few changes to it, they're likely to approve it. Whether it's for the same amount of money, though, I don't know that that's assured at this point.

When the funding was pulled, I think it was kind of a little bit of a gut punch to everybody. People are still kind of trying to figure out what parts of the proposal we need to tweak a little bit, and what parts we can leave as-is.

I haven't heard anything official at this point from from the team there, but I know they're kind of huddled up and really working on it right now.