Posted March 26th 2012 at 9:10 am by
in Urban Manufacturing

City Made: The Case for Small Urban Manufacturers

A new kind of manufacturer is beginning to dot the U.S. map. Small, city-based manufacturers are producing high-value, design-oriented products – think craft breweries, coffee, and apparel. They demand skilled workers, tend to cluster, and often share supply chains. Each company may be small, but together they are providing good jobs and local products.

Meet Veronica Scott of The Empowerment Plan.

In Detroit: The Empowerment Plan is giving previously homeless women living wage manufacturing jobs and skills-training to produce water-resistant, self-heating coats for the homeless community.
In San Francisco: Joshu+Vela is designing and producing hand-crafted bags, backpacks and accessories in a small studio (1,000 sq feet), perched above an auto-mechanic shop in SoMa near the Financial District.
In Brooklyn: Buttonwood is creating some of the nation’s highest-quality buttons in their own corner of a larger factory floor, a block away from the Brooklyn Navy Yard.

Americans have become familiar with the story of the disappearing factory: painful job losses, empty main streets, and families struggling to pay their bills. Meanwhile, a different story of American manufacturing is starting to unfold.

Meet Dennis Hoffman of Buttonwood Corp.

In a climate where the need for jobs is great, economists and policymakers alike are searching for ways to offer good jobs to the underemployed and jobless. Despite a massive dip in jobs, the manufacturing sector is still responsible for the largest number of exports in the United States (69 percent), and in 2010 employed 11.7 million Americans in the country’s 300,000 manufacturing firms. (Here is a stats table.)

Just 60 years ago, over a third of the nation’s non-farm workforce was employed in manufacturing. Today that percentage is around nine percent. What remains is an industrial landscape that looks very different than it did 50 years ago, but is in fact still there.  What role should urban manufacturers play in modern cities?

 

• Urban Manufacturing Today

Although federal policy makers and local practitioners describe the manufacturing sector as a key component in economic development for cities and surrounding regions, major challenges remain in moving from verbal endorsements to a systemically supported industry.

In a recent Huffington Post article, urban manufacturing advocate Adam Friedman said:

“The truth is, that this country has barely begun to do the urgently needed work of rewiring the economy to support manufacturing and the jobs that it brings. Just as important, it needs to nurture those jobs in the metropolitan areas where the majority of workers already live.”

Friedman is the Director of the Pratt Center for Community Development, which oversees Made In NYC. Born out of the New York Industrial Retention Network, Made In NYC provides business-to-business support, the means to promote local products, and access to local suppliers.

Kate Sofis is Friedman’s San Francisco counterpart. Sofis serves as Executive Director of SFMade, a non-profit supporting 250+ participating manufacturing companies in San Francisco by providing business development advice, retail opportunities, branding and local certification, corporate partnerships, workshops and other technical assistance programs.

Noah Guy’s outfit, Joshu+Vela, is one of SFMade’s member companies. Joshu+Vela represents the kind of industry that’s thriving in places like Brooklyn and the trendy post-industrial neighborhoods of San Francisco: small companies in the apparel and food & beverage sectors that produce high-value, design-oriented goods available for sale in local boutiques, and sometimes in similar shops internationally.

City Made: The Case for Small Urban Manufacturers
Noah Guy of Joshu+Vela. Photo credit: Joshu+Vela

Guy employs a rotating cast of part-time, skilled workers. When asked if he hired fashion-school grads, he answered, “Never!” The best type of garment worker in San Francisco tends to be an aging breed of older, career garment worker — often looking for more career stability and longevity than an outfit of Guy’s size could typically support.

Guy can, however, offer his employees on-the-job training, which improves their skill sets and marketability. Developing a relationship with a reliable and technically skilled worker is hard to come by for Guy, but starting with some talent and building more specific skills through hands-on apprenticing is a great approach to retaining and building qualified skilled labor. In fact, Guy pointed to the greater value of developing skills on the job over formal design or garment education.

City Made: The Case for Small Urban ManufacturersCity Made: The Case for Small Urban Manufacturers
Joshu+Vela. Photo credit: Joshu+Vela

Kate Sofis and Adam Friedman echo Noah Guy’s experience.

Question: How do you envision effective vocational training and education for manufacturing career paths?

KS: My perspective is that I would like to see the Urban Manufacturing Alliance advocating for funding for on-the-job apprenticeships. When we talk to our companies, very few of them say is, “What we really needed is for Susie X to go to the vocational sewing training program at City College.” But what they are saying is that they’re getting people with some hand skills who need on the job training.

So a perfect example is Heath Ceramics. Heath has this contingent of Vietnamese workers, some of whom used to work in nail salons or other trades. And they’ve taken this manual dexterity and completely translated it, but are not telling me, “What we really needed is to send these ladies off to pottery school.” What they would have appreciated, however, was a subsidy, used over 6 months to a year, to offset the cash outflow for workers who are less productive than they are now to allow them to have more training capacity.

AF: Can I offer some structural reasoning? I think with manufacturing there’s a tremendous amount of diversity. So if you’re graduating a class of 20 people who have those skills, its not going to necessarily reflect what’s needed because of diverse demand. Also, graduating 20 people at once — companies do not hire matching those class numbers. They hire one or two people at a time. So on-the-job training, structurally, works much better.

Now, sometimes you do get such concentrations of some industries that they can hire at that scale. So in NYC, fashion is an example, where you had 20 people who could pleat, you could probably place them. Or metal working in Chicago.

KS: I think that’s a perfect example, and where I’d like to see national policy not try to pick and choose what vocations we should throw people into, but provide companies with economic stimulus that incentivizes them to hire. And on a regional level, figuring out oh, well in my region, we need X, and in your region, you need Y.

AF: So on a federal level, we need research. We need flexible grants, and more on-the-job training.

KS: In addition to influencing national policy and national rhetoric, we also hope to help bring up more communities to operating at a level that I think we’re aspiring to operate at in New York and San Francisco. We’d like to help other cities figure out what pieces of this pie they’re missing, and to find an easy way to implement them through a toolkit for urban manufacturing. We want to help each other. If they’re doing an awesome job in New York at tying local source product procurement to the retrofits they’re doing on a school, well that’s useful for me the next time I talk to my Mayor’s office on a project we’re doing in our city, to have that as a talking point.

AF: If we’re interested in the scale of impact and change, having something happen in one city is good, but not adequate. We were talking before about going to foundations, funders or the feds, you’ve got to present to them 10 cities, you’ve got to aggregate the cities to achieve big impacts.

 

• Collaboration Opens Doors in Big Cities

There are major challenges associated with running a small manufacturing business in a city like San Francisco, including high rent costs and a shortage of appropriate space.

Over the past 20 years some leaders in the sector have begun to develop and adaptively re-use huge industrial complexes for mixed-use and lighter industry. Abandoned industrial space is abundant in many American cities. These models have potential for nation-wide replication and have been somewhat successful in supporting newer manufacturers alongside start-ups, cleantech companies and film production studios.

Brooklyn offers two such examples. The Brooklyn Army Terminal and the Brooklyn Navy Yard both harness public-private partnerships to provide affordable, high-quality industrial space.

The Brooklyn Army Terminal was once the largest military supply base in the country. Today it is owned and managed by NYC’s Economic Development Corporation. Renovations began back in 1984. Now the complex is home to over 70 industrial and commercial tenants.

The Brooklyn Navy Yard, a 300-acre industrial park in Brooklyn, offers high-quality light industrial manufacturing space interspersed with mixed-use space for offices and other non-industrial uses. Development around this project is increasing. In 2006, the city pledged $250 Million to overhaul the Navy Yard’s infrastructure to support sustainable and “green” manufacturing opportunities.

And the Greenpoint Manufacturing and Design Center, located in Greenpoint, Brooklyn, rehabilitates old manufacturing buildings for occupancy by small manufacturing enterprises, artisans and artists. Currently GMDC owns and manages four properties, which together represent more than half a million square feet of space. More than 100 businesses, which together employ over 500 people, occupy the space. By acquiring derelict property and rehabbing it for manufacturing use, GMDC also facilitates real estate financing and provides a successful national model for industrial repurposing in dense cities.

In San Francisco, the American Industrial Center, formerly the American Can Factory, hosts graphic designers, commercial photographers, light industrial manufacturers, and Internet services companies.

Heath Ceramics, the popular and modern ceramics manufacturer, has recently negotiated a deal to relocate one of its manufacturing facilities to San Francisco’s Mission neighborhood from its headquarters in Sausalito, California. The City expects that more companies will follow Heath Ceramics to this area, creating more of what is happening in other parts the country — agglomeration and clustering.

City Made: The Case for Small Urban Manufacturers
Heath Ceramics tile manufacturing process. Image credit: Heath Ceramics.

Smaller shops are also opening doors. According to a recent report from SFMade, 80% of its manufacturing member companies employ fewer than 20 people each. These small businesses are new; over one third of SFMade’s 250 member companies opened their doors between 2009 and 2011 – a remarkable statistic in a recession. According to the Bureau of Labor Statistics, in 2004, 98% of all NYC manufacturers employed fewer than 100 people, and 84% employed fewer than 25 people.

Being small presents additional obstacles. The cost of healthcare, and the time and resources necessary for filing for permits and subsidies, present challenges that small businesses often lack bandwidth to meet. Despite the enormous potential value tax credits and subsidies hold for these emerging companies, only the larger manufacturers are typically able to balance the burden of back-reporting required by such programs.

Guy pointed to the need for financing designed to meet the unique needs of businesses employing fewer than 10 or 20 people. Guy found extraordinary resources available for getting a business off the ground, developing a business plan, even sourcing seed financing. But tax incentives only kick in once a business expands to employing more than 5 or 10 people. If he were to scale-up, it is unlikely that he would continue manufacturing within the city.

Yet new strategies to support the work of manufacturers are gaining momentum. Rent subsidies or shared space and equipment can mitigate some of the financial pressures. A collective of businesses might also share in the cost of workers who specialize in accounting and the paperwork associated with subsidies and city programs. Support networks like Friedman and Sofis’ organizations are beginning to forge innovative partnerships to move the industry forward.

Recently, Joshu+Vela was selected as a producer for a new partnership between Banana Republic and SFMade. This major corporate alliance made local products available for purchase at the flagship Banana Republic store in San Francisco and for a limited time, online. Other SFMade companies have been invited to sell goods at Banana Republic’s Grant Avenue Flagship through Mother’s Day. Although these are niche holiday retail opportunities, the message has not been lost on Guy: consumers want high quality, local goods, and major companies are responding.

 

• Toward a National Urban Manufacturing Alliance

SFMade and Pratt Center have also joined forces in a new effort to develop a national urban manufacturing alliance called the The Urban Manufacturing Alliance (UMA). Forged between leadership under these two non-profits, along with support from economic development and government agencies, the UMA will work with other cities across the country and directly with manufacturing companies to advocate for policy change at the city, state and federal level.

The UMA stands to play a valuable role in elevating discourse around manufacturing at the federal level. The Clinton Global Initiative has already taken note of this new alliance, and offered its praise.

Kate Sofis and Adam Friedman both advocate a national strategy rooted in strong local support mechanisms:

Question: Tell me about the future of an Urban Manufacturing Alliance. What are some of your objectives?

AF: One is to influence federal policy. Currently, it’s in a vacuum. Policy should be informed by experience. It shouldn’t all be tax abatement. Hopefully we will get to a place where cities aren’t out-bidding each other.

KS: Influencing federal policy is part of it, but so is painting a new picture of what modern manufacturing looks like. I think policymakers and the American public are sort of stuck in the past on how all we can be is tied to the type of industries we’ve historically had. In particular, the kinds of companies and manufacturers that you find in highly urban areas are smaller in scale, and hybrid organizations that are doing a mash-up of manufacturing and crowd-sourcing and social media promotion, and are partnering and joint-venturing with other companies across the nation and across the world. Even though they’re strongly rooted in producing a large quantity of their stuff locally, they’re strongly rooted in the greater global economy that we’re all in.

Dialogue needs to change from smokestack chasing, from protectionism, from everybody pursuing clean tech simultaneously, and trying to get the one or two “sexy” sectors to open doors in their cities. We need to do the opposite by taking a look at what are our regional strengths, and the strengths of my city, and what’s already there, and how do we cultivate what’s already there. I don’t think all cities need to be doing everything, I think its far more effective for us to figure out, Oh, look, they’re really good at shoe manufacturing in Brooklyn, Great! And, hey, we’ve got some really good shoe designers over there, and maybe it makes more sense to be looking at partnerships, over “everything has to be done here in San Francisco.” So there’s a supply chain piece of it as well — we can, and should at the least, be connecting our regions to one another where it makes sense to collaborate.

AF: Maybe there’s a big fat irony here: we’re looking at these local and regional campaigns, but in fact we’re not competing against each other at all. We’re not doing this to champion New York or San Francisco. We’re doing this to champion the United States. The well-being of our national economy, the realization that the future of the economy relies on all these regions and local economies doing well, and all these cities doing well, and plays into competitive advantages. I would never try to get an automobile company to locate in NYC, I mean, that’s just not what we should be doing. But, we should be collaborating to get them to stay in the United States.

KS: We’re also finding that a lot of the levers at our disposal to enhance the manufacturers who are doing well, are local levers. So if you want to look at how we get a better job, or getting trained young people in jobs with manufacturers, you’ll find that its a local and a regional discussion of creating stronger networks between local community colleges, and vocational schools and workforce development programs and companies. That has to happen through local ties.

AF: Is manufacturing more place-based than a service company, which could telecommute from anywhere? Yes. Manufacturers are nurtured by local actions. I would also say, that if you want your locale to make a political decision, its helpful to tell your mayor, or whoever, that “Yes, they do this in L.A.,” or “Yes, they do this in some other city.” Give them concrete examples. The entire field, the community of practice, gets better with precedent.

Question: What do you think about the Obama administration’s support and policy around Advanced Manufacturing?

KS: “Advanced” implies robotics, and super-heavy automation, as if that’s the only profitable recipe for successful modern manufacturing. By framing it that way, we’re being deterministic, we’re picking the winners, and we’re leaving a lot out. Its also kind of an academic argument. We have sewing factories with automated equipment, and people who do hand-stitching. So drawing a distinction between these people who are building “complicated medical devices” well that’s advanced, but beer making is not? Well, last time I checked the completely automated bottling lines at Anchor Brewing Company looked pretty automated to me. The distinction creates an unhealthy, unnecessary preoccupation.

AF: And, it leads to an extraordinary misallocation of resources. So, all of the incentives that are now provided through the Small Business Administration and Department of Energy that go to advanced manufacturing, neglect other high value added sectors.

KS: And it detracts in a number of other ways. Capital flow is one, but if you talk to advanced manufacturing it pre-determines the workforce that could or would work in that sector. Its arguably a different demographic than the workforce in companies we work with.

AF: And it will not create that many jobs. It will not absorb the disenfranchised.

KS: It may create a net economic output, but it’s not likely to help concerns about mitigating jobless recovery.


“The answer isn’t to stop building things, to stop making things; the answer is to build things better, make things better, right here in the United States. We will rebuild this economy stronger than before and at its heart will be three powerful words: Made in America.”

—Remarks by President Obama at the signing of the Manufacturing Enhancement Act of 2010, August 11, 2010

Included within the federal and municipal enthusiasm for manufacturing is an explicit sentiment around supporting the manufacturing sector at large as a remaining important contributor to the United States’ economy. Perhaps this necessary realization follows a zeitgeist permeating through the country on the heels of the massive economic Recession as a need for American relevancy, economic opportunity and most importantly global competitiveness. The federal and municipal policy narrative is one that is looking to the future for answers — namely in newer technologies and linking innovation and invention back to American-based manufacturers. Non-profits and commerce organizations are gaining ground in advocating for industry support for small urban manufacturers. What is missing in this narrative, which is more explicit in bids to support small businesses, is the demonstrated needs and challenges present in the existing manufacturing sector so concentrated in major cities.

To Read more on urban manufacturing initiatives see columnist Allison Arieff’s (@aarieff) coverage on the topic in The Atlantic Cities Blog and the NYTimes Opinionator Column. For more on federal policy and urban manufacturing, see the Brookings Institution and Pratt Center for Community Development’s Report.

Article by Alicia Rouault. Editor: Alexa Mills. Follow @arouault on twitter.

3 Responses to “City Made: The Case for Small Urban Manufacturers”

  1. Really appreciated your article and agree that the future of manufacturing in the US has to focus on craft, quality, authenticity – and sustainability. Wanted to make you aware of another artisan manufacturing incubator in Oakland – the 25th Street Collective.

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