In a first-of-its-kind report, The Urban Manufacturing Alliance (UMA) examined the small-scale manufacturing sector that has taken root in America’s cities over the past decade, identifying the challenges it faces and offering potential solutions.
The State of Urban Manufacturing report concludes that the entrepreneurs making food, jewelry, clothing, ceramics, wood products and a host of other items in their homes or small manufacturing spaces could be important to a city’s economy, but that their power lies in their potential to grow. That potential may be limited by a number of factors, including the fact that these businesses—which combine art, design and production—tend to fall between the cracks of government classification. This results in a lack of understanding of what this group needs and a lack of coordinated community resources to fulfill those needs.
In an effort to address this problem, UMA spoke to 568 businesses in six cities—Baltimore, Cincinnati, Detroit, Milwaukee, Portland, Ore. and Philadelphia—to provide the first real examination of small-scale manufacturing and what it will take to supercharge its growth.
It identified six areas of concern:
- Workforce: Access to well-trained people is a particular challenge for small manufacturers in this tightening labor market. Potential solutions include leveraging non-traditional partnerships to match workers with businesses; adopting a shared workforce model and improving training programs.
- Capital Access: One of the main things researchers heard was that finding capital is difficult because traditional lenders might not like the risk involved in small scale manufacturing and angel investors or venture capitalists might not find the sector “sexy” enough. Potential solutions include a multi-stakeholder approach that includes philanthropy, CDFIs, universities and others.
- Customers and Markets: Accessing new customers was a top concern for respondents. While online marketplaces and wholesaling opportunities may open doors, not all small manufacturers know how to take advantage of them. Potential solutions include local branding initiatives to collectively promote a community’s products and the creation of regional supply chains.
- Production Space: Many cities have vacant industrial space, but it is not suited for small-scale manufacturing. What suitable production space does exist is often in high demand, driving up prices. UMA suggested cities do market studies to determine the need for small production spaces and then develop programs to subsidize their development.
- Business Support: Growing production business often fall between the cracks of existing support services—too big for start-up assistance but too small for the tax breaks and real-estate incentives available to large manufacturers. Organizations that do cater to those in the middle may have difficulty connecting with these businesses, who may not even consider themselves “manufacturers.” Possible solutions include networking events and the creation of a city “ecosystem manager” to coordinate and promote available services.
- Collaboration and Contract Manufacturing: The researchers found that fostering mutually beneficial relationships between designers and manufacturers was often more difficult than it would seem. The biggest impediment was finding potential partners. Some contract manufactures lack web presence, and regional directories can be unreliable. UMA suggested designating an organization to act as a liaison between businesses.