Manufacturing Returns to Cities

Small urban manufacturers offer economic benefits to cities and could flourish with federal policy support.
by | July 2011

They were once common sights in many American cities: Sprawling brick factories, packed warehouses, busy railyards and bustling waterfront docks -- all part of the large-scale manufacturing sector that dominated the economy for much of the 20th century. Today, most of the old-time manufacturers have left urban centers for the suburbs and foreign shores. But a post-industrial city doesn’t equal a post-manufacturing city. Think of the fashion and apparel businesses in New York City, the biotech firms in Boston, and the food and beverage industry in Los Angeles.

What these urban manufacturing sectors have in common is that they are decentralized networks of small, specialized firms. In 2007, one-third of these 50,000-plus manufacturing firms that employ fewer than 20 people were located in the nation’s 10 largest cities, according to a report published by the Brookings Institution, Urban Institute and Harvard and New York universities.

While much of this sort of manufacturing is hidden from plain sight, it makes up a growing portion of America’s manufacturing economy. It represents the 21st-century form of production, according to the report, The Federal Role in Supporting Urban Manufacturing. Today’s manufacturing is “supple, peer-to-peer networks, rather than large, vertically multi-tiered entities.”

Not surprisingly, cities want to attract these modest-sized companies, known as small urban manufacturers, or SUMs. They like the high median wages they pay their skilled workers, the relatively green processes they use, their proximity to existing infrastructure and their dynamic customer base.

Of course, not all cities have benefited from SUMs. Cleveland, Detroit and St. Louis, for example, have lost their industrial prowess, and have made little headway with this new form of manufacturing, often because they lack a workforce with the appropriate skills, access to capital and adequate infrastructure. To help these and other cities grow SUMs, local and state governments have patched together a variety of tools and strategies, including land-use planning, financing, workforce development, access to green resources and export assistance.

But the missing equation is a coordinated federal policy for boosting the urban manufacturing sector. One key federal agency is the U.S. Department of Housing and Urban Development (HUD). “They recognize the paradigm has shifted as far as urban development and manufacturing is concerned,” says Nisha Mistry, co-author of the report and an independent consultant. “But HUD needs to be involved in a more concrete way and think more broadly.”

What HUD and other federal agencies and policymakers need to do is rethink urban programs and economic development policies to include this new type of manufacturer. Current policies and programs are not designed to address the special challenges SUMs face. In many instances, they create barriers to this new industry.

“We’re not proposing a rewrite of the budget or huge set-asides,” adds Mistry, but federal policies need to support localities looking to attract urban manufacturing.

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