Urban Manufacturing Alliance
Tying Together Best Practices Across The Country For New Maker Communities
When U.S. manufacturing employment peaked in the late 1970s, American cities had eroded, with their economic fortunes reaching a nadir. New York City infamously almost filed for bankruptcy and 97 percent of the buildings in certain Bronx census tracts had burned to the ground through suspected arson-triggered fires.
Suburban decentralization attracted jobs from the urban core, while automation and globalization ensured that many manufacturing jobs disappeared altogether. What was left behind were former industrial spaces that quickly became absorbed by a highly polarized knowledge-and-services economy with white-collar workers and lower-wage service workers.
Cities rebounded, but manufacturing employment didn’t — at least not until the end of the last recession. More intriguingly, manufacturing’s real output and its real output per capita in the U.S. have increased while employment has dropped over the last forty years. Out of all the developed countries that had strong industrial bases in the twentieth century, the United States is the one that has seen its manufacturing sector fall faster and farther in terms of its share of GDP over the last half-century when compared to nations like Germany and Japan.
Today, in the face of both real estate pressures and globalization, American cities have choices to make about whether to preserve and enhance their remnant manufacturing bases and even grow nascent Maker communities.
These choices are not accidental. They are deliberate. That’s part of the reason that the Urban Manufacturing Alliance came into existence five years ago.
“There was a realization that we would be stronger in numbers if we wanted to see any global initiatives or any policies supporting local manufacturing,” said Lee Wellington, who is the Executive Director of the Urban Manufacturing Alliance. “There are so many cities doing disparate research projects and the methodology is so different in each one. What we want to become is a clearinghouse of all of these ideas in the Maker movement.”
Wellington came to the nonprofit after working in the New York City’s mayor’s office and seeing how urban policy affected the trajectory of the Brooklyn Navy Yards, where her great-grandfather worked about a century ago shortly after immigrating to the United States from Russia.
Like a think-tank and advocacy organization, the alliance, which has more than 100 members across the country, pulls best practices in workforce development, equity, real estate, and local branding together.
It has to speak to manufacturing’s past and its future, both representing communities that echo the industry’s historically blue collar roots as well as newer strands in the Maker movement, which make small-batch or artisanal goods at higher price points but will eventually need to scale their headcount and footprints.
“The manufacturing industry has been a stabilizer for so many families in the United States. But it can also be a very dirty word,” Wellington said. “People, like my family who worked in manufacturing never wanted their kids to work in manufacturing. So we have to shift the perception on a couple different levels.”
The American manufacturing sector has changed dramatically over the last generation. For one, employment began rebounding in 2010. Instead of large firms, smaller ones are forming and they’re located more closely to end consumers. Large, vertically-integrated factories are giving way to smaller, more flexible firms that can rapidly respond to changes in consumer tastes or technological breakthroughs.
While UMA is mostly focused on local and municipal efforts, because that’s where policy most deeply affects Makers and manufacturers, it is trying to branch into higher federal level policy. The organization is trying to influence a federal New Markets Tax Credit Program, created back in 2000, to become an additional capital source for cities looking to build new industrial or Makerspaces.
To re-imagine what Making and manufacturing could look like going forward, UMA has knit together member communities from Detroit and Cincinnati to San Francisco and Seattle.
They do this through about a half-dozen communities of practice which include:
• Workforce Development
• Equity
• Land Use Policy and Real Estate Development
• Local and Regional Branding
• Sourcing and Supply Chains
• Manufacturing Policy
We’re going to walk through a few of these with case examples from UMA member cities:
1. Local Branding and Marketing
With the complexity and opacity of modern, globalized supply-chains, provenance and local pride are two of the things that urban manufacturing and Maker communities can tap into to connect with and reach consumers.
Founding UMA member SFMade was one of the earliest pioneers in creating a local branding effort that put together everything from a common logo to retail partnerships. When they began, they started with 12 founding members that ranged from the city’s longest-standing manufacturer, McRoskey Mattress Company to newer companies like Ritual Coffee Roasters and DodoCase. They wanted to make sure that everyone from legacy brands to startups could feel included.
To promote local Makers, they started an SFMade week and special days where member retailers would donate 10 percent of their sales to the organization. They also held online auctions and factory tours, and created a retailer map sponsored by Levi Strauss & Co., a classic San Francisco brand from the original Gold Rush era. They also worked with the city’s travel and convention authority along with hotel chains to promote the map to visitors.
To figure out who could qualify for the branding program, they set out very specific criteria. Businesses had to be headquartered in San Francisco, manufacture at least one product in the city, have a local workforce with at least one full-time employee, and create consumer-facing products that could either be sold in retail stores or online. If they fit the bill, they could get the right to use the SFMade logo, be listed in an online directory, and cut sales deals through SFMade events and retail relationships.
To make the brand sustainable, SFMade worked on a voluntary pay-what-you-will basis. From that, they began earning about $60,000 every year from about 400 member manufacturers. On top of that, they began running educational programming with two-hour workshops and one-hour advising consultations, which brought in an extra $20,000 in revenue.
Across the country, Made in NYC, a local branding effort that is more than a decade old and was founded in the wake of the September 11 attacks, has stepped up with a larger-scale advertising campaign through a $750,000 grant from the New York City Council. More than 1,300 companies are now part of the effort, which has had recent campaigns under the slogans “Dreams, Jobs and ____,” and, “Made Here in NYC.”
Back on the West Coast, Portland’s local branding program follows a similar model, with a membership-driven structure that sustains itself through professional services that help Makers with business strategy and marketing. From $100 to more than $1,000 year, local Makers can be a part of the brand. On top of that, Portland Made offers by-the-hour services in photography, web design and real estate match-making. They’ll also help connect Makers and designers with factories that can do small production runs.
“In Portland, we have a pretty long history of manufacturing. We had a lot of shipbuilders. We had iron workers and lumber and wood-oriented products,” said Kelley Roy, who started Portland Made after opening a large Makerspace on the eastern side of the city called ADX. “But we’re also a hotbed for creativity and entrepreneurialism. Portland has always had this this kind of do-it-yourself, very independent spirit.”
The toughest issues facing Roy and Portland Made are how to help Makers in that mid-stage — companies that are five to ten years old and need to have a proactive sales strategy but still don’t have enough of a budget to put capital toward those needs. Roy partners with Made Here PDX to carry dozens of locally-made products.
2. Accelerators for Early-Stage Maker Startups
In the center of the country, Cincinnati Made takes a slightly different approach with a hands-on accelerator called First Batch that is much more intensive than the SFMade and Portland Made membership models.
During the program, the nonprofit provides four months of free rent at a Makerspace along with up to $10K in assistance for manufacturing and production and connections to mentors and advisers from the Cincinnati manufacturing community.
What Founder Matt Anthony discovered after graduating in an industrial design program was that a lot of the city’s young talent would leave despite Cincinnati’s strength in consumer packaged goods with major companies like Procter & Gamble.
“We have one of the top industrial design schools in the country. For most people, the end goal is leaving and going to Seattle or SF,” he said. “We talk about brain drain way too much, even though we have all this heritage manufacturing in the city.”
First Batch picks around eight companies with each cycle based on the strength of the team and idea, and their commitment to doing business in Southwest Ohio. Anthony said they’ve had a few breakout hits, including a beard oil and a high-end razor brand that has generated around $200,000 in commitments on Kickstarter.
“We never had a distinct crash like Detroit. When you think about these Rust Belt cities, all of them have to reinvent themselves on some level. Pittsburgh had to basically rebrand from steel and they came out of it with robotics,” Anthony said. “But Cincinnati has always been about consumer products and we never saw a crash from people not buying soap or detergent. We can be adverse to change but there are always little threads that you can pull out of our story. We do have a lot of resources around small-batch manufacturing.”
3. Land Use in Hot and Cold Real Estate Markets
While we do have a land-use and real estate section in this book, the main dilemma that UMA faces and advises has to do with the hot-and-cold nature of the real estate market.
In certain coastal cities like New York City and San Francisco, the dilemma is about how to preserve industrial space when there are extraordinary market pressures to convert them to more lucrative uses such as condos or office space. For new construction, the policy suggestion is to have cities build in incentives for mixed-use development that puts Makerspace in alongside residential or commercial space. To build understanding with the broader public, UMA recommends that Makers open their spaces to the community through brewery tours or open houses and events so that voters understand the value of Maker or industrially-zoned land.
But in less highly demanded areas, the problem is that rents are too low to cover basic maintenance or upkeep for properties.
In both cases, UMA recommends establishing or working with nonprofit development corporations, a strategy that has been used for decades in affordable housing development. Nonprofit developers can take a much longer time horizon and don’t need to sell off properties at certain points in time or parts of the economic cycle for their investors. They can also re-invest their profits into acquiring or rehabilitating more properties to build out a portfolio. Their funding sources tend to be much more diverse and they sometimes need years to establish the right capital stack to take on a project. The best-known projects tend to be hybrid public-private corporations like the Brooklyn Navy Yard.
One project to take a look at is Ruckus, a new Makerspace opening in Indianapolis in fall 2016 that was created by a non-profit developer, Riley Area Development Corporation. Although Riley has been around since the late 1970s in the city, they partnered with the city of Indianapolis in taking a grant that covers 20 percent of the total project cost. They’re building a Makerspace in a 540,000 square foot former factory, which sits at the gateway of a 500-acre industrial redevelopment district. In other parts of the factory will be space for food retailers and offices and artists studios.
On top of that, Indianapolis has undergone its very first major re-zoning in decades with new policies on the books that are intended to attract artisan manufacturers and food producers into the city’s vacant buildings.
“Indianapolis has lost over 25,000 manufacturing jobs. There have been really huge shutdowns of automotive plants and now there’s so much more brownfield space. It’s a huge loss,” said Eric Strickland, who is Riley’s executive director. “The key is not fighting politics but building political will with a real understanding of the real estate market so that you can build political interest and not compete against every other economic development idea.”
Even with help from the city, it has been tough to raise the rest of the funding for the space, Strickland said. Potential financiers perceive the Makerspace as risky and so they’re charging a higher interest rate to compensate for that. Riley is still trying to close another $3 million.
“It’s still very difficult. The market does not always see the economic benefits. We’re somewhere between what you’d see at a WeWork or co-working space to a full Makerspace,” he said. Ruckus will have everything from plain old desks to extra equipment like laser cutters to drill presses that members can access on premium price tiers.
4. New Training Strategies for Youth
Although the workforce development component of the alliance’s toolkit is still just getting started, the nonprofit wants to take a special focus on bringing young people into the industry. They’re starting with a series of partnerships in the Philadelphia public school system and are taking a closer look at some programs in Chicago and San Diego.
In Chicago, Dan Swinney is a labor activist who spent 13 years as a machinist and is now behind a program in a low-income, historically African American area of the city that’s trying to train teenagers in getting into manufacturing jobs. He founded a school called Austin Polytechnical Academy, that recently won $2.7 million dollar grant from the U.S. Department of Labor to build out its Youth CareerConnect program. That school led to the creation of a broader program called Manufacturing Connect, that serves students across three schools in the area.
“I was studying the skills gap problem,” Swinney said. “We found that starting in the late 1960s, the manufacturing industry began to change. Back then, the whole notion of manufacturing was perceived, for both the right and wrong reasons, as dangerous and dirty work. Now, we’ve shifted to higher value added and more complex work. But what’s degraded are the parts of our education system that are linked to manufacturing.”
Swinney began looking at more vocational-focused education systems in other countries like Germany to see what he could borrow and bring back to Chicago. He idealized structures like Mondragon, a federation of worker co-operatives in Spain that has more than 74,000 members and 11 billion euro in revenue.
“In the U.S., it’s broadly assumed that only the private sector with its principle values of private accumulation of wealth is capable of leading the development of the manufacturing sector,” he said.
But Mondragon, based in the Basque region of Spain, provides an alternative view of what labor and production can be. Developed toward the end of World War II by a young Spanish priest, Mondragon became a collection of cooperatives that is governed through a combination of technical experts and elected councils. The majority of profits are then re-invested back into the businesses every year, there is an unemployment assistance fund that helps kick in during recessions, and the pay ratio between managers and the lowest-compensated workers is restricted.
In the way that José María Arizmendiarrieta started Mondragon as a vocational training school, Swinney proposed the idea of creating a high school that could meet the standards of the local manufacturing industry.
As part of Manufacturing Connect, freshmen and sophomores will go on tours to see what modern manufacturing jobs look like. They then go on to take skills classes like learning how to use CNC machines later in their junior year. Paired with all of this are internships and job shadowing during spring breaks. Throughout, students take three to four years of pre-engineering courses in a system called Project Lead The Way, where engineers create the curriculum and courses discuss the issues of design, materials, and measurement.
Since the program started, about 47 percent of its graduating students have participated in a paid manufacturing work experience, and at least half have earned at least one metalworking credential from the National Institute of Metal Working. Of the 360 students that graduated from Austin Polytech from 2011 to 2015, Swinney estimates that 150 of those students were active in one way or another in the Manufacturing Connect program. Of those, around 50 have pursued careers in manufacturing. Around 38 pursued full-time jobs in manufacturing with an average retention rate of one year making between $20K and $75K a year. The rest — 10 to 12 — pursued their manufacturing interests in college through studying engineering.
“Our competitive advantage — the U.S.’s competitive advantage — is in advanced manufacturing. We are still within range of keeping that. But if we don’t revamp our education system, we will lose that advantage,” Swinney said. “It has to do with demographics and the loss of the baby boomer workforce. So for me, the next ten years is really critical. If we lose our competitive advantage, we will become marginalized in global society and you can feel that already happening with polarization and income inequality. So I have this sense of urgency.”
5. Ensuring That New Maker Communities Are Equitable
The last major piece that the Urban Manufacturing Alliance is starting to examine is inclusion and equity. Wellington says a full toolkit is going to be out shortly, with studies on New York, San Jose, Portland, and Indianapolis. This section, unfortunately, is less fleshed out because the equity and inclusion toolkit is still not finished at this point in time.
However, one of the cities that’s a part of the alliance’s very nascent equity efforts is San Jose, which is the large, often overlooked city that sits at the bottom of the San Francisco Bay.
“San Jose has a really unique story that’s valuable and needs to be more of a part of the Bay Area narrative,” said Michelle Thong, who is a business development officer at San Jose’s Office of Economic Development.
The city, which is the most populous in the region, doesn’t get the same media attention as San Francisco, which has sucked much of the tech workforce and its sources of capital northward from the industry’s historical core in Bay Area suburbs like Palo Alto, Menlo Park, and Mountain View. Nor is it getting the same cultural attention as Oakland, which has received an influx of San Francisco’s creative workers and industries after being priced out of the Western half of the Bay.
Yet San Jose’s industry in many ways is more diverse than that of the broader tech industry, which has seen widespread criticism for its lack of women and underrepresented minorities. Other East Bay cities like San Leandro and Fremont have long histories with the manufacturing industry, most famously with Fremont’s General Motors plant, which started in the mid-20th century, but then evolved into the Toyota joint venture NUMMI and is now a major Tesla manufacturing location.
Thong said San Jose’s advanced manufacturing sector is about 23 percent Latino. African Americans are still underrepresented at 1.8 percent of the manufacturing workforce, but they also only make up 3.5 percent of the city’s population.
“Many urban planners by training have come to this consensus around this shiny, happy new urbanist vision that has transit and amenities,” Thong said. “But there’s also this bifurcation. Where are the middle-income jobs? Where are the industrial lands and uses?”
The alliance is encouraging Maker programs to start looking at census tract data to check workforce placements or analyzing whether venture capital and investment is going toward underrepresented minorities and women in local communities. Cities that want to develop effective policy need to also start examining the skills gap to see how much on-the-job technical training is required.
They could ensure that Maker or manufacturing spaces pay a living wage or not exclude job applicants with criminal backgrounds, which penalize communities that are already disproportionately swept into the criminal justice system.
