Friday, May 6, 2011
By Ben Forman
A new study by the Brookings Institution argues that today’s manufacturers are increasingly small, specialized firms hidden in plain sight in American’s urban areas.
The US now has more than 50,000 manufacturers with fewer than 20 employees. These companies have multiplied in recent years, even as large manufactures have experienced steady decline. They now represent 70 percent of all manufacturing jobs. Many of these small manufacturers are located in urban areas, where they make a wide array of products including high-tech medical equipment, designer clothes, furniture, and specialty foods.
According to research cited in the report, manufacturers located in dense urban centers are more productive because they benefit from information exchange and better access to skilled labor.
Despite these advantages, the paper points out some of the unique challenges urban manufacturers face, including inadequate infrastructure, difficult to reconfigure buildings, limited access to capital, and the push to rezone land for other uses.
In addition to calling for planning at the federal level to develop strategic new approaches to grow small urban manufacturing enterprises, the paper recommends several steps the federal government could take immediately.
For instance, it argues the SBA should adjust its loan assistance programs to make them more effective for companies that rent space. Similarly, it proposes removing the prohibition limiting federal Industrial Revenue Bonds to owner-occupied buildings, which would give private and nonprofit developers a tool to renovate older mill buildings and put them back to productive use.
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