Manufacturing on Main Street: The Return of Small Scale Production Matthew Wagner, Ph.D Vice President of Revitalization Programs, NMSC
Defined… • Small scale production refers to the production of a commodity with a small plant size firm. It requires less amount of capital and is labor intensive in nature. The investment in machinery is lower when compared to large scale units.
The evolution of manufacturing in our downtowns and urban districts…
Small Scale Production – MS Statistics Main Streets: Manufacturing accounts for 2.4% of all businesses Average Main Street Capture of City-Wide Manufacturing Industry: • Manufacturing Businesses: 18.5% • Manufacturing Sales: 22.8% • Manufacturing Jobs: 20.1% Takeaway: In the average city with a Main Street, about a fifth of manufacturing is located within the Main Street boundary. In Main Streets City-Wide Difference (2015-16) (2015-16) (Higher Growth in MS) Manufacturing 5.1% 0.0% 5.1% Business Growth Rate Manufacturing Sales 31.7% 27.7% 4.0% Growth Rate Manufacturing Job 15.9% 9.0% 6.9% Growth Rate Takeaway: 1. Manufacturing sales are up over the last year. 2. Main Streets are experiencing greater manufacturing growth from 2015 to 2016 than elsewhere in cities.
What’s Driving the Shift…A Convergence of Trends • Technology • Equipment costs – 3D Printers, High Speed Sewing Machines; Performance Mixers and High Speed Ovens • Barriers to entry to global markets – Shipping and Retail Platforms • Rental Rates and Building Functionality • Overbuilt Retail Environment and Need for Downtowns to Diversity Use/Functions • New Platforms for Distribution • Etsy • Larger Retailers Seeking Unique Products for Differentiation • Side Hussle Economy • The Changing Nature of Retailing and Consumer Preferences • Growing Importance of Place to Consumerism
Nearly 1 in 4 Americans Participate in the Digital Platform Economy
Experiential Retailing - Nordstrom • Female shoppers can try on clothes together in the roomy “girlfriend” dressing rooms while others can wait in “The Apartment,” a lounge outside complete with a comfy couch and flat-screen television. Bringing children along for the day? This location provides a playhouse with crayons, coloring books, and a 32-inch touch-screen with interactive games. In addition, this store offers an Ebar for espressos, plus charging stations, a sit-down restaurant
“Creative/Experiential” Retail
Architecture & Place Matters INTERSECTIONS OF SPACE AND BRANDING • Cushman Wakefield Study of 500 Companies: • Many respondents mention • Breweries, Cafes, Etc primarily locating in their hunt for an open-office historic buildings. feel — converted warehouses and lofts impress potential workers. In addition, they take advantage of a surplus of underutilized buildings that convey local heritage. • They looked for locations that were “live/work/play” neighborhoods, located near bars, restaurants and cafes.
Sm Small F ll Farm rmin ing G Growth th • Culinary Districts Formation • The number of farmers’ • Farm to Table markets rose to 8,284 in Restaurants 2014, up from 3,706 in 2004 and 1,755 in 1994, • Value Add according to USDA’s Production with Agricultural Marketing Service Retail Components • Direct to consumer • Farmer’s Markets as markets continues to Year-Round Retail grow (USDA) Anchors • Consumption of locally grown food continues rise! Accounts for 8% of all food sales and $6.2 billion in sales (up from $4.8 four years ago)
Small Scale Production – Business Examples • Breweries • Food Production • Popcorn • Bakery • Chocolate • Apparel • Furniture • Sporting Goods • Jewelry/Watches • Artisans
Small Scale Production – Main Street Community Examples • Hasting, NE – • Pacha Soap Company – a for-profit social enterprise selling into places like Whole Foods and Bed Bath and Beyond. 46 employees • Leadville, CO • Melanzana – retail and manufacturer of outdoor recreation apparel. Employ 20 people in downtown. • Salt Lake City – The Granary District – • Frida’s Bistro – Restaurant with back-office production of Mexican food products (under the Roco Brands) shipped to West regional grocers. Employs nearly 100 in this urban commercial district.
Examples of Small Scale Production Clusters • Owosso, Michigan • Duluth, MN’s “Craft District” • Popcorn Manufacturer • Bent Paddle Brewing Company • Chocolate (39 employees) Manufacturer • Frost River – • Leather goods Canvas and Leather Manufacturer Bags (32 • Glass blowing employees) • Brewery • Hemlocks Leatherworks
Other Initiatives • Memphis, Tennessee , conducted a research study to learn more about the needs of their creative community and what actions they can take to support this sector of their economy. • Kennesaw, Georgia , held a Maker and Micro Business Expo aimed at connecting creative entrepreneurs to information and inspiration about how to scale and grow in the Metro-Atlanta region. • Knoxville, Tennessee , organized a city-specific summit to unite the maker community in Knoxville and announce the formation of a mayoral Maker’s Council, to ensure creative entrepreneurs have a voice in local policy.
Other Initiatives • Pittsburgh, Pennsylvania , is working with the city’s development corporation to identify buildings ready for rehabilitation that can be converted to work spaces for makers. • Tacoma, Washington , incorporated small scale production into the city’s long term strategic plan, Artful Tacoma, and established the Made in Tacoma initiative. • Talent, Oregon , makers formed their own nonprofit organization, Talent Maker City, and worked with the mayor and the development planning office to write a makerspace commitment into the strategic plans for the City.
What is needed to further drive? • Pipelines: • Technical assistance on the retail/merchandising side of the • Maker Spaces – acts as the R&D business…know the product but laboratory for filling the pipeline with entrepreneurs in the small perhaps not retail. scale production space • Branding/Image development • Farmer’s Markets focused on this…create the buzz • Kitchen Incubators • Equipment grants • Permanent Pop-up Space dedicated to Small Scale Producers • Proactive targeting -
What is needed to further drive • Partnerships • Regulatory Environment • Universities and • Zoning Technical/Community Colleges – • Codes Engineering • Parking Loading Zones for • SBDCs Deliveries • Incentives that specifically target • Promotions/Marketing that Small Scale Producers highlight opportunities • Could you crowdfund or approach local factories/foundations for seed pool?
Discussion and Questions…Thanks! Matthew Wagner, Ph.D. Vice President for Revitalization Programs National Main Street Center 312-610-5617 mwagner@savingplaces.org
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