How urban manufacturing can rebuild local economies

Originally published in the National Post on May 13th, 2015

Manufacturing has reinvented itself. A couple of decades ago, as North American cities began to decline after losing their manufacturing to offshoring, the mantra among urban planners and certain economic developers became that we needed to stop ‘chasing smokestacks’ and look to new markets.

But the pendulum has swung. Manufacturing is reshoring — for quality control, market proximity, skilled labour and cost savings — and it’s had a make-over. No longer William Blakes’ “dark satanic mills,” today’s factories are more likely to be clean, high tech spaces filled with highly educated engineers and trades people. The Brookings Institute reports factory work, especially in advanced manufacturing, has higher technical requirements and higher pay, rising five times faster than the national average.

Urban manufacturing has boosted the US economy and is gaining momentum in Canada as all three political parties declare support for the sector in the upcoming federal election.

Here are three reasons why cities should embrace manufacturing, and three strategies to encourage the sector’s sustainable growth:

  1. Cities are where skilled labour, supply chains and markets exist

Businesses need skilled labour, and that is found in cities. Cities are where our colleges and universities are. Factories and supply chains also want to be where the transportation hubs lie, for closer access to markets. These hubs are in urban centres. Proximity to supply chains brings increased collaboration, innovation and efficiency. Local manufacturing also means products reach the market faster, reducing the need for long lead times and weeks of waiting for shipments to arrive from Asia. In short, clustering is good for business.

  1. Manufacturing brings innovation and an export market

A recent report out of MIT declares that innovation will flourish in advanced manufacturing hubs because innovation depends on the production of goods. In fact, it finds companies that export products are less likely to fail and are more likely to be innovative. It also shows that R&D in manufacturing has a higher proportion of funding from private capital than government. Funding through manufacturer’s own resources is 63%, versus just 27% for non-manufacturers. This is good for governments, employment and the economy. The report concludes that innovation hubs based on manufacturing will be the place “where new ideas become new products.”

  1. The trend is toward local, niche products

Local wares become symbols of a city. Ceramics are synonymous with Stoke-on-Trent in the UK. We associate fashion with Milan and Paris. And, increasingly, city-of-origin is a coveted aspect of goods. As the Toronto consultancy Distl highlighted in a recent report, we are seeing a larger trend toward homegrown niche manufacturing. This is happening now in Montreal, Toronto, Brooklyn, Boulder, San Francisco and many others.

It’s time to reestablish our nation as makers, to build policies that favour urban manufacturing.

Here are 3 ways cities can help rebuild our urban manufacturing sector:

  1. Don’t make the zoning codes too specific (new industries rise quickly, e.g., 3D printing)
  2. Help businesses navigate regulatory processes (simplify and support, to reduce hurdles)
  3. Offer an expedited permit process (faster permitting can keep businesses from leaving)

In return Canada will have better paying jobs, a higher quality of life, higher innovation, and the pride that goes with building unique identities.

Manufacturing can and should be in the heart, and at the heart, of cities. Finally, this conversation is gaining traction at all levels of government.