When the eager hero of the “Start-Up” podcast (Season 1) pitches his pod-casting business plan to a Silicon Valley venture capitalist, the VC lets him know that his dream is no more than that of a small-minded, “life-style” entrepreneur. The budding business-builder is deflated. The plan he’s carefully honed for growth and profit is not the high-growth business opportunity that the VC investor seeks. Our entrepreneur’s vision of a well-planned business that funds dozens of creative podcast projects is just not the kind of heroic endeavor revered by today's VCs; his entrepreneurial plan does not scale large enough to promise the necessary return.
Nowhere is this message, that cool new businesses must exponentially scale to high returns, clearer yet more ironic than for the business of manufacturing. Nowadays, we can all appreciate the chorus for re-shoring American manufacturing and hope that it may bring some jobs back to our communities. Yet the irony here is that, despite the wide recognition of our declining manufacturing base, proposals for manufacturing start-ups only grab investor attention when they are so compelling, so promising, that they can quickly scale to mass-production in China.
The VC’s requirement for high potential growth thus seems crass, but it is a consequence of the simple math of that business model. Those speculating in new endeavors, even after extensive investigative diligence, have low rates of success. Thus, any individual project needs to start with an entrepreneur’s vision of high returns — and for manufacturing, that usually means high volumes of product, produced from factories that already exist … elsewhere.
Unfortunately, the investor voracity for “high-growth” has been contagious. The outsourcing of mass-production has become emblematic of success for our manufacturing entrepreneurs. Media hype and government stimulus programs have helped spread a message that entrepreneurs should be valued for their visions of “high-impact products”, high-impact being little more than investor-speak for “high potential return”. We have created a counter-productive choice for our would-be manufacturing heroes that now hampers re-energizing local manufacturing. We headline the superstar entrepreneurs who have launched large enterprises and made huge profits along the way — and, offer little encouragement or support to our desired heroes, the builders of local manufacturing businesses.
As a small manufacturer in Durham, NC, I’ve seen the stagnation of manufacturing and the job crisis up close. Jobs matter here and elsewhere. Yet, as anyone who has walked the downtown streets of rust-belt towns knows, returning manufacturing to our communities has an important value beyond that of creating jobs. We’ve learned from the loss of entire industries to the practice of offshoring about the importance of being producers, the importance of participating in the full industrial cycle — from invention to design to manufacture. We’ve learned that the very atmosphere of community vitality — the excitement of innovation, creativity, and scientific advance — are closely linked to the engines of production. To be competitive, perhaps even to be viable in the long run, we need to innovate. And, to innovate, we need to be making things ourselves.
The perceived need to scale products to high-volume and off-shore production distorts some of the very initiatives designed to offer new economic opportunities in our communities. Take crowdfunding. Community-oriented, crowdfunding websites offer alternative funding for local services, businesses, arts, crafts, and events. Yet, when it comes to manufacturing, crowdfunding frequently serves-up startup products in a pre-order strategy designed to collect sufficient initial investment to send the manufacturing offshore. A pitch is made that attractive prices for an item depend on the power of large volume purchases from a foreign factory. Then, when one of these crowd-funded, pre-order projects successfully sells high volumes of the new item, it is highlighted and promoted as a model for the manufacturing entrepreneur.
A great irony is that we are emphasizing high-growth criteria for manufacturing entrepreneurs at a time when there are at least two new dynamics for re-energizing small manufacturing:
· First, we are in the midst of a booming “maker movement”. It’s a movement that honors hands-on creativity, helping to dispel old notions of manufacturing as “dirty” or unattractive, and promotes the values inherent in producing things ourselves.
· Second, new technologies support a paradigm shift, what’s been called a “new industrial revolution,” with inherent features that could empower the re-emergence of small manufacturing.
The maker movement is a combination of old-fashioned curiosity, DIY-ing, and new technologies. Maker Faires are the public beacons of a movement embracing the “DIY in all of us”. They are appearing everywhere and attracting thousands of participants. The White House has held its own Maker Faire. Mini-Maker Faires were recently staged in each of the Barnes & Noble stores across the country. Inventive “makers” from all walks of life are applying newly affordable technologies such as 3D-printing, laser-cutting, and desktop CNC-routing, to make arts and crafts, to tinker just for the sake of tinkering, and to create new products. We can now tinker-and-putter with low-level parts, pieces, and components to make digital, technical, and biological stuff. The maker movement is a refreshed iteration of the DIY-making that has always been at our core.
One might imagine that the maker movement would aggressively promote local manufacturing heroes. But, the ubiquitous VC-mindset distorts the goal even here. Recruiting events held before major Maker Faires essentially serve as screening opportunities for VC’s looking for investment opportunities. At such events, along with a corps of VC’s, you’ll find a range of companies that offer services for getting makers to China, and that sell help in managing off-shore manufacturing.
Both inside and outside the maker movement the fast-growth, investor-backed company has been glamorized as the American ideal for manufacturing and as the best path for new ideas and technologies. In fairness, and with the few exceptions of high-volume consumer items, manufacturing has not been interesting to speculative investors for a long time. Making stuff is hard and the amount of profit you can squeeze out of manufacturing has limits. Manufacturing typically cannot promise the rocket ride to returns that the projections of software and network-platform business plans can offer.
Of course, a few exceptions in innovative products, now being produced by new US makers, show that doing it here is possible. But, in our present lack of acknowledgement and support, we are discouraging “life-style,” entrepreneurial makers from manufacturing locally and from working at more accessible scales.
The second re-energizing opportunity for manufacturing arises from technological progress. Affordable digital and robotic technologies for production are making small- and medium-scale manufacturing realistically competitive again. An enthusiastic case for a renewed manufacturing around these technologies has been called the “new industrial revolution” — by which small, digital-technology-based-businesses are seen as a possible core for a new manufacturing economy.
The visions for this renewed manufacturing economy have been catalyzed by the technology of 3D printing. And, 3D printing is just one of several game-changing “digital fabrication” technologies that include, along with the additive methodology of 3D-printing, subtractive technologies such as CNC-machining and laser-cutting, and many variations of robotic-assembly.
Understand that as an enabler of small operations, digital fabrication is more than a reprise of the hand-made, more than a sort-of super Etsy. Etsy does benefit from digital networks and logistics — the internet of wide-spread marketing and good shipping. But, the new-industrial-revolution concept takes networks and logistics only as a starting point, before more powerfully engaging digital design, digital product development and prototyping, digital control of machinery, digital collaboration, and digital data management to make small shops competitive again. In, Makers: The New Industrial Revolution, Chris Anderson argues that these digital capabilities will eventually impact manufacturing far beyond the way they have already transformed other commercial domains such as music, imaging, publishing, and entertainment.
We’re ready for it here in North Carolina and in the rest of the US. Less than half as many Americans are working in manufacturing today as in 1960. It is increasingly appreciated that this shift is due at least as much to technology and productivity efficiency as it is to offshoring. So it is unreasonable to expect that we’ll ever again have a large middle class supported exclusively by manufacturing jobs. More realistically, we can hope for some attractive new jobs in technology-based manufacturing, while we also re-embrace the importance of doing value-creating, innovation-spurring, production in our communities.
A new technology and our renewed engagement in DIY-making means that there is an opportunity for re-invigorating manufacturing in our communities. Hands-on work that is productive, competitive, fulfilling, sustaining, and a source of value … that’s the spirit that we share with the makers and community blacksmiths of our history. Yet, the re-establishment of production in our communities is not inevitable. If we hope for it to re-emerge, we will need to be supportive. We will need to cultivate new manufacturing heroes.
Summary: If we really want to return manufacturing to our communities, we are going to need to support a new kind of manufacturing hero.
Recommended Read: The Vanishing American Corporation: Navigating the Hazards of a New Economy, Gerald Davis, Berrett-Koehler, 2016.
Ted writes on the future of small-shop manufacturing and new fabrication technologies. Ted founded ShopBotTools (digital fab equipment), Handibot (smart power tools), and with Bill Young, started the open, small-shop, fabrication match-up & resource, 100kGarages.
