Small Manufacturers Needed to Support Local Economies

Until about a hundred years ago, most of the products we used on a daily basis were manufactured close to our homes, including personal care, food, and machines. Jobs and money flowed out of local communities as manufacturing and sourcing moved further towards an industrial global system in the mid twentieth century. Small manufacturers were pushed out of business, destroying communities that depended on these factories. These businesses must be rebuilt for local economies to grow and flourish.

Local Economies in the Age of Globalization

Local economies are a cornerstone of environmental, economic, and personal sustainability. Energy usage for transportation and mass production decreases if we purchase goods produced close to our homes. Knowing the provenance of what we eat and use everyday helps to ensure that our bodies are healthy. Forming personal connections strengthens the community. Local businesses invest in employment and infrastructure, creating a sustainable financial cycle.

The Problem

Many service businesses are by nature local. You must be physically present in a salon to get your haircut, making it difficult to send those dollars out of the community. But re-localizing goods like food, apparel, home goods, furniture, and personal care is more difficult. For small manufacturers to be successful, knowledge, raw materials production, tools, and other infrastructure must be re-introduced into our communities.

Some Solutions

Incubator programs provide small manufacturers with the tools they need to start and grow their businesses. La Cocina, a non-profit incubator program in San Francisco, helps lower income women to start food businesses with business advice, access to a commercial kitchen, and personalized programs.

New financing models can also provide much needed financial support. Most of the businesses at La Cocina cost less then $2,000 to start. Non-profits like Kickstart and Kiva provide small local manufacturers a way to connect with micro investors who can contribute as little as $25. Other businesses, including Gather restaurant, used a more traditional shareholder model but accepted investments of about $5,000.

Governmental incentives could also be put in place for small manufacturing businesses that both use materials produced and sell within the region. This might include sales tax reduction or even low interest loans from local governments.

What other innovative models and processes promote small manufacturing?

Shivani is Principal at Friday Consulting, where she works with food and technology startups on strategy, finance, and business planning. She is also a founding consultant at AchieveMission. Shivani holds a BA from Stanford University, and an MBA from Presidio Graduate School. Follow her on twitter @shivaniganguly.