Cities are changing, and they have to adapt to a multitude of demands: from the quality of public spaces to the shift from vehicular traffic to active mobility and the increased demand for (affordable) housing to accommodate a growing urban population. Is there still space for manufacturing activities in cities, do cities need them, and what’s the added value? Based on findings from Cities of Making, here are the top 4 reasons for cities to incorporate urban manufacturing in city life:

1. It Helps the City’s Economy Thrive

Urban manufacturing comes in various shapes and sizes and contributes immensely to a city economy. From food and beverages to bicycles and vehicles; from clothing to construction material; from biotechnology equipment to furniture.

While it might not be as present, visible, or heavily marketed as the service industry, manufacturing is vital to local economies: a study in the UK found that it accounts for up to 23 percent of GDP and provides up to 7 million jobs.

Urban Manufacturing contributes to a city’s economy by:

• creating local jobs,
• building exportable products,
• providing an essential base for the service industry,
• supporting the foundational economy (e.g. food production, waste management, infrastructure management, construction),
• catalysing innovation and increasing competition,
• strengthening a city’s resilience.

Urban manufacturing is largely made up of small-sized companies with fewer than 250 employees and micro-manufacturers with under 10. This adds an element of stability. A large proportion of their markets are rooted locally, stimulating a city-scale cash flow cycle. Although more vulnerable to change, SMEs are also quicker to adapt so can respond to supply, demand, and policy change. If a company goes out of business, fewer people lose their jobs. With the skills they have, and only requiring a small working space (possibly from home), they may be able to launch their own start-up. The fallout from a large-scale factory going under would be a devastating blow for the city and take time to recover.

Making local contributes to a regional culture. Local goods create a sense of place and community, and they increasingly get attention and are valued, even if their price is higher than that of imported goods. Belgian breweries serve as an example: “In 2012 there was only one remaining brewery in Brussels, by 2020 this number exceeded twenty, profiting from the local branding”.

While local producers might not be as efficient as large factories overseas, they can:

• Implement new policy (e.g., to reflect climate change protections).
• Adapt quicker to local circumstances and needs, making cities more resilient.
• Understand and be involved with the community, such as employing vulnerable and excluded people and provide in-kind support for local initiatives.
• Help deal with sudden changes in supply networks (also during a pandemic as shown by Covid-19).

Let’s focus a little more on that last point: the pandemic massively slowed down international trade. Planes, ships, and other freight vehicles ran less frequently, workers called in sick or had to self-isolate, and demand fluctuated heavily (especially for toilet paper). This is where local manufacturing can help. How? Let’s take a look at U.S. companies and their response to pandemic-related challenges:

“How did U.S. toilet-paper manufacturers respond to the shortages? None appear to have added production lines or built new plants to expand capacity. […] Instead, manufacturers wrung a bit more out of their existing processes. They ran plants at nearly 100-percent capacity and restarted idled machinery. Some streamlined their product offerings, reducing machine downtime and, in particular, shifting to large-roll products that could get more paper to households without costly changes to machinery. Others invested in their distribution systems, so that they could anticipate and respond more quickly to local shortages. These resilient responses from manufacturers helped to shorten the stressful period of empty store shelves.”

History has proven that import replacement is an important path to innovation and also improves local economic purchasing power. Reinvesting the money you earn through local production into the local economy is believed to lead to the multiplier effect. This essentially means that every Euro invested leads to higher returns.

Lastly, technological progress can have several positive effects on production in the city: it enables smaller-scale, more flexible, and customisable production to take place on increasingly smaller sites. This makes it more suitable for city centres.

2. It Sparks Innovation

When looking at innovation, it is important to think beyond just product development: business innovation includes:

• production,
• distribution,
• communication,
• administration,
• process development.

New ideas can spring from existing skills and products: even though “offshore manufacturing” might be cheaper, there is a high risk of missing the transfer of important knowledge or losing that intelligence locally altogether. Business innovation is far more likely to appear in production, distribution, communication, administration, and process development when these are not managed as silos but take place in the same facilities.

Many forms of manufacturing have traditionally co-located with similar businesses, which is not only practical but also creates a sense of community and interdependence. By sharing technology, infrastructure, and facilities, manufacturers can benefit immensely, e.g., be more innovative, collaborative, and dynamic.

As stated in Foundries of the Future: “Knowledge is ‘sticky’ and can be bound to specific places”. The local know-how has a long-lasting effect on cities, even after the most successful period of a specific craft is over.

Urban areas also have vast advantages when it comes to education and training.  Knowledge institutions and training centres are commonly located in cities, which as a result “harbour extensive amounts of living knowledge and experiences upon which new ideas and products can be created”. Usually, there is also an ample supply of work and workers within urban areas.  Businesses can make use of this. They can easily develop new ideas and skills and pick the best employees from the available workforce. This in turn leads to high competition for talent.

Higher levels of automation and AI make products more affordable and customisable to the end user, and new technology allows for more efficiency (think of urban agriculture or smart mobility). City administrations can support innovation processes by creating links between sectors and channelling efficient public investment into research and infrastructure.

3. It Fights Climate Change

The negative impacts of global production and manufacturing processes (from resource extraction to the final product) are commonly externalised and swept under the carpet. Cities have to separate material and energy consumption from economic growth and the improvement of quality of life in urban areas. Different resource management (within planetary boundaries) and waste management can trigger important change and innovation towards a circular economy, keeping resources in use at their highest value for as long as possible. Urban manufacturing can be a key component in this shift.

First, it’s about high-quality production: by manufacturing products that are made for many years of use and don’t need to be replaced regularly, waste is reduced massively. Second, repair and maintenance are key in a circular economy and also provide additional income for manufacturers and skilled tradespeople, Cities of Making states. Thirdly, re-manufacturing and refurbishing products also create new employment in cities. Even though much of the focus is currently on recycling efforts, it is only when these three options have been exhausted that we should turn to the energy-intensive process of recycling. Do remember that recycling waste locally is still tremendously better than sending it overseas, as it “reduce[s] environmental impact and provide[s] feedstock for a circular economy loop at a local scale”.

4. It Contributes to Economic and Social Inclusion

Manufacturing provides a range of employment options suited for different jobseekers, from entry-level to senior positions, differing in salaries, education and qualification requirements, and the likelihood of the job to change or be mechanised in the near future.

In cities, most manufacturing companies are SMEs. This can increase cross-sector collaboration.

Small businesses have a different sense and meet different needs for their local communities and businesses than big multinational players. Partnerships might be necessary to survive. Cities of Making states that “while there remain large amounts of uncertainty around the future of manufacturing work, hybrid skills are in increasing demand, particularly those linking creative problem solving with tacit knowledge of materials and technology. Since the future of manufacturing will be more multi-disciplinary, universities and training institutions need to find new ways of teaching content. University College London’s Institute of Making and Rotterdam’s RDM facility can serve as examples.

Finally, community-oriented organisations play a big role in sustaining urban manufacturing – examples are social enterprises, cooperatives, and communities of makers. They have low-threshold entries for unskilled workers (including minority groups), can pool finances or resources, and provide services to the community that are not on the market (e.g., technology rentals). Communities of makers can also be an easy entryway for entrepreneurs to prototype an idea. “Increasingly, multi-actor collaborations (referred to as social alliances), cross-sector social partnerships, or social innovation public-private partnerships are emerging to tackle common problems while also addressing inclusivity challenges,” Cities of Making concludes.

The Case for Urban Manufacturing in a Nutshell

There is more than one case to make for urban manufacturing. Four to be exact. According to Cities of Making, urban manufacturing:

1. Helps a city’s economy thrive. Industry adds to the city’s GDP, provides jobs for urban dwellers, and builds exportable products.
2. Sparks innovation on multiple levels. Production (and hence innovation) is bound to one place instead of scattered across various countries. Companies can form innovative networks that span across the city, and manufacturers can easily access education, training, and a skilled workforce.
3. Fights climate change by offering a new approach to material consumption, production, reuse, and waste management, also contributing to a circular economy.
4. Contributes to economic and social inclusion, facilitating collaboration across sectors and community engagement.

What are you waiting for? It’s time to establish space and infrastructure for urban manufacturing in your city now! If you want to dive deeper into the topic and would like concrete instructions for action, we recommend reading chapter 6 of the Cities of Making book Foundries of the Future.