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Small Business: U.S. America’s Downtowns Need Local Manufacturers

By Nick Leiber

Ilana Preuss is on a mission to save America’s struggling towns and cities. The community development coach works with locals across the country who are trying to overcome decades of underinvestment, poor planning, and other obstacles. She advocates equitable, inclusive economic development. “Because of systemic racism, because of our economic policies, we have created a nation where so many of our smaller cities and so many of our urban neighborhoods, particularly where Blacks and Latinos are the majority of the population, have been left behind,” says Preuss, the founder and chief executive officer of consulting firm Recast City in Washington, D.C.

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Now, because of the pandemic’s devastating effect on countless small businesses (see “Small Businesses’ Uneven Recovery”) and the downtown districts they used to inhabit, mayors, city planners, economic development directors, real estate developers, and the like are becoming increasingly receptive to Preuss’s big idea about how to revive areas that are languishing. She doesn’t want city leaders to spend all of their time and money convincing big companies to relocate. Instead, she argues, they should identify and cultivate small-scale manufacturers who are already living in (or near) town. If they do well, they will likely increase hiring and spend more locally.

The definition of small-scale manufacturers should be expansive, as she sees it. They can be artisans working out of their homes or advanced manufacturers making anything that can be replicated and packaged, from beer or biotech equipment to cosmetics or clothing. She encourages cities to identify manufacturers that are already are generating sales by selling online directly to consumers or serving as suppliers or wholesalers. She emphasizes that they generally pay better than other sectors and teach workers valuable skills.

“On a national average, the salary is 50% to 100% more than retail and service jobs, Preuss says. “If we’re really looking at getting people out of poverty, small-scale manufacturing has to be part of the solution.”Of the roughly 31 million businesses in the U.S., about 25 million are one-person operations, according to the Small Business Administration’s Office of Advocacy. The vast majority are likely operating out of their homes. Preuss recognizes the urgency of their financial situation. She pushes places to start projects that can become reality in less than a year, such as opening commercial kitchens and makerspaces. “People are in such need; it’s not about some big long-term plan, it’s about what can we do now that makes a difference,” says Preuss.

Preuss has consulted for a few dozen towns and cities since launching Recast City in 2014. Her experience has informed her how-to book, “Recast Your City: How to Save Your Downtown with Small-Scale Manufacturing,” scheduled to be published in June. In one project she facilitated in Columbia, Missouri, the initial focus was on local entrepreneurs looking to grow their home-based food product businesses. The result is a nonprofit commercial shared kitchen, the first in the city, in The Loop corridor that opened at the end of 2020.

A makerspace for community college students as well as locals is scheduled to open by summer.

Carrie Gartner, executive director of The Loop Community Improvement District, says the mile long stretch is “bordered by a lot of high unemployment, low-income areas.” She sees the effort as a way to help those hardest hit by the pandemic, particularly those, she says, “locked out of the system–who don’t have family wealth, investors, or a relationship with a bank….There’s a huge hidden economy here in Columbia of people making, growing, building, and fixing things,” says Gartner.

Similar redevelopment projects are under way in Bellflower, Calif., Minneapolis (see “His Minneapolis Distillery Was Set on Fire. Helping Locals Start Businesses Is His New Calling”), and South Bend, Indiana, which recently launched Scaling Up! South Bend to train and provide subsidized space within a massive manufacturing facility to local artisans, craftspeople, and others.

“Don’t underestimate home-based entrepreneurs,” says Terrand Smith, the founder and CEO of Chicago-based consulting firm 37 Oaks. She has been providing training to South Bend program participants since early 2021. “They’ll be the ones occupying empty storefronts in the future if we cultivate them.”

Since launching 37 Oaks in 2016, Smith’s focus has been working with women and minority owners in minority communities disproportionately harmed by the pandemic. These business owners will be the biggest drivers of local economies going forward, she says.  They “need help scaling so they can have a bigger economic impact, which means more hiring, more generational wealth, and more tax revenue.”

Betting on small manufacturers is anything but a risk — it’s “the missing piece that many never really thought about that we need to add into the mix,” Preuss says.

More stories like this are available on bloomberg.com.

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