A maker movement has emerged in the U.S. as a result of rapid prototyping technologies, new digital marketplaces, and, perhaps, also because of diminished job security among talented people. Despite its hipster-ringing name, this new movement is really about an increasing number of small businesses that integrate new design and production technologies to manufacture goods tailor-made for their customers. A recent paper examines the nascent maker movement in Portland, Chicago, and New York, in an attempt to map the maker landscape, and evaluate the movement’s potential to create jobs and wealth in urban communities.
Bags, Bites, and Bots
Maker companies seem to be similar in a number of ways. For one, they tend to focus on their product, instead of focusing on markets. The entrepreneurs behind these companies consider the act of making the most important goal of their companies, as opposed to solving a problem, or tapping a market opportunity.
They also tend to be based in large, dense urban centers where there is an abundance of talent. The founders come from a variety of backgrounds, but most commonly, they come from art and design, or science and engineering. The founders’ background in the arts and engineering also explains why their products typically fall into one of the following three categories:
- Bags: artisanal goods, such as apparel, furniture, or accessories;
- Bites: food and beverage products;
- Bots: technology-based products – robots, wearable technology, and internet-connected devices.
Moving from Custom to Mass Production
Going against the conventional wisdom that maker companies are lifestyle businesses, it turns out that three-quarters of the entrepreneurs in this research wanted to grow or sell their companies, even though “many makers enter entrepreneurship as an afterthought,” according to the authors. This ambition to grow might suggest that if successful, these companies could grow into job creators in their communities. On top of that, about 15 percent of the companies broke out to be global innovators, now focusing on product design, and outsourcing manufacturing.
On the other hand, there seems to be an inherent tension in moving a company towards mass production and distribution if they are built to focus on the production of highly personalized products, and direct firm-to-customer communication. Entrepreneurs reported challenges in the following areas:
- Pricing: entrepreneurs struggle to lower the prices of their goods to meet the extremely low price levels that large corporates can afford as a result of their economies of scale;
- Distribution channels: maker companies often begin with informal distribution channels, which are difficult to adapt for mass distribution;
- Supply chains: suppliers are difficult to find locally in the metropolitan areas where maker companies are based;
- Space: similarly to the issue of suppliers, entrepreneurs are faced with a steep increase in the cost of space as they scale their companies.
How Makers Become Employers
The paper includes some suggestions for stakeholders who hope to facilitate job creation by helping maker companies grow. They can help firms build networks of suppliers and contract manufacturers, and they can provide high-quality municipal services to help firms attract and retain talent.
Maker companies are unique assets of a city, building on local traditions and regional talent hubs. If the challenges laid out in the paper can be addressed or alleviated, they even have a potential to become sources of employment for some. For now, some of the economic implications remain to be seen: it is hard to tell if maker companies can extend employment opportunities to populations that are traditionally marginalized, or whether they can pop up in areas outside of traditional talent hubs like New York City, Chicago, or Portland.
The original paper by Greg Schrock, Marc Doussard, and Laura Wolf-Powers can be accessed here.
Contributed by Lili Torok.