The case for bottom-up economic development in manufacturing

One of the most prominent conversations taking place in economic development policy right now is the idea of ‘Re-Industrialization’. Most of that conversation takes place through a ‘top-down’ lens: billion-dollar subsidies for chip plants, tax credits aimed at the largest manufacturers, ribbon cuttings at facilities the size of a small town… on the outskirts of a small town. 

Victor Hwang, CEO and Founder of Right to Start, takes a different approach and his organization is taking this approach to Newlab in Detroit on May 15.

Right to Start is a national nonpartisan-nonprofit working to remove barriers for entrepreneurs and shift entrepreneurship policy across the country. The event on May 15, "Michigan Builds the Future: Entrepreneurship and Manufacturing for a Growing Economy" includes keynotes and panels with experts and policy makers on the topic of small-scale manufacturing across the country. 

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The engine room of the nation

In Hwang’s view, the next era of American manufacturing won't necessarily be won by states that subsidize the biggest players. It can be won by those that build the broadest base - makers, tinkerers, industrial startups, and ordinary founders building physical things at small scale.

"Big companies of course matter and entrepreneurs depend on big companies as partners and collaborators all the time," Hwang told us. "But we've got to talk [more] about small-scale manufacturing. How do you start from the bottom up?"

The ‘bottom-up’ angle is one Right to Start has been applying to entrepreneurship policy since it launched. “The way entrepreneurship support has been done in the past is where a city or a state or the government … or a community will try to develop a little targeted program … It's point by point. That's kind of a scattered approach,” Hwang suggests. His take is that entrepreneurs are actually impacted by a variety of intermingling factors: tax policy, healthcare, capital access, education, government contracting, workforce development, permitting. 

He points to a Right to Start poll that found 94% of Americans say it's important to the country's future that everyone gets a fair shot to start and grow a business and that most American cities, counties, and states do not have a single official whose job is entrepreneurship. Part of Right to Start's policy push is to suggest that as a place to start: put someone in charge.

Examples across the nation include in January this year, where Oklahoma's Governor created a Chief Entrepreneur Officer position to coordinate policy across agencies. Then in March, West Virginia's Governor signed a bill creating an office of entrepreneurship inside the secretary of state's office. 

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Can the barriers to starting be fixed? 

When citing what stops people from starting a business in America, healthcare is one of the first issues, with polling from his organization finding that 48% of respondents didn't start a business because of a fear of losing healthcare access. 

The next issue, according to Hwang, is red tape. The same polling found that about half of would-be founders cited confusing government requirements and forms as a reason they hadn’t started a business. “They can't figure out the system. It's just too complicated,” he says. “And what's amazing is there are models all over the world where they're making it less complicated.” There are state-by-state exceptions of course; he cites Colorado where they lowered the cost to $1, with the number of people starting businesses in the state increasing markedly in the following year, while Oklahoma’s Governor signed an executive order in January aimed at doing the same.

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Why Detroit, why now?

With Re-Industrialization and Re-shoring both hot topics, bringing the ‘bottom-up’ approach to Detroit of all places makes perfect sense. It has been held up as the unintended ‘poster-child’ for rust belt cities over the past several decades, although perceptions are changing. And while the city’s identity is built on a history of manufacturing, the version celebrated in policy circles is often of the enormous and capital-intensive type. The Keynote speaker for the event, Ilana Preuss of Recast City, advocates for something different: small-batch makers filling empty storefronts and warehouses, supported by sensible permitting, accessible space, and a city government willing to remove friction rather than add it.

The common thread is one Hwang argues nationally: that economic growth has to include the people normally locked out of it, and that locking people in starts with making it cheaper, simpler, and more legible to start building something. Doing so within existing resources, in many places bringing those resources back into operation, can be seen as a natural extension of that idea.

If you’d like to find out more and register to attend “Entrepreneurship and Manufacturing for a Growing Economy” you can visit the event page here.

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