Local Economic Development Strategies to Channel the Manufacturing Renaissance

MAPD Annual Conference

6/6/2013

The Manufacturing RenaissanceThe Manufacturing Renaissance

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MANUFACTURING IS MAKING A COMEBACK

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Source: NP analysis of BLS data

BUT ITS FUTURE MAY LOOK VERY DIFFERENT FROM OUR PRIOR EXPERIENCE

Additive Manufacturing

Molecular / Nano Manufacturing

Small Batch Production

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BUT ITS FUTURE MAY LOOK VERY DIFFERENT FROM OUR PRIOR EXPERIENCE

Additive Manufacturing

Molecular / Nano Manufacturing

Small Batch Production

Creating products through assembly at the molecular level

Nano products Carbon

nanotubes Synthetic biology

Creating products by layering materials rather than subtracting materials

Technologies 3 D printing Laser sintering

Creating small batch or custom products

Typically found in jewelry, food products, textiles, clothing, furniture

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Projected growth rate of 26%

Growth from 54 products in 2005 to more than 1300 by

2010

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Small batch / Bespoke / Niche product manufacturing has been growing in the region

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Connecticut’s New Manufacturers

79

2007 2010

Food Mfg

Newport County RI New Manufacturers

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2007 2010

Glass / Ceramics

SAMPLE All the growth has been in firms with less than 20 people

Manufacturing, Economic Development and Implications for Manufacturing, Economic Development and Implications for PlannersPlanners

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Manufacturing Renaissance and Its Implications

Buildings

Processes

Labor

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Throughout New England there is a high availability of industrial real estate – but most of it won’t work for large scale or “advanced” manufacturing

Example of Assessment of Viability of Vintage Industrial Building

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• Low ceiling heights place limits on its functionality for companies that require air handling systems or seek to maximize floor utilization by “cubing out” (stacking pallets vertically) finished goods, work in progress (WIP) or raw materials

• Narrow column structure (8 foot distances between columns) essentially eliminates any type of facility that uses wider flow thru capacity equipment or cellular manufacturing techniques

• Narrow and small floor plates with limited ability to maximize the length of the building due to the center stem of the building

• The bulk of the square footage is vertical rather than horizontal creating the need to add additional moves between components of the manufacturing process between floors and lengthening the cycle time of the manufacturing process

Moving from the creative economy to the creator economy - the Maker Space is one method of potential reuse of these buildings

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Collaborative Industrial Tools

Food Incubators

Garment Incubators

But as these businesses leave the incubator their business models can challenge most zoning

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Boutique Foods Glass Production

Metal Fabrication

Technology has made how to define manufacturing for purposes of land use and zoning more interesting

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Time for “New Industrialism” zoning ?

Euclidean zoning was designed to minimize conflict

Better to address the real conflict issues through performance-based approach Noise, smell, light, air, vibration, traffic,

hazard materials Impractical to list every manufacturing use

type and technology is making a NAICS approach obsolete

Emerging business models challenge the fundamental separation The manufacturing service bureau –

think Kinkos for products Retail front end / manufacturing back

end sites commonly found in food, industrial arts, garment products

Logistics for some looks more like UPS than 18 wheelers

Manufacturing & industry has 3 potential impacts on a neighborhood Building form and activity issues Can make it cool & trendy – think LA

Garment District, Brooklyn Greenpoint, emerging area around Avenue of Arts in Philly, Promenade/Eagle Square Providence

Is neutral to a neighborhood due to the nature of the businesses but important from a source of jobs for nearby residents– Mill River New Haven, Newmarket Boston

Is not so good for a neighborhood because of the nature of the businesses – think asphalt, concrete, paper, refining

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Applying a form-based model has some issues due to the number of industrial building / site typologies

15Source: Interface Studios – Philadelphia Industrial Land Strategy

A starting construct… largely for urban manufacturing districts and vintage industrial parks

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Zone L: Enclosed economic activity taking place in a form similar to the surrounding area. Operations require minimal need for open air facilities. Externality impacts are low or indistinguishable to a specific site. Does not operate on a 24 hour basis.

Zone M :Enclosed economic activity that involves fabricating, processing, finishing, packaging and/or distributing activities that may have an external impact involving noise, smell, dust, emissions, vibration and/or truck traffic. Operation also requires outdoor facilities for storage, staging or uses related to its business operations. May operate on a 24 hour basis.

Zone H:Economic activity that does not take place inside standard building forms. Piping, conveyors and other components in the process are distinguishable. Activity creates substantial external impacts involving noise, smell, dust, emissions and/or truck traffic. Hazardous materials may be substantially involved in the enterprise as an input or an output. Operation also requires outdoor facilities for storage, staging or uses related to its business operations. May operate on a 24 hour basis.

Performance impacts

Sound/Noise - dba Smell - distance Dust Emissions (and steam generation) Vibration Visual

Lighting – Lumens Setback & buffering Bulk storage are subject to stricter levels of review

Volume level 1: by right Volume level 2: zoning board approval Volume level 3: city council action

Blast risk Hazardous material management Traffic / congestion

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With support from the city of New Haven – NP and Utile will

be engaging on an open-sourced approach to designing a

form and performance based code for industry

Making residential & retail work in an “industrial zone”

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Example: •Residential Notification Requirement. For each parcel subject to the requirement for notification, the developer/ applicant shall record the following notice in the Official Records of Sonoma County, and shall include the following notice in all sale, lease or rental agreements concerning any portion of such property: "This document shall serve as notification that you have purchased property or you are leasing or renting premises in an area where river-dependent and/or agricultural support industrial operations are located which may cause off-site effects including without limitation, noise, dust, fumes, smoke, light, and odors, and which may operate at any time of night or day. The nature and extent of such operations and their effects may vary in response to fluctuations in economic circumstances, business cycles, weather and tidal conditions and other conditions. This statement is notification that these off-site effects are a component of the industrial operations in the Central Petaluma Specific Plan area of the City of Petaluma, and you should be fully aware of this at the time of purchase, lease or rental."

Sample:

Residential development shall be permitted conditionally within the zone with the following requirements:

• Notification requirement for residents• Shatter resistant windows• Quiet house design (.45 dba)

Commercial / retail shall be limited to as follows:

• Buildings that have limited utility for contemporary advanced manufacturing and renovation costs are uncompetitive for purposes of manufacturing

• Tied to the on-site manufacturing enterprise either through co-location or within a reasonable distance – less than 1 mile from manufacturing site

One last thing – time matters – so be conscience of it when going through a permitting and approval process

• Time, not only freight costs, are an increasingly important consideration

• Transit alone from China can take 4-6 weeks– A client has a lead time of 7 months– Drives carrying excess inventory which negatively

impacts capital productivity• Each day in transit equal to a .5% to 2.3% tax - NBER working

paper• If a product is late to market by 6 months 33% of gross

margins are already lost – McKinsey

Source: Journal of Commerce; Logistics Performance Indicator, World Bank19

So what?

• Manufacturing is coming back but it will different from our father’s manufacturing– Doubtful that it will ever employ 10,000 people in one factory again– Won’t all be high tech products but a mix of products made viable by technology

• Think about how to protect manufacturing sites – We all can’t live and work in a mixed use world – And mixed use in your creative districts may take on a manufactured product flavor

creating tensions in your zoning– Maybe some of our office parks and vintage industrial parks should be rethought

as mixed enterprise villages • Working regionally on locations, infrastructure and workforce is critical

– Not every community is competitive for every segment of manufacturing because of site and infrastructure limitation

– Manufacturing casts a regional footprint in terms of employment– Every community in a region can benefit from a healthy industrial base

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