Small Manufacturers Gaining GroundTrendspotting — By Melanie McIntyre on April 19, 2011 at 8:00 am
For many, the term “manufacturing” is synonymous with noisy factories and assembly lines a dozen workers deep, not to mention faceless corporations headquartered outside the United States. However, a more streamlined form of manufacturing is gaining momentum domestically− at the smaller end of the scale. In fact, small manufacturers, making products as varied as bicycles and baby teethers, are flourishing right here in Central Ohio.
No one knows that better than Alex Bandar. As director of The Columbus Idea Foundry, a grassroots design/prototyping shop and small production run facility that provides design and manufacturing services to small businesses, he views the state of small-scale manufacturing through a unique lens.
“I see it on the rise, as innovators with new ideas walk in our door and ask us how to help design and manufacture their products,” he says. “I see small businesses needing to expand their production and asking us how we can help them use technology, such as desktop manufacturing resources like laser cutting, computer numerical control machining, 3D printing and more, to boost their volume or reduce their per unit price.”
Bandar regularly collaborates and communicates with other local manufacturing, technology, and retail organizations, such as the Ohio Manufacturing Institute, TechColumbus, and Wonderland, and generally they are optimistic about small-scale manufacturing in Central Ohio, he adds.
That rosy outlook appears to be warranted, as small manufacturers claim they have distinct advantages over their larger counterparts.
One, they can customize a product fairly easily.
“ Most of my clients have been riding for years and have a very specific laundry list that cannot be filled by production bicycles,” says Adam Eldridge, owner/builder at Stanridge Bicycles. ”The bikes they want will never be built by The Big 3 [bicycle manufacturers] because they would not be profitable.”
Two, small manufacturers seem “more human than a big giant company sometimes,” says Amy Sharp, who along with her husband Joe owns Little Alouette, a company that makes wooden toys (including the teethers mentioned earlier) from locally sourced and organic materials.
“We share our life via blogging and social media,” she continues. “Our customers know this. People like special. These toys are really made by hand. These toys have love in them, not mass produced. Often Joe is making each as the order comes in!”
Eldridge shares a similar sentiment, saying “We give clients a story. We’re attached spiritually to the bicycle they ride. I made the bike with my hands, they know the me, they know my story.”
Large manufacturers have investments in capital, stock, inventory, and personnel that mean they can lower the margins on their specific products to a very competitive level, Bandar says. However, changes in market demand and technology are difficult to react to quickly.
“Smaller manufacturers can adapt to market and technology changes faster, staying on top of, or ahead of, market trends, employing novel technologies sooner, and pouncing on exciting opportunities rapidly,” he adds.
The primary hurdle small manufacturers face is producing at high volumes.
“We can normally craft one bicycle, not including paint and assembly, in 27 hours,” Eldridge says. “How long do you think it takes XYZ Corp. in Taiwan to make a bike? Thirty minutes? An hour? My client wait list is eight months to 12 months at the moment.”
Likewise, Little Alouette never has much inventory on its shelves.
“We don’t have all the law and testing and labs in-house like big companies do,” Sharp explains.
Due to economies of scale, ramping up production means per unit prices drop and per unit profit can increase, Bandar says. However, that requires greater investment in capital, which small manufacturers don’t have.
“This means that there are ceilings to the revenues possible within their markets and thus they must intelligently strategize to leverage their advantages to remain competitive,” he continues. “Furthermore, small manufacturers, with less cash flow, are more susceptible to market downturns, fluctuations in material costs, etc. In many cases their advantages can counterbalance these disadvantages, but, again, it requires being strategically nimble.”
Being technological savvy doesn’t hurt either.
For the Sharps, a CNC machine has been an excellent time saver in terms of production and Business Catalyst has been a useful content management system, as they do quite a bit of business through Little Alouette’s website.
“It is easy to learn and sell from,” Amy says of the latter.
Skype has been particularly useful for communicating with international customers, Eldridge says.
Thinking of launching a manufacturing startup? The future of small-scale manufacturing looks quite bright to Bandar, thanks to what he calls “a confluence of several exciting revolutions.”
“The availability of increasingly powerful, open-source software and generally available technical knowledge is making the how-to aspect of design and production no longer the bottleneck,” he says. “The prevalence of the Internet makes access to these resources nearly universal. And it’s not a one-way street. There are a lot of technical design and manufacturing forums where professionals and enthusiasts alike help each other to fine tune their processes.”
Plus, desktop manufacturing resources are becoming cheaper and more capable, making it possible to assemble one’s own workshop or small production line easier than ever before, he adds.
Eldridge also expresses confidence in the future of small-scale manufacturing.
“Anyone anywhere can make a product or idea work as long as they’re passionate, have a strong work ethic, and stay mentally strong,” he says.
Idea Foundry and Little Alouette photos by Adam Slane Photography. Stanridge Bicycles photo courtesy of Stanridge Bicycles.