Small Scale Manufacturers Are Key To Revive Downtowns

By Ilana Preuss

[Editor’s Note: Be sure to listen to Ilana’s interview on Manufacturing Talk Radio at www.mfgtalkradio. com]

Even before the Covid-19 pandemic, many cities and neighborhoods across America were suffering from economic stagnation. Today, we only need to drive through our local downtowns to see blocks of empty storefronts lining the streets. Rather than sparking an atmosphere of new opportunity, these images bring on a mood of despair and disappointment. We can change all that by bringing small-scale manufacturers, the businesses that might be home-based or in a shared space situation today, to the brick-and-mortar world. But first, we need to understand why these storefronts are empty and what needs to be done to fill them.

Know The Economics.

While economics isn’t the only reason, it is the primary one. In some instances, the cost of renovating a storefront may outweigh the revenue from the market-based lease rate. If the property owner has significant income from other holdings, they may receive a tax benefit from taking a loss on the empty storefront. Other vacancies might occur if an investment company is unwilling to rent a space for less than the advertised rate for fear of jeopardizing the underwriting by devaluing the space. There could even be the scenario of a guaranteed lease from a major national chain that will eagerly keep paying the rent on a closed store to prevent a competitor from moving in.

Learn The Logistics.

Sometimes vacancies are due to mismatches between the needs of owners, real estate developers, and prospective small businesses. If the retail space is larger than what small businesses need, property owners may not be willing to subdivide it or can’t because of code restrictions. Another may be if landlords expect tenants to pay for renovations, and prospective tenants can’t afford to do that. There are also too many examples, especially in smaller towns, of a distant neglectful owner holding on to a vacant main street property in hopes of better days ahead.

Call to Small-Scale Manufacturers

Regardless of why there are vacancies, they have a negative impact on our downtowns and neighborhood centers, depressing surrounding property values, encouraging more neglect, and suppressing the growth of nearby small businesses. That is why small-scale manufacturers need to recognize this opportunity as a win-win and contact the local government and community leaders for assistance. Small-scale manufacturers are ideally suited as tenants who can attract, sell, and service customers during heavy foot traffic days while continuing their manufacturing for online and B2B sales during slower periods. Not only do these types of small businesses get increased revenue from sales by locals and visitors, but active storefronts benefit the entire community as they generate relevancy, purpose, vim and vigor for the entire town!

Show Up

Knowing what to do is different from knowing how to do it, but there are ways to positively and productively build bridges toward change. Some cities have adopted vacant property tax ordinances, and smaller cities have made similar regulations for abandoned homes or buildings. But tax deterrents aren’t the only solutions which is why small-scale manufacturing business owners need to become involved with local government and community leadership to bring a purposeful voice to the message that when production and retail are combined, they provide fantastic experiential retail for all people walking by, build up the local economy, and create good-paying jobs for more residents - and that is how exciting communities are made!

Small-scale manufacturers need to become involved through online forums and community organizations to participate in the debate on taxes, real estate permitting, grant, and partnership opportunities. We need to be knowledgeable so we can ask for valuable tools and changes like flexible real estate arrangements to be combined with training and mentoring to advance the prospects of emerging businesses.

It is small-scale manufacturers who have the ability to revitalize our cities and towns and reverse the trend of empty storefronts. When “hardware, hot sauce, and handbags” fill downtown spaces across the country they will grow while reviving downtowns with vibrant economies creating great places for everyone who works, lives, or is visiting there.

Author profile: Ilana Preuss is Founder & CEO of Recast City, a nationally recognized consulting firm working with smallscale manufacturing business owners, real estate developers, foundations, city planning and economic development offices, improvement districts, and mayors. They have moved ideas to action by building great places with vibrant economies. Her book Recast Your City: How to Save Your Downtown with Small-Scale Manufacturing is a must-read for all people and organizations responsible for downtown reinvestment. She can be reached by email at ilana@recastcity.com, phone 240–472–2765 and on social media on LinkedIn and Twitter @IlanaPreussb. n

Economic activity in the manufacturing sector contracted in April for the sixth consecutive month following a 28-month period of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business® .

The April Manufacturing PMI® registered 47.1 percent. The New Orders Index remained in contraction territory at 45.7 percent, 1.4 percentage points higher than the figure of 44.3 percent recorded in March. The Production Index reading of 48.9 percent is a 1.1-percentage point increase compared to March’s figure of 47.8 percent. The Prices Index registered 53.2 percent, up 4 percentage points compared to the March figure of 49.2 percent. The Backlog of Orders Index registered 43.1 percent, 0.8 percentage point lower than the March reading of 43.9 percent. The Employment Index elevated into expansion territory, registering 50.2 percent, up 3.3 percentage points from March’s reading of 46.9 percent. The Supplier Deliveries Index figure of 44.6 percent is 0.2 percentage point lower than the 44.8 percent recorded in March; this is the index’s lowest reading since March 2009 (43.2 percent).

Of the six biggest manufacturing industries, two — Petroleum & Coal Products; and Transportation Equipment — registered growth in April. The five manufacturing industries that reported growth in April are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Petroleum & Coal Products; Fabricated Metal Products; and Transportation Equipment. ISM

Analysis by Timothy R. Fiore, CPSM, C.P.M. Chair of the Institute for Supply Management® Manufacturing Business Survey Committee