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Local Manufacturing

A few decades ago, manufacturing represented 7 percent of all businesses and 22 percent of all jobs in the United States. Today, because of the high growth in the service sector's portion of the overall economy, a little more than 3 percent of firms and just under 15 percent of employees are engaged in manufacturing. Yet manufacturing remains a vital economic sector of the economy, one that many local communities actively seek to grow, recruit, and retain, because manufacturing jobs often pay higher wages to lesser skilled workers than do service or retail jobs. The average hourly wage for a manufacturing worker was $14.38 in 2000, compared with $13.88 for service workers and $9.45 for retail workers. Furthermore, since the products of manufacturing activity typically are sold outside as well as inside the community, a strong manufacturing sector contributes to the export base—that is, manufacturing exports or sends outside the community goods for which it brings new revenues into the community. The revenue brought into the community then stimulates demand and spending for other businesses in the local economy.

Early Manufacturing Communities

Many towns owe their beginnings to the establishment of a manufacturing activity in a certain place. The extreme example of this is the establishment of company towns. Essentially owned by the manufacturer, these towns were built to house the factory workers and to provide the goods and services that the workers and their families needed. Sometimes these communities died when the manufacturing plant closed. In other cases, the communities developed more diverse economies that allowed them to survive if and when the original manufacturer left the community. While company towns often were seen as exploiting the workers by setting unfairly high prices for housing and goods sold to them, many company towns or industrial villages represent some of the earliest comprehensive social planning efforts. Saltaire, in the Yorkshire area of England, was built by the textile industrialist Titus Salt as a model industrial village in 1851. At a time when the average lifespan of a mill worker was less than twenty years due to the appalling living conditions in illprepared, rapidly industrializing towns nearby, Salt constructed a fully planned community with sanitation, housing, schools, and other public facilities for his textile factory's workers.

The village of Pullman, now a part of the city of Chicago, was America's first planned industrial town when it was established in 1880. Like the founder of Saltaire, railroad-car magnate George Pullman established the town with a progressive vision of providing an array of community services and renting retail space to privately owned business, rather than having the company control the retail.

Location of Manufacturing

Historically, the location of a manufacturing operation was based on the nature of its production process. To minimize transport and handling costs, a firm was established near existing communities and markets when the product that it made gained weight, bulk, or fragility during the production process. Alternatively, if the good lost weight, bulk, or fragility during the production process so that it became cheaper to transport the finished good to the market than to create it at the market site, the firm was situated near the primary source of its inputs. In the latter case, firms were considered to be oriented toward local inputs.

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