DIY Producer Society

When most people in the United States hear the word “manufacturing,” two images come to mind. The first recalls traditional assembly lines, men sweating over machines, and long trains of mass-produced goods coming out the other end, smoke billowing from their stacks. Automobile plants circa 1950 embody this image. The second image—epitomized by automobile plants circa 2012—is of shuttered factories and blue-collar workers displaced by foreign competition.

Consequently, policy discussions about manufacturing tend to follow this same dichotomy and to rely on conventional terms, regardless of their applicability. Most debates about the future of manufacturing focus on recovering a bygone era and become a discussion of what the U.S. economy is supposed to look like: Should we have more production and less consumption? How can the United States boost exports and reduce imports? Where will the good jobs come from?

What is most disappointing about this state of affairs is that it obscures a new type of producer society that is taking shape in the cracks in the old system. This do-it-yourself (DIY) producer society, driven by grassroots movements in tinkering, entrepreneurship, and small-scale manufacturing, has the potential to transform how we think and talk about American manufacturing—as well as its role in the U.S. economy.

This, of course, is not the first article to proclaim that manufacturing is changing. Accelerating manufacturing job losses during the Great Recession have spurred much talk about restoring the U.S. position as a country that makes things. Although the United States has never stopped making things in terms of output—it remains one of the top manufacturing countries in the world and exports billions of dollars of goods each year—there is a popular notion that we have left behind the golden age of American productivity and moved away from producing physical items, choosing instead to export that function. There are frequent indignant outcries that products like the iPhone and iPad are designed but not manufactured in America or that the U.S. Olympic team uniforms carried “Made in China” labels, implying that such facts reflect America’s downward economic spiral. These cries often emerge from those who wave the ever-popular banner of needing to save American jobs. However, a close examination of this claim reveals a much more complicated economic story than that of savings-driven outsourcing.

Visions of the revival of traditional American manufacturing often include the return of lucrative jobs to American communities. However, the future of American manufacturing shouldn’t be circumscribed by a discussion of “reshoring” jobs. There is already a great deal of false hope around the re-shoring debate. For example, Boston Consulting Group released a report last year purporting to have found that, within half a decade, millions of lost manufacturing jobs would return to the United States because of rising labor costs in China. While it’s true that labor costs in China are rising consistently relative to the United States, it’s also true that labor costs constitute a falling share of manufacturing costs. The mix of labor, shipping, and energy costs will probably mean that some jobs once sent to China will return to North America; for many others, however, that calculus will not change. This is due in part to the fact that the decision of where to locate a manufacturing center is not determined by such cost measures alone.

The expectation that rising Chinese labor costs will result in the wholesale relocation of millions of jobs to the United States simplistically assumes that there is no other reason manufacturing jobs have been created elsewhere. Economists and others have long realized that the benefits of co-location—when engineering, design, and manufacturing jobs exist in the same geographic place—go well beyond job numbers. Spillovers and returns to proximity matter; moreover, when manufacturing jobs leave, the innovative potential of the remaining workers is undermined and, hence, the skills and knowledge level of the surrounding area go untapped. A recent article in Technology Review noted that A123 Systems, one of the most celebrated lithium-ion battery companies in...