On Second Thought, Maybe U.S. Manufacturing Isn’t Dead: At Least Not in Our Inner Cities

Above: Inside of Unwrapped in Lowell, MA

We hear it all the time. U.S. manufacturing is dead.

Except, that’s not really true.  According to the National Association of Manufacturing, the industry supports an estimated 18.6 million jobs in the U.S. – or about one in six private sector jobs. Nearly 12 million Americans (9% of the workforce) are employed directly in manufacturing.

And this manufacturing is still happening in our once-thriving industrial cities. Lowell, Massachusetts is one of those cities. Located just north of Boston, the city is home to over 100,000 residents. It’s location on the Merrimack River made it a hub for textile production during the early 1900s. But as is the case with many older industrial cities, Lowell lost much of its manufacturing when companies moved to the Sun Belt or overseas. In 1931, Harper’s magazine even referred to Lowell as a “depressed industrial desert.”

Today, however, Lowell is gaining a reputation as a hotbed for small business activity within the mills that once housed the textile industry. While many high-tech companies have moved in, manufacturing companies are also capitalizing on the inexpensive real estate and mill space.

Unwrapped, Inc. is one of those companies. A 2011 Inner City 100 winner, Unwrapped is a contract production and sewing factory that produces reusable grocery bags for Trader Joe’s, mattress and pillow covers for Wal-Mart and Target, technical gloves for the U.S. Army and medical bags. The company already employs over 70 operators and sewers and continues to grow: from 2005 to 2009 the company had an average 19% year-over-year growth rate.

Led by CEO Steven Katz, the gloves the company produces for the Army account for approximately 50% of the business, bedding and mattress covers comprise 20% and medical bags an additional 15%. The remaining 5% of the business is fluid from year to year, depending on requests from consumers.

Katz explains that his company takes a one-stop-shop approach that is often underutilized in today’s era of specialization. In addition to providing the necessary sewing capabilities, Unwrapped performs all shipping services for customers. For example, mattress covers ordered on Target.com are made and distributed directly by Unwrapped—saving time that would be lost if shipped from Target’s warehouses. Katz attributes this full-service approach to the company’s rapid expansion.

Unwrapped hopes to further expand by focusing on glove manufacturing for the U.S. Armed Forces. According to current federal procedures, any glove manufactured for the U.S. government must be produced on American soil. Thus, the workers who make these gloves hold positions that simply cannot be shipped overseas. The “Made in the USA” labels might as well say “Made in Inner City Lowell.”’

Aside from gloves, Katz also believes the market for reusable grocery bags will continue to expand as consumers become more dedicated to protecting the environment. Presently, Unwrapped is the sole provider of reusable grocery bags for the increasingly popular Trader Joe’s franchise. They also make the bags for Market Basket, a large grocery store chain with locations throughout upper New England. As such, Unwrapped is exploring the possibility of producing and weaving its own line of fabric. The company has the capability to do so, making outside purchasing seem counterproductive. Indeed, they could then sell the fabric to other sewing companies as well.

The company is growing so quickly that it will soon need more manufacturing space. Unwrapped has already absorbed every floor in its current facility, as they house the shipping operations right there onsite alongside the manufacturing production.

The company hopes to find the requisite space also in inner city Lowell—as this is where most of the company’s employees reside.  The majority of Unwrapped’s employees are of Cambodian descent (Lowell has the second highest percentage of Cambodian descendants in the U.S.), live within walking distance to the company, and send their children to nearby public schools.

Firms like Unwrapped are particularly important to the inner city economy because these manufacturing jobs pay substantially more than the U.S. average. In 2010, the average U.S. manufacturing worker earned $77,186 annually, including pay and benefits—while the average worker in all industries earned only $56,436.  And while it’s true that manufacturing positions increasingly require high-skilled workers, much of the training for these positions can happen on the job. This makes manufacturing jobs a great fit for low- and middle-class residents, many of whom are living in our inner cities like Lowell.

Tell us a story about a company in your area that is beating the odds by taking advantage of an inner city location. Are manufacturing companies moving back to the industrial spaces in your city?

BY Alex Rodriguez on January 18th, 2012

TAGS: manufacturing | business | jobs | industrial | ic100 | small business