How to Make It in the Rust Belt

2015-01-30T15:15:45+00:00May 27th, 2014|

By Lee Chilcote

I come from a manufacturing family. My great-grandfather started a company that has made photographic packaging and printing products for over a century. The family firm started in a small, one-story building east of downtown Cleveland and eventually moved to a much larger brick warehouse housing hundreds of employees. My dad left the family business to become an attorney, and now a cousin runs it. But this business has always been a part of our lives.

Like many Rust Belt kids, I grew up hearing stories about the family business. But those stories always seemed more a part of our past than our future. Manufacturing, I believed, was something to move on from, not head towards. The opportunities of the future were elsewhere, in jobs that wouldn’t require getting your hands dirty, away from the grime of factory work.

This mindset was created, and reinforced, by large-scale social trends. Economics, globalization and policy put manufacturing in our rearview mirror. The Census Bureau defines “manufacturing” as work that creates new products from raw materials or components. Since 1979, the U.S. has lost about one-third of those jobs, the total plummeting from 19.4 million to 12.1 million, according to data from the Bureau of Labor Statistics. Ohio’s chapter of the story is even worse, as manufacturing jobs make up a greater share of the state’s employment. The state has lost more than 300,000 manufacturing jobs since 2000.

But for the first time in a generation, the overall trend is changing. After decades of job losses, manufacturing is growing, with 600,000 new jobs on the national level in the past four years. Ohio added 54,000 manufacturing jobs in the same period of time, about 20,000 of them in Northeast Ohio. A host of factors drive the job growth. New energy sources like natural gas make it cheaper to make things in the U.S. The global cost curve has flattened as wages rise in China and stagnate in the U.S. Consumers harbor concerns about the quality of products manufactured overseas, and American companies have focused on innovation and technology.

“We’ve had a slow recovery with not as many jobs created as you’d normally expect, yet manufacturing has been the driver,” says Dan Berry, President and CEO of MAGNET, a nonprofit organization whose mission is to help bolster Northeast Ohio’s manufacturing economy. “We took a pretty big hit during the recession, and we may never recover all those jobs, but the overall trend is positive in terms of adding wealth to the region.”

At the current rate of manufacturing job creation, it will take about 45 years for Ohio to recover the positions lost since 2001, according to Cleveland-based economic researcher George Zeller.

Despite those daunting numbers, it is small manufacturers, especially entrepreneurs, that may be key to the sector’s overall growth. Ninety-eight percent of U.S. manufacturing firms are small (fewer than 500 employees). Two-thirds of those who work in manufacturing work at small firms. Manufacturing advocates are increasingly focused on helping entrepreneurs grow new businesses. In a region with good manufacturing bones, startups can utilize the industrial base to deliver innovative products and, most importantly, jobs.

Ed Wolking, President of the Great Lakes Manufacturing Council, a trade group whose mission is to help sell and grow the region’s manufacturing economy, compares the entrepreneurial activity taking place in the manufacturing sector to seedlings taking root on the forest floor.

“There’s a lot of sunlight peeping through and the trees are beginning to grow,” he says. “Part of the story is the tremendous innovation that’s happened. There’s lots of opportunities around, and people are beginning to recognize that.”

While the glory days of American industry aren’t about to repeat themselves, the maker movement has injected some energy into the Rust Belt manufacturing sector. From bicycles in the Motor City to hand-stitched bags in the former steel hub of Pittsburgh, America’s industrial heartland is host to a diverse population of new industry. I spoke with six small manufacturers in Rust Belt cities to learn more about how they got started, their challenges, and the future of manufacturing.

Zak Pashak of Detroit Bikes (Photo by Matt Barnes/thatsthespot.com)

Zak Pashak of Detroit Bikes (Photo by Matt Barnes/thatsthespot.com)

DETROIT BIKE COMPANY

In 2012, there were 60 million bikes sold across the world. Only 50,000 of them were made in the U.S. Even though Zak Pashak is a Canadian by birth, he wants to change that. A native of Calgary, Pashak moved to Detroit to start his own business, the Detroit Bike Company. He decided to launch a bike company after seeing a growing number of two-wheeled commuters in Detroit.

Two years after Pashak started building a factory from scratch, Detroit Bikes has the capacity to pump out 100 bikes a day, and the potential to revive the kind of high-volume frame manufacturing that has all but disappeared from America since the 1970s, when domestic bike companies first began moving their production overseas.

“Manufacturing is a great part of Detroit’s history,” says Pashak. “It seemed like consumers were ready for an American-made bike that could be built for a good price point.”

Detroit Bikes sells its two-wheelers for $700. The simple, elegant design comes in one color (matte black) and one size for now. With coaster brakes, three speeds, and an internal gear hub that doesn’t require much maintenance, Detroit Bikes are commuter bikes for city riding. Pashak says the startup’s aesthetic is deliberately unfancy.

“We wanted to do something between that high-end bike and the $100 bike,” he says. “There’s a lot of elitism in the bike world, but we didn’t want to make the perfect bicycle. That’s not what we need; we need a high-functioning, high-quality bike that’s affordable.”

Creating a new bicycle factory hasn’t been easy. Pashak bought a 50,000 square foot building in west Detroit, and hunted for employees, machines, and tools. With U.S. bike manufacturing on the wane, Pasak had to scour the globe for equipment. He found his wheel-truing machine in the Czech Republic, for instance. “It’s one of a very few in the U.S.,” he says. “A lot of places do wheel building by hand now, but that takes about four hours. Our machine does it in four minutes.”

Detroit Bikes is selling about 30 bikes a week at present. When Pashak first launched, he did a huge production run to show what his factory could do, and then shut things down until sales caught up. After he sells off his existing inventory, he plans to re-start production.

“My optimistic side said that people would catch on to us right away, and that they’d love it, the story behind it, the price point,” he says. “Clearly, it’s going to take a little longer.”

Pashak remains undaunted. He envisions selling Detroit-made bikes outside the U.S., since “Made in the USA” still has cache around the world, including in China.

“That would make an interesting statement—and I think it’s going to happen,” he says.

The Floyd Leg in action

The Floyd Leg in action

THE FLOYD LEG

A great deal of mass-produced furniture seems to have been designed to be disposable, as anyone who has moved recently can tell you. One Detroit startup is banking on an alternative to throwaway furniture: a set of portable legs that turn any solid surface into a table.

In February 2014, Floyd Leg founders Kyle Hoff and Alex O’Dell launched a Kickstarter campaign with a goal of raising $18,000, hoping to complete 100 sets of the screw-clamp table legs. By the close of the campaign, they had raised over $256,000 and are presently working on filling over 1,500 orders. The Floyd Leg, named after Hoff’s father, grandfather, and great-grandfather, all of whom were steelworkers from Youngstown, went viral and generated orders from across the globe.

A set of four legs costs $189. You can create a table out of a piece of distressed wood, an old door you find in a salvage shop—whatever you’ve got on hand. And if you decide to move, of course, you can unclamp the legs and take everything with you easily. But before you can do anything, Hoff needed to produce 6,000 legs.

Hoff, a young architect who moved from Chicago to Detroit to pursue projects in the Motor City, found himself starting a small manufacturing business in a city famous as a poster child for America’s industrial decline.

“I love Detroit,” says Hoff, who works out of a co-working space (which he helped create) in a former autobody shop in Corktown. “There’s an entrepreneurial spirit here, and it’s a really great place to start a business. That wasn’t something I was really seeing in Chicago. The cost of living is a bit more there, and it can be a tough community to break into.”

Although Hoff designed his product, figuring out how to produce it on a mass scale wasn’t easy. But Detroit has no shortage of metalworking businesses ready to assist. Floyd Legs are made from cold-rolled steel that is cut, formed, welded, powder coated, and assembled in Detroit—not to mention packaged and shipped.

Hoff doesn’t want to compete with Walmart or IKEA on price, but rather to help people to create furniture for themselves. “This is lowering the bar a little bit for people to take ownership of their furniture,” he says. “People also really like the fact that it’s made in the U.S., made in Detroit.”

He is encouraged by other small manufacturers springing up locally. “There’s an industrial backbone that’s already here,” he says. “There are the people here who can do it.”

A PGH Modular product in action (Photo by Kojiro Sato)

A PGH Modular product in action (Photo by Kojiro Sato)

PITTSBURGH MODULAR

Pittsburgh Modular makes retro-styled synthesizers that help artists create unique electronic music. And it all started out as an expensive hobby. Pittsburgh Modular founder Richard Nicol, a computer software developer by trade, has always enjoyed tinkering with instruments. So he started messing around with building synthesizers in his basement in the evenings. When his hobby got expensive, he began building synthesizers for friends to subsidize it, reinvesting whatever he made back into new toys.

“I had buddies coming over and building them with me,” he says. “You couldn’t get to the laundry room, because the basement was totally consumed with this project. That’s when my wife said, ‘You have a month to get the hell out of my house, get a shop, and do this.’”

“That’s when it hit me this was not a hobby, it’s a business,” Nicols says with a laugh.

That was two years ago. He had been selling three or four synthesizers a month on the side. “I called key stores, and within 24 hours I’d sold 50,” he says. “The Eurorack industry was really starting to explode. There’s so much demand for it, and it was a completely original circuit I’d come up with. It did something no other synthesizer had done in that way before.”

A Eurorack synthesizer allows musicians to mix and match sounds in ways they can’t do with other synthesizers. “What my circuit did was allow users to create low-frequency, oscillating modulation in a unique and interesting way,” says Nicols. With two kids and a mortgage, Nicols didn’t quit his day job right away. Yet within a year, he’d built up enough business to turn his hobby into a job. Soon his wife told him to quit his day job, and a few months later she quit hers to join the team.

Pittsburgh Modular now employs seven people, and the company is moving to a new space to accommodate its growth. One of the main challenges Nicols faces is access to capital. Banks often aren’t willing to loan money to small manufacturers with under a million dollars in annual revenue.

“The market is growing every day, but we can only grow so fast because we only have so much money,” he says. “We’re constantly backordered, working as fast as we can to get products out. If we want to get a new product up and running, we need $50,000.”

Nicols is not complaining: He knows he’s lucky to have found a job doing what he loves.

“I couldn’t have done this in New York or L.A.,” he says. “I found a great shop with cheap rent. The cost of living is very low, and the quality of life is very high. It’s a unique time right now, where you can do this kind of thing and succeed.”

A fresh set of TinyCircuits (Photo by Bob Perkoski)

A fresh set of TinyCircuits (Photo by Bob Perkoski)

TINYCIRCUITS

In the old B.F. Goodrich rubber factory in Akron, a sprawling complex barely saved from the wrecking ball 30 years ago, local entrepreneur Ken Burns has started a company. His firm, TinyCircuits, manufactures a circuit called TinyDuino that can be used for everything from making a GPS pet tracker, to launching rockets, to building your own robots. The boards are geared for hobbyists and the maker community.

Burns is an electrical engineer who spent 10 years helping design products for other companies before going out on his own. He came up with the idea of shrinking the standard Arduino circuit, normally the size of a deck of cards, to the size of a quarter. So he launched a Kickstarter campaign seeking $10,000. Before he knew it, he had raised $110,000.

“We wanted to make it extremely easy for non-engineers to create electronic projects,” says Burns. “By shrinking it, you still have same capability of the larger platform, but now we’ve enabled a number of new projects. They’re almost like electronic Legos.”

Two years in, TinyCircuits  products have sold all over the world. A Northwestern University professor used a TinyDuino to create sensors that measure water currents in underground caves, while a German schoolteacher is launching the circuits inside of “pong-sat” experiments (ping-pong satellite) to measure high-altitude atmospheric changes.

“When I was young, to do the stuff that a seventh- or eighth-grader could do now, you’d have to be a degreed engineer,” says Burns. “It’s just kind of an enabler, this whole maker movement. It allows people to create things that they couldn’t do before.”

Over the past two years, Burns has faced a steep learning curve. He quit his day job after seeing the Kickstarter response. To fill hundreds of pre-orders, he bought used equipment for $40,000 and set about learning how to manufacture circuits. “It took a good year to get to point where we could reliably create quality products,” he says. “There were hard lessons, a lot of wasted products and components.”

Facilities in Canal Place, the former BF Goodrich headquarters near downtown Akron, have worked out well. The space was reasonably priced and met TinyDuino’s power requirements. Burns shares his space with two companies he does business with, and he’s also formed relationships with other tenants in the complex.

TinyCircuits currently employs seven people, and the company will soon hire more and lease additional space. Although Asian countries still dominate electronics manufacturing, Burns stays competitive as a small-batch manufacturer with a niche product. Still, he worries that a competitor will find a cheaper way to make the same thing.

But for now, he’s enjoying himself in Akron. “We definitely have a startup vibe,” Burns says. “I’m the oldest guy here at 39, and most of the other guys are in their 20s. The place we’re in is very industrial and it’s got a cool feel to it. There are two rock bands next to us, a roller derby outfit above us, and artists all around us.”

The hand-making of a Moop bag

The hand- and paw-making of a Moop bag

MOOP

Wendy Downs didn’t see herself making bags. As an art grad student at Ohio State, she just needed a bag to carry her books and camera. So she stitched one herself from leftover fabric scraps. Pretty soon, friends were asking where she had gotten the bag, and she found herself making them for other people.

That was before her husband, also an artist, landed a tenure-track teaching job in western Massachusetts. The couple moved to the area, but Downs couldn’t find a good job. “I felt very unemployable,” she says. “So I put something on the Internet and sold it to Australia, to someone that I’d never met. Within a year, I had two assistants.”

Today, Downs’ company, Moop, makes canvas and waxed canvas bags inside of a 7,000-square-foot factory in Pittsburgh. All of the bags are sewn by hand, employing artists from Pittsburgh. Downs currently has seven employees, and the company is growing.

“When I began, I didn’t realize I was starting a business,” says Downs. “But once I got into it, I knew I wanted to do in-house manufacturing. It wasn’t going to be an interesting project if I was going to manufacture something but have no connection to who was making it.”

Moop sells its bags direct to consumers for under $200. Products include letter bags, totes, backpacks, and messenger bags. The designs are functional and stylish, sleek and contemporary; durable buttons and straps offer a nod to Pittsburgh’s industrial tradition. The Moop shop is a factory, but not a traditional assembly line. Downs and her employees sit in a sewing circle, talking and listening to NPR or music while they stitch together bags on their Juki industrial sewing machines.

Moop

Moop employees wrap up some of their bags

As Downs and her employees work, they brainstorm ways to improve the product. They don’t have backgrounds in manufacturing, but they’re all artists with a savvy for making things, a bit like the post-industrial version of your grandparents’ generation who knew how to fix everything.

This sense of community expresses itself in Moop’s output. “It makes a difference in the product,” says Downs. “Everyone is equally invested, and we build relationships. There’s more attention to detail, more back and forth about, ‘Oh, this tab could be placed this way and reduce wear and tear overall,’ things like that.”

Moop leased a warehouse building and built it out themselves, easier in Pittsburgh than in coastal cities with higher rents. It doesn’t hurt that the region is still chock-full of small manufacturers, either. Downs bought her machines from a large U.S. sewing machine distributor about 20 minutes away.

The next move for Moop may be a storefront shop. Customers could watch bags being made as they shop. “I love the idea of main-street manufacturing,” says Downs.

Fresh vinyl at Gotta Groove (Photo by Bob Perkoski)

Fresh vinyl at Gotta Groove (Photo by Bob Perkoski)

GOTTA GROOVE RECORDS

Vince Slusarz could be enjoying a round of golf right now, but instead, he’s running a record pressing plant. Slusarz’s Gotta Groove is in its fifth year of churning out albums from a sprawling industrial complex near downtown Cleveland.

In a previous career, Slusarz was a corporate attorney, rising to become COO of a major manufacturer. But the company was bought out, and it became clear that things weren’t going to work out there for Slusarz. So he took his stock and left.

“It was initially intended to be retirement capital,” says the 58-year-old with a wry smile. “But I was too young to retire, number one—and I was also too antsy to retire.”

He knew that he wanted to do something in manufacturing, and that he wanted to do it in Cleveland. One day he saw his older daughter buying old-school vinyl records. “I started looking into it, and record sales were up. Makes sense: some people still want something physical.”

Some fans tout records as better-sounding, or maybe they love them for aesthetic reasons. But for Slusarz, it came down to one thing: “Records force you to listen to music. Even getting up to turn them over, it’s sort of a lost social experience. In college, we were record geeks, listening to them for three-hour stretches. It was so much fun.”

To start manufacturing that fun in bulk, Slusarz had to find the equipment. The last record presses were made decades ago, when the medium was entering a downward slide. The only way to start a new plant is to find another manufacturer willing to sell you their equipment. After a year or two of searching, Slusarz finally found a plant ready to exit the record-pressing industry.

In the fall of 2009, Gotta Groove pressed 100 records for a local band. Last year, the company pressed just shy of 700,000 records and shipped them all over the world. Vinyl sales are now the fastest-growing segment of the music industry. At Gotta Groove’s 5,000-square-foot plant in a former elevator factory, the presses constantly hiss and clank. Workers shuffle about, feeding vinyl pellets into machines, removing records from the presses. At full speed, each press can turn out a 12- or 7-inch vinyl record every 45 seconds. Gotta Groove is known for its high-quality product.

The first step in the process is using a recording lathe to cut an audio-signal-modulated groove into the surface of a special lacquer-coated blank disc, a process that happens off-site. From there, the lacquer cut goes to a plating shop, where a metal image called a “mother” is made. A negative image of the mother—called a stamper—is made. The stamper is sent to Gotta Groove. The stamper is a metal record with raised grooves that is made specifically for compression molding of records – the stamper presses grooves into the soft vinyl of the record much like a waffle iron shapes batter.

After pressing, the fresh vinyl is sampled and tested for flaws. Gotta Groove has a reputation for great custom work—customers frequently request special colors or unique artwork. The presses require constant attention. These are not Xerox machines—there’s no repairman on speed dial in the event of a breakdown. “Not a day goes by that they don’t need some work,” says Slusarz. “All of our employees do some, plus we have a mechanic and a small machine shop.”

Vince Slusarcz of Gotta Groove Records (Photo by Bob Perkoski)

Vince Slusarz of Gotta Groove Records (Photo by Bob Perkoski)

Although there are only 12 record pressing plants left in the U.S., 2012 was the biggest year in two decades for the industry, with production up 34 percent. Ironically, capacity is limited due to the scarcity of equipment. Gotta Groove is focused on purchasing and refurbishing old presses to expand production. Slusarz already runs two shifts, and may add a third if demand warrants. Gotta Groove employs 22 full-time staff already.

Slusarz is glad he decided to launch his encore career. “I was bullish on the region having a manufacturing presence. The jobs typically pay better, and we can’t just have a service economy. Making things still counts for something.”

He says Cleveland is a great place to make things. Space is cheap and qualified workers are plentiful. “The employee pool is here, plus we have a great music scene,” he says. “There’s a living, breathing, vibrant music industry right here in Cleveland.”

Lee Chilcote is a Cleveland-based journalist, poet and nonfiction writer, and the editorial director for Issue Media Group. He is at work on a collection of poetry.

4 Comments

  1. JmM May 27, 2014 at 7:27 pm - Reply

    Nice job pulling together some great individual stories

  2. JohnR May 29, 2014 at 11:54 am - Reply

    A great piece. Fascinating, hopeful stories. Let’s hear it for entrepreneurs!

  3. ginniek June 2, 2014 at 1:27 pm - Reply

    Lee,

    I really enjoyed your article. Is your family company Brewer-Chilcote? That name brings up very old memories of my father’s printing company in downtown Cleveland (where the Justice Center is today); he used to buy something (I cannot remember what) from them.

    Thanks for the great research and writing.

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