In the past few decades, there had been a decline in manufacturing jobs in the United States. Companies had been able to produce goods abroad at a cheaper price due to lower labor costs in developing countries.
Incubators are crucial to the revitalization of U.S. manufacturing. The Fulton-Carroll Center Incubator in Chicago is one of the largest and first incubators in the nation. It established in 1980 with $2.6 million in grants from the federal government. In 2015, the city of Seattle awarded the Industry Space Seattle, a manufacturing incubator started by Johnny Bianchi in 2015, a grant of $100,000.
Traditional startup incubators provide office space, networks and business advice for tech companies developing software and apps. Startups usually pay a monthly/annual membership fee, or pay monthly rent at a rate determined by the incubator. The rent is usually slightly more expensive than what companies need to pay to get a similar office in the same area. However, the extra values came from the usage of resources. Costs are shared among multiple startup companies makes as well as by the incubator sponsor, which many be a nonprofit or for-profit entity.
Incubators are perhaps even more important to the manufacturing industry. Manufacturing firms require more expensive machines and tools in addition to the basic resources. Incubators that provide those technologies are especially important for startups that aren’t ready to invest in its own infrastructure yet.
Chicago’s mHub, opened in March 2017, is an innovation center for physical product development and manufacturing. It is equipped with ten labs including a 3D-printing lab, fabrication labs, electronics labs, plastic molding, textiles, welding and grinding, wood shop and wet lab, a total of more than $2.5 million of prototyping and manufacturing equipment.
Industry Space Seattle gives its tenants the use of 10 overhead crane systems, which can cost up to $80,000 each, along with a $30,000 compressed-air system, a $20,000 forklift and an industrial paint booth.
In addition to the machinery and tools, incubators provide manufacturing startups with general business resources. The Industry Space Seattle partners with Impact Washington, which is a nonprofit that provides consulting services and business mentoring to fledgling manufacturers. The Advance Business & Manufacturing Center Incubator, a program provided by the Greater Green Bay Chamber in Wisconsin since 1987, partners with local universities, which connects college students to startups when extra manpower is needed. When multiple firms work in close proximity, they share knowledge and inspire each other with ideas. The business networking made at the incubators can also foster collaboration and expansion of the businesses in the future.
Structures of Manufacturing Incubators
The sizes of manufacturing incubators can range from less than 100,000 square-foot to the size of a city block. On the smaller side, the Industry Space Seattle provides up the ten industrial working spaces, while mHub can serve few hundreds startups at one time.
Although these incubators provide machinery for manufacturing, not all of their client companies are in the manufacturing industry. Startups ranging from non-profits to law firms to consulting firms can rent out only the office space at a cheaper price.
The up-front investment in a manufacturing incubator is expensive. Although most of the are sponsored by the government, there are individuals who started these incubators because they believe these incubators offer talented minds chances to succeed. Bianchi bought and renewed a building into Industry Space Seattle because “there’s a whole bunch of people operating out of garages trying to legitimize their business, it’s financially infeasible to grow them.” Elissa Bloom started a fashion incubator because “there’s so much talent in the city, but they’re not getting the know-how to run and launch a business.”