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OM in the News: Small Factories Emerge as a Weapon in U.S. Cities

October 31, 2016
James Branch works as a skilled machine operator at Marlin, which makes specialized baskets.

James Branch works as a skilled machine operator at Marlin, which makes specialized baskets.

The New York Times (Oct. 30, 2016), tells the story of the unlikely survival of Baltimore’s Marlin Steel, a rare breed: the urban industrial manufacturer. Marlin, a 50-year old company that makes steel baskets, is a thriving factory in a place that factories have fled — first to the South, and later to Asia.

How did Marlin survive? Over the course of a decade, it invested in robots that churned out baskets 100 times as fast as human beings. Marlin trained its workers to operate the robots, which cost several $100,000 each, and hired engineers to help design ever-more-sophisticated products to win customers and stay ahead of overseas rivals. Automation did not mean the elimination of jobs– in fact, it saved the company– by producing many more baskets, with only a few more workers, each paid well over $50,000.

Factories will never employ the masses of Americans they once did. Automation and foreign competition will not abate. Over the last 20 years, industrial employment has dropped by 1/3. Only 12.3 million Americans work in the sector today, millions fewer than in leisure and hospitality. But small manufacturers like Marlin are vital if the U.S. is to build a society that offers greater opportunities for everyone.

Today, smaller plants are particularly important to job creation in factory work. As megafactories are the exception, small manufacturing is holding its own. Out of 252,000 manufacturing companies in the U.S., only 3,700 had more than 500 workers. The vast majority employ fewer than 20.

While they may not rival the scale of 1950s assembly lines, these smaller craft-type producers hold out hope for cities, particularly as some companies look to move jobs back from overseas to be closer to customers and more nimble to supply customized, small-batch orders. And, these jobs pay more. Manufacturing workers typically earn over $26 an hour.

Classroom discussion questions:
1. What was Marlin’s OM strategy?

2. Why will millions of manufacturing jobs never return?

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