Local Business Is Dying – Can Manufacturing Survive The Internet-Age?

Local BusinessOnce upon a time, my Mom would take me downtown to help her with grocery shopping.  The only way she would get me to do this without kicking and screaming was she would promise to take me to the local video store to pick out a game and or movie and possibly to the record store for a new music CD.  Fast forward to 2011, big conglomerates of NetFlix, Redbox, etc. have completely run these local stores out of business.  What about album shops? Aside from a few that sell vintage vinyl, forget about it.  Apple’s iTunes have completely monopolized the music industry.  I even remember when BestBuy came along everyone was scared that this giant would be the end to local business.  Now, even BestBuy is struggling to compete since wholesale electronic goods are so easily accessible thanks to virtual marketplaces.  These are just a few examples of how the internet-age has changed the economics of our societies.  The manufacturing industry might be one of the few remaining and lasting local businesses alive and kicking. 

Based more on raw materials, skilled workers, and the economy, or supply & demand, manufacturing is one of the least effected industries by the current internet-age we have become.  We know physical goods cannot be replaced directly by the internet; however, economic factors will still play the major role.  Lawrence, Massachusetts was once known as a large mill town, producing thousands of jobs in the textile industry producing wool as their major export.  Industrial decline, easy replication, and cheap labor elsewhere have been the major contributors as to why Lawrence has struggled and continued to struggle over the recent years.  Technology did play a minor role, but the internet and modern-age utilities were hardly factors.  When you look at even more specialized manufacturing companies, such as metal fabrication businesses, it becomes much more difficult to duplicate or produce the same goods, thus making it easier to rule out companies that would might replace them with cheap production, labor, etc. elsewhere.

The next major contributor to why local manufacturing business won’t die is the labor pools.  Local resources may not be available everywhere but specialty schools are known to only be in certain locations.  MIT, in Boston, MA is a perfect example.  MIT, along with a plethora of other technological schools in the greater New England area, has fed, and continues to feed, into local engineering and technological companies.  Sure, the internet has played a role for graduates, students, and other unemployed workers to search for companies anywhere in the world, however, the worst thing that would come of this is skilled workers might be pulled from one area to another, granted there is no competing local company.  Even one of our own program developers specifically moved to the area because of the specific job types this area/industry offered.

The bottom line is that the economy, resources, and labor force will always be the key contributors to success and failures in the manufacturing industries.  While technology continues to grow by leaps and bounds, it will only act as a contributor, rather than a deterrent, to industry growth.  While the internet can give companies a strong presence on a national, or even global level, and we will see internet conglomerates continue to take over local businesses, in general, building space, infrastructure and proximity to research centers and universities will still remain as irreplaceable commodities.

Posted by Jason Rourke, Marketing Director, ProfitKey International

12 thoughts on “Local Business Is Dying – Can Manufacturing Survive The Internet-Age?

  1. profitkey

    Thanks for the nice comment, James. I know, not only is it changing local business, but also how people don’t even need to leave the house half the time (but that’s a topic for another discussion!).

      1. Sandra

        I am not sure if I remember Alladin’s Castle. I used to visit the miniture golf course on Route 9 across from McDonalds and the arcade called Fun and Games.

  2. harsh

    Until I clicked the link, I was pretty sure you were talking about Lowell, MA.

    As someone who works for a steel fabricator (portable rock crushing equipment), I can assure you that things are thin here too. Capital expenditures aren’t happening and what little new business we get is in refurbishing equipment that may have otherwise been abandoned or scrapped.

    1. profitkey

      Lowell is in the heart of our ‘example’ territory. They were once right up there with Lawrence, many years back now. Do you see any opportunity for re-growth with your capital expenditures and how do you combat with those refurbished companies? Thanks for the comment and great insights!

      1. harsh

        Absent significant impact from long-promised federal infrastructure restoration and upgrade programs, there’s not much hope for change. Our customers supply rock and sand for roads and buildings. If those aren’t getting built, our customers aren’t buying.

        You can train people to work in manufacturing and associated industries but if there’s no work for them to do, it is pretty much just an exercise in adding more water to the ocean of unemployed.

      1. harsh

        We, the taxpayers, are the ones that rake up all the leaves (money) and the politicians are the children that jump into the middle of the pile and scatter everything and remind us that they helped. They spend billions with other government agencies on carefully crafted statistics to back it up.

        The problem is that government isn’t motivated to convert ideas to product. They’re (collectively) all about converting our money into their votes.

        Ideas get converted into product by manufacturers, craftsmen and artisans and that’s who we need to be funding to find solutions. Government’s cut in the partnership is just too high given that all they produce is overhead.

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