Cheaper by the Dozen?
The argument against local production often comes down to “economies of scale.” The products we depend on will be cheaper, the argument goes, if they are made in huge factories and then shipped around the globe.
Not necessarily, says Michael Shuman, author of The Small-Mart Revolution, a book about the why's and how's of going local:
- Global corporations can't tune in to local markets the way local businesses can. A local enterprise has an edge in the new world of “flexible manufacturing” in which production takes place in small batches that meet the tastes and needs of particular customers.
- Banks can better judge what to finance when they know would-be borrowers and local business opportunities.
- Even some capital-intensive production turns out to be most efficient at smaller scales. Some 40 percent of U.S. raw steel is produced in mini-mills using scrap metal as the source, Shuman says.
Certainly, there are some economies of scale. But those savings may kick in at a smaller scale than was thought to be true in the past, opening the way to efficient localized production.