I spoke this past week at the Illinois Green Business Association Summit, and discussed how cheap energy and advances in entertainment technology have damaged our conventional approach to economic development. Traditionally, we acquired the resources we needed to survive through community-scale businesses that had access to distribution and supply in a way that efficiently delivered resources from source to user. As we gained cheap mobility, and as we spent more time at home, larger retail outlets could efficiently reach millions of people and locate less densely, opening up the possibility of more regional development. Instead of business leading the distribution of resources, we picked up some of that slack - and gained some freedom of choice.
Now, we face new challenges. With economic development morphing into a constant battle for a smaller pool of consumption dollars, and energy prices tripling over their hey-day of 10 years ago, we need a new way to develop the businesses that supply the resources supporting our quality of life. There is some hope that the information economy will provide the spark to make that happen.
Consider, right now, that if you need a piece of furniture, or an appliance, you scan the web for deals, pick a couple of retail outlets to visit, then choose the appliance. In the transaction, you pay the retail outlet who pays the manufacturer who pays the parts supplier who pays the material supplier - none of whom have operations in your community. The manufacturer controls the design, engineering, creation, and distribution of the product. This includes all the energy and logistics required to ship a full-sized item across the country or world.
Imagine if, instead, you were able to walk to a local manufacturing outlet. In their location, you browsed through some samples of what you want to purchase, then that outlet receives the plans for how to construct it. The manufacturer develops the most efficient supply chain possible, potentially using local suppliers, and as many locally available resources as possible. The larger corporation controls a smaller subset of the materials needed to construct the item, and ships them to the local manufacturer. More of your dollar goes to a local economy, and you have a stronger relationship with the company building the product. Transportation costs are lowered, offsetting the increases in costs from lost economies of scale.
The primary developer of the product still receives the profit for their most significant contribution: the design. The information in that design carries the greatest benefit to them, and they still receive compensation commensurate with the value. Instead of communities fighting for retail, distribution, and manufacturing outlets that cannot locate everywhere, we build up a network of light manufacturing that can be more nimble and less damaging. When product designs improve, large operations built around one way of doing things no longer present an obstacle. The network of small manufacturers pivots quickly. The businesses also can diversify, manufacturing products in high demand instead of relying on the feast or famine of one brand. The distribution networks become more focused on quick transmittal of information and smaller parts than on large, fully-assembled product.
Loss of manufacturing base has created large economic issues in our country. Developing a network of nimble, clean, and information-centered manufacturing facilities creates a storehouse for our institutional knowledge, expands options for community economic development, and improves our ability to deliver a high quality of life throughout the country.
We have spent two decades creating an information infrastructure that has damaged our communities...it's time we put it to use rebuilding them.
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