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The rapidly expanding food manufacturing sector in New York City holds tremendous promise for economic and job growth. In order to encourage optimal growth and ensure that the industry generates jobs for local residents, it is imperative that we develop a game plan that addresses the challenges these businesses face and links job opportunities back to New York residents. This Thanksgiving is the perfect moment to start this conversation. With a new administration coming in and consumer preferences for locally-sourced products at an all-time high we just need a few more well-executed plays to get to the end zone.
My organization, the East Williamsburg Valley Industrial Development Corporation (EWVIDCO) has been providing services and technical assistance to businesses in industrial North Brooklyn since our inception over three decades ago. In response to increasing requests for assistance from start-up food manufacturers, we developed a line of programming tailored to the needs of the emerging specialty food production sector.
Through partnerships with initiatives like NYC Food Manufacturer’s Growth Fund and organizations like the Industrial Technical Assistance Corporation and LaGuardia Community College, the Small Food Producer’s Network has worked to facilitate growth in this industry.
Although many industrial subsectors have been in decline in North Brooklyn and throughout the city, the emergence of specialty food manufacturing has created a bright spot in the local manufacturing landscape.
According to a recent report released by the Pratt Center for Community Development “The [food and beverage manufacturing] sector saw growth of over 11 percent between 2008 and 2012, notably higher than the 7 percent increase for all businesses in the five boroughs. In the past year alone, the number of food and beverage manufacturers has increased by almost 40 firms, for a total of 1,097 in 2012.”
In 2012 food manufacturing employed nearly 1000 more people throughout the city than it did in 2011, accounting for 88 percent of overall growth in all manufacturing categories. Much of this growth is in companies that create specialty food products consumed by many of New York’s ethnic communities and beyond, and some is in small-batch, hand produced specialty products. Despite its strength, our specialty food manufacturing industry is still early in its development. Companies have high visibility, but very small operations. The city is at a turning point, where we can either help these businesses put down roots with favorable zoning and a relevant package of business services, or watch as these businesses turn to out-of state co-packers or cheaper industrial property outside the five boroughs.
With a new administration, we have an opportunity to develop policy and promote ideas that will have a real impact on business growth and creation of good jobs for workers of all skill levels. If we want to grow these businesses here, they need to have access to affordable space. In addition to high equipment and energy costs, food production requires much more expensive build-out than other industrial space. Although there are many quality food incubator kitchens like Hot Bread Kitchen and The Entrepreneurs Space, current demand for kitchen space could likely support another. And when they get a little larger, there is little step-up space for incubator graduates to move into. Finally, there is very little pre-fitted food production space in current real-estate stock, and we are losing the small amount that is available to non-manufacturing uses that are able to pay a premium, like bars, hotels, and nightclubs. It is clear that availability of affordable real estate is a key challenge for growth in this industrial subsector, and that city policies and investments can go a long way toward rectifying this issue.
Access to financing is another hurdle small food manufacturers must navigate. Many fledgling firms start their businesses by maxing out their personal credit cards and debt-to-credit ratios. As they mature, many firms then have issues accessing business financing due to their personal credit. Additional flexibility in underwriting standards could make create an environment that fosters these high-growth, low asset businesses in their earlier years to allow them to reach their full potential.
Creating opportunities for food manufacturers to grow locally is the only way that New York will reap the benefit of employment for residents. For some businesses, growth might mean buying or renting industrial real estate, purchasing more equipment and hiring more residents. Businesses might also use growth as an opportunity to expand their operations, but do so in a way that results in no new jobs. Co-packing resources outside of the city mean that production does not need to remain in New York, which means that valuable jobs could be lost. We believe there is opportunity to keep new jobs here in New York, and that with the right policy support, combined with increased access to workforce programming, local specialty food manufacturers will choose to hire disadvantaged New Yorkers as they grow their business.
Policies that encourage growth in the burgeoning food manufacturing sector will have positive impact in New York beyond the increased availability and variety of really good pickles and chocolates! If executed correctly, good local policies will create a fertile environment to cultivate homegrown food manufacturing firms. In turn, these firms have the potential to increase the quantity and quality of manufacturing jobs throughout the city’s industrial neighborhoods. The increased visibility and desirability of city-made consumer products brings dollars in from beyond our city and grows the Made in NYC brand worldwide. More and stronger businesses mean healthier tax rolls to support vital city services.
But proactive food production policy will have its most far-reaching effect on other non-food industrial businesses in the city. The surge in popularity of locally manufactured food is changing the conventional wisdom about manufacturing here. A few years ago, most people would look at our industrial neighborhoods as fodder for inevitable residential conversion. The public conversation is starting to shift toward an appreciation for local production and a flickering understanding that food and other products are currently being produced in our city, and must continue to be produced here. Food manufacturers are like a versatile tight end that can catch a pass, but throw a mean block when he needs to so others can make forward progress.
A win for New York City food manufacturing is a win for New York City—let’s work together to help Mayor-elect de Blasio field an unbeatable team.