The Secret Life of New York Industry
Urban manufacturing is mostly unrecognized by economic development experts, or seen as an anachronism. This is a mistake.
A city is a settlement that consistently generates its economic growth from its own local economy.
The Economy of Cities
Donald and I were married in May 1965, five months after I became a full reporter. We returned from our honeymoon, and without telling him, I changed my byline from Roberta Brandes to Roberta Gratz. It did not seriously occur to me to keep my maiden name, something so many professional women do today, including our two daughters, Laura and Rebecca. But three months later my father died. I learned from my mother that my father had been saddened—though he did not tell me—that I had dropped the family name. In his memory—not for feminist reasons—I retrieved the maiden name and changed the byline to Roberta Brandes Gratz. To some of the editors this was a nuisance at best, an annoyance at worst.1
6.1 Ramsammy Pullay, nicknamed Dez, has been with the company since 1996. Here he is “benching” or bending a steel furniture component. Joshua Velez.
Donald, like me, had been living in the city with no interest in leaving. He had moved in happily after college, having grown up in Pelham, a near-in Westchester suburb. He took a one-room ground-floor apartment facing a small courtyard on East Twenty-sixth Street. He walked to work.
In 1955 Donald had joined the family metal fabrication business, started in 1929 by his father and a partner.2 Metal fabrication simply means a process by which objects are made out of metal. Steel, aluminum, and copper, primarily, are bent, drilled, welded, polished, and assembled into chairs, tables, architectural elements, exercise equipment, and custom-designed objects. None of this is mass produced. Instead, skilled and semiskilled workmen individually operate the assorted machines that make up the process. Treitel-Gratz (now Gratz Industries) was located on the sixth floor of a six-story loft building on East Thirty-second Street between Lexington and Third Avenues.
Watching the fate of this building and business unfold was for me another source of learning about both the changing city and the working of the urban economy. The evolution of the Gratz family business continues to be instructive, just as my own father’s dry-cleaning business provided urban lessons. Gratz Industries, like most city manufacturers, faces an ever-changing array of challenges from both the national economy and city policies. More than eighty years old, it is as contemporary as it ever was.3
A 1997 report, Designed in New York/Made in New York, noted about the city’s “large, complex manufacturing sector”: “Although manufacturing in New York struggles with high costs and a continual need to reinvent itself, the frequent public pronouncements of its demise are, as the pundit said, premature. Twelve thousand firms employing a quarter of a million production workers endow New York with what is still one of the densest concentrations of manufacturing in the United States.”4
MANUFACTURING: EVER CHANGING
Treitel-Gratz had moved to Thirty-second Street in the 1930s from a small brownstone on lower Lexington where it started in the 1920s. The East Thirties were filled with furniture manufacturers. By the 1960s, an assortment of small manufacturers and esoteric businesses occupied this loft building: a menu printer, a bra manufacturer, a cabinetmaker, three decorative wood finishers, a manufacturer of machines for glove makers, a type-setter, an umbrella manufacturer, a drapery and slipcover maker, a dinette furniture seller, a gold stamper, a store display maker, and a woman who raised rats. Quite a combination! Some of the businesses worked together on special jobs and were spontaneously and conveniently clustered for the decorating trade. We did metalwork for the cabinetmaker and store display maker and used the upholsterer when we needed that work. Everyone did odd jobs for one another. It is difficult to place a monetary or operational value on this kind of synergy. “By the early 1930s, the company had established itself as the metal shop of choice for, among others, the celebrated industrial designer Donald Deskey,” wrote Charles Gandee in an article about the company titled “Heavy Metal” in the New York Times Home Design Magazine in spring 2003. Deskey was then doing the celebrated interior furniture for Radio City Music Hall, including the Art Moderne furniture for the office of the great impresario S. L. Rothafel, known as Roxy. Other great industrial designers, like Raymond Loewy with his iconic Coca-Cola machine, George Nelson with his furniture prototypes, and John Ebstein with his toy models for Gabriel Industries, were also customers. The company’s history parallels the history of twentieth-century design.
In 1948, Hans Knoll, a German émigré, wanted to bring the furniture of legendary Bauhaus architect Mies van der Rohe to the United States and enlisted the company to engineer and manufacture the Mies line of chairs and tables now considered classics—Barcelona, Bruno, Tugendhat—all first exhibited at the 1929 International Industrial Exposition in Barcelona. In 1958 architect Philip Johnson turned to Deskey for the interior of the Four Seasons Restaurant when it opened in the base of the Mies-designed Seagram Building on Park Avenue that was also filled with Mies furniture. Johnson was a protégé of Mies and coarchitect on the building, and he designed the restaurant interior with Garth Huxtable. That restaurant, a city-designated interior landmark, was—and still is—furnished with the classic Mies furniture.
In the 1940s, ’50s, and ’60s, American furniture design was in its heyday. Treitel-Gratz furniture and metalwork were going into scores of new office buildings in New York, Chicago, and other cities and suburbs, especially those designed by Gordon Bunshaft of Skidmore, Owings, and Merrill.
But aside from the building interiors, Knoll furniture, a line of furniture designed by Nicos Zographos, and the industrial-design model work, most of Treitel-Gratz business in the 1950s and early 1960s was actually precision sheet metal for electronic equipment, before that field of work moved to California with the aircraft industry. But as can—and often must—happen in any kind of business, especially manufacturing, as one product line diminishes or moves away, another fills the spot. It happened for Treitel-Gratz as the art world was transformed in the 1960s. Isamu Noguchi had long been a customer for many of his metal sculptures since the 1940s, but Alexander Liberman was the first of a new group of sculptors who came to Treitel-Gratz not just for its reputation for skillful implementation and metal craftsmanship but because of its proximity to Manhattan. Liberman often visited the shop and worked alongside one of our machinists.
People fail to understand the importance of New York City-based manufacturing if they don’t recognize the value that industry has to the fields, like art and architecture, for which the city is famous. For designers, being able to implement ideas locally is critical to their craft. Surely, it was true for the long line of leading artists, architects, and furniture designers who passed through our factory. We’ve always been convenient to a subway. “Urban manufacturing needs to be done where it is used,” observes Columbia University professor Saskia Sassen, who has written several books on global capital and the mobility of labor. “This is not an old, outdated condition but a very contemporary one. This is not about the past; this is cutting edge. The specialized service economy demands it; the new economy needs this kind of manufacturing.” Designers benefit from proximity in many ways but none so important as what architect David Childs calls “the knowledge of the skilled workers who operate the machines, work with the materials and understand what those can do. They know things you can’t put in books. Designers need that knowledge more than ever.”
THE CHANGING ART WORLD CHANGED US
In the 1960s Alexander Liberman brought sculptor Barnett Newman to the shop. Newman subsequently brought in a whole group of young Minimalists who were either his friends or protégés, all little known. The Minimalists were changing the nature of contemporary art. Many of them made a big splash with the 1966 Minimalist show Primary Structures at the Jewish Museum. That landmark exhibit defined the Minimalist movement. Donald Judd, Walter De Maria, Sol Lewitt, Robert Rauschenberg, Forrest Myers, Michael Heizer, Robert Indiana, and more—it was a cast of soon-to-be stars.
Just as the company history parallels the evolution of interior and industrial design of the twentieth century, so does it parallel the evolution of the Minimalist and post-Abstract Expressionist art that emerged in the 1960s when the center of the art world shifted from Paris to New York. In New York, the art scene shifted from the Upper East Side to SoHo with the new trend in larger and larger artworks and the opening of the Paula Cooper Gallery in 1967. Key artists exhibiting there came to us.
From the 1960s on, office furniture, custom metalwork, and sculpture dominated. As the field of architecture evolved, so did the content of our production. I. M. Pei, Charles Gwathmey, Deborah Burke, Masimo and Lila Vignelli, Robert A. M. Stern, James Polshek, and Skidmore, Owings, and Merrill, and others, looked to the company to solve fabrication challenges.
Change is inevitable in manufacturing. One big change with a company like ours can shift the whole picture. In the mid-1960s, Knoll took its business away to its own manufacturing operation in Pennsylvania. At the same time, a new item for production was added. Romana Kryzanowska, the chosen successor to innovative exercise master Joseph Pilates, came to Donald to produce metal exercise equipment, long before his Pilates Method became the rage. In time, Pilates exercise equipment surpassed custom metalwork and furniture as the company’s primary product.
6.2 Barnett Newman with his first steel sculpture, Here II (1965), at Gratz Industries. Ugo Mulas, courtesy of the Barnett Newman Foundation.
Like many New York manufacturers, our work goes all over the country and abroad, more heavily abroad with the weak dollar. But also, like many local companies, our work is part of the fabric of the city, in homes, museums, offices, building lobbies, and the public realm—Maya Lin’sTime Piece in Penn Station, the button and needle in the Garment District, the Martinelli sculpture on the facade of the United Nations, the Robert Indiana LOVE sculpture at Sixth Avenue and Fifty-fourth Street, and the stainless steel and glass Bank of America sculptural logo hanging in the lobby of its new building at Forty-second Street and Sixth Avenue. As the city loses businesses like ours, often unnecessarily, the ability diminishes to design or invent and fabricate locally. As the report Designed in New York/Made in New York noted, “New York is home to a highly evolved manufacturing sector, which . . . retains a strong core of production facilities capable of producing goods for world markets. Many of these manufacturers produce for the design-driven market. Fashion, jewelry, publishing, advertising, and marketing—these are New York City’s best-known industries in which design plays a key role. But designers are also essential in other lower profile but important New York industries such as custom furniture, architectural woodwork and metal, accessories, lighting fixtures and toys.”
In fact, the whole country still manufactures much more than is popularly understood. America remains by far the biggest manufacturing economy in the world, producing more by half than China and two-thirds more than Japan. This is difficult to comprehend because all sorts of primarily technological innovations have increased productivity and diminished dependency on a large labor force. That labor is now increasingly higher skilled than before.5
THE INDUSTRIAL NETWORK IS COMPLEX
Manufacturers form a complex web of similar and disparate operators that function both individually and interdependently. The modest and small scale of most of these manufacturers allows for considerable flexibility, quick production, and innovation. As Scott E. Page, professor of complex systems, political science, and economics and author of The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, told the New York Times: “New York City is the perfect example of diversity functioning well. It’s an exciting place that produces lots of innovation and creativity. It’s not a coincidence that New York has so much energy and also so much diversity.”6
The ability of the designer to participate in the fabrication process can be critical, especially since so much of local manufacturing is customized work. In 2007, for example, we fabricated at the behest of Gensler, the national design firm, a rather complicated floor-to-ceiling bronze screen for the lobby of the Park Avenue UBS office building. Ed Wood, the principal at Gensler who designed and engineered the screen, made frequent trips to both the factory and our affiliated space in Harlem where the massive screen was assembled. Most of the fabrication occurred at the factory, but specialized parts requiring machinery we didn’t have were produced by a Bronx fabricator. A patinator in Beacon, New York, another fabricator in New Jersey, an engineer in Massachusetts, a rigger in Philadelphia, and a score of local shops all had a hand in this complex structure. At one time, all of these operations could be found in the scattered industrial neighborhoods of New York. No more. And while most of the work stays local, or not far away, the proximity issue makes a difference at every step of the process and in the final cost. Our complex, mostly local network of suppliers numbers close to 150 businesses.
While “experts” have long been quick to declare manufacturing dead in New York and other places around the country, many manufacturing companies like Gratz Industries stay very much alive if flexible enough to adjust to changing times and if not undermined by government policies. Too often, industrial districts are declared “blighted” when many diversified businesses exist in the seemingly run-down assortment of industrial spaces.
In an article titled “The Changing Face of Manufacturing in New York City,” Sara P. Garretson, executive director of ITAC, the Industrial Technology Assistance Corporation, wrote: “No question, manufacturing has experienced a drastic decline. The cost of doing business here (particularly labor, energy and taxes) has driven away many manufacturers who depend on high value volume and narrow profit margins. Land costs discourage companies that need to expand, particularly those that want large, single-floor production facilities, and environmental regulations have hampered others. The manufacturers who thrive here offer a wealth of lessons the city can use to stabilize, or even expand, its manufacturing base.”7
Few factory buildings or their districts ever look spiffy. Architecturally, they range from the design worthy to the plain. But together they form a comprehensible pattern built over time as industry evolved. Significantly, industrial neighborhoods contain a mix of scale that accommodates the large factory or the small job shop with residential buildings scattered throughout. The mix of buildings and uses is exactly what sustains the district if not knocked off balance by inappropriate rezoning.
The uneducated or uncurious observer would be unaware of what productive businesses exist in such areas that play an important role in the city’s overall economy and social fabric. Few city officials or planners comprehend or appreciate the hodgepodge, gritty nature of an industrial district, nor do they want to. As architecture professor John A. Loomis wrote in the Livable City article “Manufacturing Communities—Learning from Mixed Use”: “Mixed-use neighborhoods defy neat zoning categories. They are mature communities with integrated networks of activities and building types, woven together over many years from countless incremental, often spontaneous acts of building. They are often inhabited by one or more distinct ethnic groups, which contribute to a rich cultural life.”8
The city’s Planning Department is quick to measure an area when it can show a statistical decline in the number of businesses as justification for an already planned upzoning. Rarely are surveys designed to show an area’s hidden strength. One former Planning Department staffer conducted a very revealing survey in the 1990s of Brooklyn’s Greenpoint and Williamsburg waterfronts about to be rezoned. “Don’t show me those maps of job density,” a hostile department boss said. The genuine survey with door-to-door canvassing to really understand what was going on undermined the pronounced assumption that a residential rezoning was in order and would have no negative effect. Honest surveys actually reveal what is needed to improve business rather than replace it. New innovations and new businesses in the incubating stage become known. In fact, one former staff planner says, “They made it clear they did not want to know.”
“City government needs to protect the opportunity for new things to get a foothold and live,” Jacobs said. “Just keeping things open for opportunity is important. Opportunity, not necessity, is the mother of invention.”
URBAN RENEWAL INTERFERES
Manufacturers, like any business, experience many ups and downs but survive if they can change with market demand. But undisturbed was not to be for Gratz Industries. The story of Gratz Industries should not be viewed as unique. Similar tales are found in all cities.
In the early 1960s, the entire Thirty-second Street block—a mixture of small apartment houses, industrial lofts, and six-story tenements—was condemned for urban renewal to make way for a post office. Because emptying some of the buildings on the site, especially one apartment house around the corner, was a politically hot topic, Senator James Buckley opposed the project. That killed it but not before most of the properties had been condemned as blighted, businesses and residents displaced, and then properties demolished.
The block had exhibited traditional urban vitality, regardless of its worn look. No vacancies existed. In each building, a new tenant appeared when one moved out. Pedestrians filled the street. Shopping and other uses drew them nearby. But, by law, to be an official “Urban Renewal” site, the block had to be declared “blighted.” Blighted, in this case, as with so many others, simply means the property is wanted for a different purpose from the one for which it is currently used:
• That the Thirty-second Street buildings were filled with economically viable uses was irrelevant.
• That the buildings were merely neglected by owners waiting for a lucrative government buyout was irrelevant.
• That the buildings could have been economically renovated and upgraded, like thousands of similar surviving properties around the city have since, was irrelevant.
The only relevant fact was, as usual, simple: a new development agenda was set, and manufacturing was not on it. This was just like what was illustrated in the chapters about Greenwich Village and SoHo. Manufacturers and manufacturing districts have experienced this over and over and not just in New York. This is not a natural process; it is about real estate.
The federal government continued to own the cleared Thirty-second Street site after the post office project died. Empty land is a monumental lost opportunity in cities everywhere. In this case, it was even more: an unnecessary loss of economic diversity. Years later the land was sold to a private developer. The federal Urban Renewal program was notorious for condemning privately owned property for a public purpose with the help of eminent domain, then eventually selling it to another private property owner. This still happens today and is a source of great injustice. The abuse of eminent domain is a scandal of national proportions.
Until a U.S. Supreme Court decision (Kelo v. New London) in 2005, the purpose of eminent domain was understood to have been primarily for taking private property for a public purpose such as school construction, roads, public utilities, or other clearly public uses. Over time, however, this fundamental idea had been corrupted to permit the taking of private property from one owner to give to another private owner, this time a real estate developer or commercial user.
All over the country, small businesses have been erased by eminent domain to make way for shopping centers, big box stores, or corporate office parks. Modest, middle-class residential communities have been partially or completely erased for a commercial, so-called mixed-use project of a grand scale or for a stadium or casino.
One woman, Susette Kelo, a divorced nurse, renovated a falling-down Victorian house. She and her neighbors in New London, Connecticut, had watched neighboring land confiscated for development that hadn’t even materialized, again empty land representing an erasure of economic and social value. This area was once the heart of a downtown community that many cities once had but lost to “renewal” projects over time. These were traditional areas where people walked to work, to shop, to school, or to the movies, the very kind of neighborhoods experiencing great popularity today where they still exist. Susette Kelo and her neighbors sued to stay. The city wanted their land as part of a Comprehensive Plan that included condos, a hotel, and labs for Pfizer, Inc. The case went to the U.S. Supreme Court, ending with a decision broadening government’s power of eminent domain.9 Jane Jacobs, who didn’t oppose eminent domain in principle, contributed to the brief and noted: “Eminent domain is being terribly abused, almost as a war-making instrument, an instrument of force, not being used decently.” Enormous repercussions have ensued across the country since the decision.
And, as on Thirty-second Street, this urban renewal project has been another debacle. Eight years later, no construction has occurred. The land is empty. The promised 3,169 new jobs and $1.2 million a year in tax revenue never materialized. Developers, desperate to obtain financing, even applied to HUD for taxpayer-backed loans to build luxury rental housing. So far $78 million in public funds have been spent on the project with nothing to show for it but ninety acres of emptiness and lost businesses, jobs, and retail uses, disrupting lives and erasing a community. Quite a definition of economic development. (In November 2009 Pfizer Inc., for whose expansion the land was cleared, announced the closing of its already huge New London R&D headquarters and made plans to sell or base those offices and leave New London entirely.)
TO LONG ISLAND CITY
In 1967, with the impending demolition of the Thirty-second Street building, Gratz Industries moved across the Queensborough (Fifty-ninth Street) Bridge to Long Island City, Queens, where it remains today. The first move was to a rental building. Then we purchased the current eleven-thousand-square-foot cinderblock building in the shadow of the Queensboro Bridge. At the time, Long Island City, on the east side of the East River across from Sutton Place, was primarily a manufacturing district, the city’s most concentrated industrial district outside Manhattan. Three subway lines, the Long Island Railroad, and the Long Island Expressway are all accessible here. Tenements, small apartment houses, apartments over retail shops, and even a one-block designated historic district of brownstones mark the area. Enclaves of classic working-class areas in Long Island City have shops, churches, small workshops, and single-family homes. The majority of firms are like ours with twenty-five employees or less. Within its 330 blocks are twelve hundred industrial firms employing forty-five thousand people.
6.3 Gratz Industries today in Long Island City. Mural was painted by a local youth organization. David Rosencrans.
The proximity to Manhattan was critical to the location choice, since our customers are mostly Manhattan based. And Long Island City was filled with the kind of suppliers we used, minutes away as unanticipated needs arose during the manufacturing process. This complex and delicate assortment of seemingly unrelated businesses enables all to network easily among themselves. Even the gas station next door to our present location has found need for our services and we for theirs. Time is money in any business, and these critical connections make this delicate economic network work.
Taking the business out of New York never tempted Donald. Fully one-third of the district’s businesses moved from Manhattan.10 The upholsterer moved to Long Island City, too. Several of the businesses from Thirty-second Street closed for good, years earlier than they otherwise would have. Others scattered. Several left the state. Some would have evolved into different businesses, if not fatally disturbed. Undoubtedly, some of them would have disappeared naturally as their markets dried up or they sold out to larger companies, but, as can be observed today in similar types of buildings, new businesses would have moved in. Furthermore, just because a business might eventually close doesn’t justify closing it down before its time and denying the business owner the opportunity to sell profitably to a subsequent owner or to reinvent the business.
Many companies manage to reinvent themselves, as New York Times economics editor Catherine Rampell has demonstrated. With a combination of “perseverance, creativity, versatility and luck,” she notes, many companies have survived, and some, like IBM, have transformed themselves many times. Few remember, as she points out, for example, that radio was pronounced dead in 1953 with the advent of television. “But the industry revitalized itself by tapping into new markets,” such as “the youth music market, congregating around the car radio . . . longer-form news and talk radio.”11
Gratz Industries reflects this pattern, and our production assortment continues to evolve. Some of it stays the same, like the classic modern furniture and Pilates equipment. Some of it continues in a different form; the cast of architects, industrial designers, and sculptors changes. New markets open up, like interior work for hotels, high-end retail stores, and restaurants in New York and abroad. And who could have predicted a renewed interest in Modernist furniture, giving us an opportunity to again manufacture Modernist pieces long out of production, or the global spread of Pilates, with our equipment in demand from Sweden to South America to Russia?
Some materials, like bronze, or processes, like chrome plating, are too costly to offer easily. And some items are more cost-effective to outsource. But all of these are normal adjustments in any business. Yet the skills of our twenty-five or thirty workers—machinists, welders, benders, polishers—remain applicable, as adjustments come along. And our pay scale and health insurance—as in all manufacturing—are probably double the pay of chain-store retail or tourist industry services, the kind of businesses whose job-creation ability is overpromised by city officials. And unlike chain stores and hotels, our profits stay in the local economy.
6.4 Pilates Classic Reformer is the primary piece of Pilates equipment. The whole Pilates line is now a major portion of our business.
Our employees mirror blue-collar New York. The city’s production workforce is 63 percent immigrant and 78 percent people of color, similar to ours. In classic manufacturing form, some employees come with one or no skills and learn new ones as they move along. A few have been with the company for ten, fifteen, even thirty years.
As the number of New York businesses employing these kind of workers diminishes, the opportunities disappear for blue-collar workers and the immigrants who keep coming. Yet these employees live in neighborhoods around the city, support local stores, send their kids to local schools, fill church pews, and volunteer in civic activities. They are not suburban commuters. They pay local taxes. None would find a place on Wall Street or in the tourist industry to which the city so heavily caters.
INDUSTRIAL SPACE IS BEING NIBBLED AWAY
In recent years, Long Island City has gone through a number of zoning changes that have eroded its status as the heart of industrial New York. City Hall and the Planning Department, through several administrations, have devalued and dismissed the importance of this district. Such a view can only be based on ignorance. Notes Professor Sassen, “City agencies don’t understand this aspect of the economy. Misunderstanding continues since the 1980s that we need only luxury office buildings. New York has steadily been getting rid of or shrinking industrial zones. They fail to distinguish between what can leave the city and what benefits from being in the city.” Sassen is a world-renowned economist known for her specialized knowledge and understanding of urban economies, with several books to her credit. She is called upon and listened to in cities around the globe, but the message she has been delivering to New York for several decades has fallen on deaf ears. She has repeated these messages many times over the years, noting years ago, for example, that the “ripple (or ‘multiplier’) effects of manufacturing in the regional economy are as much as one third larger than those of comparable service sector activities.” Her voice is not alone.
A 2003 report, Engine Failure, by the Center for an Urban Future and funded by the Rockefeller Foundation, suggested a dramatic shift by the city away from traditional FIRE (finance, insurance, and real estate) businesses, large-scale commercial properties, and policies that increase real estate costs and overwhelm small businesses with multiple permits and diminished services. A “doomed strategy,” the report labeled existing policies. And this was before the biggest wave of upzonings that priced out so many. While large firms shed jobs and small ones add them, New York “has become one of the worst environments for entrepreneurs and growing firms,” the report said.
What city shapers value in Long Island City and other industrial neighborhoods is the proximity to the East River waterfront with its views of the New York Harbor and Manhattan’s East Side. Real estate is king in New York. That manufacturing is “dying,” “dead,” or “going overseas” is the usual false justification for rezoning. Reality is more nuanced and not as simplistic. If you repeat an untruth often enough, however, and it gets repeatedly quoted in the press, the unknowing public believes it. The erroneous notion is promoted that space for industry is protected under the upzonings and through other nonzoning policies. Those other protections don’t work, however, and enforcement of the so-called protections is lax.
In fact, these planners cling to the pre-World War II idea of questionable validity that there is no manufacturing in the future of New York and only the FIRE and service (some say “servant”) economy is appropriate for the city. No matter how many times the city loses all the financial job gains of recent years each time it experiences a recession, officials continue to pursue an all-out effort to revive the same financial sectors and ignore the industrial. Often they cite amazing statistics for vacant industrial space, but it is always a lie. The lie is this: counted in those statistics are underwater and marshlands, airports and low-density space near airports, public transportation yards, water and sewer services, and solid waste disposal and other unusable sites. This becomes the rationale for a policy of continuous upzoning of industrial neighborhoods.
Upzoning, the method by which the local government increases what a developer can build, inevitably drives up the cost of industrial space. This is not rocket science; this process never fails. If you zone for high-rise development and offer incentives as well, it will happen. No comparable incentives exist for property owners to retain a manufacturing use. Predictably, slowly but surely, industrial space is being lost. As it diminishes, nibble by nibble, the cost of creative production in New York becomes increasingly prohibitive. The death of industry becomes a self-fulfilling prophecy. Long Island City is only one example.
A 1991 study of Long Island City commissioned by the Public Development Corporation under Carl Weisbrod and produced by planner John Shapiro describes in great detail its strength as an industrial area, identifies the threat posed by greater commercial development, and encourages retaining industry. Three major recommendations were made to spur new office development but reduce the risk to manufacturing:
• Upzone close to the subways and provide incentives to stimulate new office development in a concentrated and limited core.
• Invest in the subways, sidewalks, roadways, and open space to attract office tenants.
• Create more restrictive zoning in the industrial ring—“manufacturing sanctuaries”—to reduce real estate speculation, preserve space for manufacturing, and prevent the conversion pressures from spreading.
Adam Friedman, former head of the New York Industrial Retention Network whose mission is to assist the survival of the threatened industrial sector, endorsed these recommendations and added a few innovative ones as well. In an op-ed article in Newsday in 2001, Friedman suggested, “If a developer prefers to create a building without manufacturing uses, he could pay an assessment fee that goes into a fund to help manufacturers purchase their buildings, to subsidize their relocation or to encourage the development of new rental properties for manufacturers. Developers could also purchase the unused development rights on industrial properties in the surrounding areas, allowing them to build more in the core.”12
Not unexpectedly, the city did (1) and (2) but not (3) and ignored NYIRN’s suggestions. Speculation that his article predicted is exactly what happened, clearly what the planners wanted. Manufacturers were priced out and continue to be. In addition, it actually hurt the commercial development by dispersing it beyond the core. Without density in the core, it was harder to attract restaurants, shops, and other desired amenities.
Friedman also wisely suggested creating a new “balanced mixed-use” district that would deny conversions to residential use if 50 percent of a block was already converted. Lots of less than six thousand square feet, he added, could be converted to residential. Those ideas as well were ignored. It seems that it’s okay for government to intervene to encourage office and residential development and give tax breaks to big box retailers, but it is beyond the role of government to preserve the conditions that foster manufacturing.
I, too, testified at that Planning Commission hearing on behalf of Gratz Industries. Picking up on some of Friedman’s ideas and adding some of my own, I said:
Create manufacturing sanctuaries. Assess new office or residential developments with a manufacturing retention fee. Assess, as well, current property owners whose property values will jump considerably. Use the money to help manufacturers either buy their building or underwrite the predictable rent increase that will follow your upzoning. Where possible encourage development of new manufacturing space but require its rent to be affordable in a manner similar to requirements of a percentage of new residential apartments be kept affordable.
Give incentives to manufacturers, like my husband, to retain their manufacturing business. This city knows how to offer gargantuan financial incentives to big new developments. Only modest ones are required here. And you know inevitably incentives will be offered to new development in this area. Why not offer it to those who don’t sell their industrial property for another use?
And why not think along the lines of farm trusts and land conservancies who buy the development rights from land to retain agriculture and open space? Gratz Industries would be the first in line to entertain such a proposal, one that would guarantee beyond our ownership that our space would remain industrial.
INDUSTRY NURTURED AND SUSTAINED NEW YORK
For its eighty years of existence, Gratz Industries has represented the kind of small, individualized manufacturing resource that once sustained New York. The city’s once-booming economy was almost entirely based on just this kind of small and medium-size manufacturer. Collectively, the city’s manufacturers produced a dizzying and endless array of goods shipped around the globe. Until the 1980s, even while the city was losing jobs, tax collections from industrial New York underwrote the bulk of the city’s budget for public services.
New York was never the classic smokestack city dominated by a single large industry like steel in Pittsburgh and Youngstown, automobiles in Detroit, Boeing in Seattle, rubber in Akron, or Kodak in Rochester. What heavy industry New York had was gone by the 1940s, notes sociologist and professor Robert Fitch, such as “chemical plants, slaughterhouses, animal-fat rendering plants.” Instead, small production and processing industries formed the bulwark of New York’s economy. As Fitch observes further: “The whole form of industrial life was practically invented in New York City. As early as the 1940s the city’s chief manufacturers were not producing standard, assembly-line products. . . . They were a bunch of little guys practicing ‘agglomeration’ economies—the cost savings that result from businesses locating next to each other . . . small inventories, design driven, relying on ‘external’ rather than ‘internal’ economies of scale. Instead of savings from long production runs, capital savings arise from not having to sink capital in expensive equipment available nearby.”13
The breadth and diversity of its economy and greatest concentration in the world of manufacturing jobs insulated New York well from the ups and downs suffered by the singular-industry cities. In large measure, it is the reason New York fared better during the Depression than many other cities. New York’s bewildering array of businesses provided entry-level jobs for the steady flow of immigrants, many who eventually opened their own businesses elsewhere in or out of the city, adding to the national economy. The same immigrant absorption and new business creation process is visible today. New immigrant-generated, innovative businesses exist all over the city and since the 1980s have been probably the most unacknowledged source of the city’s regeneration.
The staggering variety of products once made in New York City is long forgotten, and what is made here today is hardly known. Whereas Manhattan was a manufacturing center dominated by the garment, jewelry, and printing industries, Brooklyn probably had the greatest variety of products. Brooklyn was the fourth-largest manufacturing center in the country by the early twentieth century, home to makers of Brillo soap pads, Heinz ketchup, Spalding sporting goods, Eberhardt-Faber pencils, Domino sugar, Pfizer Pharmaceuticals, Pechter Fields Rye Bread, Topp’s chewing gum with its popular baseball cards, Rockwell chocolate bars, Gretsch musical instruments, Corning Glass Works, Esquire Shoe Polish, and Meri-lei’s that were exported to Hawaii to be sold to tourists, many from New York. Coffee, tea, machinery, paint, paper boxes, shoes, soap, and beer added to the variety of goods manufactured there. Queens had Swingline staplers and still has Steinway pianos and knitwear. The Bronx had American Bank Note and Farberware. Harlem had Madame Alexander Dolls, furniture repair, high-end woodworking, and window manufacturing. And the Brooklyn Navy Yard produced an assortment of vessels.
The diversity and number of manufacturers are comparable today. The variety is huge, the individual scale of each often modest. Many big companies that started small and grew large and then left the city did so because at a certain scale, experts note, large companies don’t need the advantages cities offer smaller companies. As Jacobs emphasized, the important point is not how many mature companies leave the city; the important measure is how many new ones grow in their place. That is the measure of a dynamic economy.
From the 1890s to 1950s, the New York City region was the dominant manufacturing center of the country, and the city’s economy was its most robust. 14 Industrial production dominated. Then the agenda changed to office and residential priorities, public investment in supportive infrastructure plummeted, and decline set in. All the areas designated for demolition and rebuilding were doomed, no matter how many successful businesses remained and wished to stay. For its two decades of subsequent steady decline, New York still had the nation’s largest concentration of manufacturing jobs. They were not disappearing for natural causes. It is not a coincidence that the decline of industry here, although started before World War II, paralleled the increasing momentum of Urban Renewal clearance projects planned and implemented by Robert Moses. For the century of its economic preeminence, New York’s economy had grown organically with a spontaneity that produced its unpredictable hodgepodge of businesses. This unique economic system remained a national stronghold longer than conventionally believed.
By the 1950s the combination of a technological revolution and low-wage competition from the South or abroad threatened New York’s and the national industrial economy. Many factors were cited, including containerization and cheap suburban land available for the preferred one-story plants instead of the multistory lofts. This was the favored rationale for assuming the inevitability of deindustrialization and planning to make it so. Yet if global competition made it all so inevitable, how is it that in the 1980s, Los Angeles gained precisely the manufacturing jobs New York was losing, especially in the garment industry that doubled there? Some manufacturers moved elsewhere, but there were plenty left behind.
Clearly, attention and investment went elsewhere during the war. A neglected infrastructure made doing business in New York more challenging, while new, cheap suburban alternatives multiplied. Rail freight diminished, while highways multiplied and cheaper truck freight increased. But as has been pointed out in many ways in this book, the answer to neglect and deterioration is not replacement. The assumption that manufacturing was dead, of the past, or anachronistic was as ill-considered as the idea that a financial- and information-based monoculture could fully sustain a “new” economy or that it did not have production needs.
POSTWAR OPPORTUNITIES MISSED
Three directions were possible after the war. One focused on nurturing the strengths of an innovative entrepreneurial class and the workforce behind it. The second focused on replacing it with a real estate- and service-based economy. The first valued the tradition of individual innovation and entrepreneurial instincts; the second valued the city’s real estate almost like a natural resource to be mined into a shining replacement. A third possible direction would have been to balance the first two, providing for the survival and strengthening of the old economy and recognizing its contemporary value and emergence and growth of the new economy. Under this direction, neighborhoods would not have been replaced wholesale. New housing would have been fitted in where opportunities allowed. Small numbers of businesses would have been forced to relocate, but appropriate neighborhoods would still be available to locate in. But that third option is not what happened.
“Information-” or “knowledge-based” jobs, in the FIRE sectors, so the conventional rationale went, were the wave of the future. Thus, a carefully planned, neat, newly created city to house a financial-based, information-age, and service-based economy would purposefully replace a messy, organically grown, unpredictable, and fundamentally flexible economy that had evolved according to no imposed plan. For this scenario, growth of the city economy was overly dependent on leveraging the value of real estate instead of the entrepreneurial spirit and energy of people whose innovative ideas create the new businesses, jobs, and meaningful expansion and growth. This scenario is also heavily dependent on public funds or incentives of all kinds, what many call “corporate welfare.” This distorted economic policy at best leaves the city vulnerable to economic shifts that would be mitigated with a more balanced and diverse economy in place. Instead, the current overdependence on Wall Street evolved.
In the 1980s, for example, white-collar jobs on Wall Street and in other FIRE sectors proliferated with head-spinning growth. Proponents of this “new economy” strategy patted themselves on the back. Then in the late 1980s, the stock market took a nosedive. Jobs were lost with the same head-spinning velocity they had grown. According to the Federal Bureau of Labor Statistics, Manhattan, where most FIRE-economy jobs take place, lost 149,000 jobs between March 1989 and April 1992. This equaled the entire gain since 1980. In other words, by the early 1990s, all the job gains of the 1980s were lost. Considerable revenue was lost, too, due to all the corporate tax breaks given to businesses to remain in the city and create jobs.15 Even more jobs were lost during a period of heavy mergers and consolidations. Of course, jobs in this sector multiplied again in the boom of the late 1990s. A bigger loss occurred in 2008. If, however, New York had nurtured its multiple economic assets, tumultuous ups and downs in one dominant sector might have been balanced by sectors experiencing less dramatic shifts.
Also during the 1980s, as city policy and investments were focused on nurturing this white-collar economy, industry experienced insult upon injury. Developers were getting tax breaks, subsidies, and cheerleading from all city agencies. But industrial districts were suffering service cutbacks and infrastructure neglect. Gratz Industries experienced periodic break-ins in the 1980s. When Donald sought some police assistance, he was told there was one patrol car for the entire district. When it rained, the street in front of the shop flooded due to a clogged drain that caused long-lasting backup. All pickups and deliveries occurred at this frequently flooded entrance and were made exceedingly difficult. I remember Donald’s innumerable frustrating attempts to call one city agency after another, over and over again, pleading for relief. It took years.
FALSE GOD OF EFFICIENCY
The 1929 plan of the Regional Plan Association (RPA) first reflected in a formal way the emerging disdain for the messy, difficult to define, individualized assortment of industries and the similarly varied residential neighborhoods. While this view of urban life already had been growing, it was codified in the 1929 Regional Plan and embraced and implemented enthusiastically by Robert Moses.
Here was the first potent articulation of the view still in force today that the city’s major asset was not its pulsating, complex industrial economy, its diverse entrepreneurs, its patterns of innovation and new start-ups, its energetic immigrants, and its skilled and semiskilled workers but its residential and corporate real estate. Rearranging the city’s built form to be more orderly, less congested, and cleaner was the goal. Real estate became the resource of choice to effect the change.
This transfer of economic priority was not a natural market shift but one of official policy. The RPA, the establishment’s favorite nongovernmental voice, led the chorus for this refrain, supported by “The Plan.” City officials, financial leaders, corporate heads, newspaper editorial boards, unions, architects, and the emerging profession of city planners embraced it wholeheartedly from 1929 forward. The appeal of this strategy was strengthened by the federal funding that would fuel it.
The broad acceptance of this urban strategy in effect gave Robert Moses carte blanche to pursue his vision of the efficient city of demolished, replaced neighborhoods connected by an efficient spaghetti network of highways. Under the skillful direction of Moses, the master builder who could get things done, all things would be put where they belonged. Productive efficiency would be the result, so the thinking went.
Cities, however, cannot be reduced to an efficient order like a machine, as Jacobs has taught. Efficiency stifles innovation and a diverse economy, as one learns well from her book The Economy of Cities (1969). In this, Jacobs’s second and probably most important book, she shows in several ways how “efficiency fails to make a city prosper.” In her chapter “The Valuable Inefficiencies and Impracticalities of Cities,” Jacobs describes how Manchester, England, stagnated due to its “efficient specialization,” becoming an “obsolescent city” and “the very symbol of a city in long and unremitting decline.” The economy of Birmingham, on the other hand, “did not become obsolete, like Manchester’s. Its fragmented and inefficient little industries kept adding new work, and splitting off new organizations, some of which became very large but were still out-weighed in total employment and production by the many small ones.” The key measurement of the economic rate of a city, Jacobs points out, is “the addition of new work to . . . older work” in which Birmingham excelled.16 Her analysis of efficient and stagnant Manchester contrasted to fragmented and diverse Birmingham remains instructive.
The efficiency that has great value, Jacobs also shows, is the efficiency of density, what she calls the “concentrated market.” That concentrated market “is, in itself, an efficient thing. And its chief characteristic, that it is concentrated, makes it possible for small, fragmentary, exceedingly special, weak or much-duplicated enterprises to operate with considerable inefficiency and yet often get away with it. But apart from this, as far as I can see, the conditions in a city that promote efficiency of operation are in conflict with the conditions that promote development work.”17
Economist Sandy Ikeda provides a similar take on this idea:
The modern demand to rationalize the city and to make it ‘more efficient’ is misplaced. A living city cannot be efficient. Efficiency, in the economic sense, presupposes an overarching plan against which measured outcomes can be evaluated. A living city, however, follows no such plan. It is itself the unplanned, collective result of the countless individual plans executed continuously in it day after day.
Neither can it be inefficient, because that too presupposes a system-wide plan. Both efficiency and inefficiency presume that we know how things ought to be, what success and failure look like, and that’s impossible in the urban dynamic. Instead, . . . a living city is a ‘dynamically stable’ process . . . [that] generate[s] order through time. It embodies trial and error, surpluses and shortages, apparently useless duplication, conflict and disappointment, trust and opportunism, and discovery and radical change. These are in the nature of the living city.18
The valuable economic density that Jacobs refers to, fostering new business formations and breakaways from existing businesses, is what is being eroded as the city’s industrial neighborhoods are purposefully transformed into high-end residential communities, erroneously labeled “mixed use” because some retail and commercial space is included. This continues the never-ending search for order. Overdesigned order represented by large-scale redevelopment projects inhibits new patterns of activity. It stifles the fundamental DNA of the New York economy, which is more complex, unpredictable, fluid, and diversified. The result is a monoculture revolving around financial and related services—in other words, Moses’s sterile vision of efficiency.
Thus, in the name of rational planning for the efficient service and financial economy, many of New York’s industrial jobs were deliberately and needlessly lost, an occurrence still happening in twenty-first-century New York. City officials boast of a much diminished rate of displacement from renewal-type projects since the days of Robert Moses. Maybe the loss is less, but, of course, what’s left is already diminished considerably. And maybe it is more scattered around the city. But it is like being a little bit pregnant: first month or ninth, you are still pregnant. Displacement is displacement at any rate. The loss continues to be unnecessary and avoidable, given available alternatives. The pursuit of oversized replacement projects continues to cause needless disruption and economic and social loss.
City officials, for example, are enthralled with new mall development where possible, missing the opportunity to preserve small, growing businesses or create new, much-in-demand industrial space to incubate new ones. In 2007, a large city-owned vacant industrial building provided a redevelopment opportunity for which the city sought a developer. The location was in Sunset Park, a traditionally mixed industrial and residential area in Brooklyn. One development team proposed to recycle the existing building, making it totally energy independent and giving it a modern new design. Most of the space would be retained for industry, but retail and residential would be added modestly. The developer’s primary goal was to preserve industrial space and advance a sustainable development opportunity. The proposal offered an interesting mix of uses asked for by the city. But, instead, the city chose a politically well-placed developer planning a conventional shopping mall and upscale housing mix. The idea of preserving some space for industry was dropped entirely. Fortunately, the economic collapse caused the winning developer to withdraw, and a chance exists that the first developer interested in industrial space may be the winner after all.
Moses’s power diminished and then disappeared in the late 1960s and ’70s, but the industrial erosion continues under new policy formations.
LONG ISLAND CITY ESCAPES FOR A WHILE
For reasons not apparent, most of Long Island City escaped the worst of this urban strategy for a long time, probably because the focus and interest of planners and real estate speculators were elsewhere in the city. Our factory is just south, in the shadow of the Fifty-ninth Street Bridge. North of the bridge had been totally bulldozed and replaced in the 1930s with a thirty-six-hundred-unit tower-in-the park public housing complex—twenty-six six-story buildings on six superblocks and a lot of fenced-in green grass. But south of the bridge—down to the entrance of the Queens-Manhattan Tunnel and the beginning of the Long Island Expressway—escaped major surgery. It was the strongest and densest area of the whole city’s industrial economy until recent years.
Long Island City’s escape from the worst was not through any positive action on the city’s part. In fact, commercial and residential development was heavily encouraged by the city but went nowhere fast because the market wasn’t there yet. But even at slow speed, redevelopment began a nibbling trend that has accelerated over time. In 1989 CitiCorp built a huge tower with a facade of green glass and ninety-seven million dollars in tax abatements. Several suppliers of materials like aluminum and small job shops disappeared. All sorts of ancillary service businesses—pattern makers, cabinet shops, upholsters, machine shops—were priced out and moved away. The farther they moved, the higher became our cost of doing business. The serious erosion of this industrial heartland was perhaps later than other areas but gaining momentum.
Queens West, at a onetime waterfront port and terminal site with varied industrial buildings, was begun—a massive, highly subsidized complex of high-end residential and commercial towers meant to be a whole new neighborhood, not unlike Battery Park City but surely out of place in a functioning industrial district. Five apartment buildings went up in ten years. The plan for sixteen apartment buildings with forty-four thousand apartment units and four office towers on this seventy-four-acre site gained momentum in recent years as new development raced forward all over the city.
Long Island City’s Hunters Point community was hardly a blighted outpost. A longtime industrial and manufacturing district was mixed in with a historic Italian working-class community that included small locally owned businesses. Thirty-two companies were located there, employing two thousand people doing everything from baking to servicing elevators. Some land had been vacant for years, left from the 1940s when land-banked property was held for large-scale schemes, such as a possible UN residential village, directly across the East River. The Planning Department staff member who surveyed the area in 1980 found that this was a robust mixed neighborhood with a fair amount of thriving industrial businesses. Her bosses did not want to hear it. They demanded instead that she sign a document reporting it was blighted. She resigned instead.
THE PAST IS PAST
Absolutely no one is suggesting that New York City will or could once again become an “industrial” city, but this is a simplistic way of dismissing economic realities that question current thinking. The challenge the city fails to face is allowing existing industry to survive instead of being excessively sacrificed on the altar of real estate development. The loss of industry is no more now a natural process than it was over the past fifty years.
The twenty-first century needs a new set of definitions for such things as “manufacturing,” “industry,” and “crafts.” New York has become a so-called service, not production, economy. But what is service and what is production? Is Kinko’s a service provider with its copying services or a manufacturer with its production of bound books or both? Is the stained-glass craftsman who restores deteriorating old church windows but also designs and produces new lighting fixtures a craftsman, service provider, or object producer, or all three? And what is the designer who designs for others and also produces a small inventory to sell retail on-site? Then there is Sarabeth’s Kitchen, which started twenty-nine years ago as a jam-and-jelly shop and became one of the city’s top gourmet-food brands. Two Sarabeth’s Kitchen restaurants are quite popular. The brands are sold in grocery stores, with baked goods and soups added to the mix. So is it a restaurant, wholesaler, or retailer, or all three? And what about the hairdresser who provides the usual services but also produces his own line of products, manufacturing and selling them? In what categories are these businesses classified and measured in the economy?
Likewise, one need not advocate bringing back lost industry to promote the idea that manufacturing is not only alive but actually an undervalued economic sector with new things bubbling up that could be nurtured instead of strangled. Industry can’t be brought back to what it was, but neighborhoods where new innovations might emerge could be protected and nurtured. New elements of a green economy—products to serve the new interest in green construction—are starting here in hidden ways, but may not be able to find the space in which to grow, expand, and add new work to old.
The important thing is to recognize the multiple values that existing industry has for the city and its workforce and not lose what exists because a real estate speculator has designs on a site or a district. A manufacturer today may lose a market or find a more economical way to produce overseas, but that does not mean another form of production won’t fill the unused space or employ the same skilled labor, just as Gratz Industries has over the decades. And who could anticipate production work returning to our shores because of the weak dollar, increased production costs abroad, and high shipping costs?
As larger businesses leave today, the spaces once occupied by single-use tenants are sometimes being divided up for multiple smaller businesses. One of several buildings once occupied by the Eberhardt-Faber Pencil factory in Greenpoint was divided into dozens of smaller spaces for woodworkers, designers, jewelry manufacturers, printers, and artists. The forty-thousand-square-foot former Nassau Brewery in Crown Heights has been carved up into two dozen smaller spaces ranging from four hundred to four thousand square feet, and includes a mix of metalworkers, designers, video producers, and others. The former Monti Moving & Storage building, also in Crown Heights, is now home to twenty-five workspaces that include artists, woodworkers, film editors, set designers, and architects.
Also significant is the proliferation of food-preparation businesses occupying old factories. This is especially true of ethnic specialty foods, the fastest-expanding segment of the growing New York food industry that includes everything from a variety of breads to chocolate and beer (again). The problem comes as these small companies succeed and grow and need larger spaces, the kind the city is losing rapidly. Many will be forced out of the city. At the same time, Friedman notes, not enough big spaces are being divided into small spaces, as O’Connell and Sweeney have done, as we will see. Start-ups need rental spaces under ten thousand square feet. A space mismatch exists. The supply is the bigger older buildings for single-use tenants, and the demand is for small and medium-sized properties. This seeming contradiction becomes understandable when one observes that the big ones frequently are converted to high-end condos, not new industrial space.
TRUE ECONOMIC DEVELOPMENT IS A RENEWABLE PROCESS
Many familiar corporate giants—Kodak, General Motors, Apple Computers, Macy’s—were started by a single innovative entrepreneur. Starting in a small, limited way, each one expanded, shifted its product mix, and evolved into a corporate giant. That process is not anachronistic. It repeats itself regularly when not stifled by city policies. This is the DNA of economics. Some famous companies didn’t start out making what they became known for, as Catherine Rampell pointed out in her article mentioned earlier about companies reinventing themselves. Nokia made paper before cell phones. Toyota made looms before cars. Some auto-parts manufacturers today have reinvented themselves into windmill turbine producers. For city planners to continue to plan and rezone as if industry can’t survive, grow, and be a significant contributor to the city economy is dramatically shortsighted. The rezoning of almost every industrial district in the city reflects that shortsightedness.
Ironically, one city agency is actually proving the wrongheadedness of the official no-confidence vote in industry. The Brooklyn Navy Yard with more than forty buildings, four million square feet of industrial space, 230 tenants, and five thousand employees has a never-ending waiting list for production businesses wishing to get in. It can’t build new buildings fast enough to fill demand. Only one business, so far, has folded during the economic collapse, and another was right there to fill the space. Current tenants keep growing and want more space. Demand grows while available space citywide keeps shrinking.
The entrepreneurial processes from which new businesses emerge and grow have a timeless legitimacy and repeat themselves if conditions exist to allow the process to continue. The repetition of the process often looks somewhat different over time, but the repetition of a natural process remains nonetheless. Real estate development doesn’t create economic growth; it follows it.
Again we return to Jacobs’s point that economic growth comes when new work is added to old and imports are replaced with local production. One of the most important and oft-cited examples she presented to demonstrate new work created by import replacement was the Japanese bicycle industry, which, when her book was published, was a world leader. She wrote: “Innovations are the most important kind of goods and services added to older work. But for every true innovator, there are many, many imitators. Innovations make up only a fraction of the many individual instances in which new goods and services are added logically to older work. Imitation is a shortcut. It seldom requires as much trial and error as innovations do. The repairing of things is often the older work to which the newer work of making the same things is added.”19
In late-nineteenth-century Japan, Jacobs observed, the Japanese economy was in the doldrums. The import of Western goods was preeminent, including bicycles, a popular means of transportation. A conventional response by government to this evolving business would be to invite a Western manufacturer to set up shop, as has been done in many places with car companies. Alternatively, the government arranges for the establishment of a manufacturing business, copying Western models and importing Western machinery and professionals to operate the new facility.
Instead, Jacobs observed, the Japanese production of new bicycles grew out of the extensive network of one- and two-man repair shops that sprang up to service the growing demand. Instead of importing expensive parts or cannibalizing valuable existing bikes, the “repairmen” learned to manufacture replacement parts, thus becoming light manufacturers. New entrepreneurs became the “assemblers,” in effect producing their own line of bicycles. “The Japanese had acquired a pattern for many of their other achievements in industrialization: a system of breaking complex manufacturing work into relatively simple fragments, in autonomous shops,” Jacobs wrote. “Parts making has become a standard foothold for adding new work.” In fact, Sony too, she noted, began at the end of World War II “as a small-parts shop in Tokyo, making tubes on contract for radio assemblers, and was built up by adding to this the manufacturing of whole radios . . . and other types of communication and electronic goods.”
Ford Motor Company had a similar beginning, Jacobs pointed out. Henry Ford failed twice to set up complete car-manufacturing operations but succeeded the third time by buying “from various suppliers in Detroit every single item he needed for his cars—wheels, bodies, cushions, everything.” Ford evolved into a manufacturer from there. Philco, Motorola, Lockheed, Grumman, and others followed similar patterns. Today, parallel success stories are all over the place, including Apple, Google, and Microsoft, all garage start-ups.
Ironically, a variation of this very process can be observed today in, of all industries, bicycle manufacturing. Portland, Oregon, often hailed for its early farsighted public transit policies, built an ever-expanding light rail network, increased densities, and rolled back its greenhouse emissions. It was also early in planning and developing bike lanes. This was in the 1970s when the focus of that city’s transportation planning shifted from accommodating the automobile to promoting the revival of mass transit. Today 3-5 percent of Portlanders commute by bike, the highest percentage in the country, according to the Census Bureau.20 The increasing popularity of biking caused an increase in sales of national brand bicycles produced elsewhere by large corporations.
Now, Portland has an expanding twenty-mile network of bike boulevards, and a growing number of custom-made bike builders. These are the import replacements Jacobs cited as crucial to expanding a local economy. An estimated 10 small shops produce high-end handmade bikes, and approximately 125 bike-related businesses produce racks, components for manufacturers, and clothes. Bike sales and bike tourism keep growing as the city increases bike lanes and bike-friendly amenities. A cycling industry and its offshoots now account for an annual one hundred million dollars and a thousand jobs in the local economy. Ten years ago, a small number of those employees were working for retailers selling mass-produced bikes—the imports in the process Jacobs described.
The public health- and environment-minded city government recognized an emerging new industrial sector. Now it is working with the small number of bike builders to improve business and accounting skills as well as hosting handmade bicycle trade shows. This is government at its best, nurturing spontaneous and genuine economic development. Often, assisting small businesses in marketing, accounting, and joint advertising is more beneficial than tax breaks or incentives. For genuine economic growth, nurturing the homegrown business beats luring the mature one from elsewhere with tax breaks and other expensive incentives.
Unplanned economic growth has occurred in New York City over the years, but in most cases that growth has been nurtured by not-for-profit developers or under-the-radar small entrepreneurs, especially in the furniture-making industry.21 The Greenpoint Manufacturing and Design Center started by David Sweeney, for example, rehabilitated five vacant North Brooklyn buildings containing five hundred thousand square feet, creating space for more than a hundred firms. Officially, this spontaneous new growth has been handicapped at best and stifled at worst.
OFFICIAL LOGIC IS ELUSIVE
The current official approach to industrial districts in New York is schizophrenic. Officials go through the motions of protecting them, and then undermine them with erroneous planning and zoning policies. On the one hand, for example, the mayor created the Office of Industrial and Manufacturing Businesses and charged it with creating sixteen special Industrial Business Zones offering industries additional services but no legal zoning protection. Zoning in manufacturing districts still allows hotels and big boxes that erode needed space. Land values escalate because of proximity to new residential and commercial development that the upzoning encourages. Industry continues to be priced out. Incentives are available to relocate into an industrial zone but not to survive if you are already there.
A 2008 study revealed that big boxes are like big vacuums, sucking up local retail dollars and sending them to home offices out of the city.22 In addition, they are huge automobile and truck traffic generators, low-wage job creators, and magnets for more vehicular-dependent businesses. In manufacturing districts, they squeeze out industry. Take, for example, the city-approved—actually encouraged and subsidized—Ikea superstore, the largest in the country, on Brooklyn’s waterfront in Red Hook.23 Why, one might ask, would the city want to encourage a mile-long site with spectacular harbor views of the Statue of Liberty and Lower Manhattan to be given over to a windowless superstore surrounded by parking?24 But that is the least of questionable notions apparent in this project.
Peninsula-shaped Red Hook once formed the heart of Brooklyn’s rough-and-tumble working waterfront with multiple cargo piers, location for the immortal film, On the Waterfront (actually filmed in Hoboken). Here is the Erie Basin, the southern terminus of the Erie Canal, and the reason for its vibrant shipping history. In the 1930s, bustling streets and solid housing were cleared to build the Red Hook Houses, a twenty-eight-building public housing complex with 8,000 residents, the city’s biggest and most insular. A combination of two- and six-story redbrick buildings, this was the country’s first high-density public housing and Brooklyn’s largest. Another eighty acres were cleared for an enormous containerport. But after many buildings were demolished and businesses displaced, the project was considerably downsized and land left vacant. To accelerate the area’s demise, also under the direction of Robert Moses, the Gowanus Parkway was built on the pillars of the former elevated BMT subway line, bisecting South Brooklyn along Third Avenue. The once job-rich waterfront was cut off from the upland neighborhoods and the rest of the borough. More than 1,300 families and 100 businesses were erased and the area sent into a permanent downward spiral.
After the war, federally subsidized mortgages and the new suburbs did the rest to undermine Red Hook. The 1990 census showed 11,000 people living where 22,000 lived in 1950. Most of them were then and still are on public assistance. Containerization and the Port Authority’s shifting of waterfront work to New Jersey accelerated the decline. The most imaginative idea city planners could come up with for this view-rich acreage of waterfront was luxury high-rises with ferry access to Manhattan so residents didn’t have to pass through the rough neighborhood.
While city planners plotted rezoning scenarios, one man had a different vision. Greg O’Connell, a former cop, started buying Civil War-era warehouses on abandoned piers in the late 1980s. He renovated and slowly converted them for small businesses hungry for the space. Rejected for financing by banks and with no public money and, in fact, in the face of official government skepticism, O’Connell single-handedly proved experts wrong. More than 120 businesses and 1,250 jobs occupy O’Connell’s seven buildings, everything from a glassworks to a music set-making studio.
I first encountered O’Connell in the 1990s while researching Cities Back from the Edge, and I included the beginning of his story in that 1998 book. But O’Connell, probably the star example of the civic-minded developer, was really just beginning then. He had transformed only the first warehouse, a nineteenth-century massive brick structure with heavy timber frames, some with terra-cotta arches. Subsequently, he renovated more waterfront warehouses and other spaces, gave free space to community groups and community activities, built a public park and walkways along the water using all recycled materials and solar night-lights, and renovated neglected inland residential properties for affordable housing.
Slowly, officials and the public took notice. Artists were moving into Red Hook, priced out of the string of earlier successful artist neighborhoods. Then O’Connell redeveloped a former warehouse for the city’s premier fresh food market, Fairway, founded on the Upper West Side in the 1940s. The plan was both brilliant and community sensitive: supermarket on the first floor, prepared-food operations with jobs for local residents on the second floor, and live-work spaces on two floors above. And since Red Hook is nowhere near a subway stop and is served poorly by bus service, Fairway—at O’Connell’s insistence—developed a shuttle bus going to the public housing where few residents had cars. The city has since improved regular bus service, and a water taxi stops at its waterfront entrance.
By then, it was all over for Red Hook as a fairly priced, remote outpost of the city. Red Hook was on the map. Ikea landed the next choice site. But a very significant and historic business remained on this twenty-two-acre site—a Civil War-era graving dock, one of the few working graving docks left in New York Harbor. Graving docks are used for ship repair and are based on relatively simple technology—a ship floats in, a door closes behind it, and the water is pumped out, leaving the hull exposed for repair. Red Hook’s dock was in continuous use from 1866 until evicted by Ikea. In fact, it was where the city’s own sanitation and sludge-removing vessels were repaired and one uniquely large enough to handle a 750-foot vessel where others can’t.
Ikea went through the motion—pro forma, of course, for every new development—of promising jobs, “500 or 600” of them, none of which would be promised for local residents. Understandably, even the remote prospect of jobs was enough of an enticement to excite the local job-seeking population.
Now this was curious. This 346,000-square foot facility would be Ikea’s largest in the country. But the 311,000-square-foot Ikea in New Haven, Connecticut, has only 350 employees. Why the Brooklyn store would need 50 percent more than that number of employees is inexplicable indeed. (Ikea refuses to disclose the actual number of jobs created and how many are local.) Nearby neighborhood businesses see the Ikea traffic go by, but none of it also comes to them.
Speaking of jobs. The graving dock had 100 well-paying skilled jobs with additional ones added when a supersize ship repair came in. Apart from their own inherent value and higher pay scale, these kind of jobs are better than retail jobs as an economic multiplier for goods and services in the community. Certainly, no economic growth will emerge from Ikea, no innovations or new work. That all happened years ago in Sweden, Ikea’s home country. Instead, what is emerging is more big box development nearby where a fabulous old manufacturing building sits. It will probably be demolished instead of creatively reused.
So first we have a spectacular waterfront site given over to a big box. Then we have a singular and significant operating business displaced. Then we lose 100 solid skilled jobs. But there is more, much more.
The graving dock is paved over for a 1,400 car parking lot even though two alternative designs showed how Ikea could have the same parking lot just as conveniently on the store’s other side, sparing the graving dock. This parking supplements generous parking under the building. Here is yet another classic example of where the city could have had both, not either-or, but both big box and big boats. Officials chose not to force Ikea to move the parking lot to achieve both. As of April 2009, the parking lot has been full twice!25 Most weekdays it is completely empty.
Also on the site were two significant rows of historic redbrick warehouse buildings, of the same Civil War vintage as the O’Connell buildings and several designated city landmarks elsewhere on the Brooklyn waterfront. In these buildings could have been the kind of innovative new businesses incubated in O’Connell’s buildings and more economically beneficial.
That the graving dock was of great local and national historical significance apparently made no difference to city officials who treat preservation lightly. The National Trust for Historic Preservation, the Preservation League of New York State, the city’s Municipal Art Society, and other similarly prestigious organizations appealed to city officials to intervene but were ignored. In fact, it was pointed out that the whole Ikea project was contrary to the Planning Department’s own 1992 Waterfront Plan for the site, which strongly called for this piece of the waterfront to remain zoned and dedicated to continued maritime activity. Public access and commercial activity were to happen in other areas of the peninsula, including where Fairway opened. So much for official “plans” and officially protected economic uses.
All this comes while the city is expanding its use of the waterways for commuting, commerce, garbage transport, ocean liners, and park development. Where will the ferries, tugs, passenger ships, and other vessels be maintained and repaired? The city is reportedly investing a half-billion dollars for new passenger ship terminals, ferry landings, and transfer stations, yet eliminated a functioning graving dock. In fact, now the city is reportedly looking to create three new graving docks.26 Where is the logic in that? A Maritime Support Services Location Study, begun in the summer of 2006 by the city’s Economic Development Corporation, noted that the “port has experienced a resurgence in waterborne transportation” and a considerable increase in the barge and tugboat fleets in recent years.
So many of these development conflicts are presented erroneously as either-or, take-it-or-leave-it proposals. Invariably, alternatives offered by the public make possible a better combination. But without pressure from city officials or the city council that rubber-stamps these Planning Commission approvals, Ikea and all developers hold fast. The fallacy of designating protection zones while destroying viable places has never been satisfactorily explained. “Conformity and monotony, even when they are embellished with a froth of novelty, are not attributes of developing and economically vigorous cities,” Jacobs wrote. “They are attributes of stagnant settlements.”
In the press, the favorite themes are jobs versus home owners, gentrifiers versus the poor, affordable housing versus historic preservation, all individually legitimate issues made out to look like they are in intractable conflict, a competition among worthy values. These are easy, formulaic interpretations that include some truths but miss the bigger picture, the picture that illustrates the potential for balance that achieves multiple goals, not just blind development goals. Ironically, this comes at a time when new fields for innovation are clear and in need of the space to incubate. Products and processes are in demand to address the market for green products, environmental cleanup, new sources of energy, building restoration. Space for these economic opportunities continues to diminish. Jane Jacobs foresaw this potential in 1969 at the end of The Economy of Cities: “In highly developed future economies, there will be more kinds of work to do than today, not fewer. And many people in great, growing cities of the future will be engaged in the unroutine business of economic trial and error. They will be faced with acute practical problems which we cannot now imagine. They will add new work to older work.”
Less and less of this is possible in New York City.