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Starting a Shop Today in a Major City- Whats an Assessment of the Risks

UptownSport

Cast Iron
Joined
Jul 25, 2012
Location
Cable WI
Perhaps it's my specifics, all but a few cities have 'Risk' written all over them.

- The instant news- Riots, looting and arson- It seems this will be 'The new normal' and encouraged by elected officials
- Crazed leadership that seems to only spew agendas or fantastical plans instead of actual management
- Growing embracing of homelessness- eventhough the economy (was) at record levels and employment record lows. Park Machine in St Paul is long gone- no one could imagine a machine shop there today
- Crazed taxes- it's nearly 10% sales tax. In some spots downtown, it's OVER 10%!!

On the other hand, access to infrastructure-
The downtown Post Office postmarks customer orders until 20:00, two miles away is the metal shop and one can get a printer cartridge for order labels by putting on the leather personnel carriers.

A city is massive, and you start second guessing that it could fall apart when you see companies like Huot, Kurt and Bokers Washers (albeit in an old Minneapolis Moline Building) up and running everyday

Or is common sense going to prevail, and there be some rational leadership returning?
 
Leather personnel carriers? What's that?


It's pretty simple....avoid Democrat-run cities. Most cities in Texas, for example, might beat you up a little on taxes and the like but for the most part they want you up and running. That's common sense, which the 19 year old, spineless mayor of Mpls is lacking in abundance.

You get what you ask for...


"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

H. L. Mencken
 
First Q

Are you a town or country boy / girl ? ....(IMO it will make a big difference)

P.S. and I don't mean musical taste :rolleyes5:
 
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Recall those city streets scenes from the middle east (and other areas of the world) where every store
front is a roll up metal door.

Closed down, they form a riot resistant wall.

I've been in certain parts of Cleveland, that the parking lot has barbed wire, the gate is only open
during business hours, and you still need "buzzed in" at the front door.
 
No idea how it would affect the business to your liking, but consider getting just outside a "major" city and alot of those problems might go away. For example I am about 35-40 minutes from downtown Tampa, and about 25 minutes from downtown St Pete. There have been protests and all that good stuff in those cities, but it's pretty quiet where I live.
 
A friend of mine just sold off about 3/4 of his business because the major industries he serviced for years had all closed or moved away! Over the years his customers just got further and further away? He was in the cnc machining/metal fabricating business. Other similar shops in the area have closed also. Local government doesn't seem to be welcoming these businesses anymore either!. Zoning changes, high taxes etc. have all not been kind to anyone wanting to start a new manufacturing business in cities?
 
To the OP - I think you’re forgetting the one crucial issue here ... actually finding space zoned appropriately for a manufacturing business at a price one can afford that is not slated to be “redeveloped.”

Property owners/investors in Major cities (nyc, sf, chicago, atlanta, denver, d.c., etc) have figured out many ways to make money, and that really doesn’t have anything to do with machine shops anymore.

Edited to add: detroit, cleveland, buffalo, mpls, rapid city, tampa, richmond (traditionally mid sized cities) small manufacturing is still a viable option for many reasons. But major? Damn is it tough to find anything.
 
I subscribed to this thread, just sit back and hear the answers from folks, got to be tough with covid BS, and Democratic , Cities and states closing
Businesses down, and can not do business. 70% of businesses mostly retail have gone out of business
I am in California, but I am out in the boonies. I work from Home Part Time.
 
I think the biggest one is cost of living. Not necessarily for you (although that may be a concern) but for your employees. Most cities are freaking expensive in the US, and getting more so. Can you afford to pay a wage that will allow your employees to live near to where you are located? If not (and many small mfg shops cannot, so no shame here), realize that will result in some or all of the following:
  1. Hard to hire employees locally, simply because you can't compete with wages offered by other places. If you're paying $15 an hour for a skilled position at a manufacturing facility and Chipotle pays the same for an entry level burrito assembler, that may be an issue for you. You will need to "sell" employment at your shop a lot more- its easy for us who love machining to take it for granted why someone would want to do this, but the reality is when a physcially/mentally easier job has the same or greater wages you will have a harder time attracting employees and you will need strategies to overcome that.
  2. Commute time. The classic solution to expensive city housing costs is to move into the burbs, but this has a cost for both employer and employee. I worked with a guy who had a daily commute of 2 hours each way into the Seattle area. It's not a big leap to see how that affects productivity, lateness/absences and general mood of your employees.
  3. The employees you will attract at non-competitive wages in a big city may be a lot of younger kids starting out or folks with other mitigating circumstances or career interruptions (read: jail and/or drug time). Not necessarily a problem depending on your situation, but something you will have to account for as a manager.
  4. Going off the previous point, if you are only able to pay wages equivalent to a "starter" position in your local market, how are you going to retain employees long term? It's great if you find a brilliant 18 year old kid who will put in the time to become a superstar but if you're in a city where you need a $100k salary to raise a family comfortably (low estimate in many places) will that kid stay with you in 5 years when they decide to get married and start a family? We've seen that for our shop, about 2 years of training is really required for talented employees to do great within our specialized field. So there needs to be a salary cap that will still be competitive in our area in 2 years (given inflation, given cost of living increases) or we lose all the investment in that employee if they move on for greener pastures.
  5. What is the trajectory of cost of living change in your local market within the near future? This is obviously a tricky one considering how much change is going on right now. No one can predict the future. My current area (Phoenix, AZ) was long thought to be one of the more affordable major metros for the size and opportunity available here. That is very rapidly changing as we have the fastest growing county in the nation. From May 2019 to May 2020, rents in the Phoenix metro rose 6%, the largest increase in the country beating out even places like SF and Seattle. We have already seen this affect how we hire and what kind of candidates we can expect to see.

PS...not commenting on the validity of some of the other reasons brought up in this thread, but I will say it is not going to get better. NO ONE who has or is near to power in American politics right now will fix it. There is no will or ability for anyone in current system to change the deep structural issues that have resulted in the mess we've seen during 2020. Settle in for the long haul :)
 
Property owners/investors in Major cities (nyc, sf, chicago, atlanta, denver, d.c., etc) have figured out many ways to make money, and that really doesn’t have anything to do with machine shops anymore.

This - For the floorspace that your machines will take up many more information workers could be fit in and be cleaner and quieter. Digitization is creating money with data without the burden of actually having to manufacture something - making scale up much easier and profitable. Manufacturing will have limits. Land in Boston is selling for over $1M an acre.
 
Sewer, water, gas, taxes and 3 phase power.
Road size and condition, distance to freeway,.
Door height and width, ceiling height, power bus max amps, oh my.
Security can be bought from locals even in the worst areas for not a lot.
Bob
 
To the OP....with the Minneapolis area being expensive like it is, a good place to start up a manufacturing business is farther south and east. I live in the Rochester and Winona area. Some of the smaller towns in between have industrial parks right on Interstate 90 and close to state highways and they offer great incentives.
There are a lot of manufacturing facilities doing very well right now and are starving for skilled labor or the right kind of people to train.
 
Ask yourself this, Am I willing to go to my own shop at 1:00AM? If the answer is no then don't do it.

Your tools are there 24hr a day and you can't be. If stuff is stolen you will have to replace them and if you turn it in on insurance than your rate goes up of they will drop you.
 
I ran another guys shop for about 5 years and ours for 30+ and ain't been closer than 50 miles to a city, 5 miles from a town of 3000 but never a city. We have delivered parts if it was a bunch cheaper than UPS/FedEx. It used to be I didn't like cities but some years back I realized that without them I might find myself surrounded by all them crazy people. One nice thing about a machine shop is you can be just about anywhere the UPS truck will go, there are some challenges but we think they are worth it so have a view like this out the shop door.
IMG_7596.jpg
 
When you are focusing on a location, wander into city hall of the town or city, and ask about how to go about setting up a machine-shop business, looking for advice. While the resulting advice may be useful, that's not the objective here. The objective is to judge the reaction of the local regulatory authority to the very idea, and to you.

War story: When I was much younger and single, I went looking to buy a row house with an apartment for me plus rental apartment or two in The Peoples Republic of Cambridge, Mass, so I could afford to buy there. When I talked to the folk at city hall, their hatred spewed from the phone. That was the end of that - you cannot fight city hall. No problem in Concord, Mass, in the suburbs. Did I mention that Cambridge and Boston had had rent control, but it was banned in a statewide ballot question in 1994. It had been destroying the rental stock because landlords could not afford maintenance any more.
 
Thanks- Wow, lots of thoughtful replies. I'll read More thoroughly tomorrow AM. I had some orders to get out.

Speak of the devil- I said hi to the mayor- he was sitting on some school steps- after I dropped the orders at the downtown Post Office.
 
Thanks- Wow, lots of thoughtful replies. I'll read More thoroughly tomorrow AM. I had some orders to get out.

Speak of the devil- I said hi to the mayor- he was sitting on some school steps- after I dropped the orders at the downtown Post Office.

Never had a Mayor, what's he do besides block the steps?
 
Democratic city? Wait until after the election.

But then, perhaps you should do that in any case. If Biden wins, do it in another country.
 
Democratic city? Wait until after the election.

But then, perhaps you should do that in any case. If Biden wins, do it in another country.

Biden gets in, yer screwed if you do not already have a presence in another country. Obama/Biden, we took a 30% hit on the value of the US home and US$ purchasing power. Not 100% recovered yet, but really close.

The krew of looters in their plan this go is not your legacy ho-hum Democratic Party. Not even close. The wrecking krew of looters this go, a 50% drop would be about the least damage I'd expect. That makes it hard to get out with enough to go and start even a retirement elsewhere, let alone a business.

NB: Thanks to the other communists - the ones in China - we've already seen a 30% loss in Hong Kong assets. More grief yet to come.

Not the only legs on our milking stool, but then we planned for this starting 30 years ago and have kept our options open.
 
"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

H. L. Mencken
QFT. You just can't beat Mencken

Are you a town or country boy / girl ?
I'm a boy, LoL- Or a few decades ago was, to be accurate.
I worry that the most insignificant item takes an hour to procure - if you can find it locally.

Recall those city streets scenes from the middle east (and other areas of the world) where every store
front is a roll up metal door.
Security is a major concern. It's very, very clear that they are encouraging lawlessness, and have been laying the groundwork for quite some time.
we've gone from one-two break in attempts in 20 years to a half dozen in the last 9 months. something is happening.
They're encouraging this, except for their neighborhoods, or course ...

No idea how it would affect the business to your liking, but consider getting just outside a "major" city and alot of those problems might go away.
There's a massive difference just a couple miles away. If you're a troublemaker there, Blam! The cops are all over you.
Here ...

Local government doesn't seem to be welcoming these businesses anymore either!
That seems like it.

a price one can afford that is not slated to be “redeveloped.”

Property owners/investors in Major cities (nyc, sf, chicago, atlanta, denver, d.c., etc) have figured out many ways to make money, and that really doesn’t have anything to do with machine shops anymore.
If you analyze a city council's behavior, I think you're correct, everything is aimed at developers- It might be slathered in some ideological lingo, but the outcome always favors large developers.

I think the biggest one is cost of living. Not necessarily for you (although that may be a concern) but for your employees. Most cities are freaking expensive in the US, and getting more so. Can you afford to pay a wage that will allow your employees to live near to where you are located? If not (and many small mfg shops cannot, so no shame here), realize that will result in some or all of the following:
  1. Hard to hire employees locally, simply because you can't compete with wages offered by other places. If you're paying $15 an hour for a skilled position at a manufacturing facility and Chipotle pays the same for an entry level burrito assembler, that may be an issue for you. You will need to "sell" employment at your shop a lot more- its easy for us who love machining to take it for granted why someone would want to do this, but the reality is when a physcially/mentally easier job has the same or greater wages you will have a harder time attracting employees and you will need strategies to overcome that.
  2. Commute time. The classic solution to expensive city housing costs is to move into the burbs, but this has a cost for both employer and employee. I worked with a guy who had a daily commute of 2 hours each way into the Seattle area. It's not a big leap to see how that affects productivity, lateness/absences and general mood of your employees.
  3. The employees you will attract at non-competitive wages in a big city may be a lot of younger kids starting out or folks with other mitigating circumstances or career interruptions (read: jail and/or drug time). Not necessarily a problem depending on your situation, but something you will have to account for as a manager.
  4. Going off the previous point, if you are only able to pay wages equivalent to a "starter" position in your local market, how are you going to retain employees long term? It's great if you find a brilliant 18 year old kid who will put in the time to become a superstar but if you're in a city where you need a $100k salary to raise a family comfortably (low estimate in many places) will that kid stay with you in 5 years when they decide to get married and start a family? We've seen that for our shop, about 2 years of training is really required for talented employees to do great within our specialized field. So there needs to be a salary cap that will still be competitive in our area in 2 years (given inflation, given cost of living increases) or we lose all the investment in that employee if they move on for greener pastures.
  5. What is the trajectory of cost of living change in your local market within the near future? This is obviously a tricky one considering how much change is going on right now. No one can predict the future. My current area (Phoenix, AZ) was long thought to be one of the more affordable major metros for the size and opportunity available here. That is very rapidly changing as we have the fastest growing county in the nation. From May 2019 to May 2020, rents in the Phoenix metro rose 6%, the largest increase in the country beating out even places like SF and Seattle. We have already seen this affect how we hire and what kind of candidates we can expect to see.

PS...not commenting on the validity of some of the other reasons brought up in this thread, but I will say it is not going to get better. NO ONE who has or is near to power in American politics right now will fix it. There is no will or ability for anyone in current system to change the deep structural issues that have resulted in the mess we've seen during 2020. Settle in for the long haul :)
In bold is the quote of the thread.
I shudder to think of dealing with employees, especially in a specialized field.
Drugs has become a serious rural issue, as well.


This - For the floorspace that your machines will take up many more information workers could be fit in and be cleaner and quieter. Digitization is creating money with data without the burden of actually having to manufacture something - making scale up much easier and profitable. Manufacturing will have limits. Land in Boston is selling for over $1M an acre.
and the condos- you can extract far more property tax from high rise office/condo than you can a manufacturing floor.
That's the key, I think. The city council wants money, and you're not the most productive cow to milk.

3 phase power.
This one on the list eliminates so many reasonable properties.
Even our local restaurant has 3 phase. Why, I'm not sure.

To the OP....with the Minneapolis area being expensive like it is, a good place to start up a manufacturing business is farther south and east. I live in the Rochester and Winona area. Some of the smaller towns in between have industrial parks right on Interstate 90 and close to state highways and they offer great incentives.
There are a lot of manufacturing facilities doing very well right now and are starving for skilled labor or the right kind of people to train.
Thanks, sounds like they actually want businesses.
It seems most people who have anything going for them move to the big city. There's a lack of talent.
The cost is only one part- security, regulation.

It was interesting to see E Musk tell California to go to hell.
When some clown can arbitrarily destroy the most successful new manufacturing businesses in decades- just by decree- Not through competition, or even taxes, that scares the living Jesus out of you.

Ask yourself this, Am I willing to go to my own shop at 1:00AM? If the answer is no then don't do it.

I realized that without them I might find myself surrounded by all them crazy people. One nice thing about a machine shop is you can be just about anywhere the UPS truck will go, there are some challenges but we think they are worth it so have a view like this out the shop door.
View attachment 296631

When you are focusing on a location, wander into city hall of the town or city, and ask about how to go about setting up a machine-shop business, looking for advice. While the resulting advice may be useful, that's not the objective here. The objective is to judge the reaction of the local regulatory authority to the very idea, and to you.

War story: When I was much younger and single, I went looking to buy a row house with an apartment for me plus rental apartment or two in The Peoples Republic of Cambridge, Mass, so I could afford to buy there. When I talked to the folk at city hall, their hatred spewed from the phone. That was the end of that - you cannot fight city hall. No problem in Concord, Mass, in the suburbs. Did I mention that Cambridge and Boston had had rent control, but it was banned in a statewide ballot question in 1994. It had been destroying the rental stock because landlords could not afford maintenance any more.
The gov't has become the people's master, instead of the other way around.
That's very, very good advice.

Never had a Mayor, what's he do besides block the steps?
You haven't been reading the headlines?

Democratic city? Wait until after the election.

But then, perhaps you should do that in any case. If Biden wins, do it in another country.
You just don't know what anyone of them will do.
A politician is a politician- to again quote Mencken

"If a politician found he had cannibals among his constituents, he would promise them salted missionaries for dinner."

That's the most important consideration of the thread, after all the comments- That a person can arbitrarily just decide they don't want you, and take some direct or indirect action to get rid of you.

Just like E Musk and Tesla.

Have as little political risk as possible.

That 'business friendly' small town mayor decides on a new water tower, and flips you the $35,000 assessment...
 








 
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