A couple of years ago, Chris Woehrle grew sick of corporate life and decided to become an artisanal food craftsman — any kind of artisanal food craftsman. "I spent a month making every item I could think of: kimchi, harissa, salsa, every kind of pickle imaginable, a bunch of different herb mustards," says Woehrle, who worked for a music conglomerate. And every time, he quickly discovered, "there were eight companies already doing it well."
This is because Woehrle lives in Brooklyn, ground zero of the artisanal-food universe, where competition is intense. Eventually, though, he and his partner stumbled upon a hole in the market: handcrafted, all-natural beef jerky. And so Kings County Jerky was born. Woehrle expects that the company will be profitable in a year or two, which is pretty good for a new small business.
Like many successful entrepreneurs in the United States, Woehrle followed what seems like an ancient business model: making things by hand. He rejected the high-volume, low-margin commodity business in which ConAgra and PepsiCo compete against each other with their Slim Jim and Matador jerky products. Instead, Kings County found a niche in which engaged consumers will pay a premium for a specialty product.
Contrary to popular belief, the revival of craft manufacturing isn't just a fad for Brooklyn hipsters. (Woehrle resists the term. His beard is too short, he says.) Jason Premo, an entrepreneur I recently met in Greenville, S.C., is also studying the unmet needs of his customers and carefully making the things they most value, albeit on a more industrial scale. Premo, a former corporate manager, learned that many large companies faced challenges getting their hands on precision parts (like rocketry propulsion housings for ICBMs or rotor hardware for Black Hawk helicopters) that must be made of high-performance metal alloys and cut to exacting standards. So he and a partner bought a tiny metal-machining shop, invested in some precision machines and hired a few advanced machining experts. Their company, Adex Machining Technologies, now has contracts with Boeing and G.E.
It's tempting to look at craft businesses as simply a rejection of modern industrial capitalism. But the craft approach is actually something new — a happy refinement of the excesses of our industrial era plus a return to the vision laid out by capitalism's godfather, Adam Smith. One of his central insights in "The Wealth of Nations" is the importance of specialization. When everyone does everything — sews their own clothes, harvests their own crops, bakes their own bread — each act becomes inefficient, because generalists are rarely as quick or able as specialists.
For most of human history, though, people needed to do a bit of everything to survive. The result was a profoundly inefficient economy that required almost everyone to work very hard just to create enough of the essentials for survival; even then, famines were still disturbingly common. Efficiency, Smith explained, comes when individuals focus on specific tasks. The miracle of the Industrial Revolution was that through specialization, humankind became far more productive.
In the United States, this works so well that, despite all the economic pain we're enduring, the average American leads a shockingly good life by any historical or international standard. As other countries move into mass production, the United States, even in the depths of economic doldrums, has a level of wealth that translates to fewer people willing to do dreary, assembly-line work at extremely low wages. More significant, we're entering an era of hyperspecialization. Huge numbers of middle-class people are now able to make a living specializing in something they enjoy, including creating niche products for other middle-class people who have enough money to indulge in buying things like high-end beef jerky.
Economically, this was an expected outcome. The hot field of happiness economics argues, rather persuasively, that once people reach some level of comfort, they are willing — even eager — to trade in potential earnings at a lucrative but uninspiring job for less (but comfortable) pay at more satisfying work. Some research by the Chicago economist Erik Hurst suggests that half of entrepreneurs start businesses as much to pursue happiness as to make money.
When it comes to profit and satisfaction, craft business is showing how American manufacturing can compete in the global economy. Many of the manufacturers who are thriving in the United States (they exist, I swear!) have done so by avoiding direct competition with low-cost commodity producers in low-wage nations. Instead, they have scrutinized the market and created customized products for less price-sensitive customers. Facebook and Apple, Starbucks and the Boston Beer Company (which makes Sam Adams lager) show that people who identify and meet untapped needs can create thousands of jobs and billions in wealth. As our economy recovers, there will be nearly infinite ways to meet custom needs at premium prices.
Meanwhile, the idea (or at least the hope) is that as China and other emerging nations develop, the United States can stay on the profitable forefront, delivering specific high-tech parts to their factories and the latest upmarket foods to their middle class. According to this view, the fracturing of industrial manufacturing, however painful, has helped prepare parts of the economy for this new course.
The transition to an increasingly craft-centered economy will not be without agony. Woehrle and Premo succeeded because both had access to investors and the innate ability to segue from the salaried confines of corporate life to a much riskier, entrepreneurial world. A craft economy is far less stable: those who succeed this year may fail the next, as their once-unique products become commodities made cheaply overseas. Still, this new world seems, to some extent, inevitable. Instead of rolling our eyes at self-conscious Brooklyn hipsters pickling everything in sight, we might look to them as guides to the future of the American economy. Just don't tell them that. It would break their hearts to be called model 21st-century capitalists.