A major existential challenge faces small and mid-size manufacturing firms creating a huge opportunity for employees, Black, Latinx, Indigenous, Asian and other persons of color (BIPOC) entrepreneurs, women and communities. The challenge is ownership succession. Aging owners of the baby boom generation are now leaving their  leadership positions in large numbers. As recent studies have shown, many of these companies don’t have a successor in place to sustain the company putting it at risk of closing. A recent study by the Great Cities Institute at the University of IL surveyed and found that 73% of sampled manufacturing companies in the Chicagoland area have an owner over the age of 55. It was also found that as many as 60% of companies with less than 100 employees and an aging owner don’t have a succession plan or successor.  Another challenge facing the manufacturing sector is the lack of diversity at the top levels of the company including ownership. For example, in Illinois, 99% of manufacturing companies are owned by individuals who racially identify as white—a painful reminder of inequality and exclusion in our society. The loss of these companies is a major contributing factor to the growth of poverty, violence, and income inequality.   

A key challenge facing the manufacturing sector is the lack of diversity at the top levels of companies, including Ownership. In Illinois, 99% of manufacturing companies are owned by individuals who racially identify as white, despite nearly 42% of individuals living in the state identifying as some other race or ethnicity—a painful reminder of inequality and exclusion in society.  Women, as well, typically have been excluded from ownership in the manufacturing. 

This project will directly address the issues of industrial retention, employee engagement, racial equity, diversity, and community development.  This is an opportunity to save hundreds of companies from shutting down due to not having identified an ownership successor. The project will also meet the aspirations of hundreds of Black, Latinx, Asian, and Native American men and women entrepreneurs to assume a new role. This is a unique opportunity—a once in a lifetime situation—to retain and rebuild our manufacturing base in Chicago and to dramatically diversify ownership in our manufacturing sector. 

Our target communities are those in urban, low-income communities. These communities were disproportionately impacted by deindustrialization. It’s a matter of fairness that these communities disproportionately benefit by programs to re-build our manufacturing sector including this initiative. This approach also applies to all sectors and all communities. 

This challenge has been confronted on a small scale over the last 40 years in Chicago and around the country.  This project will retain critically important companies in our supply chain and diversify ownership in the manufacturing sector that will tap into the talent of employees as well as entrepreneurs of color.  

Specifically, the Manufacturing Succession Solutions (MSS) will: 

• Engage the Chicago Early Warning Network to establish contact with owners of manufacturing companies including those that face a succession challenge
• Establish a formal relationship with the owner defined in an MOU to assess the challenges and identify solutions including assistance in securing a successor; 
• Evaluate the viability of the company and determine a reasonable price,
• Identify employee and entrepreneurs of color interested in purchasing the   company,
• Provide assistance in arranging the transfer of ownership, as well as other challenges facing manufacturers;
• Develop a network of trusted advisors to assist and guide the new owners in all aspects of the transition; and
• Provide on-going support for the new enterprise.

Manufacturing Succession Solutions handout here.

Read more about in this Crain’s Chicago Business article.

This is a project that directly addresses the challenge by President Biden to dramatically address the issues of racial equity and set bold goals. This is an opportunity of engaging thousands of companies and meeting the aspirations of thousands of Black, Latinx, Asian, and Native American men and women entrepreneurs. This is a unique opportunity—a once in a life-time situation—to both retain our manufacturing base in cities and to dramatically diversify ownership in our manufacturing sector. 

Sandra Finley, CEO of the League of Black Women, recently commented on the impact of MR’s vision: 

“Manufacturing Renaissance’s clarion call that small manufacturing companies are at unprecedented risk due to lack of traditional ownership successors prompted the League of Black Women to form a new partnership with Manufacturing Renaissance.  Together, we will help Black women identify acquisition opportunities and leverage our legendary management acumen to grow these companies and be the “superheroes” needed to save the day.” 

Our target communities are those in urban, low-income communities. These communities were disproportionately impacted by deindustrialization. It’s a matter of fairness that these communities disproportionately benefit by programs to re-build our manufacturing sector including this initiative. This approach also applies to all sectors and all communities. 

This challenge has been confronted on a small scale over the last 40 years in Chicago and around the country.   This project will retain critically important companies in our supply chain and diversify ownership in the manufacturing sector that will tap into the talent of employees as well as entrepreneurs of color. 

Manufacturing Renaissance’s Experience in Acquisitions:  MR was founded in 1982 in response to the crisis in the manufacturing sector. We worked on behalf of the City of Chicago as well as unions and community-based organizations to find ways to avert plant closings and retain jobs. In 1988, we were introduced to a small company on Chicago’s South Side that faced a succession challenge by one of its customers. Six months later and with our assistance, the workers at Bankers Print purchased the company and converted it into a cooperative. On behalf of the City of Chicago, we did a study of 800 small companies and found that 40% were at risk because of succession. Based on this information, MR created Chicago Focus to take advantage of the opportunity and identify these companies, and when possible, arrange the acquisition by employees as well as entrepreneurs of color. We arranged 8 acquisitions. We closed Chicago Focus but retained an understanding of the importance of this work.  

For additional information, contact Dan Swinney

This is a project of Manufacturing Renaissance (MR)—a not-for-profit corporation. (www.mfgren.org) MR will be the fiscal sponsor and is joined in the program by leadership of the League of Black Women, Ravinia Capital, Gaebler Ventures, Rubicon Innovative Solutions LLC, Laser Associates, and Meridian Associates.  Our team has extensive experience in arranging acquisitions and community development.