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Urban Manufacturing Project

Victoria's role in supporting small urban manufacturers



Melbourne's future vibrancy, competitiveness and jobs growth will benefit from this latest research geared towards improving opportunities for small-scale urban manufacturers in Melbourne.  The project is aimed at promoting centre-city economic development and informing decisions on rezoning.

The Inner Melbourne Councils (IMAP) of the cities of Melbourne, Port Phillip, Yarra, Stonnington and Maribyrnong together with the University of Melbourne are conducting a study and seeking participation by local businesses and creative specialists operating in this exciting and innovative space.  Other key stakeholders participating include Moreland Council, the Metropolitan Planning Authority and the Department of Economic Development, Jobs, Transport & Resources and the Department of Environment, Land, Water & Planning.

The goal of the study is to guide strategic decisions about rezoning of urban commercial and industrial zoned land in the IMAP area. There is great value in the urban economy in preserving a place for small, high value-added, highly-innovative urban makers and innovators in the central city and immediate inner suburban areas.  There is a strong latent demand for housing in central-city areas.  Residual land values for industrial properties are likely to be significantly higher under most housing redevelopment scenarios compared with continued use as 'employment land'.  Property market valuations do not factor in the wider economic, social and environmental benefits attaching to retention of employment-generating landuses in the inner city.  Left to its own devices, the market may well be generating inefficient outcomes in the inner Melbourne region.

This project aims to examine the competing needs for industrial and commercial land in central cities and the shift with small producing firms innovating toward being more service-oriented and no longer needing to be housed exclusively on industrial-zoned land.

 Framing the Solution



The Land Approach

The primary activity in the land approach will be a cataloguing and analysis of the economic activities occurring in industrial/commercial-zoned areas.  This will be crucial as urban policy is currently being formed that will heaviliy influence the use of a significant amount of industrial/commercial-zoned land in the inner Melbourne region.  It also creates the possibility of a renewed understanding of what constitutes manufacturing in today's service-oriented economy.

The Sector Approach

This will examine the interactions of inner-city land uses with the requirements of firms to survive, innovate, grow and prosper.  The activities and questions in this approach are informed by economic theory on agglomeration economics and innovation.  Agglomeration economies are the productivity benefits that firms receive from being in close proximity to concentrations of firms and people.  They can be described in two sub-categories:

Urbanisation economies - are the productivity effects of being in a large labour market featuring a large concentration of readily acceptable firms across a variety of sectors.

Localisation economies - are the productivity benefits associated with being near firms that are involved in similar or complementary industries.

In Melbourne, it is possible that displacement of urban manufacturers from central cities could have a stifling effect on innovation, creation, growth and prosperity of individual firms.

The Economic Approach

The economic approach examines that impacts that small urban manufacturers exert on the urban economy, including the effect on wages, jobs and innovation in the region.  Underlying this approach is the assumption that the barriers experienced by small manufacturing firms can have a stifling effect on the entire economy, and equally, that these small firms can apply positive influences on their own and other related sectors.  If small, high-value manufacturing creates positive effects for the urban economy, and if the contributions of this sector can be made more productive through public policy initiatives, then policy makers will surely welcome this.  In examining this economic approach consideration will be given to longer-run issues such as whether firm birth, growth and innovation are limited by the diminishing industrial-zoned land in the inner Melbourne region and what would be the overall economic costs (local, state, and national) of continued loss of urban industrial land in terms of jobs, value-added, and innovation.

Paving the Way

The first step is to engage businesses, makers and creative specialists as a central source of information for the research and how high-value central locations impact on small urban makers.  We are particularly interested in industry professionals that engage in high-value, highly-innovative, urban manufacturing and creative production. 

The research is not just limited to the study area; the project will open a new front in domestic urban research with far reaching implications for government programs dealing with balanced labour markets, social inclusion and environmental sustainability.  The research can be expected to attract interest across national, state and local government areas.

Future Proofing

The research can be expected to have an immediate impact on planning policies for key employment and urban growth areas.  It will provide an initial evidence base to support decision making about if and when employment areas should be ‘protected’ from property market pressures or how to leverage of investment to create value adding employment opportunities.  The same insights may support the development of more nuanced and innovative planning mechanisms and design models to accommodate the needs of contemporary manufacturers, promote business development and profitability, strengthen positive interaction between industrial and non-industrial uses, and promote industry-university partnerships.


Contact Us

For more information on the project or how you can become involved in the research please contact;

Dr. Jennifer Day,
Senior Lecturer in Urban Planning,
The University of Melbourne
Phone: 0451 054 878


Ray Tiernan - Project Team Leader
Industry, Investment & Research – City of Port Phillip
Phone: 9209 6448



Final Phase 1 report.pdf [7.2MB]

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