Thus the new industrial organizational model. It’s built around small pieces, loosely joined. Companies are small, virtual, and informal. Most participants are not employees. They form and re-form on the fly, driven by ability and need rather than affiliation and obligation. It doesn’t matter who the best people work for; if the project is interesting enough, the best people will find it.

…Although it’s shrinking, America’s manufacturing economy is still the world’s largest. But China’s growing production sector is predicted to take the number one spot in 2015, according to IHS Global Insight, an economic-forecasting firm. Not all US manufacturing is shrinking, however — just the large part. A Pease Group survey of small manufacturers (less than $25 million in annual sales) shows that most expect to grow this year, many by double digits. Indeed, analysts expect almost all new manufacturing jobs in the US will come from small companies.

More from the article:

For a lens into the new world of open-access factories in China, check out Alibaba .com, the largest aggregator of the country’s manufacturers, products, and capabilities. Just search on the site (in English), find some companies producing more or less what you’re looking to make, and then use instant messaging to ask them if they can manufacture what you want. Alibaba’s IM can translate between Chinese and English in real time, so each person can communicate using their native language. Typically, responses come in minutes: We can’t make that; we can make that and here’s how to order it; we already make something quite like that and here’s what it costs.

Alibaba’s chair, Jack Ma, calls this “C to B” — consumer to business. It’s a new avenue of trade and one ideally suited for the micro-entrepreneur of the DIY movement. “If we can encourage companies to do more small, cross-border transactions, the profits can be higher, because they are unique, non-commodity goods,” Ma says. Since its founding in 1999, Alibaba has become a $12 billion company with 45 million registered users worldwide. Its $1.7 billion initial public offering on the Hong Kong Stock Exchange in 2007 was the biggest tech debut since Google. Over the past three years, Ma says, more than 1.1 million jobs have been created in China by companies doing ecommerce across Alibaba’s platforms.

This trend is playing out in many countries, but it’s happening fastest in China. One reason is the same cultural dynamism that led to the rise of shanzhai industries. The term shanzhai, which derives from the Chinese word for bandit, usually refers to the thriving business of making knockoffs of electronic products, or as Shanzai.com more generously puts it, “a vendor, who operates a business without observing the traditional rules or practices often resulting in innovative and unusual products or business models.” But those same vendors are increasingly driving the manufacturing side of the maker revolution by being fast and flexible enough to work with micro-entrepreneurs. The rise of shanzhai business practices “suggests a new approach to economic recovery as well, one based on small companies well networked with each other,” observes Tom Igoe, a core developer of the open source Arduino computing platform. “What happens when that approach hits the manufacturing world? We’re about to find out.”

From earlier in the article:

Here’s the history of two decades in one sentence: If the past 10 years have been about discovering post-institutional social models on the Web, then the next 10 years will be about applying them to the real world.

This story is about the next 10 years.

Transformative change happens when industries democratize, when they’re ripped from the sole domain of companies, governments, and other institutions and handed over to regular folks. The Internet democratized publishing, broadcasting, and communications, and the consequence was a massive increase in the range of both participation and participants in everything digital — the long tail of bits.

Now the same is happening to manufacturing — the long tail of things.

The tools of factory production, from electronics assembly to 3-D printing, are now available to individuals, in batches as small as a single unit. Anybody with an idea and a little expertise can set assembly lines in China into motion with nothing more than some keystrokes on their laptop. A few days later, a prototype will be at their door, and once it all checks out, they can push a few more buttons and be in full production, making hundreds, thousands, or more. They can become a virtual micro-factory, able to design and sell goods without any infrastructure or even inventory; products can be assembled and drop-shipped by contractors who serve hundreds of such customers simultaneously.

Today, micro-factories make everything from cars to bike components to bespoke furniture in any design you can imagine. The collective potential of a million garage tinkerers is about to be unleashed on the global markets, as ideas go straight into production, no financing or tooling required. “Three guys with laptops” used to describe a Web startup. Now it describes a hardware company, too.

“Hardware is becoming much more like software,” as MIT professor Eric von Hippel puts it. That’s not just because there’s so much software in hardware these days, with products becoming little more than intellectual property wrapped in commodity materials, whether it’s the code that drives the off-the-shelf chips in gadgets or the 3-D design files that drive manufacturing. It’s also because of the availability of common platforms, easy-to-use tools, Web-based collaboration, and Internet distribution.

We’ve seen this picture before: It’s what happens just before monolithic industries fragment in the face of countless small entrants, from the music industry to newspapers. Lower the barriers to entry and the crowd pours in.

The academic way to put this is that global supply chains have become scale-free, able to serve the small as well as the large, the garage inventor and Sony. This change is driven by two forces. First, the explosion in cheap and powerful prototyping tools, which have become easier to use by non-engineers. And second, the economic crisis has triggered an extraordinary shift in the business practices of (mostly) Chinese factories, which have become increasingly flexible, Web-centric, and open to custom work (where the volumes are lower but the margins higher).

The result has allowed online innovation to extend to the real world. As Cory Doctorow puts it in his new book, Makers, “The days of companies with names like ‘General Electric’ and ‘General Mills’ and ‘General Motors’ are over. The money on the table is like krill: a billion little entrepreneurial opportunities that can be discovered and exploited by smart, creative people.”

A garage renaissance is spilling over into such phenomena as the booming Maker Faires and local “hackerspaces.” Peer production, open source, crowdsourcing, user-generated content — all these digital trends have begun to play out in the world of atoms, too. The Web was just the proof of concept. Now the revolution hits the real world.

VERY interesting…