What is a cottage industry?
A cottage industry is a small, decentralized manufacturing business, often operated from a home rather than a specially designed facility. The craft industries are defined by the amount of investment required to start, as well as by the number of people employed. They often focus on the production of labor-intensive goods, but face a significant disadvantage when competing with factory-based manufacturers who produce goods in bulk.
Key points to remember
- A cottage industry is a small manufacturing business, often short of home.
- Handicraft industries play an important role in the economies of developing countries.
- Small craft industries are also an important source of employment, especially in rural areas.
How craft industries work
The first artisanal industries were light manufacturing activities in England and the United States engaged in subcontracted clothing, textiles or sewing, as well as in the manufacture of shoes and small metal machinery parts. They can be made up of family members engaged in the production of finished products using raw materials supplied by a business manager. Many of the contemporary industries that currently operate in factories were once cottage industries before the industrial revolution.
Many modern craft industries serve a market that seeks original and craft products, as opposed to mass-produced branded products. These can include anything from clothing to handicrafts to decorative furniture.
Handicraft industries play an important role in the economies of developing countries. These economies may not have the capital and financial systems necessary to support large industries. It can be difficult for small businesses to grow because of a lack of available capital or because of the uncertainty of private property and legal rights.
Developing countries are also more likely to have a comparative advantage in the use of labor compared to the use of capital, which enables them to produce labor-intensive goods. works at a lower cost than developed countries. Since the cottage industries may use work methods that rely heavily on traditional tools and machines or that require the use of hands, they are more likely to experience reduced productivity. Thus, even if they can employ a large part of the population, they may not produce a proportional amount of production.
Small craft industries are also an important source of employment, especially in rural areas. For farmers, the exploitation of an artisanal industry at home can supplement the income generated by the sale of crops. In winter, when agricultural activities tend to decrease, a cottage industry can generate additional income. For small villages, a craft industry can allow local residents to come together to produce crafts for sale in local markets or even to export to major cities and other countries.
Although companies operating in the cottage industries may remain small, they still have to compete with other companies, whether they are other cottage industries or large companies. This forces them to use new technologies that will improve efficiency and productivity. They will also have to compete for sources of labor, which can be particularly difficult as a country develops and wages rise.
Many flea markets or farmers’ markets often have people selling crafts or other products that are the products of the cottage industries.
Example of a craft industry
Competitive dancers, figure skaters and the like often wear original handmade costumes. Parents can make costumes for their children at the lowest levels of youth competition. However, as artists rise to higher levels of competition, the demand for better quality costumes increases, creating opportunities for the most qualified costume designers to meet these demands. If they are qualified enough, designers who started out creating costumes for their own children and perhaps a few others may end up creating a craft industry for themselves.
Designers who have costumes worn by the best competitors in the sport may see increased demand for their original creations. Even at the regional level in these sports, there are designers who create names with their costumes and can be very successful in such a niche.