Why would too many makers make the industry go downhill? Maybe you can give us an example of where that has happened. Certainly not in the car industry, for example.
No, not the car industry as there are relatively few manufacturers per dollar in that industry. However, the classic economic case for this kind of argument is the furniture industry. Very low barriers to entry. High shipping cost per dollar of value. So, tiny little two man garage start ups can succeed making dining room tables, kitchen cabinets, and the occasional rocking chair. The furniture industry is not dominated by huge, highly efficient corporations.
What's the problem, you may ask? Because two guys making a decent living in a fragmented industry isn't really a problem, is it? Depends on your point of view. From the cost efficiency perspective, two guys in a garage is insanely expensive per piece. No, really. It is. Any decent factory could make a thousand pieces in the same time those guys make two, and and for a tenth of the unit cost. So, furniture prices can be considered somewhat artificially high as a result. This relatively high pricing and high cost to ship pretty much eliminates any possible export market (with rare exceptions) which has trade balance implications.
The opposing argument is that with so many manufacturers, people who are buying based on cost alone have many alternatives, so each individual firm (whether two guys in a garage or a modern factory) has very little pricing power and either they offer what the market will pay, or they lose their shirts and go back to working at the paper mll. If they can get their jobs back.
Another perspective is one that is a bit harder to describe. Two guys in a garage have nothing in terms of benefits. Until this year, they may not have even had basic health care insurance. That will be handy when someone slices their hand open on the table saw. There is a social cost for those who can't afford basic health care (an argument for a single payer system with universal coverage). That social cost has to be balanced by some other benefits, such as two guys who more or less support themselves and serve the interests of the general public by providing a decent product. The same argument can be made if these guys make a substandard product that injures someone due to poor design or craftsmanship and during the law suit it comes to light that they essentially have nothing and the state is left to help the victim, if the state is willing to provide anything at all (probably not in this day and age).
On the other hand, you have two guys doing what they want to do, presumably, which is a kind of freedom we rarely see these days. There's nothing wrong with that, but it does come with a price.
So, if we substitue "knife industry" for "furniture industry" do we come up with the same issues? Maybe. There are half a dozen or so major manufacturers here in the US, and there are hundreds of small start ups with one or two guys in a garage somewhere. No, they'll never make a major contribution to our international balance of trade, but presumably they are doing something they love and contributing a valuable service to the general public.
One can also ask the question if we as a country should be doing more to help small businesses like this, not with lower taxes (these guys aren't paying huge taxes, so really, what are they saving?), but with things like a single payer health care system and a better retirement system.
)-- also at the CNC machine question-- this is totally against the principle of a custom piece of shaped steel in my collecting mind.
