ON A quiet street in Hackney, in a building that was once a button factory, is a picture of modern manufacturing. The headquarters of Sugru, a firm that makes a kind of mouldable glue, is an office, laboratory and factory floor rolled together. Around 30 people clatter away at computers in one room, staffing social media or organising deliveries. In the next room, six workers put lumps of the Plasticine-like material into shiny foil packets or stick labels onto plastic packaging. Each day 15 or so vans pull up to take orders. Sugru sells its stuff to people in 159 countries, but still makes it in London.

The capital used to have plenty of manufacturers. Printers clustered around the City; furniture and clothes were made in the East End and Soho; gas works and sawmills lined the banks of the Thames. In 1896 Charles Booth, a social reformer, noted with slight horror that some 6m barrels of beer had been made in the city the year before. From that great height, the fall has been steep. Most heavy industry had gone by the 1980s. Between 2000 and 2010 London lost more manufacturing jobs than any other region.

But in the past few years it has recovered a little. Between September 2011 and September 2014 the number of manufacturing jobs in London rose by 15%, the fastest growth rate in Britain (see chart). Although they are a tiny proportion of the overall workforce, 136,000 Londoners now work in the sector—the same as the entire working population of Newcastle upon Tyne. The growth hints at the magnetism of the city. It also suggests some of the ways that manufacturing is changing.

British manufacturers are no longer sending work offshore quite as enthusiastically as they once did. Picky customers demand shorter turnaround times; few small companies can afford to wait four weeks for a ship if they want to restock or tweak their products. And the risk of someone copying or messing up a specialist, high-end design increases the farther the work is sent. Meanwhile manufacturing is “hollowing out”, with ever fewer blue-collar jobs and more highly-skilled workers, observes Nicholas Crafts, a professor at Warwick University. Factories are no longer crammed full of workers, but rely on a few individuals looking after advanced machinery. This emphasis on human capital gives London, home to 8m people including many hard-working immigrants, an edge. London’s excellent universities provide plenty of engineering and science graduates. Several firms, such as Yoomi, a manufacturer of self-heating baby bottles, started out by using equipment at Queen Mary University and the University of East London. Technical specialists from abroad are keener to move to London than to a smaller city, suggests Ed Saper of Pai Skincare, which has a small factory in Acton. Being near clusters of accountants, lawyers and patent attorneys also helps. The five big accountancy firms are more likely to support a fledgling business than are smaller outfits, says Roger Ashby of Sugru. They tend to have their main offices in London. Hobnobbing with potential investors, or giving them a tour of the factory floor, is easier for firms in the city. In an increasingly competitive global market, being slightly unusual is also an advantage. “No other fruitcake is making bikes in London,” claims Will Butler-Adams, the managing director of Brompton Bicycle, which has made all its folding cycles in a factory in Brentford, west London, for the past two decades. Partly because of its apparent rarity, discerning customers are likely to shell out more cash for something which is marketed as having been made in Britain.

London manufacturing is likely to remain small. Many companies complain of rising rents and business rates. A drive to convert industrial sites into flats—an inevitable result of London’s roaring housing market—has squeezed space. A dozen businesses used to be based in the same building as Sugru, but most of their units have been turned into flats. Grants are less numerous in the capital, and labour costs are far higher. After “reshoring” parts of its manufacturing back to a factory in Woolwich, the baby-bottle manufacturer Yoomi recently moved out to Kent, where warehousing is cheaper and the council offered an interest-free loan.

If this drift continues it will be no bad thing. Just as Londoners tend to move out once they settle down and have children, so too will expanding companies venture out into the suburbs and elsewhere. In the process, the capital’s entrepreneurial zeal will be spread a little more widely over the rest of England.