After remarking on the charm of its steep streets, Pacific Ocean setting and ethereal foggy climate, first-time visitors to San Francisco are quick to point out how surprised they are by its scale. For a city that rivals New York and LA for brand appeal, it is comparatively small in size and population – around 800,000 inhabitants perch on more than 50 hills in a 121 sq km area.

For such a small city, a lot has happened here. It was the hub of the Californian Gold Rush – a plot of land that cost $16 in 1847 would sell for $45,000 two years later. The world’s first cable car system was installed here in 1873. Lying on the San Andreas Fault, it has a history of earthquakes: 80 per cent of the city was destroyed following the 1906 tremor. Levi’s started making denim jeans here in the 1920s. It was the birthplace of The GAP and “free love” in the 1960s and home to the American gay rights movement in the 1970s. Through the 1980s and 1990s it became a tech haven and then the biggest victor and victim of the dotcom bubble in 2000.

The city’s capacity to reinvent itself, the entrepreneurial and fun-loving spirit of its inhabitants and its scenic but fragile setting are ingredients that create a fertile environment of opportunity. Today you’d assume the city (or at least its suburbs) is all about its global brands – Apple, Facebook, Twitter and creative agencies such as IDEO and Gensler. Those a little more familiar might point you in the direction of the local food movement and the independent restaurants and coffee bars that have emerged in its wake.

The city’s most recent development doesn’t have an “i” prefix, though. San Francisco is home to a fast-growing community of makers – craftsmen and small manufacturers – spearheaded by a generation who lived through (and in many cases contributed to) the dotcom bubble. They value physical over virtual, small batches over mass production, local over global vending, sustainability over speed and above all quality of life over the potential to make a fortune. It’s a post-industrial, post-digital phenomenon. And it’s a movement that could serve as a model for cities the world over, struggling to reconcile the loss of their manufacturing capabilities with a new generation keen to make and sell manually, not machine operate or, God forbid, outsource.

Independent pockets of industry, craft and business can be found the length and breadth of the city. It was this creative tapestry that inspired Kate Sofis and Mark Dwight to launch sfmade.org last year – a non-profit organisation dedicated to supporting and connecting what they refer to as “artisan” manufacturers.

Sofis grew up in Buffalo, New York State, and “watched local industry fall apart”. She worked in hi-tech manufacturing and helped Apple run the production line for its first iMac. While there, the firm outsourced production of its Powerbook to LG and Sofis realised then her calling was to find and support industries that the US might be in danger of losing. Dwight had a similar conversion. After working for 15 years in Silicon Valley he was brought in as CEO to turn around the fortunes of Timbuk2, a messenger bag manufacturer. Impressed by how San Franciscan the brand was, he devised SFMade as “a branding programme rooted in geography and provenance, reflecting the soul of a place and its SFMade launched initially with 12 organisations, expecting to gather 30 in the first year. After nine months, it had amassed 100 and is now working with 150. Its mission is to connect San Franciscan designers and small local manufacturers, creating a community with a single voice.

“We provide workshops, host talks and local factory tours, educate and give advice,” says Dwight. “We’re working with City Hall to build an infrastructure that manufacturers need to feel supported and welcome in the city. When the dotcom bubble was at its height, factories were closing and industrial areas were redeveloped to house digital companies instead. The message was that manufacturers were no longer welcome in the city. The companies we help are all businesses, employing, expanding, making and selling.”

Sofis is quick to point out that SFMade is not an industry trade association but a community service-providing organisation. “Our funding mirrors how we operate our programmes,” she says, “and it’s a real collaboration between the city, major corporations and banks who are invested in the city, the manufacturers and the philanthropic public.”

Dwight adds: “We’re not going to start building ships or fire up old steel mills but we can inspire and support local makers and challenge the notion that disaffected graduates have no option but to head down a digital route or manufacture in China.” Impressively, they have garnered the ear and support of City Hall for their mission. The mayoral elections take place in November and all 18 candidates will attend a fundraising event they are hosting. “Above all we are advocates, not activists,” says Dwight. “Although this movement is a reaction against the homogenisation that comes with a mass-production economy, we also have to acknowledge the importance of mass-production. But that doesn’t mean relinquishing small, local manufacturers and the danger is they get left behind.”

Derek Chen, 43, is the founder of Council Design, a five-year-old furniture brand based in San Francisco’s Dogpatch neighbourhood. After studying electrical engineering at the University of Illinois, he worked as a management consultant and then got swept up in the dotcom frenzy.

“I loved building furniture as a kid,” he says. “When things imploded, I found myself with a bunch of tools and thought I’d give my passion a real go.” Chen now has a 20-strong collection of designs and in five years Council has won awards and has a strong international reputation as a contemporary design brand.

“This year I hope we’ll start making a profit. I’ve paid all my bills and still have money for lunch,” Chen jokes. “As a hands-on design and manufacturing brand, success is a double-edged sword. If you start selling thousands of tables, you can’t make them in your own workshop any more. The success I’m currently having is all I ever wanted. I like being able to speak with the people I sell to and surf with the people I work with. We are all working here because we like doing this – this is a lifestyle choice. One that makes us happy.”

Chen’s attitude is typical of this growing community in San Francisco. And community is definitely the operative word. At the other end of the city in the Sunset district Woodshop is a four-strong collective of designers working and selling under one roof. Danny Hess, Josh Duthie, Luke Bartels and Jeff Canham have been cohabiting since last October and their output consists of wooden surfboards, chair repairs, custom-made furniture and hand-painted signs respectively. On the day Monocle visits, the workshop is bustling with activity, laughter and sawdust. Bartels’ brother is giving a helping hand, Canham’s mother is visiting from Hawaii and five dogs are making their presence felt at ankle height. The laid-back atmosphere belies the serious industry that takes place: Hess turns out five wooden surfboards a week, selling as far afield as France and Japan; Duthie is currently working on 10 projects; Canham’s graphic design can be found in publications, galleries and on T-shirts the world over. “This is a set-up that works incredibly well for each of us,” Hess says. “We all buy our wood from a mill in Marin County across the bay. We are a group of craftsmen, each with a fully realised vision – but our skills and interests overlap too and we all help each other out.”

Hess describes how this manner of working and selling is on the rise too: “The young generation has a growing appreciation of handmade things. It’s a backlash against the tech industry, a love for DIY craft, small business and independent retail.”

Back in the city centre, Matt Dick has a thriving small business, MatoCreative, designing utility wear and aprons for many of the city’s finest restaurants, bars and cafés. His assistant Marco Veneziano, who trained as an architect at the Illinois Institute of Technology, sums up the impetus for this new generation perfectly: “I want to use my hands and prick my fingers doing something that feels real. Yes it can be a struggle turning handcraft into a viable business, but it adds to your identity and that of the place you live in. The more people who engage in this, the better local culture becomes.”

San Francisco’s local making-and- selling scene is impressive and you don’t have to knock on doors to find it. The community has a real visibility in the city. Speak to a local food producer at the Ferry Terminal building and they’ll point you to their friends elsewhere making organic beauty products; the local coffee producer, meanwhile, will tell you about his friend’s linen start-up.

Mutual support comes with an awareness that there’s room for everyone. More than a benefit to the local economy or employment rates, this community-driven craft and retail scene creates the soul and character of the city at street level, for both residents and visitors alike. “It propels people to deepen their connections with the city,” says Dwight. “And above all it’s a model that can be applied anywhere – it celebrates the pride of a place and what makes that place unique.”