Urban policy-makers have largely treated the cultural economy as either an appendage of a larger creative or knowledge-based economy or as a means of enhancing consumption. The result has been a focus on programs to attract highly educated and skilled professionals often at the expense of attention to workforce inequality, manual workers and skills, gentrification, and the displacement of small, independent manufacturing businesses. In the context of growing labour market inequality and deepening urban cultural schisms, this paper seeks to redirect urban and cultural policy toward a more progressive research and policy agenda centered on material cultural production. Our point of departure is to focus on the nascent intersection between the cultural economy and small manufacturing. This paper first provides a brief summary of the current approaches to urban policy and the cultural economy and the factors that have shaped policy decisions. Next, we discuss emerging attention around an alternative urban cultural policy agenda geared toward the cultural industries, small manufacturing, and craft-based production. Finally, we explore the relationships among cultural industries and small manufacturers and discuss the key research gaps and policy issues that will affect relationships and development oriented to cultural production and manufacturing at the city-region level.