DETROIT —

Tom Kartsotis, the wealthy co-founder of Fossil, has no connection to the Motor City. He lives in Dallas, where he now oversees a handful of ventures he’s invested in. In early 2011, he decided to build a small watch factory that would sell high-quality watches that were priced, as he puts it, “at the entry point of luxury.”

He also wanted to make these watches in America. “So many big companies have sourcing infrastructures whose knee-jerk reaction is to head to China,” he said. He couldn’t compete with China at the low end of the market — nobody can. But he felt that the kind of watches he had in mind — priced between $450 and $600 at the low end, with a distinctive but classic design — could be made competitively in the United States. So he decided to put his new factory here in Detroit, a city once renowned for its manufacturing prowess that, in recent times, has needed all the help it can get.

That original idea turned into a company called Shinola. It has eight retail outlets and employs around 375 people, most of them in Detroit. Although those stylized watches are its biggest sellers — the company expects to sell between 150,000 and 180,000 this year — it also designs and makes bicycles, leather goods and other well-crafted, high-end products. Not only are those products built in Detroit, but Shinola also tries to buy the parts it needs from other American companies. Its leather, for instance, comes from the Horween Leather Co., a Chicago tannery more than a century old. Its bicycle frames are shipped from a company run by a fourth-generation Schwinn.

Although it was a philanthropic impulse that moved Kartsotis to set up shop in Detroit, it has turned out to be a very good business decision. The space Shinola needed to build its factory was cheap. There was also plenty of talent — engineers, for sure, but also former auto assembly-line workers, people eager to work who Shinola could train to be watchmakers. When I visited the watch factory recently, I saw rows of employees bent over their desks, focusing intently as they placed tiny, intricate parts inside the unassembled watches.

Indeed, to spend any time in Detroit these days is to be amazed at the extent to which it is humming with entrepreneurial activity. Dan Gilbert, the founder and chairman of Quicken Loans — which he relocated to Detroit — has bought more than 70 buildings and is converting some of them into office space for small businesses. There are other buildings with common workspaces and tools like 3-D printers than can be shared. The city’s government and, especially, its foundations are focused on helping people who want to start a new business. I spoke with a woman named Julie James, who, with her four sisters, manufactures a brand of juices they call Drought. It employs 32 people. New companies like this are starting every day.

Kartsotis told me that “creating a few hundred jobs isn’t going to move the needle.” He’s right about that, of course. But, collectively, all these small companies do seem to be helping to bring Detroit back. Young people are moving in to the downtown and midtown areas. The unemployment rate is dropping. Once-abandoned buildings are being reoccupied. Something very good is happening here, and it’s largely the result of private-sector activity.

Shinola’s products are well-designed and made. They are selling briskly. But they are not cheap, and they’ll never be mass produced. I’ve written before about how even big manufacturers like Caterpillar and General Electric employ far fewer workers than they used to thanks to automation. Shinola offers a different twist on that idea. It’s not automation that is restricting the number of workers but rather the niche appeal of its products. I’m not sure its example is particularly replicable.

As for Shinola, Kartsotis is readying its next product: Shinola-style headphones that can compete with high-end models like those from Beats. He told me that he has just completed a round of financing and hopes to take the company public one day.

Which will be good for him — and Detroit.

— Joe Nocera is a columnist for The New York Times.