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National Governors Association Clusters and Economic Development

National Governors Association Clusters and Economic Development. April 4-5, 2002 Stuart Rosenfeld Regional Technology Strategies. Clusters are economic ecosystems, not membership organizations. Rule of Thumb 1 : Select clusters based on systemic relationships that provide market advantage.

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National Governors Association Clusters and Economic Development

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  1. National Governors AssociationClusters and Economic Development April 4-5, 2002 Stuart Rosenfeld Regional Technology Strategies

  2. Clusters are economic ecosystems, not membership organizations Rule of Thumb 1: Select clusters based on systemic relationships that provide market advantage

  3. Wood Products Mini-Cluster

  4. Critical mass attracts externalities, cooperation creates externalities Rule of Thumb 2: The minimum firm density necessary is what will produce external economies

  5. Hard externalities • Externality > Benefit • Supply chains > efficiency • Specialized labor > productivity • Specialized services > access • More choice > costs, quality • Range of firms > joint ventures

  6. Soft Externalities • Externality > Benefit • Association > Vision, planning, influence • Trust > Networking • Learning (1) > Tech transfer, innovation • Learning (2) > Know how • Informal LaborMarkets > Career ladders

  7. Boundaries of clusters are self-selecting--and are not constraining Rule of Thumb 3: Boundaries are set by distances people will travel to work, associate, and network

  8. Clusters have life cycles Rule of Thumb 4: Stages of Development of a cluster shape its needs and interests - Embryonic - Growth - Mature - Decaying

  9. Success Factors • Concepts - Innovation - Imitation and competition - Entrepreneurship • Connections - Networks and networking - Connections and Intermediaries • Competencies - Specialized labor force - Industry leaders - Talent - Knowledge

  10. Common Concerns • Can states create clusters? • Is there a risk of being too specialized? • Do clusters constitute favoritism? • Are firms too competitive to compete? • Is a rural cluster an oxymoron? • Will Internet negate proximity advantage? • Do clusters serve low income people/places? • Do decaying clusters have an afterlife?

  11. Origins of Clusters

  12. Does proximity matter?

  13. Actions for states • For understanding economies • For engaging industry • For organizing and delivering services • For investing and allocating resources • For marketing the region an state • For preparing the work force • For achieving social goals

  14. Actions for understanding economies • Identify clusters- measures of scale & concentration- local views and intelligence • Map systemic relationships- competitiveness factors- supply chains- knowledge chains • Benchmark against competitors

  15. Identifying Clusters

  16. Furniture in Alabama and Mississippi

  17. MAJOR 2-DIGIT MANUFACTURING SECTORS, 1996-1999 JOB GROWTH, LOW WAGES JOB GROWTH, HIGH WAGES Stone, Clay & Glass Products Chemicals Paper Lumber & Wood Products Rubber & Plastics Products Industrial Machinery Fabricated Metals WAGES, AS % OF NONRETAIL AVG. Textiles Electronic & Other Electric Equipment Furniture & Fixtures Primary Metal Industries Food Products JOB LOSS, LOW WAGES Printing & Publishing JOB LOSS, HIGH WAGES Apparel JOB GROWTH, 1996-99 size of bubble indicates number of employees

  18. Supply Chain Clusters

  19. RHODE ISLAND’S CLUSTERS • JEWELRY • BOAT BUILDING • ELECTRONICS & INSTRUMENTS • SOFTWARE • TOURISM • PRECISION METAL WORKING • AQUACULTURE • FINANCIAL SERVICES • BIOMEDICAL

  20. 1993 AEROSPACE AGRICULTURE, FORESTRY, FOOD BUSINESS SEVICES HEALTH/BIOMEDICINE INFORMATION MINING & MATERIALS OPTICS TOURISM TRANSPORTATION & DISTRIBUTION 2001 BIOINDUSTRY ENVIRONMENTAL TECH. FOOD FIBER & NATURAL PRODUCTS HIGH TECHNOLOGY MINING & MATERIALS OPTICS PLASTICS & COMPOSITES SENIOR INDUSTRIES SOFTWARE & INFORMATION TOURISM ARIZONA’S CLUSTERSNOW AND THEN

  21. ILLINOIS’ CLUSTERS • AGRICULTURE & FOOD PROCESSING • COAL MINING • TRANSPORTATION & DISTRIBUTION • EXPORT SERVICES • HEALTH & BIOMEDICAL • BUSINESS AND PERSONAL TRAVEL • MANUFACTURED INPUTS • INDUSTRIAL MACHINERY • TRANSPORTATION EQUIPMENT • TELECOMMUNICATIONS EQUIPMENT • CONSUMER PPLIANCES AND ELECTRONICS • ELECTRICAL EQUIPMENT

  22. Cluster Benchmarks • R&D capacity • Work force & skills • Education & training • Proximity to suppliers • Capital availability • Specialized services • Tool builders/software • Social capital • Entrepreneurship • Innovation/imitation • Market leaders • Specialized services • External connections • Vision and leadership

  23. Actions for engagement • Inventory social capital • Establish, recognize cluster organizations • Formalize communications channels • Facilitate networks

  24. Measures of Social Capital • # of business, trade, professional associations • Sector advisory board membership • Membership, meetings, attendance • Networks formed • Civic leadership by businesses

  25. Putnam’s Regional Survey Factors • Social trust • Informal socializing • Interracial trust • Diversity of friends • Convent. Politics • Giving, volunteering • Protest politics • Faith based engage. • Civic leadership • Social cap equality • Associational involvement

  26. Forming Networks • Publicize concepts • Train brokers • Identify multipliers • Provide startup incentives • Assessment

  27. USNet State Programs: Examples • Delaware DE Manufacturing Alliance • Florida Enterprise Florida • Illinois Dept of Com/Comm Affairs • Louisiana Depart of Economic Dev. • Massachusetts Bay State Skills • Minnesota Minnesota Technology • New York Empire State Development • Oklahoma Alliance for Mfg Excellence • Washington Dept of Comm. Development

  28. The Northeast Oklahoma Manufacturers’ Council, Inc. • Formed in 1993 as a 501-C3. • Began with a few core members locally • Grew to around 40 members and held steadily for several years • With growth in new economy has grown to over 80+ active members today • The NEOMC, Inc. was the first organized collaborative in Oklahoma, now there are over 25!

  29. MISSION Statement The Northeast Oklahoma Manufacturers’ Council, Inc will provide leadership to form partnerships to continuously improve manufacturing operations, address manufacturing issues and concerns, foster employee development, modernize technology, support industrial education, and promote corporate citizenship.

  30. Outcomes • Networked expertise to solve manufacturing problems, share costs • Increased opportunities to bid on projects via joint bidding and procurement assistance • Cultivation of local vendors/suppliers • Advocacy voice for multiple companies, political leverage • Expand skilled labor pool

  31. Metal Workers Mfg & Training Alliance (META) • 12 Companies • 1,700 Employees • Over $235 million in annual sales • 821,800 square feet of manufacturing space • Core competencies include: • Engineering Design (CAD & CAM) • CNC & Lathe Turning • Grinding, Milling,Welding, Machining • Process Development • Assembly

  32. Genesis of the META “Cluster” • BERC / Housatonic Community College Employer Surveys • Manufacturing Committee • Initiative for a Competitive Inner City (ICIC) Cluster Research- Michael Porter • CT Economic Resource Center/Connecticut Business and Industry Association Business Workforce development $10,000 grant • State of CT Cluster Funding $125,000 • DOL Grant $1.7 million

  33. META Logic Model Problems Activity Outcome Intermediate Final Low unemployment (2.4%- 7/00) Model for Cluster Development Training Customized job training program designed to build on the resources of industry partners Retiring Workforce Sustainability techniques Create business alliances Competitive, Trained Work- force Perception of the Manufacturing Industry Centralized Facilities Metrics for ROI Continuous assessment Resume Database Value added organization Lack of Educational Programs Lean Manufacturing Incorporate Lean Database for tracking Outcome Measurements Low-population Growth

  34. Actions for organizing and delivering services • Collect and disseminate by cluster • Establish one-stop cluster shops • Form cross agency cluster teams • Employ cluster expertise • Facilitate external connections • Work with intermediaries

  35. Cluster Hubs • PT-CAM (Greensboro) • CITER (Carpi) • TC2 (Raleigh) • Advanced Mfg Tech Center (Lynchburg) • Candy Institute (Chicago) • WIRENet (Cleveland)

  36. Actions for Allocating Resources, Making Investments • New business startups • Set-asides or incentives for collective applications • Invest in cluster R&D needs • Fund critical foundation factors • Cluster technology and science parks

  37. Examples of Technology Centers • CITER (Carpi) • NC Biotechnology Center (RTP) • Ellison Miles Geotechnology Center (Dallas) • TC2 (Raleigh) • Ceramics Corridor Innovation Center (Alfred)

  38. Actions for marketing clusters • Focus inward investment • Promote clusters • Support regional branding • Form export networks

  39. A method of bringing the hosiery industry together Legsourcewill provide the tools for you to do business more efficiently.

  40. Legsource Services • Industry Communication Infrastructure • Maintain Mill Database • Assist Mills in Website Development • Search for New Ind. Business Opportunities • Government Procurement Assistance • Video Conferencing Technology • E-Commerce Assistance to Suppliers

  41. Everyone is linked by: • Manufacturer’s database(information about mills they can update themselves via internet) • Supplier’s database (information about suppliers they can update themselves via internet) • Retail/consumer “hosiery terms” search engine ( “keyword” search capabilities to match mills with retail or consumer searches)

  42. Example Report for a Vertical Mill Production Planning Person Report For Sally @ Big Mill • Top Gun Hosiery has 200 needle double cylinder production available, email bob@topgunhosiery.com for details • ABC Hosiery has excess inventory of 1000 dozen 108 needle women’s ½ cushion cotton 9-11 crew socks, email jack@abchosiery.com for details

  43. Response to Technical Knitting Question (From Glenn @Top Gun Hosiery) Question: We are having yarn tails protruding from the sock where the yarn feeder changes take place our KnitBetter knitting machines. Does anyone have a solution for this problem? Response from Tim @ Big Mill: Machine Supplier has a new 2 feed tail attachment that we have used to help with the problem. tim@bigmill.com Response from Eric @ Machine Supplier: We offer a 2 feed tail attachment that can be added to the 2nd feed to address the yarn tail ends. Please contact me at eric@machinesupplier.com for more details

  44. Actions for building a work force • Develop specialized labor force • Contextualize curricula • Form industry cluster skills hubs • Build partnerships between education & clusters • Create work force information portals • Form regional skills alliances • Work with non-profits

  45. Characteristics of Community College Cluster Hubs • Staff experienced in cluster • Develops & updates curricula, case studies • Engages and works with cluster leaders • Technology and market scanning • Maintains contacts with other regions • Brokers specialized services • Conducts needs assessments, research • Organizes forums, workshops, study tours

  46. Examples of College Hubs • Itawamba Community College, MS - Upholstered Furniture Technology Center • Catawba Valley Community College, NC - Hosiery Technology Center • Northampton Community College , PA- Electrotechnology Applications Center • Alabama Southern Community College - Chemical Processing Technology Center

  47. Actions for achieving equity • Qualify people for employment • Include community based intermediaries in clusters • Provide incentives and subsidies • Support industry networks in distressed areas • Encourage social responsibility

  48. Intermediaries that raise incomes, build career ladders • Garment Industry Development Corp. • Jane Addams Resource Center • Wisconsin Regional Training Partnership • ACENet

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