National Governors Association Clusters and Economic Development June 6-7, 2002 Stuart Rosenfeld Regional Technology Strat...
Clusters are economic ecosystems, not membership organizations Rule of Thumb 1 : Select clusters based on systemic relatio...
Critical mass attracts externalities, cooperation creates externalities Rule of Thumb 2 : The minimum firm density necessa...
Hard externalities <ul><li>Externality >  Benefit </li></ul><ul><li>Supply chains >  efficiency </li></ul><ul><li>Speciali...
Soft Externalities <ul><li>Externality > Benefit </li></ul><ul><li>Association > Vision, planning, influence </li></ul><ul...
Dynamics of Clusters <ul><li>Flows of: Lead to: </li></ul><ul><li>Information   Greater knowledge of markets, labor   mark...
Boundaries of clusters are determined by members --and are not constraining Rule of Thumb 3 : Boundaries are set by distan...
Clusters have life cycles Rule of Thumb 4 : Stages of Development of a cluster shape its needs and interests - Embryonic -...
Success Factors <ul><li>Concepts   - Innovation   - Imitation and competition   - Entrepreneurship </li></ul><ul><li>Conne...
Common Concerns <ul><li>Can states create clusters? </li></ul><ul><li>Is there a risk of being too specialized? </li></ul>...
Origins of Clusters <ul><li>Chance </li></ul><ul><li>Plastics-combs </li></ul><ul><li>1760 </li></ul><ul><li>NC Mass. </li...
State Policies Levers <ul><li>For organizing its service delivery </li></ul><ul><li>For targeting its investments </li></u...
Understanding Regional Economies <ul><li>Identify clusters - measures of scale & concentration - local views and intellige...
Cluster themes/advantages Prisons, Northern NY Other Software, Fairfield, IA Other Ports, SE Louisiana Distribution Wood, ...
MAJOR 2-DIGIT MANUFACTURING SECTORS, 1996-1999   Fabricated Metals Electronic & Other Electric Equipment Industrial Machin...
RHODE ISLAND’S CLUSTERS <ul><li>JEWELRY </li></ul><ul><li>BOAT BUILDING </li></ul><ul><li>ELECTRONICS & INSTRUMENTS </li><...
ARIZONA’S CLUSTERS NOW AND THEN <ul><li>1993 </li></ul><ul><li>AEROSPACE </li></ul><ul><li>AGRICULTURE, FORESTRY, FOOD </l...
Cluster Benchmarks <ul><li>R&D capacity   • Work force & skills </li></ul><ul><li>Education & training   • Proximity to su...
Measures of Social Capital <ul><li># of business, trade, professional associations </li></ul><ul><li>Sector advisory board...
Putnam’s Regional Survey Factors <ul><li>Social trust •  Informal socializing </li></ul><ul><li>Interracial trust •  Diver...
Policies for service delivery <ul><li>Aggregate,collect, sort information by cluster </li></ul><ul><li>Form cross-agency q...
Forming Networks <ul><li>Publicize concepts </li></ul><ul><li>Train brokers </li></ul><ul><li>Identify multipliers </li></...
USNet State Programs: Examples <ul><li>Delaware   DE Manufacturing Alliance </li></ul><ul><li>Florida   Enterprise Florida...
Broker Certification in Arkansas
 
The Northeast Oklahoma Manufacturers’ Council, Inc.  <ul><li>Formed in 1993 as a 501-C3.  </li></ul><ul><li>Began with a f...
Connecticut Plastics Council: From Network to Cluster <ul><li>1993:  Six companies in Naugatuck Valley approached by MTC <...
Target Investments to clusters <ul><li>Invest in cluster R&D </li></ul><ul><li>Build cluster-based tech centers/parks </li...
Cluster Technology Centers <ul><li>PT-CAM (Greensboro) </li></ul><ul><li>CITER (Carpi) </li></ul><ul><li>TC2 (Raleigh) </l...
Strengthen Networking and build bridges <ul><li>Establish/recognize cluster organizations </li></ul><ul><li>Facilitate ext...
Strengthen Networking and build bridges <ul><li>Establish/recognize cluster organizations </li></ul><ul><li>Facilitate ext...
Cluster Organizations <ul><li>Arizona Optics Industry Assoc. </li></ul><ul><li>CIT.MS </li></ul><ul><li>Connecticut Plasti...
External Linkages are Crucial <ul><li>Prevent lock-in </li></ul><ul><li>Source of inspiration, innovation </li></ul><ul><l...
Legsource Services <ul><li>Industry Communication Infrastructure </li></ul><ul><li>Maintain Mill Database </li></ul><ul><l...
Develop human resources <ul><li>Develop a skilled and specialized labor force </li></ul><ul><li>Qualify people for cluster...
Actions for Building a Cluster’s Workforce <ul><li>Develop specialized labor force </li></ul><ul><li>Contextualize curricu...
Educational Advantages of Cluster Skills Centers <ul><li>Improves content and quality of E&T (codified knowledge) </li></u...
Characteristics of  Community College Cluster Hubs   <ul><li>Staff experienced in cluster </li></ul><ul><li>Develops & upd...
Examples of College Hubs <ul><li>Itawamba Community College, MS - Upholstered Furniture Technology Center </li></ul><ul><l...
Intermediaries that raise incomes, build career ladders <ul><li>Garment Industry Development Corp. </li></ul><ul><li>Jane ...
Achieving equity <ul><li>Qualify people for employment </li></ul><ul><li>Include community based intermediaries in cluster...
Stuart A. Rosenfeld Regional Technology Strategies, Inc. Carrboro, NC 27510 919-933-6699 [email_address] WWW.RTSINC.ORG
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  • National Governors Association

    1. 1. National Governors Association Clusters and Economic Development June 6-7, 2002 Stuart Rosenfeld Regional Technology Strategies
    2. 2. Clusters are economic ecosystems, not membership organizations Rule of Thumb 1 : Select clusters based on systemic relationships that provide market advantage
    3. 3. Critical mass attracts externalities, cooperation creates externalities Rule of Thumb 2 : The minimum firm density necessary is what will produce external economies
    4. 4. Hard externalities <ul><li>Externality > Benefit </li></ul><ul><li>Supply chains > efficiency </li></ul><ul><li>Specialized labor > productivity </li></ul><ul><li>Specialized services > access </li></ul><ul><li>More choice > costs, quality </li></ul><ul><li>Range of firms > joint ventures </li></ul>
    5. 5. Soft Externalities <ul><li>Externality > Benefit </li></ul><ul><li>Association > Vision, planning, influence </li></ul><ul><li>Trust > Networking </li></ul><ul><li>Learning (1) > Tech transfer, innovation </li></ul><ul><li>Learning (2) > Know how </li></ul><ul><li>Informal Labor Markets > Career ladders </li></ul>
    6. 6. Dynamics of Clusters <ul><li>Flows of: Lead to: </li></ul><ul><li>Information Greater knowledge of markets, labor markets, technologies. </li></ul><ul><li>Ideas Diffusion of improvement, innovation </li></ul><ul><li>People Increased experience, career ladders, </li></ul><ul><li>Goods More efficient value-added chains </li></ul><ul><li>Services Expanded expertise, choices </li></ul><ul><li>Capital Support for modernization, startups </li></ul>
    7. 7. Boundaries of clusters are determined by members --and are not constraining Rule of Thumb 3 : Boundaries are set by distances people will travel to work, associate, and network
    8. 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. 9. Success Factors <ul><li>Concepts - Innovation - Imitation and competition - Entrepreneurship </li></ul><ul><li>Connections - Networks and networking - Connections and Intermediaries </li></ul><ul><li>Competencies - Specialized labor force - Industry leaders - Talent - Knowledge </li></ul>
    10. 10. Common Concerns <ul><li>Can states create clusters? </li></ul><ul><li>Is there a risk of being too specialized? </li></ul><ul><li>Do clusters constitute favoritism? </li></ul><ul><li>Are firms too competitive to cooperate? </li></ul><ul><li>Is a rural cluster an oxymoron? </li></ul><ul><li>Will Internet negate proximity advantage? </li></ul><ul><li>Do clusters serve low income people/places? </li></ul><ul><li>Do decaying clusters have an afterlife? </li></ul>
    11. 11. Origins of Clusters <ul><li>Chance </li></ul><ul><li>Plastics-combs </li></ul><ul><li>1760 </li></ul><ul><li>NC Mass. </li></ul><ul><li>Labor,wood </li></ul><ul><li>Furn.-Futorian </li></ul><ul><li>1948 </li></ul><ul><li>Tupelo, MS </li></ul><ul><li>University </li></ul><ul><li>Biotech-Research </li></ul><ul><li>1950 </li></ul><ul><li>San Diego </li></ul><ul><li>Costs, distr. </li></ul><ul><li>Toys-Immigrants </li></ul><ul><li>1968 </li></ul><ul><li>Los Angeles </li></ul><ul><li>Local clay </li></ul><ul><li>Tiles-Rubbiani </li></ul><ul><li>1600 </li></ul><ul><li>Sausoulo, IT </li></ul><ul><li>Chance </li></ul><ul><li>Carpet-craft tufters </li></ul><ul><li>1918 </li></ul><ul><li>Dalton, GA </li></ul><ul><li>Marine ind. </li></ul><ul><li>Telecom-SP Radio </li></ul><ul><li>1948 </li></ul><ul><li>Aalborg, DK </li></ul><ul><li>Reason </li></ul><ul><li>Cluster/Origin </li></ul><ul><li>Year </li></ul><ul><li>Cluster </li></ul>
    12. 12. State Policies Levers <ul><li>For organizing its service delivery </li></ul><ul><li>For targeting its investments </li></ul><ul><li>For strengthening networking opportunities </li></ul><ul><li>For developing its human resources </li></ul>
    13. 13. Understanding Regional Economies <ul><li>Identify clusters - measures of scale & concentration - local views and intelligence </li></ul><ul><li>Map systemic relationships - competitiveness factors - supply chains - knowledge chains </li></ul><ul><li>Benchmark against competitors </li></ul>
    14. 14. Cluster themes/advantages Prisons, Northern NY Other Software, Fairfield, IA Other Ports, SE Louisiana Distribution Wood, Arkansas Resources New media, Manhattan Skills/talent Optics & imaging, Rochester Technology Aerospace in Seattle Value chain Plastics in CT Process Carpets in Dalton, GA Product
    15. 15. MAJOR 2-DIGIT MANUFACTURING SECTORS, 1996-1999 Fabricated Metals Electronic & Other Electric Equipment Industrial Machinery Lumber & Wood Products Furniture & Fixtures Printing & Publishing Food Products Paper Apparel Chemicals Rubber & Plastics Products Textiles Stone, Clay & Glass Products Primary Metal Industries JOB GROWTH, LOW WAGES JOB GROWTH, HIGH WAGES JOB LOSS, LOW WAGES JOB LOSS, HIGH WAGES WAGES, AS % OF NONRETAIL AVG. JOB GROWTH, 1996-99 size of bubble indicates number of employees
    16. 16. RHODE ISLAND’S CLUSTERS <ul><li>JEWELRY </li></ul><ul><li>BOAT BUILDING </li></ul><ul><li>ELECTRONICS & INSTRUMENTS </li></ul><ul><li>SOFTWARE </li></ul><ul><li>TOURISM </li></ul><ul><li>PRECISION METAL WORKING </li></ul><ul><li>AQUACULTURE </li></ul><ul><li>FINANCIAL SERVICES </li></ul><ul><li>BIOMEDICAL </li></ul>
    17. 17. ARIZONA’S CLUSTERS NOW AND THEN <ul><li>1993 </li></ul><ul><li>AEROSPACE </li></ul><ul><li>AGRICULTURE, FORESTRY, FOOD </li></ul><ul><li>BUSINESS SEVICES </li></ul><ul><li>HEALTH/BIOMEDICINE </li></ul><ul><li>INFORMATION </li></ul><ul><li>MINING & MATERIALS </li></ul><ul><li>OPTICS </li></ul><ul><li>TOURISM </li></ul><ul><li>TRANSPORTATION & DISTRIBUTION </li></ul><ul><li>2001 </li></ul><ul><li>BIOINDUSTRY </li></ul><ul><li>ENVIRONMENTAL TECH. </li></ul><ul><li>FOOD FIBER & NATURAL PRODUCTS </li></ul><ul><li>HIGH TECHNOLOGY </li></ul><ul><li>MINING & MATERIALS </li></ul><ul><li>OPTICS </li></ul><ul><li>PLASTICS & COMPOSITES </li></ul><ul><li>SENIOR INDUSTRIES </li></ul><ul><li>SOFTWARE & INFORMATION </li></ul><ul><li>TOURISM </li></ul>
    18. 18. Cluster Benchmarks <ul><li>R&D capacity • Work force & skills </li></ul><ul><li>Education & training • Proximity to suppliers </li></ul><ul><li>Capital availability • Specialized services </li></ul><ul><li>Tool builders/software • Social capital </li></ul><ul><li>Entrepreneurship • Innovation/imitation </li></ul><ul><li>Market leaders • Specialized services </li></ul><ul><li>External connections • Vision and leadership </li></ul>
    19. 19. Measures of Social Capital <ul><li># of business, trade, professional associations </li></ul><ul><li>Sector advisory board membership </li></ul><ul><li>Membership, meetings, attendance </li></ul><ul><li>Networks formed </li></ul><ul><li>Civic leadership by businesses </li></ul>
    20. 20. Putnam’s Regional Survey Factors <ul><li>Social trust • Informal socializing </li></ul><ul><li>Interracial trust • Diversity of friends </li></ul><ul><li>Convent. Politics • Giving, volunteering </li></ul><ul><li>Protest politics • Faith based engage. </li></ul><ul><li>Civic leadership • Social cap equality </li></ul><ul><li>Associational involvement </li></ul>
    21. 21. Policies for service delivery <ul><li>Aggregate,collect, sort information by cluster </li></ul><ul><li>Form cross-agency quick response teams </li></ul><ul><li>Encourage and support multi-firm activity </li></ul><ul><li>Build incentives for multi-firm proposals into funding programs </li></ul>
    22. 22. Forming Networks <ul><li>Publicize concepts </li></ul><ul><li>Train brokers </li></ul><ul><li>Identify multipliers </li></ul><ul><li>Provide startup incentives </li></ul><ul><li>Assessment </li></ul>
    23. 23. USNet State Programs: Examples <ul><li>Delaware DE Manufacturing Alliance </li></ul><ul><li>Florida Enterprise Florida </li></ul><ul><li>Illinois Dept of Com/Comm Affairs </li></ul><ul><li>Louisiana Depart of Economic Dev. </li></ul><ul><li>Massachusetts Bay State Skills </li></ul><ul><li>Minnesota Minnesota Technology </li></ul><ul><li>New York Empire State Development </li></ul><ul><li>Oklahoma Alliance for Mfg Excellence </li></ul><ul><li>Washington Dept of Comm. Development </li></ul>
    24. 24. Broker Certification in Arkansas
    25. 26. The Northeast Oklahoma Manufacturers’ Council, Inc. <ul><li>Formed in 1993 as a 501-C3. </li></ul><ul><li>Began with a few core members locally </li></ul><ul><li>Grew to around 40 members and held steadily for several years </li></ul><ul><li>With growth in new economy has grown to over 80+ active members today </li></ul><ul><li>The NEOMC, Inc. was the first organized collaborative in Oklahoma, now there are over 25! </li></ul>
    26. 27. Connecticut Plastics Council: From Network to Cluster <ul><li>1993: Six companies in Naugatuck Valley approached by MTC </li></ul><ul><li>1994: $500,000 ConnSTEP grant </li></ul><ul><li>1996: Hartford seminar </li></ul><ul><li>1997: Growth to 48 members along Rte 8 corridor, become CPC </li></ul><ul><li>1997: Incorporated as 501c3 </li></ul><ul><li>2001: Officially launched by state as “cluster” </li></ul>
    27. 28. Target Investments to clusters <ul><li>Invest in cluster R&D </li></ul><ul><li>Build cluster-based tech centers/parks </li></ul><ul><li>Support cluster entrepreneurial activity </li></ul><ul><li>Employ specialized expertise </li></ul><ul><li>Market clusters </li></ul>
    28. 29. Cluster Technology Centers <ul><li>PT-CAM (Greensboro) </li></ul><ul><li>CITER (Carpi) </li></ul><ul><li>TC2 (Raleigh) </li></ul><ul><li>Advanced Mfg Tech Center (Lynchburg) </li></ul><ul><li>Candy Institute (Chicago) </li></ul><ul><li>WIRENet (Cleveland) </li></ul>
    29. 30. Strengthen Networking and build bridges <ul><li>Establish/recognize cluster organizations </li></ul><ul><li>Facilitate external linkages </li></ul><ul><li>Encourage cluster communications channels </li></ul>
    30. 31. Strengthen Networking and build bridges <ul><li>Establish/recognize cluster organizations </li></ul><ul><li>Facilitate external linkages </li></ul><ul><li>Encourage cluster communications channels </li></ul>
    31. 32. Cluster Organizations <ul><li>Arizona Optics Industry Assoc. </li></ul><ul><li>CIT.MS </li></ul><ul><li>Connecticut Plastics Council </li></ul><ul><li>Carolina Hosiery Assoc. </li></ul><ul><li>New York New Media Assoc. </li></ul><ul><li>Tri-State Manufacturers Assoc. </li></ul><ul><li>Rhode Island Plastics Partnership Council </li></ul>
    32. 33. External Linkages are Crucial <ul><li>Prevent lock-in </li></ul><ul><li>Source of inspiration, innovation </li></ul><ul><li>Benchmarking </li></ul><ul><li>Potential markets/customers </li></ul>
    33. 34. Legsource Services <ul><li>Industry Communication Infrastructure </li></ul><ul><li>Maintain Mill Database </li></ul><ul><li>Assist Mills in Website Development </li></ul><ul><li>Search for New Ind. Business Opportunities </li></ul><ul><li>Government Procurement Assistance </li></ul><ul><li>Video Conferencing Technology </li></ul><ul><li>E-Commerce Assistance to Suppliers </li></ul>
    34. 35. Develop human resources <ul><li>Develop a skilled and specialized labor force </li></ul><ul><li>Qualify people for cluster employment </li></ul><ul><li>Establish cluster skill centers </li></ul><ul><li>Support regional skill alliances </li></ul><ul><li>Engage CBO intermediaries </li></ul>
    35. 36. Actions for Building a Cluster’s Workforce <ul><li>Develop specialized labor force </li></ul><ul><li>Contextualize curricula </li></ul><ul><li>Form industry cluster skills hubs </li></ul><ul><li>Build partnerships between education & clusters </li></ul><ul><li>Form regional skills alliances </li></ul><ul><li>Work with non-profits </li></ul>
    36. 37. Educational Advantages of Cluster Skills Centers <ul><li>Improves content and quality of E&T (codified knowledge) </li></ul><ul><li>Increased rates of and means for informal learning (tacit knowledge) </li></ul><ul><li>Increases access to employment information and opportunities (labor markets) </li></ul>
    37. 38. Characteristics of Community College Cluster Hubs <ul><li>Staff experienced in cluster </li></ul><ul><li>Develops & updates curricula, case studies </li></ul><ul><li>Engages and works with cluster leaders </li></ul><ul><li>Technology and market scanning </li></ul><ul><li>Maintains contacts with other regions </li></ul><ul><li>Brokers specialized services </li></ul><ul><li>Conducts needs assessments, research </li></ul><ul><li>Organizes forums, workshops, study tours </li></ul>
    38. 39. Examples of College Hubs <ul><li>Itawamba Community College, MS - Upholstered Furniture Technology Center </li></ul><ul><li>Catawba Valley Community College, NC - Hosiery Technology Center </li></ul><ul><li>Northampton Community College , PA- Electrotechnology Applications Center </li></ul><ul><li>Alabama Southern Community College - Chemical Processing Technology Center </li></ul>
    39. 40. Intermediaries that raise incomes, build career ladders <ul><li>Garment Industry Development Corp. </li></ul><ul><li>Jane Addams Resource Center </li></ul><ul><li>Wisconsin Regional Training Partnership </li></ul><ul><li>ACENet </li></ul>
    40. 41. Achieving equity <ul><li>Qualify people for employment </li></ul><ul><li>Include community based intermediaries in clusters </li></ul><ul><li>Provide incentives and subsidies </li></ul><ul><li>Support industry networks in distressed areas </li></ul><ul><li>Encourage social responsibility </li></ul>
    41. 42. Stuart A. Rosenfeld Regional Technology Strategies, Inc. Carrboro, NC 27510 919-933-6699 [email_address] WWW.RTSINC.ORG

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