In 2011, The Department of Economic Development commissioned Mohr Partners to create an Economic Development strategy for the City of Cleveland. Mohr Partners, using an industry cluster strategy as formulated by Michael Porter of Harvard University, identified and analyzed Cleveland’s industry clusters to determine each cluster’s future viability and potential for economic growth. Mohr Partners validated Cleveland’s Health and Technology cluster as one of the City’s strongest. This document is their analysis.

1.
Excerpts from:
An Economic Development Strategy for the City of Cleveland’s
Department of Economic Development
Prepared for:
The Cleveland Citywide Development Corporation
Prepared by:
Mohr Partners/Cleveland:
Dennis Burnside
Jim Robey, Ph.D.
Anthony Bango
July 11, 2012

2. Introduction
Mohr Partners was engaged by the Cleveland Citywide Development Corporation to create an
economic development strategy for the City of Cleveland Economic Development Department.
The purpose of the strategy is to improve the effectiveness of the city’s practices and to validate
pre‐identified clusters and sites as part of an outreach program to potential site selectors and
companies.
Clusters and Their Validation
In 1990, Harvard Professor Michael Porter published his seminal work “The Competitive
Advantage of Nations.”1 It was Porter’s work that defined the term and concept of a “clusters”
approach to regional growth and development. Porter and his work have helped defined
economic development strategy since that time. “A cluster is a geographically proximate group
of interconnected companies and associated institutions in a particular field, lined by
commonalities and complementarities.”2 Possibly more easily said and understandable, Hill and
Brennan3 “define a competitive industrial cluster as a geographic concentration of competitive
firms or establishments in the same industry that either have close buy‐sell relationships with
other industries in the region, use common technologies, or share a specialized labor pool that
provides firms with a competitive advantage over the same industry in other places.” Clusters
are, therefore, groups of firms in the same industry in a region that are there because the
location has assets that affect the bottom line for the firm or establishment, potentially
including customers, suppliers, workforce, academic/research institutions,
transportation/infrastructure, and other factors that may positively affect a company’s ability to
compete in a global market.
Northeast Ohio has a long history of looking at regional industry clusters. In 1996, then Senior
Director of Research at the Greater Cleveland Growth Association, Jack Kleinhenz, Ph.D., worked
with regional partners to engage the Levin College of Urban Affairs at Cleveland State University
(CSU/Levin) to conduct a detailed statistical analysis of the region to identify the region’s
clusters.4 The next step was a series of key informant interviews and focus groups that validated
the CSU/Levin findings. The next phase was to engage industry participants to form working
groups around creating cluster strategies on workforce, business investment, and the role of
regulation at the state and local level. Clusters identified in the first phases included
metalworking, plastic products, chemicals, motor vehicles and parts, and insurance.
In 2011 and prior to engaging Mohr Partners for this study, the Department of Economic
Development had done some research and analysis in identifying potential clusters that could
be appropriate for the city to use as targets for a series of available and developable sites. The
1
Porter, M.E. (1990). The competitive advantage of nations. New York: Free Press.
2
Porter, M.E. (2000). Location, competition, and economic development: local clusters in a global
economy. Economic Development Quarterly, 14(1), 15-34.
3
Hill, E.W. & Brennan, J.F. (2000). A methodology for identifying the drives of industrial clusters:
the foundation of regional competitive advantage. Economic Development Quarterly, 14(1), 65-
96.
4
Kleinhenz, J. (2000). An introduction to the northeast Ohio clusters project. Economic
Development Quarterly, 14(1), 63-64.
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3. targeted industry clusters include health care/medical, paints and coatings, lighting and electric,
information technology, food processing, automotive, and banking and finance.
The following analysis looks at both validating the self‐identified clusters through data analysis,
as well as looking at all other exportable goods and services industries to see if they could be
potential targets for inclusion in the city’s attraction efforts.
As part of the cluster validation, both quantitative and qualitative approaches were used to
assess the industry potential as a candidate for Cleveland. Due to limits in the scope of this
work, the level of detail used in this assessment was not quite as deep as offered in 1998 in the
CSU/Levin study. Mohr Partners looked at the clusters for both Cleveland (Cuyahoga County)
and the northeast Ohio region5 using two common statistical techniques, location quotients and
shift‐share analysis. Another measure was to look at the top backward linkages or suppliers to
the industry within the northeast Ohio region. A fourth measure was to look at the workforce
and confirm that there were sufficient workers in the region to support attraction efforts. The
fifth measure was to look at the number of educational degrees issued in support of workforce
training. Finally, Mohr Partners looked at various industry sources, such as Standard and Poor’s,
to assess the long‐run viability of the industry at the national level.
Recommendations
In marketing, outreach, and site selector events, Mohr recommends that the Department of
Economic Development use a clusters‐based approach in attracting new establishments to the
City of Cleveland. The following industries are likely fruitful targets for attraction. A more fully
developed analysis of each cluster follows in the next section.
1. Paints and Coatings: These industries have a long history in northeast Ohio. The
northeast Ohio factors, with a high level of concentration in employment, a level of
competitive advantage (Shift Share), a strong supply base, and a significant amount of
post‐secondary training, suggest that firms in this industry should do well in the City of
Cleveland. The growth in the shale oil plays could create opportunities for inputs to
these products if the chemical industry invests in processing the liquids from the Utica
and Marcellus shale. Companies in this industry, within the region, include RPM
International, the Ferro Corporation, Sherwin‐Williams, OMNOVA Solutions Inc. and
Tremco Incorporated.
2. Automotive Manufacturing: Also an industry with a long history in northeast Ohio. Both
final assembly and parts have a strong location quotient (LQ), and automotive parts
appear to have a strong competitive advantage in the next 5 years. Key occupations
have high levels of support from post‐secondary training and demand for autos is
expected to grow. It is unlikely that Ohio will see new auto plants, but growth in the
industry and demand for cars and light trucks make automotive parts suppliers an
5
The northeast Ohio region for this study includes the following counties: Ashland, Ashtabula,
Cuyahoga, Columbiana, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark,
Summit, Trumbull, Tuscarawas and Wayne. These are the counties that currently comprise the
Jobs Ohio definition of “Northeast Ohio.”
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4. industry with potential for attraction. Companies in this industry, within the region,
include Stoneridge, Inc., Hyster‐Yale Materials Handling, General Motors, Transdigm and
the Park‐Ohio Holdings Corporation.
3. Banking and Finance: Although suffering from some competitive advantage issues (see
small negative shift shares), strong LQs and strong educational assets for this group of
industries suggest that opportunities continue to exist for this group. Notably insurance
carriers have a strong LQ likely due to Progressive Insurance. A strong base of
experienced workers that can support new entrants to the market could be valuable.
Companies within this industry, within the region, include the United Financial Casualty
Company, Progressive Insurance, the Resilience Capital Partners LLC, Medical Mutual of
Ohio and the Reserve Group.
4. Management of Companies and Enterprises: Later in the analysis, this sector is
combined with Banking and Finance, but for targeting purposes, it is extracted here and
supported separately. With an LQ of 1.7, it is relatively highly concentrated, but appears
to have a competitive disadvantage. Because of the United Airlines hub and direct air
service to 73 destinations,6 Cleveland should remain attractive to regional headquarter
locations and may be able to attract additional national headquarter locations. Without
direct international air service to Europe or Asia, attracting an U.S. headquarters for an
international company will prove challenging. Companies within this industry, located
within the region, include the Wilson Mills Land Company, the Key Corporation, Diebold,
Charter One and the Strang Corporation.
5. Food Processing: While not highly concentrated in the region, some of the competitive
shares for industries in this group suggest that Cleveland can capture some new
employment. With a significant supplier base and a good workforce development
system aiding in growth in the sector, Cleveland has potentially important production
assets, including water, sewer, electricity, and natural gas in abundance, which could
create an opportunity to bring business in to Cleveland. Companies included in this
industry, within the region, are the J.M. Smucker Company, Nestle, Alfred Nickles
Bakery, Shearer’s and Buitoni North America.
6. Information Technology: This cluster best works as enabling or crosscutting technology.
The significant amount of fiber running through northeast Ohio, plus significant post‐
secondary training (certificates to Ph.D.), makes Cleveland a potentially robust place for
IT. Based on prior work, only 1 out of 3 IT occupations are in the IT industry.
7. Health Technology: While mostly a population‐serving industry, or what Port refers to as
a local cluster (at least in the Services sector), the research and teaching aspects of the
Cleveland medical cluster make this a prime place for medically related firms to locate.
Tech transfer and commercialization create significant opportunities here. But, many of
NEO and Cleveland’s assets are masked by their NAICS codes, being in polymers7,
6
Crains Cleveland Business, (2012) 33(25) 1 and 24.
7
The Rubber Manufacturing industry is a strong industry within the region with a LQ value of 2.64 (in 2011) and a Shift
Share value that is projected to be 167 in 2016.
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5. instruments, controls, sensors8 and chemistry9 rather than NACIS 3391: Medical
Equipment and Supplies Manufacturing. Companies in this industry, within the region,
include the Invacare Corporation, STERIS Corp. Independence Medical, GOJO Industries
Inc., and Coltene / Whaledent Inc.
8. Electric and Lighting: Ohio produces more electrical appliances than any other state, and
the major industries have strong location quotients. A fundamental shift in lighting,
however, will require Cleveland to attract a new type of firm in a different industry to
the region. As regular light bulbs are phased out by federal legislation, there will be a
brief period of high demand for CFLs, but in the long run, current thinking suggests that
most lighting in the future will be based in LEDs. As part of an attraction strategy for
lighting, the companies producing LED‐based lighting, whether foreign or domestic
should be actively recruited to locate in Cleveland. Within the region, companies like
the Eaton Corporation, TTI Floor Care, Lincoln Electric, GrafTech International and
Preformed Line Products are all considered to be part of this industry.
9. Oil and Gas: The Utica and Marcellus shale production represents two different
opportunities for attracting and expanding firms in Cleveland. The first is to key on the
supply chain for the industry and key to focus on what strengths already exist, including
wholesale trade, pipe and pipe fittings, value and valve fittings, and transportation, as
well as consulting services such as legal, accounting, engineering, and environmental.
While the supply chain for drilling offers a shorter run opportunity as drilling will decline
over time, the use of output from the wells, or “downstream” uses, create a longer run
opportunity for Cleveland. Existing industries already in Cleveland in the basic chemicals,
paints, coatings, and adhesives, and polymers industries could benefit from locally
produced inputs. Some of these industries have already been mentioned as being
potential targets for attraction, but the additional supply of input products to their
supply chains (should regional production occur) would help solidify Cleveland as a
location of production. Companies, within the region, that are part of this industry
include the Buckeye Oil Producing Corporation, Everclear Transportation, Kenoil,
Everflow Eastern Partners and Bocor Holdings LLC.
Measures
As noted earlier, Mohr Partners used six different measures to estimate the validity of each
cluster as a potential target for attraction to the City of Cleveland. These measures include:
1. Location quotients. This method, commonly called LQs, measures the relative
concentration of an industry within a region. This measure is a ratio of the share of local
employment in an industry relative to the share of industry employment for a base
geography, in this case the United States. When an LQ is less than 1, it is expected that
the region will import some of its needs for the industry. When the LQ is close to 1, it is
8
The Navigational, Measuring, Electromedical, and Control Instruments Manufacturing industry is currently not a strong
industry within the region with an LQ value of .78 in 2011 and a Shift Share value of -207.
9
The Basic Chemical Manufacturing industry is currently a strong industry within the region as it has a LQ value of 2.12
and a Shift Share value of 193 in 2011.
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6. assumed that the region produces enough output to meet local needs. When the LQ is
greater than 1, it is assumed that some output is exported. Higher levels of concentration
would suggest that there are some competitive advantages in the region, but the LQ
does not identify what those advantages may be. This is a commonly used measure in
looking at identifying clusters, but looks only at a single point and time. For this and the
shift‐share analysis, Mohr Partners used four‐digit NAICS10 data from economy.com and
for the periods 2006, 2011, and 2016.
2. Shift‐share analysis. This technique looks at changes in employment between two
periods (either history or forecast), and disaggregates the change in period into three
factors based on growth (or decline) of the national economy, growth (or decline) of the
industry at the national level, and a residual value. This residual value is called the
competitive share and estimates employment change for the period based on local
competitive advantages (or disadvantages). Unfortunately, this technique does not
identify the advantages or disadvantages, but does suggest they exist. For this study
periods of 2006 to 2011 and 2011 to 2016 were used to estimate competitive advantage
using the economy.com data.
3. Supply chain. Using an economic impact model from Implan,11 top supplier industries to
each industry sector were identified based on value of sales. Using OneSource,12 a
business database, suppliers in northeast Ohio with 50 or more employees were
identified. Using geographic information software (GIS), these establishments were
mapped (see Appendix for each cluster).
4. Staffing. Using a staffing matrix from the Bureau of Labor Statistics (BLS), key occupations
were identified including technical (such as technicians and engineers) and production
related occupations. Using the economy.com data for employment values in 2011,
estimates of numbers of workers were estimated by critical occupations. Using the 2010
Starting Wage and Benefit Survey funded by the Cleveland/Cuyahoga Workforce
Investment Board, starting wages and median wages in 2010 are reported for each
occupation (where the data are available).
5. Training. Using data from the Integrated Postsecondary Education Data System13 (IPEDS),
the number of degrees issued between July 2009 and June 2010, from certificates to
Ph.Ds., are reported for each occupation.
10
North American Industrial Classification System. See more at
http://www.census.gov/eos/www/naics/
11
http://implan.com/V4/Index.php
12
http://www.onesource.com/
13
https://surveys.nces.ed.gov/ipeds/
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7. 6. National forecast. Using data from a number of sources, outlook and forecast for each
industry is reported.
Clusters Analysis
Health Technology cluster
This cluster in Cleveland and NEO in general combines both services and manufacturing into a
single cluster. Cleveland’s hospital/direct service cluster is driven by three nationally ranked
systems, the Cleveland Clinic (ranked #1 in Cardiology nationally), University Hospitals (ranked
#14 in Gastreonology nationally) and Metro Health Hospitals (ranked #41 in Pulmonology
nationally). While providing direct service to residents and non‐residents of the city and of the
region, both are also world‐class teaching and research hospitals. On the supplier side of the
equation, they jointly create (along with other major regional systems such as Summa)
significant demand for products associated with hospital operations and patient care. On the
research side, they generate significant potential to provide opportunities for technology
transfer and commercialization into product development and production.
In some ways, the manufacturing part of the Health Technology cluster suffers from the same
identity issues as the IT cluster in that many companies innovating and producing medical‐
related products have NAICS codes outside of NAICS 3391, Medical Equipment and Supplies. If a
company is producing a stent made from polymers, although the end use if a medical product,
the firm would likely be assigned a polymers NAICS code. Similarly, an electronic device
monitoring heart functions would likely be assigned a NAICS in Instruments and Controls
industry and a pharma product would be in a chemistry‐related NAICS code.
This cluster includes the following industries:
 3391 Medical Equipment and Supplies Manufacturing
 6221 General Medical and Surgical Hospitals
The aging of America will likely increase demand for both direct health‐related services as well
as medical‐related products. Current economic conditions hamper growth in technology
companies as the availability of credit continues to remain tight and venture capital is less easy
to obtain than prior to the 2007 recession. Hospitals will continue to engage in cost
containment, but a recent decision by the United State Supreme Court on maintaining a
program of national health care could have interesting ramifications. Depending on how this
new system works out, this could lead to spending for medical services and support in a number
of potentially opposing directions, depending on where companies, individuals and politics take
the national program. It is likely that the outcomes of these decisions and implications will not
be fully understood until after the fall term elections and well into 2013. Employment, wages
and GRP are all forecasted to grow through 2021 for the Health Technology sector.
Cluster summary measures for the northeast Ohio region:14
14
Detailed information can be found on Figure 11 in the Appendix.
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8.  Location Quotient in 2011
o Medical Equipment and Supplies Manufacturing 1.21
o General Medical and Surgical Hospitals 1.59
 Shift‐share 2011‐2016
o Medical Equipment and Supplies Manufacturing ‐14(‐.3%)
o General Medical and Surgical Hospitals ‐2904(‐2.9%)
 Suppliers: share from top 10 15
o Medical Equipment and Supplies Manufacturing 56%
o General Medical and Surgical Hospitals 60%
 Significant supplier base in northeast Ohio16
 Degrees awarded July 2009 to June 201017
o Certificates and less than a Bachelor 847
o Associate 698
o Bachelor (BA/BS) 388
o Masters (MA/MS) 75
o Doctorate 26
15
These values represent the percent of an industry’s overall spending that go to its top 10 suppliers.
16
Within the NEO region there are clusters of this industries top 10 suppliers that can engage with developing firms.
16
Detailed information can be found on Figure 2 in the Appendix.
17
Detailed information can be found on Figure 12 in the Appendix.
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10.
Appendix:
Figure 11: Health Technology Cluster: Location Quotients and Shift Share Analysis for 2011 and 2016
Northeast Ohio Region Cuyahoga County
Employment LQ LQ SS SS Employment LQ LQ SS SS
NAICS: Description: 2011 2011 2016 06‐11 11‐16 2011 2011 2016 06‐11 11‐16
Medical Equipment and Supplies
3391 Manufacturing, 5,090 1.21 1.23 ‐306.39 ‐13.93 1,650 1.03 1.01 ‐128.70 ‐104.46
‐ ‐
6221 General Medical and Surgical Hospitals, 97,180 1.59 1.57 1291.79 2904.45 48,880 2.10 2.11 2558.69 1782.92
*Source: Economy.com
*Notes: Data used for these calculations are current until 2010, forecast data is used for 2011 and an estimate is used for 2016.16.

11.
Figure 12: Degrees Issued from July 1st, 2009 to June 30th, 2010 in the 17 County Region
Classification Certificates < B.S. Associate B.A./B.S. M.A./M.S. Ph.D.
Biology Technician/Biotechnology Laboratory Technician 9 2 10 0 0
Biomedical/Medical Engineering 0 0 113 20 19
Clinical Laboratory Science/Medical Technology/Technologist 0 0 6 0 0
Clinical/Medical Laboratory Assistant 37 12 0 0 0
Clinical/Medical Laboratory Science and Allied Professions‐ Other 0 2 0 0 0
Dental Support Services and Allied Professions 292 152 0 0 0
Electrical Engineering Technologies/Technicians 28 331 29 0 0
Electrical/Electronics Maintenance and Repair Technology 12 0 0 0 0
Electromechanical Instrumentation and Maintenance Technologies/Technicians 1 12 0 0 0
Heavy/Industrial Equipment Maintenance Technologies 16 2 0 0 0
Industrial Engineering 25 0 22 15 0
Industrial Production Technologies/Technicians 17 49 8 0 0
Machine Shop Technology/Assistant 23 0 0 0 0
Mechanic and Repair Technologies/Technicians‐ Other 29 0 0 0 0
Mechanical Engineering 0 15 162 43 7
Mechanical Engineering Related Technologies/Technicians 17 103 38 0 0
Ophthalmic and Optometric Support Services and Allied Professions 0 17 0 0 0
Quality Control and Safety Technologies/Technicians 97 1 0 0 0
Welding Technology/Welder 244 0 0 0 0
Total Degrees 847 698 388 78 26
Source: Institute of Education Science
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