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Helping people and places innovate, collaborate, and prosper. www.rtsinc.org 1 National Governors Association Clusters and Economic Development June 6-7,

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Presentation on theme: "Helping people and places innovate, collaborate, and prosper. www.rtsinc.org 1 National Governors Association Clusters and Economic Development June 6-7,"— Presentation transcript:

1 Helping people and places innovate, collaborate, and prosper. 1 National Governors Association Clusters and Economic Development June 6-7, 2002 Stuart Rosenfeld Regional Technology Strategies

2 Helping people and places innovate, collaborate, and prosper. 2 Clusters are economic ecosystems, not membership organizations Rule of Thumb 1: Select clusters based on systemic relationships that provide market advantage

3 Helping people and places innovate, collaborate, and prosper. 3 Critical mass attracts externalities, cooperation creates externalities Rule of Thumb 2: The minimum firm density necessary is what will produce external economies

4 Helping people and places innovate, collaborate, and prosper. 4 Hard externalities Externality> Benefit Supply chains> efficiency Specialized labor> productivity Specialized services> access More choice > costs, quality Range of firms> joint ventures

5 Helping people and places innovate, collaborate, and prosper. 5 Soft Externalities Externality> Benefit Association> Vision, planning, influence Trust> Networking Learning (1)> Tech transfer, innovation Learning (2)> Know how Informal Labor Markets> Career ladders

6 Helping people and places innovate, collaborate, and prosper. 6 Dynamics of Clusters Flows of:Lead to: Information Greater knowledge of markets, labor markets, technologies. Ideas Diffusion of improvement, innovation People Increased experience, career ladders, Goods More efficient value-added chains Services Expanded expertise, choices Capital Support for modernization, startups

7 Helping people and places innovate, collaborate, and prosper. 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 Helping people and places innovate, collaborate, and prosper. 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 Helping people and places innovate, collaborate, and prosper. 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 Helping people and places innovate, collaborate, and prosper. 10 Common Concerns Can states create clusters? Is there a risk of being too specialized? Do clusters constitute favoritism? Are firms too competitive to cooperate? 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 Helping people and places innovate, collaborate, and prosper. 11 Origins of Clusters ClusterYearCluster/OriginReason Aalborg, DK1948Telecom-SP RadioMarine ind. Dalton, GA1918Carpet-craft tuftersChance Sausoulo, IT1600Tiles-RubbianiLocal clay Los Angeles1968Toys-ImmigrantsCosts, distr. San Diego1950Biotech-ResearchUniversity Tupelo, MS1948Furn.-FutorianLabor,wood NC Mass.1760Plastics-combsChance

12 Helping people and places innovate, collaborate, and prosper. 12 State Policies Levers For organizing its service delivery For targeting its investments For strengthening networking opportunities For developing its human resources

13 Helping people and places innovate, collaborate, and prosper. 13 Understanding Regional Economies Identify clusters - measures of scale & concentration - local views and intelligence Map systemic relationships - competitiveness factors - supply chains - knowledge chains Benchmark against competitors

14 Helping people and places innovate, collaborate, and prosper. 14 Cluster themes/advantages ProductCarpets in Dalton, GA ProcessPlastics in CT Value chainAerospace in Seattle TechnologyOptics & imaging, Rochester Skills/talentNew media, Manhattan ResourcesWood, Arkansas DistributionPorts, SE Louisiana OtherSoftware, Fairfield, IA OtherPrisons, Northern NY

15 Helping people and places innovate, collaborate, and prosper. 15 MAJOR 2-DIGIT MANUFACTURING SECTORS, 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, size of bubble indicates number of employees

16 Helping people and places innovate, collaborate, and prosper. 16 RHODE ISLAND’S CLUSTERS JEWELRY BOAT BUILDING ELECTRONICS & INSTRUMENTS SOFTWARE TOURISM PRECISION METAL WORKING AQUACULTURE FINANCIAL SERVICES BIOMEDICAL

17 Helping people and places innovate, collaborate, and prosper. 17 ARIZONA’S CLUSTERS NOW AND THEN 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

18 Helping people and places innovate, collaborate, and prosper. 18 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

19 Helping people and places innovate, collaborate, and prosper. 19 Measures of Social Capital # of business, trade, professional associations Sector advisory board membership Membership, meetings, attendance Networks formed Civic leadership by businesses

20 Helping people and places innovate, collaborate, and prosper. 20 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

21 Helping people and places innovate, collaborate, and prosper. 21 Policies for service delivery Aggregate,collect, sort information by cluster Form cross-agency quick response teams Encourage and support multi-firm activity Build incentives for multi-firm proposals into funding programs

22 Helping people and places innovate, collaborate, and prosper. 22 Forming Networks Publicize concepts Train brokers Identify multipliers Provide startup incentives Assessment

23 Helping people and places innovate, collaborate, and prosper. 23 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

24 Helping people and places innovate, collaborate, and prosper. 24 Broker Certification in Arkansas

25 Helping people and places innovate, collaborate, and prosper. 25

26 Helping people and places innovate, collaborate, and prosper. 26 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!

27 Helping people and places innovate, collaborate, and prosper. 27 Connecticut Plastics Council: From Network to Cluster 1993: Six companies in Naugatuck Valley approached by MTC 1994: $500,000 ConnSTEP grant 1996: Hartford seminar 1997: Growth to 48 members along Rte 8 corridor, become CPC 1997: Incorporated as 501c3 2001: Officially launched by state as “cluster”

28 Helping people and places innovate, collaborate, and prosper. 28 Target Investments to clusters Invest in cluster R&D Build cluster-based tech centers/parks Support cluster entrepreneurial activity Employ specialized expertise Market clusters

29 Helping people and places innovate, collaborate, and prosper. 29 Cluster Technology Centers PT-CAM (Greensboro) CITER (Carpi) TC2 (Raleigh) Advanced Mfg Tech Center (Lynchburg) Candy Institute (Chicago) WIRENet (Cleveland)

30 Helping people and places innovate, collaborate, and prosper. 30 Strengthen Networking and build bridges Establish/recognize cluster organizations Facilitate external linkages Encourage cluster communications channels

31 Helping people and places innovate, collaborate, and prosper. 31 Strengthen Networking and build bridges Establish/recognize cluster organizations Facilitate external linkages Encourage cluster communications channels

32 Helping people and places innovate, collaborate, and prosper. 32 Cluster Organizations Arizona Optics Industry Assoc. CIT.MS Connecticut Plastics Council Carolina Hosiery Assoc. New York New Media Assoc. Tri-State Manufacturers Assoc. Rhode Island Plastics Partnership Council

33 Helping people and places innovate, collaborate, and prosper. 33 External Linkages are Crucial Prevent lock-in Source of inspiration, innovation Benchmarking Potential markets/customers

34 Helping people and places innovate, collaborate, and prosper. 34 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

35 Helping people and places innovate, collaborate, and prosper. 35 Develop human resources Develop a skilled and specialized labor force Qualify people for cluster employment Establish cluster skill centers Support regional skill alliances Engage CBO intermediaries

36 Helping people and places innovate, collaborate, and prosper. 36 Actions for Building a Cluster’s Workforce Develop specialized labor force Contextualize curricula Form industry cluster skills hubs Build partnerships between education & clusters Form regional skills alliances Work with non-profits

37 Helping people and places innovate, collaborate, and prosper. 37 Educational Advantages of Cluster Skills Centers Improves content and quality of E&T (codified knowledge) Increased rates of and means for informal learning (tacit knowledge) Increases access to employment information and opportunities (labor markets)

38 Helping people and places innovate, collaborate, and prosper. 38 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

39 Helping people and places innovate, collaborate, and prosper. 39 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

40 Helping people and places innovate, collaborate, and prosper. 40 Intermediaries that raise incomes, build career ladders Garment Industry Development Corp. Jane Addams Resource Center Wisconsin Regional Training Partnership ACENet

41 Helping people and places innovate, collaborate, and prosper. 41 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

42 Helping people and places innovate, collaborate, and prosper. 42 Stuart A. Rosenfeld Regional Technology Strategies, Inc. Carrboro, NC


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