Cluster Development RPR, Ogre

Deck 1 Clusters: The What? & The Why?

Cluster Development:
The What? & The Why?

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Ifor Ffowcs-Williams 100% no projekta finans Eiropas Savienba ar Eiropas

Cluster Navigators Ltd Soci
l
fonda starpniecbu.
New Zealand Apakšaktivit
ti administr Valsts kanceleja sadarbb
ar
Sabiedrbas integr
cijas fondu.

. .

The Competitiveness Institute

Ifor (E4) Ffowcs-Williams Members: Government agencies & multilateral
Background organizations fostering economic development

•  Welsh, Canadian & New Zealander

•  International business development
•  Multinationals in London, Toronto & Auckland
•  New Zealand’s export development agency
•  ‘Co-operating-to-Compete’ approach
•  Established Cluster Navigators 1997
•  Founder and Past President: The Competitiveness
Institute
•  Director, Nelson Economic Development Agency
. .

Cluster Navigator’s experience Workshop draws on:

Europe: Latvia
Czech Lithuania
Denmark Norway
Estonia Poland
Asia:
Bangladesh Malaysia
Americas: Finland Spain •  Cluster Navigators’ work in 45+ countries
Bahamas Georgia Sweden
Cambodia
China
Pakistan
Singapore
Canada
Dominican
Germany
Iceland
Switzerland
Turkey
UAE •  Training, cluster start-ups, reviews
India Thailand Ireland UK Saudi
Korea Vietnam
Republic
Trinidad
Arabia •  Leading academics
USA Africa:
Botswana Mozambique
•  Mike Enright, Mike Porter, Stu Rosenfeld …
Australia Ethiopia Rwanda
New Zealand
Kenya Tanzania •  International agency strategies
Libya Uganda
Mauritius South Africa •  OECD, World Bank, UNIDO, USAID
•  The Competitiveness Institute
World Bank UNIDO
•  www.tci-network.org
Advisors
to:
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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

Cluster development
The What? The Why? The How?
!

 !"

Smart specialisation
 

Joined-upness
Place based
 
 !

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Clustering…a natural occurrence

‘Clusters are the
building blocks
of a modern
economy’

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Grasse: Perfume capital of the world Bresle, northern France: Glass Valley
Distillation of perfume oils 50 manufacturers; 6,000 jobs; 60% of local workforce
75% of world production of perfume bottles;
75% exported

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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

Cosmetics Valley, France Three specialist clusters with close links

200 firms; 16,000 jobs
178 reseach labs; 4 universites

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France:
Major
clusters
under
development

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Italy: Examples, World Class

Clusters Montebelluna - ski boots
Udine - furniture
Carpi - knitwear
Sassuolo - ceramic tiles
In addition: Biella - wool textiles
Modena - sports cars
Milan - finance,
376 ‘rural machine tools Bologna- food machinery &
packaging machinery
clusters of Turin - autos
Castel Goffredo - hosiery
Parma - food industries
excellence’ Carrara - stonework
Prato - wool textiles

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The changing environment
Development of global centers of excellence
•  Castel Goffredo, Italy
•  Population 7,000
•  200 sock firms
•  Annual production:
•  1.3 billion pairs
•  60% of Europe’s socks
•  Machinery exports
Silicon Valley
The leading
high-tech
cluster globally
Home to
7,000+
high-tech
companies
Aarhus, Denmark
•  #1 wind energy cluster
in the world
•  Now Vestas’s HQ
•  90% of Denmark’s
activity
•  80+ companies
•  Full supply chain
•  11,000 employees
Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?
Udine chair cluster, Italy
Specialised cluster, specialised firms
•  14,000 employees
•  Datang, China •  1,200 firms; 250 export
•  Population 100,000 •  Strong rivalry, yet
•  2,500 sock firms collaboration: Co-opetition
•  Annual production •  No. 1 in the world for chair
•  9 billion pairs manufacturing
•  1/3 of world supply
. .
Silicon Valley’s culture
‘The Next Silicon Valley’ White Paper
•  "Silicon Valley is not a place for research,
it's a place where people communicate
ideas"
•  “The universities are more application-
oriented than elsewhere in the nation”
•  “Silicon Valley is not about silicon, it's
about innovation“
•  It’s the culture that matters; informal
networking and adaptability. “
Source:
Doug Henton
. Collaborative Economics
.
Arjeplog, northern Sweden
A global ‘hot spot’
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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

Winter car testing The Sunne Surprise

Arjeplog, northern Sweden
Smart specialisation:
Graphic design for flexible packaging
•  Today: 2,000 people
directly employed
•  High school programme

Slow beginings:
“Several of the entrepreneurs were like
enemies and did not talk to each other”

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BrobyGrafiska, Norway’s
Sunne, Sweden ’National Centers of
Expertise’ NCE Aquaculture

The only flexography Major Clusters

printing school in
Scandinavia.
NCE Instrumentation

NCE Maritime

A meeting place,
conference centre and NCE Tourism – Fjord Norway

NCE Subsea
NCE Raufoss

NCE Oslo Cancer Cluster

research facility. NCE Culinology

NCE Systems Engineering
NCE Energy and Emissions Trading

NCE Microsystems

Norwegian offshore & Drilling Engineering

28
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Bergen, Norway: the world

s leading centre

for subsea technology
•  100 companies and organisations; employing
4,600.
•  Three of the world
s leading subsea production
system firms, many subcontractors.
•  NCE Subsea (1) contributes to closer relations
between firms, (2) develops Bergen as the leading
authority on subsea maintenance, modification and
operation.
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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

Norway’s Mountain Tourism Cluster

Bergen University:

Attracts high value

students globally
•  B.Sc. in Underwater
Technology, focus on
subsea operation and
maintenance
•  New Master’s in
Underwater Technology 7 destinations with 250 members

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Public authorities
The Triple Helix Sweden’s national cluster initiative
Kommunene, fylkeskommunene Mountain
Innovasjon Norge
Direktoratet for naturforvaltning cluster
Nærings- og handlesdep.
Landbruksdep.
Miljøverndep.

Knowledge institutions
HiBu v/Senter for reiseliv
Telemarksforsking-Bø
Cluster Companies Nasjonal og internasjonale miljøer

The core business

Travel, Stay, Sleep, Eat,
activity, experience, cultur etc.
when travelling in the region

Partners
Nasjonale
Internasjonal klynge/
bedrift
Transport
NSB
Color Line Suppliers
Oslo Lufthavn/OSL Tjeneste- og innholds
Busselskaper leverandører

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The world is not flat … it’s spiky

Germany’s
lead
clusters

Financing for
each cluster:
€80 million
over 5
years

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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

Clusters … an international buyer's view

Buyers are travelling to fewer places … places with
an established reputation in a specific field

Buying knitwear? Go to Carpi, Italy Select from

2,500 knitwear
firms
Buying carpets? Go to Dalton, 178 mills, 45%
Georgia, USA of world
production
Buying cigarette Go to Wenzhou, 95% of world
lighters? China production
Buying oil rig Go to Kristiansand, 98% of world
accomodation systems? Norway production
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International research Wealth creation and strong clusters

Positive correlation
The evidence on clusters is clear GDP per Capita (PPP adjusted), 2004

70,000 €

•  Firms in clusters are more competitive than 60,000 €

similar firms located outside clusters.
50,000 €

Clusters generate:
40,000 €
•  More employment
•  Higher economic growth 30,000 €

•  Higher wages y = 83342x 2 - 16467x + 22886

20,000 € R2 = 0.3941
•  Better productivity
•  Higher levels of innovation 10,000 €
0% 10% 20% 30% 40% 50% 60% 70% 80%
•  More entrepreneurship Share of Employees in Strong Clusters*, 2005

•  More start-ups, and Note: Strong clusters defined by LQ>2; NUTS Regions excluding
Portugal and Greece. Source: European Cluster Observatory.
•  Attract more investment. ISC/CSC cluster codes 1.0, dataset 20070510

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Ketels/Sölvell - CSC

Clumps & Clutter v. Innovative Clusters Innovative Clusters

Clumps of firms Common elements
•  Local agglomerations of self-contained, stand alone,
vertically integrated, isolated firms; 1.  Deep specialisation, competencies
•  Little trust, limited interaction; •  Supported by public investments, academia
•  Little out sourcing, subcontracting, collaboration 2.  Local buzz: dense networking
•  Geographic but not social proximity
•  Rivalry yet collaboration, co-opetiton
Clutter of public agencies •  Rapid movement information
•  Silos with individual (divergent?) development •  Teamwork between firms
agendas for the cluster and with university, government agencies
•  Each seeking PR glory •  Leadership, tight alignment
•  Absence of teamwork, alignment, trust
3.  Global pipelines
•  Remote from the private sector
•  Connections beyond the region
•  Priorities set in isolation;
•  And ever changing, esp with national agencies •  Attracting customers, new investment…

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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

“In today’s creative

economy, the real
source of
economic growth
comes from the
clustering and
concentration of
talented people”

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Economist Intelligence Unit Cluster-based economic development

Fostering innovation-led clusters, 2011 A focus in 75+ countries
Positive link between
cluster development &:
“There are few economic development •  Innovation
policies as popular as clusters. •  Productivity
•  Competitiveness
It is hard today to find a country,
•  Job creation
region, or even city that is not trying to
•  SME growth
develop a network of complementary
•  Investment attraction
and competitive firms.”
•  Export development

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Cluster development in Europe

Now a mainstream approach

European Union
•  Over 2,000 regional clusters identified
•  Supporting the cooperation across Europe
•  38% of European jobs concentrated in
of regional ‘research-driven clusters’
clusters
•  Overarching objective: Promoting
•  Approximately 1,400 cluster organisations
European competitiveness and regional
•  130 funding schemes specifically development through smart
dedicated to cluster development in 31 specialisations of regions in a
countries globalized world.

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 Cluster Development RPR, Ogre
Deck 1 Clusters: The What? & The Why?

 
!

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!

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What is not a cluster?

A Cluster Definition
Geographic concentrations
of interconnected companies,
specialised suppliers, service
providers, firms in related
industries and associated
institutions … in particular
fields that compete but also
cooperate.’
Prof. Michael Porter, Harvard University
. .
•  A real estate development…an industry /
science / technology park…a precinct…an
incubator…an export processing zone;
•  A consortium between a number of firms…a
grower’s cooperative…a business network;
•  An industry, trade or professional
association.
But each of these may well be an
important element within a cluster

Next: The How...establishing the

clustering programme
Most common cluster actions
Source: The Cluster Initiative Greenbook

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