Pescara, 26 27 February 2004

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Pescara, 26 - 27 February 2004
IRC IRE NETWORK
Clustering as a driver of innovation at regional
level
Giancarlo Leoni Province of Mantova Polytechnic
of Milan
http//www.provincia.mantova.it/ritts/homepage.htm

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Industrial Districts in Italy and their weight

• Within the Industrial Districts there is the 25
  of the Italian population and the 31 of the
  Municipalities.
• There works the 45 of the manufacturing sector
  employees.
• The employment weight, within the districts, on
  the national total reaches the top in leather
  products (66), textile-clothing (63), glasses
  and sofas (58), machinery (49), paper (41).
• CENSIS Research Centre has recently monitored 300
  touristic clusters where 22.4 million Italian
  inhabitants live
• 96 maritime clusters
• 38 artistic / cultural clusters
• 137 mountain clusters

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The Industrial Districts in East Lombardy

• East Lombardy includes the provinces of Mantua,
  Brescia, Cremona and Bergamo with a significantly
  high number of SMEs
• High rates of specialization (Textile-Garment,
  Metalworking, Mechanical Equipment Manufacture,
  Electric Equipment Manifacture)
• Population 2,717,283
• Active population 1,150,000 (42.3)
• Total Firms 206,037
• Manifacturing Industries 40,839
• Employees 877,167
• Manifacturing Employees 426,830 (48.7)

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Definition of a Cluster (Porter, 1998)

• "A cluster is a geographically proximate group of
  interconnected companies, associated institutions
  in a particular field, linked by commonalities
  and complementarities. The geographic scope of a
  cluster can range from a single city or region to
  a country or even network of neighbouring
  countries.
• Clusters take varying forms depending on their
  depth and sophistication, but most include
  end-product or service companies suppliers of
  specialised inputs, components machinery, and
  services financial institutions and firms in
  related industries.
• Clusters can also include firms in downstream
  industries producers of complementary products
  specialised infrastructure providers government
  and other institutions providing specialised
  training, education, information, research and
  technical support and standards-setting
  agencies.
• Government agencies that significantly influence
  a cluster can also be considered a part of it."

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Origins of Clusters (S. Rosenfeld)

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The Hosiery DistrictCastel Goffredo a case study

• In terms of export, Italian production covers
  about 50 of the European market. 60 of this
  hails from the district of Castel Goffredo, 50
  of its own production.
• Castel Goffredo and its area represents not only
  the strongest territorial concentration in Europe
  in terms of ladies hosiery production, but also
  the biggest concentration with an inclination to
  export.

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Employment
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Size class of enterprises
Companies tend to become bigger. The average size
in terms of employees in 2001 is 34.6, while in
1996 was 32. Strong presence of the family small
enterprises even if in slow decrease.
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Phases of the production process
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Typology and quality of the production
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Companies Competition
The ways of developing of the productive system
have determined a high grade of competition among
the district companies within the area,
especially among the artisan ones. Contrarily,
among the medium-big companies, the competitive
structure may be defined as a "diversified
oligopoly".
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Companies with direct access to the market
In the Castel Goffredo hosiery district the 70
of the companies have not a direct access to the
market, the 15 produces either for the market
and for bigger companies and only the remaining
15 for the final market (about 70 in number).
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COMPETITIVE ADVANTAGES WITHIN THE DISTRICT1960 -
1990

• Availability of capital from the agri-food
  sector
• Technological innovation in close collaboration
  with the producers of technology
• Diffusion of information through formal and
  informal ways
• Development of the flexibility of the district
  system
• Availability of workers and existence of a black
  market at a low cost
• Technicians trained within the companies or
  within professional schools
• Low environmental, territorial and start up
  costs
• Social cohesion and low political conflicts
• Companies Service Centres and animators of the
  district
• Proximity to the markets and capacity of
  following up the innovative demand

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Co-operation within the district

• Family groups (financial and productive control)
• Informal groups (not formalized relationships)
• Brand Agreements (commercialisation of fashion
  products)
• Consortia (Hosiery Service Centre)

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Trend of the hosiery world consumptions
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Recent Market Problems

• 15 is the labour cost per product unit.
• Competition new producers (China, Korea,
  Eastern Europe).
• Overproduction.

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External economies changes. 1

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External economies changes. 2

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Life Cycle Innovation Transfer Districts supported
by "Innovation Service Centres"
New Innovation Input
(HIGHER)

Innovation Input



INNOVATION CAPACITY
Imitation

TIME
Innovation Service Centres
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Approach to the Innovation TransferFor every
District and specialized SME groups

• Community building This is the definition phase.
  It is useful to individualize the available
  subjects and Insitutions leading to the
  constitution of the Interaction Junction.
  Networking activities within and outside the
  district are essential.
• Constitution of the Innovation Exchange Groups
  This is the strategic phase. It is fundamental to
  individualize the main items communication and
  conversation process, communication languages,
  supply and demand of innovation, etc.
• Projects catalog It is the tangible result of
  the common activities within the Interaction
  Junctions among the firms demanding and the
  research centre and universities offering
  innovation.

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Model of an"Innovation Exchange Group"
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The "Innovation Exchange Groups" within the Ritts
East Lombardy

• FINAL OBJECTIVES
• Creation of a permanent network among subjects
• Continuous monitoring of the district
• - needs
• - evolution
• - trends
• Feasibility of the projects coming from the
  Innovat. Exchange Groups
• Project development
• Optimization of the information transfer

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The "Hosiery District" Innovation Exchange Group
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Silicon ValleyThe Cross Association
Source IRER J. Cabot Int.
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FACTORS OF CRISIS AND DEATH OF A DISTRICT The Toy
District of the Provinces of Mantova and
Brescia (Death by international competition)

• International competition of the "Barbie" doll
  and difficulties in the international penetration
  and publicizing.
• Companies too small that didnt make "group"
  and competitive sinergies.
• Development of qualitative market niches but
  only importation from Taiwan.
• Competition based on the job lower cost
  strategy has brought to the defeat. The hosiery
  district has won on the plan of the technological
  innovation.

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FACTORS OF CRISIS AND DEATH OF A DISTRICT The
case of the Shoes Production in the Provinces of
Verona and Mantova (Death for productive
rilocalization Disappearance of the district)

• Strategies of the leader companies have
  developed the relocation of the companies in
  Eastern Europe Countries or in South America,
  maintaining the commercial, design and planning
  functions in Italy.
• Such a strategy has brought problems of quality
  of goods and a general strategy of lower
  productive level.
• Some companies are returning in Italy.

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FACTORS OF CRISIS AND DEATH OF A DISTRICT The
case of the Carpi Knitwear-clothing
District (Strong reduction of the district).

• Strong cutting of the productive activities
  (local units and employees).
• Relocation of the activities in the Eastern
  Europe countries or goods purchase from other
  Countries.
• Strong presence of only commercial, design and
  planning functions in Italy.
• Problems of "obsolescence of the district".

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The Italian Cluster Model.A new Challenge
The question is how to find a new way for
reproducing the successful development of a
cluster. Local systems cannot grow
"quantitatively" anymore they are condemned to
grow in "quality", with a great effort in
"innovation". Which innovation?
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ICT infrastructures / facilities delay within the
Districts

• From the Federcomin Report some features can be
  emphasized
• In 39,5 of the districts have been activated
  websites for exchange of informations ( in 7,9
  already planned), intercompany e-procurement
  portals (activated in 36,8 of the districts and
  planned in 9,2), but also initiatives for shared
  Data Banks, E-Business and Shared Software.
• New wireless technologies are well supported in
  advanced territories (in 1 on 5 districts there
  are initiatives).
• Technological solutions for "networking" allow
  not only a more efficient exchange of data and
  information, but concern the main strategic view
  of the company. Technologies may represent for
  SME's a great reserve of competitiveness to
  release.

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Infrastructures and shared technological
applications in the East Lombardy districts
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New external economies and public strategies

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New external economies and public strategies

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Benchmarks for Clusters(S. Rosenfeld Guide to
Cluster Policy)

• RD 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

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Benchmarking - External economies N 1
Intersectorial mix
a) Why? A good mix of different but integrated
groups of companies improving tecnologies allows
a high innovation at a local level.
Example First Sector isTextile clothings
Secondary Sectors in cluster
area cooperating with first are Mechanical
Tecnologies for textile,
Chemical products to paint textile - ICTs to
upgrade automation, ecc. The proximity of
other sectors bring to new experiments involving
innovations exchanging directly
experiences and informations b) Which is the most
suitable intersectorial mix within a cluster? c)
Some indicators of employees of the first
sector in relation to other sectors d) How to
stimulate Pubblic Policy territorial Marketing,
Incubator...
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Benchmarking - External economies N 2quick
diffusion of the innovation culture
a) Why a high speed diffusion of the innovation
culture? In mature clusters there is a
high speed circulation of informations
(Technology / market demand / new organisations
/ etc.) Traditional mechanisms
are Informal (worker and technicians
exchange) Formal (public meetings, schools,
associations networks, sub supplier)
News mechanism Internet, ICT, ecc... b) Which
is the actual speed of the diffusion of
innovation culture? c) Some indicators time to
introduce innovation (how to calculate?)
d) How to stimulate Local Service Centres
ICTs. infrastructures innovation transfer.
Development of local cultural identities
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Conclusions. Strategic Vision
The long history of the Castel Goffredo Hosiery
District and the awareness of the actual problems
teach us that the Cluster Model has worked and
may still be winning if it will be able to
develop updated strategic answers to the global
competition process.
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Conclusions. Benchmarking
Globalization has leaded to the necessity, more
and more evident, to face international
competition with strategic innovation made of
public and private efforts, comparable in
different Countries.
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Conclusions. Innovation Networks
The development of Innovation Infrastructures
becomes, today, more strategic than in the last
decade. District "Business Service Centres" are
not enough any more to assure a suitable support
to the district companies. There is the necessity
to have stable "Public Policies for Networking"
at a regional level, but also at European level,
able to work as real support.