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Industry Cluster Approach to Workforce and Economic Development

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Title: Industry Cluster Approach to Workforce and Economic Development


1
Industry Cluster Approach to Workforce and
Economic Development
  • RCCI Annual Conference
  • October 7, 2003
  • Lee W. Munnich, Jr.
  • State and Local Policy Program
  • With
  • Liz Templin
  • Extension Educ. - Community Economics
  • University of Minnesota

2
Why this presentation?
  • Link between workforce development and economic
    development
  • A trained workforce is critical for success
  • Articulating the regions industry clusters can
    focus community economic development efforts

3
Objectives
  • Definition of industry clusters
  • Adaptation to rural communities
  • How industry clusters start (case studies)
  • Role of higher education

4
Michael PortersDiamond of Advantage
Chance

Government

5
The Knowledge Economy
  • In todays economy, innovation is survival, no
    matter what your product or service line is.
  • Any innovation requires knowledge about the
    technologies, processes, markets, etc., that make
    it work
  • The economic development challengeproviding a
    fertile environment for innovation

6
Rural knowledge clusters defined
  • Innovative, interrelated groups of firms
  • Located outside metropolitan areas
  • Deriving competitive advantages through
    accumulated, embedded, and imported knowledge
    among local actors and institutions.

7
Rural Knowledge Clusters What Matters?
  • Competitive advantage e.g. a rich base of
    skilled workers, access to proximate market
    opportunities, local entrepreneurial culture
  • Historical development and evolution of local
    knowledge base rarely appears out of thin air
  • Institutions formal and informal foster the
    creation, diffusion, and renewal of the local
    knowledge base

8
State and Local Policy ProgramIndustry Cluster
Studies
9
Industry Clusters Research Steps
  • 1. Economic data on regions industries
  • 2. Local leaders determine industries to study
  • 3. Focus groups of industry to identify
  • Competitive advantage
  • History
  • Institutional support / needs
  • 4. Policy recommendations

10
Identifying ClustersLocation Quotient
  • Measures employment concentration in a particular
    industry in a particular region
  • Measure of specialization
  • LQ is calculated as a ratio of the industrys
    share of employment in the region to the
    industrys share of employment in the nation
  • LQ 1 means that concentration of employment in
    the industry in the region is higher than
    concentration of employment in same industry in
    the nation i.e. the region specializes in that
    industry

11
Case Study Evidence of Rural Knowledge
Clusters in Minnesota
  • Recreational transportation equipment (Northwest
    Minnesota)
  • Automation and motion control technologies
    (Alexandria)
  • Advanced composite materials (Winona)
  • Precision Agricultural Machinery (Southwest
    Minnesota)

12
Case Example 1Competitive advantage
  • Factors that give local firms a market advantage
  • Supply or demand in the marketplace
  • Related industries
  • Local rivalry

13
Northwest Minnesota Key Facts
  • Population (2000) 88,472
  • Major Cities
  • Crookston 8,192
  • East Grand Forks 7,501
  • Roseau 2,756
  • Thief River Falls 8,410
  • Population Density (pop/sq mi) 11
  • (Twin Cities 601 MN state 62)
  • Population Growth (1990-2000) -2
  • (MN non-metro 4 US non-metro 9)
  • Job Growth (1990-2000) 16
  • (MN non-metro 25 US non-metro 18)
  •  
  • Kittson, Marshall, Norman, Pennington, Polk, Red
    Lake, Roseau counties (Region 1)
  • Source Census Bureau Bureau of Economic Analysis

14
Northwest Minnesota Recreational Transportation
Equipment
  • Key Industries
  • Other transportation equipment
    manufacturing (NAICS 3369/SIC 3799)
  • 2000 Employment 2,197, 20,500 more concentrated
    than U.S. overall
  • Source County Business Patterns

15
Competitive AdvantageRecreational
Transportation Equipment
  • Key Employers
  • Arctic Cat (Thief River Falls) 1,500 employees
  • Machinewell (Grygla) 110 employees
  • Polaris Industries (Roseau) 2,100 employees
  • TEAM Industries (Bagley) 250 employees
  • Source MN Dept of Trade and Economic Development

16
Northland Community and Technical College
  • Customized training for engineers
  • Certificate programs
  • Continuous quality improvement training

17
  • Competitive Advantages
  • Demanding local customers
  • Intense interfirm rivalry
  • Diffusion to new products and industries
  • Firms and Industries
  • Snowmobile manufacturing
  • All-terrain vehicles
  • Equipment suppliers and machine shops
  • Institutions
  • Northland Community Technical College
  • Minnesota Job Skills Partnership
  • Racing culture snowmobile racing circuit

18
Case Example TwoHistory
  • An historical base of knowledge about an industry
    or technology that is used to create new products
    or services

19
Alexandria Key Facts
  • Population (2000) 210,059
  • Major Cities
  • Alexandria 8,820
  • Fergus Falls 13,471
  • Moorhead 32,177
  • Population Density (pop/sq mi) 26
  • (Twin Cities 601 MN state 62)
  • Population Growth (1990-2000) 6
  • (MN non-metro 4 US non-metro 9)
  • Job Growth (1990-2000) 25
  • (MN non-metro 25 US non-metro 18)
  • Becker, Clay, Douglas, Grant, Otter Tail, Pope,
    Stevens, Traverse, and Wilkin counties (Region
    4).
  • Source Census Bureau Bureau of Economic
    Analysis

20
Alexandria Automation and Motion Control
Technologies
  • Key Industries
  • Packaging Machinery (NAICS 3339/SIC 3565)
  • 2000 Employment 1,209, 446 more concentrated
    than U.S. overall
  • Machine Shops and Related (NAICS 3327/SIC
    3599, 3451, 3452)
  •  2000 Employment 844, 210 more concentrated
    than U.S. overall
  •  
  • Source County Business Patterns

21
Alexandria Automation and Motion Control
Technologies
  • Key Employers
  • 3M (Alexandria) 317 employees
  • Alexandria Extrusion (Alexandria) 274 employees
  • Brenton Engineering (Alexandria) 127 employees
  • Douglas Machine (Alexandria) 492 employees
  • Minnesota Automation (Crosby) 120 employees
  • Massman Automation (Villard) 100 employees
  • Schott Automation (Garfield) 35 employees
  • Thiele Engineering (Fergus Falls) 81 employees
  •  Source MN Dept of Trade and Econ Development

22
Alexandria Technical College
  • Fluid Power Technology major
  • Center for Automation and Motion Control (CAMC)
  • Manufacturing Automation Research Laboratory
    (MARL)
  • Customized training

23
  • Competitive Advantages
  • Industry collective action around shared needs
  • Shortage of skilled labor in related industries
  • Firms and Industries
  • Industry packaging and material handling
    machinery
  • Other light manufacturing industries
  • Institutions
  • Alexandria Technical College, Ctr for Automation
    Motion Control
  • MN Mfg Automation Coalition
  • Tri-State Manufacturers Assoc.
  • Minnesota Technology Inc.
  • West Central Initiative

24
Case Example ThreeInstitutions
  • formal and informal foster the creation,
    diffusion, and renewal of the local knowledge
    base

25
Winona Key Facts
  • Population (2000) 112,517
  • Major Cities
  • Winona 27,069
  • Lake City 5,054
  • Population Density (pop/sq mi) 44
  • (Twin Cities 601 MN state 62)
  • Population Growth (1990-2000) 5
  • (MN non-metro 4 US non-metro 9)
  •  Job Growth (1990-2000) 21
  • (MN non-metro 25 US non-metro 17)
  • Blue Earth, Nicollet and Waseca counties
  • Source Census Bureau Bureau of Economic Analysis

26
Winona Advanced Composite Materials
  • Key Industries
  • Custom compounding of purchased resin (NAICS
    325991/SIC 3087)
  •  2000 Employment 517, 537 more concentrated
    than U.S. overall
  • All other plastics products manufacturing
    (NAICS 326199/SIC 3089)
  •  2000 Employment 241, 30 more concentrated than
    U.S. overall
  •  
  • Source County Business Patterns

27
Winona Advanced Composite Materials
  • Key Employers
  • RTP Company (Winona) 407 employees
  • Cytec Engineering (Winona) 175 employees
  • Ticona Celstran (Goodview) 69 employees
  • We-no-nah Canoe (Winona) 75 employees
  • Watlow Polymer Technologies (Winona) 24 employees
  • AFC Strongwell (Chatfield) 200 employees
  • Composite Products Inc. (Winona) 50 employees
  • CodaBow Composites (Winona) 15 employees
  • Miken Composites (Caledonia) 15 employees
  • Geotek (Stewartville) 35 employees
  •  Source MN Dept of Trade and Economic
    Development

28
Higher Education
  • Winona State University
  • The only composites engineering undergraduate
    program in U.S.
  • Composite Materials Technology Center (COMTEC)
  • Southeast Technical College
  • Customized training in process and quality
    improvement

29
  • Competitive Advantages
  • Diverse local industry base
  • Skilled worker base around composite engineering
  • Cooperative relationships
  • Firms and Industries
  • Composite materials producers
  • Existing products improved through use of
    composite materials (i.e. canoes, heated
    plastics, automotive products, violin bows)
  • History
  • Miller Brothers formed Fiberite after WWII
  • Initial growth in aerospace, military
    applications
  • Spin-off/startup activity to new firms
  • Institutions
  • SAMPE professional society
  • Winona St composite eng
  • COMTEC applied RD/testing
  • Winona Composites Consortium
  • Technical college custom training, technical
    education

30
Case Study FourIndustry Cluster at Risk
  • Southwestern MinnesotaPrecision Agricultural
    Equipment

31
Southwestern MinnesotaPrecision Agricultural
Equipment
  • Agricultural sprayer technology
  • Pitfall -- companies doing the same thing, rather
    than diverse activities around the same
    technology
  • Vulnerability from non-local ownership
  • Needed New products using existing knowledge

32
RTS Snapshots of Rural Innovation Rural Cluster
Vignettes
  • Auto Industry Supply Chain
  • Automotive
  • Carpet Manufacturing
  • Crafts
  • Furniture (Household)
  • Gaming
  • Hosiery
  • Hosiery
  • Houseboat Manufacturing
  • Oil and Gas
  • Pottery
  • Central Tennessee
  • Northwestern South Carolina
  • Dalton, Georgia
  • Western North Carolina
  • Northeastern, Mississippi
  • Tunica County, Mississippi
  • Catawba Valley, North Carolina
  • Fort Payne, Alabama
  • Somerset, Kentucky
  • Southern Louisiana
  • Seagrove, North Carolina

Source Stu Rosenfeld, RTS http//www.rtsinc.org/
rc/rc_home.html
33
Key Findings of Case Studies
  • History and context are important
  • Core knowledge base can drive multiple industries
    and applications.
  • Difficulty developing comparable quantitative
    indicators
  • Non-local ownership risky if production-only
  • Institutional and entrepreneurial strategies
    boost rural knowledge clusters

34
Implications for Economic Development
  • Understand your local knowledge base.
  • Identify specialized knowledge (job
    classifications)
  • Note firms in similar industry
  • Note underlying technology
  • Consider cluster industry study or Business
    Retention and Expansion program

35
  • 2. Foster linkages between firms and local
    institutions
  • Map linkages and stakeholder relationships note
    gaps
  • Emerging workforce training school-to-work,
    apprenticeships
  • Incumbent workforce training customized job
    training, continuing education, training
    partnerships

36
  • 3. Develop strategies for promoting innovation
    around rural knowledge clusters
  • Research centers
  • Technical assistance to entrepreneurs
  • Risk capital

37
  • 4. Dont try to go it alone promote a regional
    vision to guide local strategies
  • A. Labor market is regional

38
For further information
  • Go to
  • http//www.ruralvitality.org
  • http//www.hhh.umn.edu/centers/slp/

39
For further information contact Lee W.
Munnich, Jr. Senior Fellow and Director,
State and Local Policy Program Humphrey
Institute of Public Affairs University of
Minnesota
  • Lmunnich_at_hhh.umn.edu
  • http//www.ruralvitality.org
  • http//www.hhh.umn.edu/centers/slp/
  • (612) 625-7357
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