Rural Knowledge Clusters: Strategic Planning & Practical Application Lee Munnich Senior Fellow and Director State and Local Policy Program Humphrey Institute of Public Affairs University of.
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Rural Knowledge Clusters: Strategic Planning & Practical Application Lee Munnich Senior Fellow and Director State and Local Policy Program Humphrey Institute of Public Affairs University of Minnesota Phone: (612) 625-7357 E-mail: [email protected] State and Local Policy Program Overview Defining rural knowledge clusters and keys to cluster success Minnesota successes and other cluster examples in Southern states Steps to developing a rural knowledge cluster initiative Rural Knowledge Clusters Specialized networks of innovative, interrelated firms Centered outside major metropolitan areas Deriving competitive advantages primarily through accumulated, embedded, and imported knowledge among local actors Keys to Cluster Success Understand your local knowledge base. Foster linkages between firms and the local institutions that support them. Develop strategies for promoting innovation around rural knowledge clusters. Don’t try to go it alone – promote a regional vision to guide strategies. Minnesota Success Stories illustrating Competitive advantage History Institutions Case Example 1: Competitive advantage Factors that give local firms a market advantage: Supply or demand in the marketplace Related industries Local rivalry 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 Northwest Minnesota: Recreational Transportation Equipment Key Industries Other transportation equipment manufacturing (NAICS: 3369/SIC: 3799) 2000 Employment: 2,197, 20.5 times more concentrated than U.S. overall Source: County Business Patterns Competitive Advantage: Recreational 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 Case Example Two: History An historical base of knowledge about an industry or technology that is used to create new products or services 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 Alexandria: Automation and Motion Control Technologies Key Industries Packaging Machinery (NAICS: 3339/SIC: 3565) 2000 Employment: 1,209, 4.5 times more concentrated than U.S. overall Machine Shops and Related (NAICS: 3327/SIC: 3599, 3451, 3452) 2000 Employment: 844, 2.1 times more concentrated than U.S. overall Source: County Business Patterns 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 Case Example Three: Institutions formal and informal; foster the creation, diffusion, and renewal of the local knowledge base 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%) Winona *Blue Earth, Nicollet and Waseca counties Source: Census Bureau; Bureau of Economic Analysis Winona: Advanced Composite Materials Key Industries Custom compounding of purchased resin (NAICS: 325991/SIC: 3087) 2000 Employment: 517, 5.37 times more concentrated than U.S. overall All other plastics products manufacturing (NAICS: 326199/SIC: 3089) 2000 Employment: 241, 3 times more concentrated than U.S. overall Source: County Business Patterns Winona 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 Winona Winona: Rural Knowledge Cluster Profile Competitive Advantages Diverse local industry base Skilled worker base around composite engineering Cooperative relationships Firms and Industries History •Miller Brothers – formed Fiberite after WWII •Initial growth in aerospace, military applications •Spin-off/startup activity to new firms •Composite materials producers Advanced Composite Materials Mfg Institutions •SAMPE – professional society •Winona St – composite eng •COMTEC – applied R&D/testing •Winona Composites Consortium •Technical college: custom training, technical education •Existing products improved through use of composite materials (i.e. canoes, heated plastics, automotive products, violin bows) A Cluster in Turmoil: Precision Agricultural Equipment in Southwestern Minnesota Agricultural sprayer technology Highlights potential pitfalls of having a cluster of companies doing essentially the same thing, rather than diverse activities around the same technology Vulnerability that comes from non-local ownership Suffered from corporate consolidations, layoffs, and plant closings Minimal start-up activity Current and Emerging Industry Clusters Overview of past research Data on potential emerging clusters State and Local Policy Program Regional Cluster Studies Twin Cities Southeast Minnesota Southwest Minnesota Northwest Minnesota Northeast Minnesota Printing and Publishing Composites Computer and Electrical Components Manufacturing Recreation and Transportation Equipment Manufacturing Forest Products Value-Added Agricultural Cooperatives Value-Added Agricultural Processing Health Services Agricultural Equipment Manufacturing Wood Products Food Processing Computers and Software Medical Devices Machinery and Metalworking Financial Services Printing, Publishing, and Software Industrial Machinery and Computer Manufacturing Dairy Processing Tourism Information Technology Tourism 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 Identifying Clusters: Location Quotient Measures employment concentration in a particular industry in a particular region Measure of specialization LQ is calculated as a ratio of the industry’s share of employment in the region to the industry’s 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 Developing a Cluster Initiative: 6 Key Steps 1. 2. 3. 4. 5. 6. Identify Cluster Candidates Select Key Industries Perform Stakeholder Analysis Hold Industry Stakeholder Roundtable Perform One-on-One Interviews Develop Action Plan Knowledge Cluster Strategies Research and Innovation Cluster Branding and Awareness Strategic Partnerships Global Marketplace Knowledge Cluster Expansion Cluster Initiative Sustainability Project Team should be assembled prior to the cluster initiative development process Concurrent to the development of the cluster initiative, Project Team requires training in: overall cluster approach and criteria for cluster identification qualitative assessment process design and coordination of cluster roundtables and interviews Conclusions The cluster study approach: ensures that pertinent issues are brought to the forefront, gives a voice to the region’s businesses, leading to future economic development And thus… secures the industries’ future secures jobs for the region’s residents motivates and engages industry leaders and policy makers. For further information: Go to http://www.ruralvitality.org http://www.hhh.umn.edu/centers/slp/