Industry ClustersIndustry Clustersand Innovationand Innovation

March 2005

www.ImpresaConsulting.com

RoadmapRoadmap

Visualizing the EconomyUnderstanding ClustersIdentifying Oregon’s ClustersWhat to do

I. Visualizing the EconomyI. Visualizing the Economy

What’s your mental image?

Picturing the Oregon EconomyPicturing the Oregon Economy

80,000 Businesses with a Payroll

by Geographic Locationby Geographic Location

by Business Sizeby Business Size

Large Business

Medium Business

Small Businesses

by Industry Clusterby Industry ClusterWood Products Electronics Metals Food Software

II. Understanding ClustersII. Understanding Clusters

What are they? How do they work?

What Kind of Economy?What Kind of Economy?

While most jobs and businesses in every state area are the same

Restaurants, grocery stores, hospitals, beauty salons,

About a third differs: Traded sector

Traded Sector Drives GrowthTraded Sector Drives Growth

Traded/Export Sector

Suppliers

Local

Sales to the rest of the world

Most jobs are here: schools, hospitals, grocery stores, restaurants

But firms in this sector drive the economy

Strategies DifferStrategies Differ

Traded/Export Sector

Suppliers

Local

Build Cluster Competitiveness

Promote Efficiency & World Class Suppliers

Clustering is CriticalClustering is Critical

Traded sector success isn’t randomSimilar and related businesses draw

advantages from proximityPlaces specializeClustering holds for most “traded”

goods: autos, carpets, RVs, others

DefinitionDefinition

Cluster: A geographically bounded group of similar or related firms--connected by common markets, technologies or knowledge--their suppliers, their skilled workers and supporting institutions

Traded sector: selling goods and services in national or international markets

What makes Clusters Tick?What makes Clusters Tick?

Rivalry & Cooperation

Customers

Suppliers

Inputs

Source: Michael Porter, Harvard Business School

Oregon’s Microbrew ClusterOregon’s Microbrew Cluster

Competition & Brewer’s Guild

Savvy Beer Drinkers,HomebrewersSmall Restaurants

Equipment Makers,Creative Services

Hops, Water,Brewmasters

RivalryRivalry

SuppliersSuppliers

CustomersCustomersInputsInputs

An Oregon ClusterAn Oregon Cluster

SuppliersSuppliers

Wine and Brewing Supplies

SemiconductorsSemiconductor Manufacturing

Equipment/Electronic Design AutomationSilicon WafersPrintersComputersDisplay & Imaging Technology

High Tech StrengthsHigh Tech Strengths

High Tech ClustersHigh Tech Clusters

Seattle- SoftwarePortland

- Semiconductors- SME/EDA- Display- Computers

Silicon Valleyeverything!

San Diego- Communications

Austin- Semiconductors- Computers- SME

Salt Lake City- Software- Medical Devices- Storage Technology

Sacramento- Computers

Minneapolis- Computers- Medical Devices

Boston- Computers

Research Triangle Park- Software

Denver- Telecommunications- Satellite- Storage

Atlanta- Database- Telecommunications

Phoenix- Semiconductors

© Impresa, Inc. 2002 -- www.impresaconsulting.com

The Ecology of the Silicon ForestThe Ecology of the Silicon Forest

Signs of LifeSigns of Life

The Growth of Biotechnology Centersin the United States

Brookings Institution

Clusters Create IdeasClusters Create Ideas

Clusters are places where people turn ideas into businesses– Better– Faster– More Reliably

III. Identifying ClustersIII. Identifying Clusters

What are Oregon’s Clusters?

Criteria for Identifying ClustersCriteria for Identifying Clusters

More Concentrated– Location Quotient

Faster Growing– Outperformed Same Industry Nationally

Higher Paid– Exceds US average for same industry

Groups of Industries in which Oregon is:

Oregon ClustersOregon Clusters

Industry Cluster JobsHigh Technology/Software 66,850 Forest/Wood/Paper Products 62,412 Food Processing 48,208 Apparel/Sporting Goods 18,413 Transportation Equipment 14,972Creative Services 16,345Recreation 11,907Metals 9,215Nursery Products 10,247Professional Services 4,417Biomedical 3,404

Define regionDefine region

Identify Key PartnersIdentify Key Partners

Quantitative AnalysisQuantitative Analysis

Qualitative AnalysisQualitative Analysis Competitiveness AnalysisCompetitiveness Analysis

Identify Economic Development Policies & ActionsIdentify Economic Development Policies & Actions

Industry cluster groupsOregon Employment DepartmentIndustry & Trade Associations

Researchers at universities

Local economic developersOthersUse CEW data & identify clusters

using 3 criteria:LQ > 1.25Average wages = 10 % above US averageGrowth rate > national growth rate

Conduct interviews or focus groups with industry representatives. Collect data about the industry sectorin general, cluster connections and relationshipscluster drivers, support factors, and challenges.

Collect additional information about particular cluster such as Patents, key products, major geographic concentrations, top 10 leading firms, entrepreneurial activity, competitor regions for specific cluster. Conduct Shift-Share analysis.

Define geographic area for whichcluster analysis is done.I.e. Portland-Vancouver, OR-WA PMSA

Policies and actions should be identifiedin collaboration with key partners. Should address state, regional, and local scale.

ProductsProducts

Identificationof DataSources

Identificationof CandidateClusters

Differentiation of- Existing Clusters- Emerging Clusters- Target Industries

Cluster-basedEconomicDevelopmentStrategy

Identify metrics and performance indicators.

Strategy development and assessment is ongoing.

IndustryIndustry

FirmFirm

OngoingOngoing

Cluster Methodology

Cluster AnalysisCluster Analysis

Define Cluster

Convene Firms

Gather Data

Nursery Industry ClusterNursery Industry Cluster

1,000 firms with payroll 12,000 employees $500 million sales Average salary: $20,000 Growing much faster

than US Nursery Industry

Oregon’s largest agricultural commodity

85% of industry in Metro area

0

100

200

300

400

500

600

1991 1995 1998

Sales (Millions)

Related Industries

Commercial Printing (2752, 2754, 2759)Prepress (279)Ad. Signs (3993)

Printing

Staffing Agencies (7363)

The Creative Services ClusterThe Creative Services Cluster

Newspapers (2711)Magazines (2721)Radio (4832)Cable (4841)Television (4833)

Media

Internet Service Providers

Educational/CulturalPerforming ArtsMuseumsArt SchoolsGalleries

Telecommunication & Cable Providers

Education & Training Institutions

Other IndustriesIn-House “Shops”

Advertising/Public Relations

Film & Video

Software/Multimedia

SIC 737Content DesignersMultimediaWeb Sites

SIC 874, 731

SIC 781, 782FilmVideoAllied ServicesSound Studios (7389)

Freelancers & Self-employed(Supporting all industry groups)

Commercial photographers (7335)Graphic Design (7336)Writers (8999)Producers/Actors (792)

Additional Human Resource Providers

IV. What to DoIV. What to Do

The Architecture of a Cluster Strategy

Using ClustersUsing Clusters

Think of the Economy as a series of Clusters

Organize Efforts by Cluster

Act Cluster by Cluster to promote competitiveness & innovation

For More InformationFor More Information

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