Rural Knowledge Clusters:Strategic Planning & Practical Application

State and Local Policy Program

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: lmunnich@hhh.umn.edu

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 FactsPopulation (2000): 88,472*Major Cities: Crookston: 8,192 East Grand Forks: 7,501 Roseau: 2,756 Thief River Falls: 8,410Population 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

Thief River Falls

Northwest Minnesota: Recreational Transportation Equipment

Key IndustriesOther transportation

equipment manufacturing (NAICS: 3369/SIC: 3799) 2000 Employment:

2,197, 20.5 times more concentrated than U.S. overall

Source: County Business Patterns

Thief River Falls

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

Thief River Falls

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 FactsPopulation (2000): 210,059*Major Cities: Alexandria: 8,820 Fergus Falls: 13,471 Moorhead: 32,177Population 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

Alexandria: Automation and Motion Control Technologies

Key IndustriesPackaging 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

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

Alexandria

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: 5,054Population 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

Winona

Winona: Advanced Composite Materials

Key IndustriesCustom 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

Advanced Composite Materials Mfg

Competitive AdvantagesDiverse local industry baseSkilled worker base around

composite engineeringCooperative relationships

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 R&D/testing•Winona Composites Consortium

•Technical college: custom training, technical education

Firms and Industries•Composite materials

producers

•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 ProgramRegional Cluster Studies

Twin Cities Southeast Minnesota

Southwest Minnesota

Northwest Minnesota

NortheastMinnesota

Printing and Publishing

 Computers and

Software 

Medical Devices 

Machinery andMetalworking

 Financial Services

Composites 

Food Processing 

Printing, Publishing, and

Software

 Industrial

Machinery and

Computer Manufacturing

 

Computer and Electrical Components

Manufacturing

 Value-Added Agricultural

Cooperatives

 

Agricultural Equipment Manufacturing

 Dairy Processing

Recreation and Transportation

Equipment Manufacturing

 Value-Added Agricultural Processing

 Wood Products

 Tourism

Forest Products 

Information Technology

 Health Services

 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 TennesseeNorthwestern South CarolinaDalton, GeorgiaWestern North CarolinaNortheastern, MississippiTunica County, MississippiCatawba Valley, North CarolinaFort Payne, AlabamaSomerset, KentuckySouthern LouisianaSeagrove, 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. Identify Cluster Candidates2. Select Key Industries3. Perform Stakeholder Analysis4. Hold Industry Stakeholder Roundtable5. Perform One-on-One Interviews6. 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.orghttp://www.hhh.umn.edu/centers/slp/