![Page 1: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/1.jpg)
Industry Cluster Approach to Workforce and
Economic Development RCCI Annual Conference
October 7, 2003
Lee W. Munnich, Jr.State and Local Policy Program
WithLiz Templin
Extension Educ. - Community EconomicsUniversity of Minnesota
![Page 2: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/2.jpg)
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
![Page 3: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/3.jpg)
Objectives
Definition of industry clusters
Adaptation to rural communities
How industry clusters start (case studies)
Role of higher education
![Page 4: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/4.jpg)
Michael Porter’s“Diamond of Advantage”
DemandConditions
Factor
Conditions
Related andSupported Industries
Firm Strategy,Structure,
and Rivalry
Chance
Government
![Page 5: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/5.jpg)
“The Knowledge Economy”
In today’s 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 challenge:providing a fertile environment for innovation
![Page 6: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/6.jpg)
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.
![Page 7: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/7.jpg)
Rural Knowledge Clusters: What Matters?
Competitive advantage – e.g. a rich base of skilled workers, access to proximate market opportunities, local entrepreneurial cultureHistorical development and evolution of local knowledge base – rarely appears out of thin airInstitutions – formal and informal; foster the creation, diffusion, and renewal of the local knowledge base
![Page 8: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/8.jpg)
State and Local Policy ProgramIndustry 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
![Page 9: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/9.jpg)
Industry Clusters Research Steps
1. Economic data on region’s industries
2. Local leaders determine industries to study
3. Focus groups of industry to identify:A. Competitive advantage
B. History
C. Institutional support / needs
4. Policy recommendations
![Page 10: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/10.jpg)
Identifying Clusters:Location Quotient
Measures employment concentration in a particular industry in a particular region
Measure of specializationLQ is calculated as a ratio of the industry’s share of
employment in the region to the industry’s share of employment in the nationLQ > 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
![Page 11: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/11.jpg)
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)
![Page 12: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/12.jpg)
Case Example 1:Competitive advantage
Factors that give local firms a market advantage:
Supply or demand in the marketplace
Related industries
Local rivalry
![Page 13: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/13.jpg)
Northwest Minnesota: Key FactsPopulation (2000): 88,472*Major Cities:
Crookston: 8,192East Grand Forks: 7,501Roseau: 2,756Thief 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
Thief River Falls
![Page 14: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/14.jpg)
Northwest Minnesota: Recreational Transportation Equipment
Key IndustriesOther transportation
equipment manufacturing (NAICS: 3369/SIC: 3799)
2000 Employment: 2,197, 20,500% more concentrated than U.S. overall
Source: County Business Patterns
Thief River Falls
![Page 15: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/15.jpg)
Competitive Advantage:Recreational Transportation Equipment
Key EmployersArctic Cat (Thief River Falls) 1,500 employeesMachinewell (Grygla) 110 employeesPolaris Industries (Roseau) 2,100 employeesTEAM Industries (Bagley) 250 employees
Source: MN Dept of Trade and Economic Development
Thief River Falls
![Page 16: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/16.jpg)
Northland Community and Technical College
Customized training for engineers
Certificate programs
Continuous quality improvement training
![Page 17: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/17.jpg)
HistoryFarm equipment mfg base
Need for transportation in snow
Heteen et al develop first modern snowmobile, start Polaris
Spins off, starts Arctic Cat
Recreational transportation equipment
NW Minnesota: Rural Knowledge Cluster Profile
Competitive Advantages
Demanding local customersIntense interfirm rivalryDiffusion to new products and industries
Firms and Industries
Snowmobile manufacturing
All-terrain vehicles
Equipment suppliers and machine shopsInstitutions
Northland Community & Technical CollegeMinnesota Job Skills Partnership “Racing culture” – snowmobile racing circuit
![Page 18: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/18.jpg)
Case Example Two:History
An historical base of knowledge about an industry or technology that is used to create new products or services
![Page 19: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/19.jpg)
Alexandria: Key FactsPopulation (2000): 210,059*Major Cities:
Alexandria: 8,820Fergus Falls: 13,471Moorhead: 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
![Page 20: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/20.jpg)
Alexandria: Automation and Motion Control Technologies
Key IndustriesPackaging 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
Alexandria
![Page 21: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/21.jpg)
Alexandria: Automation and Motion Control Technologies
Key Employers3M (Alexandria) 317 employeesAlexandria Extrusion (Alexandria) 274 employeesBrenton Engineering (Alexandria) 127 employeesDouglas Machine (Alexandria) 492 employeesMinnesota Automation (Crosby) 120 employeesMassman Automation (Villard) 100 employeesSchott Automation (Garfield) 35 employeesThiele Engineering (Fergus Falls) 81 employees
Source: MN Dept of Trade and Econ Development
Alexandria
![Page 22: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/22.jpg)
Alexandria Technical College:
Fluid Power Technology major
Center for Automation and Motion Control (CAMC)
Manufacturing Automation Research Laboratory (MARL)
Customized training
![Page 23: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/23.jpg)
HistoryAg region, craft-like machine shops and equipment mfg
Proximity to markets for packaging equipment
Automation and motion
control technologies
Alexandria: Rural Knowledge Cluster Profile
Competitive Advantages
Industry collective action around shared needsShortage 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 ControlMN Mfg Automation CoalitionTri-State Manufacturer’s Assoc.Minnesota Technology Inc.West Central Initiative
![Page 24: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/24.jpg)
Case Example Three:Institutions
formal and informal; foster the creation, diffusion, and renewal of the local knowledge base
![Page 25: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/25.jpg)
Winona: Key FactsPopulation (2000): 112,517*Major Cities:
Winona: 27,069Lake 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
Winona
![Page 26: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/26.jpg)
Winona: Advanced Composite Materials
Key IndustriesCustom 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
Winona
![Page 27: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/27.jpg)
Winona: Advanced Composite Materials
Key Employers
RTP Company (Winona) 407 employeesCytec Engineering (Winona) 175 employeesTicona Celstran (Goodview) 69 employeesWe-no-nah Canoe (Winona) 75 employeesWatlow Polymer Technologies (Winona) 24 employeesAFC Strongwell (Chatfield) 200 employeesComposite Products Inc. (Winona) 50 employeesCodaBow Composites (Winona) 15 employeesMiken Composites (Caledonia) 15 employeesGeotek (Stewartville) 35 employees
Source: MN Dept of Trade and Economic Development
Winona
![Page 28: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/28.jpg)
Higher Education:Winona State University
The only composites engineering undergraduate program in U.S.Composite Materials Technology Center (COMTEC)
Southeast Technical CollegeCustomized training in process and quality improvement
![Page 29: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/29.jpg)
Advanced composite materials
mfg
Winona: Rural Knowledge Cluster Profile
Competitive AdvantagesDiverse local industry baseSkilled worker base around composite engineeringCooperative relationships Firms and Industries
•Composite materials producers
•Existing products improved through use of composite materials (i.e. canoes, heated plastics, automotive products, violin bows)
Institutions•SAMPE – professional society•Winona St – composite eng•COMTEC – applied R&D/testing•Winona Composites Consortium•Technical college – custom training, technical education
History•Miller Brothers – formed Fiberite after WWII•Initial growth in aerospace, military applications•Spin-off/startup activity to new firms
![Page 30: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/30.jpg)
Case Study Four:Industry Cluster at Risk
Southwestern Minnesota:Precision Agricultural Equipment
![Page 31: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/31.jpg)
Southwestern Minnesota:Precision 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
![Page 32: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/32.jpg)
RTS Snapshots of Rural Innovation: Rural Cluster Vignettes
Auto Industry Supply ChainAutomotiveCarpet ManufacturingCraftsFurniture (Household)GamingHosieryHosieryHouseboat ManufacturingOil 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
![Page 33: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/33.jpg)
Key Findings of Case StudiesHistory 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
![Page 34: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/34.jpg)
Implications for Economic Development
1. Understand your local knowledge base.A. Identify specialized knowledge (job
classifications)
B. Note firms in similar industry
C. Note underlying technology
D. Consider cluster industry study or Business Retention and Expansion program
![Page 35: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/35.jpg)
2. Foster linkages between firms and local institutions
A. Map linkages and stakeholder relationships; note gaps
B. Emerging workforce training: school-to-work, apprenticeships
C. Incumbent workforce training: customized job training, continuing education, training partnerships
![Page 36: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/36.jpg)
3. Develop strategies for promoting innovation around rural knowledge clusters
A. Research centers
B. Technical assistance to entrepreneurs
C. Risk capital
![Page 37: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/37.jpg)
4. Don’t try to go it alone – promote a regional vision to guide local strategiesA. Labor market is regional
![Page 38: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/38.jpg)
For further information:
Go to
http://www.ruralvitality.org
http://www.hhh.umn.edu/centers/slp/
![Page 39: Industry Cluster Approach to Workforce and Economic Development](https://reader035.vdocument.in/reader035/viewer/2022062500/568151a3550346895dbfd37e/html5/thumbnails/39.jpg)
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
http://www.ruralvitality.org
http://www.hhh.umn.edu/centers/slp/
(612) 625-7357