In Search of In Search of a Canadian Space Clustera Canadian Space Cluster

In Search of In Search of a Canadian Space Clustera Canadian Space Cluster

Innovation Systems Research NetworkInnovation Systems Research Network

Sixth Annual MeetingSixth Annual Meeting

May 13-14, 2004May 13-14, 2004David ArthursDavid Arthurs

Tijs CreutzbergTijs Creutzberg

Christine HaveyChristine Havey

Innovation Systems Research NetworkInnovation Systems Research Network

Sixth Annual MeetingSixth Annual Meeting

May 13-14, 2004May 13-14, 2004David ArthursDavid Arthurs

Tijs CreutzbergTijs Creutzberg

Christine HaveyChristine Havey

OutlineOutline The Canadian Space SectorThe Canadian Space Sector The Six L’sThe Six L’s

• LocationLocation• LabourLabour• LegislationLegislation• LabsLabs• LearningLearning• LeadershipLeadership

ConclusionsConclusions Implications for Cluster TheoryImplications for Cluster Theory

Space Sector CharacteristicsSpace Sector Characteristics CSA statistics:CSA statistics:

• 200 organizations (122 in this study)200 organizations (122 in this study)• Revenues - $1.8BRevenues - $1.8B• Workforce 5,789 – 59% Ontario, 21% Quebec, 9% BCWorkforce 5,789 – 59% Ontario, 21% Quebec, 9% BC• The top 30 firms account for 98% of the revenuesThe top 30 firms account for 98% of the revenues• 40% exported40% exported• 63% Telecom, 13% EO63% Telecom, 13% EO

Many firms no longer are active in space.Many firms no longer are active in space. Several firms do no consider themselves a part of Several firms do no consider themselves a part of

the space industry.the space industry. Apart from earth observation, firms are usually Apart from earth observation, firms are usually

less than 25% space.less than 25% space.

ToolsTools ComponentsComponents& Services& Services IntegrationIntegration OperationOperation ApplicationApplication

SpaceSpaceSystemsSystems

TelecomTelecom

NavigationNavigation

EarthEarthObservationObservation

SpaceSpaceScienceScience

RoboticsRobotics

3

2

1

5

2

19

11

3

6

2

6

10

7

1

2

1

2

2

34

3

32

9

24

6

46

5

122413184713

Space Sector StructureSpace Sector StructureValue Chain

Sub

-Sec

tors

CityCity # # FirmsFirms

Anchor Anchor OrganizationOrganization

CityCity # # FirmsFirms

Anchor Anchor OrganizationOrganization

Toronto/WaterlooToronto/Waterloo 2828 XX SaskatoonSaskatoon 44 XX

Ottawa/KingstonOttawa/Kingston 2323 XX St. John’sSt. John’s 44

MontrealMontreal 2121 XX KelownaKelowna 22

Vancouver/VictoriaVancouver/Victoria 1212 X X EdmontonEdmonton 22

HalifaxHalifax 88 WinnipegWinnipeg 33 XX

Quebec CityQuebec City 77 XX MonctonMoncton 22

CalgaryCalgary 66 TotalTotal 122122

CSACSA

GeoidGeoid

CCRSCCRSCRCCRC

CresTechCresTech

LocationLocation““We don’t work for the region. People are here because they We don’t work for the region. People are here because they

want to live here.”want to live here.”

Location decisions are based on history and lifestyle Location decisions are based on history and lifestyle preferences. They are not business decisions.preferences. They are not business decisions.

Distance is not difficult to overcome.Distance is not difficult to overcome.• ““Really the only infrastructure that is important is communications – Really the only infrastructure that is important is communications –

especially the high speed Internet”especially the high speed Internet”

Proximity is somewhat an issue for customers: Proximity is somewhat an issue for customers: • ““Where we think it helps to be close, we put people there”Where we think it helps to be close, we put people there”

Proximity is not an issue for competitors, suppliers, Proximity is not an issue for competitors, suppliers, research.research.

There is no accounting for taste in location.There is no accounting for taste in location.

LabourLabour““The most important factor is probably the supply of The most important factor is probably the supply of

qualified people”qualified people”

Technical personnel are more likely to be sourced Technical personnel are more likely to be sourced locally. Management is more likely to be sourced locally. Management is more likely to be sourced nationally and internationally.nationally and internationally.

Turnover is very low.Turnover is very low.

LegislationLegislation““CSA placed itself in a geographically unlucky place”CSA placed itself in a geographically unlucky place”

Regional Benefits Policy.Regional Benefits Policy.• Cannot use ‘best of class’ suppliersCannot use ‘best of class’ suppliers• Playing field is not levelPlaying field is not level• Regional distribution disperses a critical massRegional distribution disperses a critical mass

Regional Agencies.Regional Agencies. Political location of the Canadian Space Agency.Political location of the Canadian Space Agency.

• Firms are not locating close-by.Firms are not locating close-by.

LabsLabs““The knowledge exchange, however, goes from us The knowledge exchange, however, goes from us

to them”to them”

Effective research is a dialogue, not technology Effective research is a dialogue, not technology transfer.transfer.

Innovation is global, not local.Innovation is global, not local.• ““Innovation has become distance insensitive”Innovation has become distance insensitive”

LearningLearning““Space is a strange market for adopting new Space is a strange market for adopting new

technologies. There is a heavy reliance on technologies. There is a heavy reliance on heritage products because of risk aversion.”heritage products because of risk aversion.”

Most learning results from interactions with Most learning results from interactions with customers.customers.

High degree of interaction with distant High degree of interaction with distant laboratories.laboratories.

Low levels of collaboration.Low levels of collaboration. Low labour mobility reduces inter-firm transfers of Low labour mobility reduces inter-firm transfers of

knowledge.knowledge. Significant training within the firm.Significant training within the firm.

LeadershipLeadership““We have a giant and lots of pimples. MDA’s We have a giant and lots of pimples. MDA’s historical approach to clustering is to stamp on historical approach to clustering is to stamp on

pimples”pimples”

Anchor organizations are not acting as cluster Anchor organizations are not acting as cluster leaders.leaders.

““We tend to complement on another more than We tend to complement on another more than compete, but we are not successful at coming compete, but we are not successful at coming together”together”

““Yes we do consider ourselves a part of a network Yes we do consider ourselves a part of a network or related firms, but not with firms in the region”or related firms, but not with firms in the region”

ConclusionsConclusions Is there a Canadian Space Is there a Canadian Space

Cluster?Cluster?

Has public policy worked Has public policy worked against the emergence of against the emergence of a cluster?a cluster?

Has the lack of a cluster Has the lack of a cluster hurt the industry?hurt the industry?

Emphatically NO –Emphatically NO –• No spatial agglomerationNo spatial agglomeration• Poor functional inter-linkagePoor functional inter-linkage

There is a national There is a national innovation systeminnovation system

Probably YESProbably YES

That is the questionThat is the question

Implications for Cluster TheoryImplications for Cluster Theory““This is a fad; it only makes sense in Ontario”This is a fad; it only makes sense in Ontario”

The space sector provides a counter-example for The space sector provides a counter-example for cluster theory.cluster theory.

Firms rationalize their decisions.Firms rationalize their decisions.

Cluster theorists find what they are looking for. Cluster theorists find what they are looking for. Correlation versus Causation.Correlation versus Causation.