Useful Notes on International Experiences on Cluster & Cluster Development

a. Access key market information

b. Gain new listings with UK retailers

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c. Build the skills of their workforce; and

d. Develop new products.

Scottish Food and Drink is now a recognizable brand, is supported through the public agencies and has a strong information based website. It has a published strategy developed with food and drink companies and organizes a series of regional forums offering an opportunity for related companies to meet and make contact.

Developing New Institutional Structures:

In some cases a whole host of networks and other institutions have been established as clusters. This has developed often as a natural phenomenon in maturing clusters. In Cambridge, for example:

The Cambridge Network was established by local business leaders to increase networking between local IT firms and to raise their international profile;

a. An academic – business alliance, Cambridge Future has also been established, with private sector funding, to explore different scenarios for accommodating anticipated growth in the Cambridgeshire area; and

b. The Greater Cambridgeshire Partnership was established in 1998 between local businesses, government and the university for a similar purpose.

Bringing firms together:

The state of Oregon, like other US states, built upon earlier experience in Denmark to develop a network programme. This was designed to encourage firms to join together into networks. The elements of the network programme were.

a. Network brokers-the key to each network, brokers acted as facilitators for networking events, as well as acting to bring firms together. To support the scheme Oregon also designed a broker training programme.

b. Multipliers-well placed individuals familiar with local firms that can pass on information of opportunities for collaboration to network brokers.

c. Incentives-support to compensate small firms for some of the costs of network participation.

d. Information campaigns – the use of media, brochures and newsletters to publicise the potential value of networks.

Developing International Networks:

Officials of the Carolian Hosiery Association, along with community college technology centre staff, the director of the North Carolina technology agency and the Governor’s economic advisor traveled to Castel Goffredo and Carpi in northern Italy.

Not only did the trip lead to the establishment of links to machine builders in Brescia and the development of export networks it also led to a revamp of the local technological centre, through offering additional research and training activities and the formation of an R& D network between hosiery firms and North Carolina State University.

Engaging firms:

There are many ways of engaging firms in networks. Scottish Enterprise used the following means of engaging business in its identified tourism cluster:

1. A ‘Leadership Group’ comprised of industry champions and key stakeholders, was established.

2. Facilitators then worked with firms to undertake some background profiling and scoping of the sector.

3. Meetings were undertaken to discuss potential, strategic objectives and also to prioritise actions. At this stage painting a compelling ‘vision’ of shared under­standing for the cluster was important.

4. These actions were used to develop ‘Action Groups’ that drew up action and business plans for the sector. One of the responsibilities of the leadership group was to review and support the process as a whole.

Developing a Physical Focal Point:

In England, South East England Development Agency (SEEDA) has developed its Enterprise Hub network partly to assist in networking between firms. A prominent business champion, supported by a group of ambitious entrepreneurs, leads each Hub. University and network brokers support the Hub, with a team of experts to advise small businesses on innovation, product design, business finance, IT & e- commerce.

The Enterprise Hub Network aims to set up 30 new Hubs across the South East of England, each Hub will provide:

a. Incubator space for new businesses.

b. Strong links with venture capitalists.

c. An affiliated university research department.

d. A Business Club for networking

e. Web based tax and accounts advice

f. Business mentoring

Institutional arrangement for promoting innovation:

Many successful clusters are supported by a range of institutional organizations; some are focused on that cluster, others have a more general remit. Analytical Biotechnology Clusters in Massachusetts identified the following as amongst the key agents.

a. Massachusetts Biotechnology Council: trade association representing biotech­nology firms.

b. Massachusetts Department of Economic Development: has a key role in busi­ness and trade development improving the business climate (R&D tax credits, investment tax credits).

c. Massachusetts Technology Collaborative state – founded independent body to foster technology-intensive enterprises.

d. Massachusetts Institute of Technology: leading centre for biotechnology re­search and commercialization campus incubators and Technology Park; MIT Entrepreneurship Centre trains scientists in entrepreneurship; MIT Technology Licensing Office, identifies technologies suitable for start-ups, introduces tech­nology to potential investor (usually venture capitalists.)

e. Whitehead Institute of Biomedical Research: an independent research and teach­ing institution.

Automotive and Pharmaceutical Cluster Training:

Partnership for Learning operates as a registered charity and with partnership from private, public and community. It is a self-sustaining, commercial business that aims helping regenerate Merseyside by providing a route to highly skilled, well paid employment for local people and success in business for their employers. It provides vocational training to 40 major clients in the Northwest including companies such as Jaguar, Evans Vaccines; Ell Lilly and Glaxo Smith Kline.

The aim of the centre is: (a) to deliver training that enhances the education and skills opportunities of the local communities, and (b) to support business with demand- led training solutions. To this end it provides community based and SME focused training for re-skilling and up-skilling. The centre was established under the premise that employers and local economies cannot thrive if they act in isolation from each other.

Improving Higher-Level Skills:

The Bio Pharma Skills Task Force was funded by SEEDA and aimed at the continuing education needs for scientists and managers in industry. The programme is aimed at employees within the biopharma industries who are encouraged to broaden their education. It comprises of three main elements:

a. Investment in resource centres to provide information, up-skilling, retraining, careers advice and teaching.

b. Benchmarking of opportunities to attract the right people.

c. The establishment of a Bio Pharma Skills Unit dealing directly with individual companies to analyse skills needs and source appropriate providers and work with training providers to develop their capacity (to train).

Public or Private Research Institutes as Key Drivers of Clus­ter Development:

The role of research institutes as drivers of cluster development has been emphasized by the experience of places like Silicon Valley in the USA and Cambridge in the UK where universities have been important components in the development of the cluster.

In the Cambridge cluster estimates of the proportion of new firms that have spun out of the university are up to 31% of new firms. 42 out of 50 firms in one survey reported free technological advice from University based staff through formal or informal networks, with 14 reporting these as critical to the success of the firm.

Innovation Where a University Base is not present:

Universities need not be present for the development of successful clusters. The centre of the US furniture industry is located in Mississippi. This has developed over time from spin offs from Futorian Furniture; the original furniture making firm located in the area.

There are now more than 200 companies based within the cluster, plus suppliers and support services and companies compete fiercely in terms of designs and innovations. Yet the social fabric of the community is very strong and ideas travel quickly through social contacts and worker mobility.

Supply chain development in France:

Mechanic Valley in Midi Pyrenees is structured around the aerospace, automotive and machine tools sectors in Aveyron, Correze and Lot and comprised of some 210 businesses and 1 4,000 employees. The area is one of DATARs’ 11 cluster development projects in the region.

The policy in this instance has been developed to encourage diversification and restructuring through supply chain development. Large firms (such as the Aerospace Company Ratier in Figeac) have been encouraged to develop within industrial district and rely on the local skills base of SMEs.

The French experience shows that in addition to spatial planning, strategies can be used to help foster inter firms links and to embed firms into the local economy. Particularly successful policies designed to encourage cluster development in the Midi Pyreness has included:

a. The development of business incubators (pepinieres) providing logistical ser­vices (such as fax photocopying and high speed network connections) and low cost office and workshop space;

b. Exoneration from property tax for three years, which frees new businesses from one element of the tax burden;

c. Low levels of (local authority) property tax, which make one commune more attractive to businesses than another;

d. The establishment of an ‘Economic Development Service’, which can range from simple information provision to companies wanting to move to the area to the organization of meetings and networks with “outside companies and potential finance providers; and

e. Partial financing of development and information units in certain areas. These units have different objectives (assistance, putting together projects proposals or grant aid bids, market potential studies, communication tools to promote the advantages and skill base of the local area).

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