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December 8, 2013

Business 'clusters' can boost economy

Last month, The Development Corporation (TDC) hosted a meeting skillfully facilitated by Howard Silverman, president of the CAI Global Group headquartered in Montreal, of local transportation manufacturers and some of their suppliers.

The purpose was to discuss how best to continue to develop Clinton County’s aerospace/transportation equipment cluster.

What exactly is an industry cluster, you ask. Good question. Harvard professor Michael Porter coined the term industry cluster in his 1990 book “The Competitive Advantage of Nations.” The term is often misused to describe companies with similar interests, needs and competencies that locate close to one another.

A true industry cluster, however, is more than that. A true industry cluster is comprised of a vertically and horizontally integrated value chain consisting of manufacturers, suppliers, vendors and distributors intertwined with economic-development organizations, academic institutions, research facilities and workforce-training organizations.

As an aside, let me say that I’ve never really liked the word “cluster,” it’s seems like an unsophisticated word to use to describe a sophisticated concept. For me, the word “cluster” brings to mind a description of the rollout of Obamacare. When you think about the value chain that comprises an industry cluster, the word “synergistic” comes to mind; it better describes the nature of an industry cluster, why they form and what their advantages are.

But, hey, who am I am to criticize a Harvard professor’s choice of words?

An industry cluster initiative is a tool to help govern a region’s economic-development and recruitment efforts. It’s an industry-led effort to further the development and success of, in our case, aerospace/transportation equipment manufacturing. The creation of an organized network of economic partners, with the common goal of improving performance and competitiveness, will help strengthen the cluster, help companies grow, and create and retain good jobs.

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