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.
According to Michael Porter, among other things, a successful industry cluster initiative:
▶ Is led by the private sector;
▶ Has wide participation of companies in the cluster;
▶ Builds on knowledge-based and value-added advantages;
▶ Values personal relationships;
▶ Has a bias toward action; and
▶ Becomes institutionalized and measures success and impact.
You might ask why helping to initiate an industry cluster initiative is important to The Development Corporation.
Very simply, it helps fulfill our mission, which, in part, is to foster an environment that creates and retains quality jobs and investment in the community. It’s important to note that organizations like TDC and the Plattsburgh-North County Chamber of Commerce don’t really create or retain jobs. What we do is to help create the environment in which private-sector companies can create and retain jobs; hence, why the private sector is best suited to lead industry cluster initiatives.
If we are successful, creating a true aerospace/transportation manufacturing industry cluster will help us to strengthen the region’s economic competitiveness and increase economic opportunities for businesses and residents.
In other words, developing a highly functioning industry cluster can help bring focus and organization to disparate business-attraction and business-retention and expansion efforts. It will also allow us to understand and learn more about the priorities and workforce needs of the employers that are driving our regional economy. The goal is to create effective linkages among private, public and not-for-profit stakeholders and to identify and fill gaps in the value chain.
Equally important is that by understanding our relevant industry cluster(s), we can provide better information to job seekers who are looking to develop new skills and find career pathways. By developing training based on a particular cluster’s needs, we can more effectively engage with employers to connect jobseekers with jobs.
Does an industry cluster initiative mean that we won’t focus on attracting or developing other industries?
While our goal is to help create a true aerospace/transportation equipment-manufacturing cluster, we recognize that economic diversity is important, and we will continue to pursue other business sectors as we always have. Consider the high-technology business cluster in California’s Silicon Valley. Look at that industry cluster closely and you will find that in their value chain there are many non-technology companies and even more non-technology jobs.
Effective industry clusters are a proven recipe for success, and implementing an effective industry cluster will only help enhance our region’s competitive advantage.
Paul Grasso is the president & CEO of The Development Corporation in Plattsburgh.