North Carolina Vision Plan Project: Industry Clusters for North Carolina

1. North Carolina Vision Plan Project: Industry Clusters for North Carolina Office of Economic and Business Development September 18, 2008

4. a panorama …

7. The team: The Players The Brain Trust The Owners Ed Feser Jesse White Chris Harder Allan Freyer Chris Beacham Stephanie McGarrah Alison Gillette Nichola Lowe Tim Cole Brady Gordon Jonathan Morgan Micah Weinberg MeenuTewari Harvey Goldstein Ted Zoller The Manager Ben Mauk

8. Background Objective of project: Recommend a set of statewide industry clusters as targets for the North Carolina economy of the future. Phase I: Bottom-up ‘synthesis’ from seven Regional Vision plans Phase 2: Identify targeted clusters using combination of national benchmark clusters from I-O tables and state input-output data estimates; Design a monitoring /tracking system for Department of Commerce; Identify choices for organizing and implementing statewide cluster strategies Identify knowledge assets in NC to support targeted clusters

9. Why clusters? Clusters are geographic concentrations of interrelated firms and institutions of sufficient scale to generate external positive economies, i.e., “the whole is greater than sum of its parts” In theory . . . firms are more competitive and innovative when they belong to a robust cluster, vis a vis standing alone Hence, an argument to target clusters rather than individual industries or individual firms

10. Example cluster “map” From Porter, M, Chile‘s competitiveness: Where does the country stand?, presentation, Santiago, Chile, 29 June 2005.

11. Benchmark approach Begin with industries, not clusters Identify an industry’s national (or global) value chain Map each industry’s value chain using input-output data Evaluate the strength and competitiveness of the chain in terms of particular region |Use results to inform range of ED activities Marketing and recruitment Workforce development Export promotion Infrastructure investments Building knowledge assets Increasing local governance capacity

12. Finding linkages, defining chains Metal stampings, n.e.c. Wholesaling Logging Marketing CORE INDUSTRY Sawmills and planing mills Non-upholstered wood furniture Petroleum refining Retail Trade Veneer and plywood LINKED INDUSTRIES 12

13. Methods and data 378 industries from U.S. I-O national benchmark tables, then aggregated to 105 industry categories Ensure concordance between NAICS, I-O, and IMPLAN industries Each of 378 industries treated as ‘core’ industry with its own unique value chain Compare U.S. and N.C. value chain linkages >> ‘completeness’ in NC Decide on criteria for selecting targeted clusters, and apply to value chain analysis results to rank clusters Criteria are flexible and can be adjusted to fit particular ED goals

14. Categories of clusters Established (existing) By employment growth performance By average wage level Emerging By average wage/salary By strength of linkages

15. Criteria for established clusters Index = Measures of absolute scale (in NC) + Measures of relative scale (i.e. competitiveness) + Measure of depth of value chain

16. Criteria for emerging clusters Index = Measures of absolute growth performance + Measures of relative growth performance + Measures of relative scale

19. Big picture and cautions Definition of strategic targets depends upon ED goals Workforce development and finding jobs for laid-off workers Export potential Grow knowledge-based economy Rural development Cluster-based strategies are not substitutes for other approaches Clusters are neither necessary nor sufficient to be cornerstones of the future economy of an area ‘Champions’, strong technical staff capacity, private sector buy-in, are key success factors