Cluster evolution: from “in itself” to “for itself” Observations from Sudbury’s Mining Supply and Service Cluster

1. Cluster evolution: from “in itself” to “for itself”Observations from Sudbury’s Mining Supply and Service Cluster David Robinson, Laurentian UniversityMay, 2004 Prepared for the Annual Conference of the Innovations Systems Research Network Vancouver, May 11-13, 2004

2. The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood." John Maynard Keynes

3. Canada’s leading mining community • GDP much larger than the GDP of Prince Edward Island, (5.6 vs. 3.4 billion) • Population greater than the combined populations of the Yukon, the Northwest Territories and Nunavut,. • 270 specialized mining supply and service firms, • Demanding anchor firms • A concentration of administrative services • The only city in the world with 15 producing mines within the city limits. • The only mining community in Canada with a research university.

4. 13+ x4.5 Adamic Catastrophe

5. Regional supply Stylized facts: 1960 Suppliers In house production Local Canada World

6. Regional supply 1980 Suppliers World Local

7. Regional supply 1990 branches World Local

8. Research centers MNDM OGS, 2002 branches World Specialized suppliers

9. Inco, Falconbridge 4. Metal Fabricating 12. Environmental 2. Instrumentation 1. Underground vehicles 8. Drilling and blasting 6. Ground control 3. Air and liquid flow 11. Lubricants, engines, 9. Material handling material 7. Packaging and handling 5. Building materials 10. General industrial supplies

10. NRCan’s three largest centres for MS&S by advertising SUDBURY VANCOUVER SASKATOON for Dale TORONTO 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Concentration Ratio 0 1 2 3 4 5 6 7 8 9 10 Growth rate

11. A cluster without suits Extraction G O V E R N M E N T F I N A N C E Supply and services Education Research Sudbury Cluster Exploratio suits

12. Deepening • 75% employ specialized service providers. Accounting, law firms, payroll, insurance and business consultants. • Firms native to Sudbury AND firms with branches locally said that the specialized service providers were local.

13. Capital • The firms studied did not report difficulties in raising capital. (As Holbrook notes for west) • 28/73 internally generated funds • 56 /73 banks • Only two went to non-local bank offices

14. Networked • 84% participate in local or regional associations • 39 of 75 regularly attend networking events

15. Innovation • 76% offered new or significantly improved products or manufacturing/production processes over last 3 years. • 16 were world firsts. • 16 were Canadian firsts. • 25 were firm firsts.

17. Factors contributing to growth of firms: External benefits of labour force

18. First invisible, then disputed • By officials of the Ministry of Northern Development and Mines (MNDM), • By the Director of the Canadian Association of Mining Equipment and Service Exporters (CAMESE). • By The Institute for Competitiveness and Prosperity (ICAP) • By University: Sudbury now a service economy • By owners of the first 12 firms interviewed

19. “official” profiles of the top five clusters of traded industries: 2002 • Education and Knowledge Creation • Hospitality and Tourism • Heavy Construction Services • Financial Services • Business Services A View of Ontario: Ontario’s Clusters of Innovation. The Institute for Competitiveness & Prosperity. Working Paper No. 1, April 2002, http://www.competeprosper.ca/public/wp01.pdf

20. Questions • Why was an evident cluster not observed • How does it come into sight? • Why resisted? • What does it tell us?

21. Why not seen 2002? • Methodology misses • Look for exporting sector • Location quotients • Theory • Emphasis on connections, organization, self-representation • Entrenched interests • No champions

22. If image is a criterion, these questions must be asked to measure whether an area is a tech cluster: http://www.technologycanada.com/views.cfm • Would an outsider say the city, town or region in question is a tech cluster, without prompting? • Do the people involved in the tech cluster understand what it is and define themselves in one? • Is there a mouthpiece, a news organization or organizations that are very supportive of the industry. • Is there a professional organization that supports technology exists in every tech cluster

23. 2004: 3 out of 4 • City declares MS&S the leading growth engine • 2003, December: SAMSSA incorporated • 2004 First issue, Sudbury Mining Solutions, a Sudbury MS&S trade journal • Now most firms interviewed (April) say there is a network of firms and they are part of it.

24. Numbers, size verified • Network structure described) • Organization is emerging

25. An unchampioned cluster • Weak city state • Weak entrepreneurial culture • Weak, new, sectoral leaders, • Senior governments under pressure to spread goodies around • Old ideas: • City promoting self as centre of healthcare, tourism, alternate energy • Mining-related means mining-run • University not committed to economic development, technology • Political competition from other segments of industry

26. Policy implications? • Key policy choices: • Location of public assets • Voice: Public role in branding, signalling • Outcomes likely to be suboptimal because of because governments respond to pressure to include everyone. • Don Di Salle: locals have to get organized • Role of social, political

27. Theoretical implications? • Invisible clusters? • Power of customers and traditional aggregation forces -Role of moderately thick labour market -tacit knowledge • Importance of recycling talent • Importance of culture – Negative example • Role of university in moving up-technology – late joiner • Importance of public sector decisons

28. That’s all Folks

29. Notes from talks • We lived here and we didn’t want to leave • This is THE centre for mining • Weak entrepreneurial culture • Blue collar, branch plant town, • Loss of jobs: Schumpeter? • Community response is important • spatial agglomeration or functional network?