Manufacturing Clusters: Finding Strength in Numbers

In a world of instantaneous communication and global supply chains, personal interaction still has value for manufacturers, particularly in promoting innovation and entrepreneurial success.

Using a process called anaerobic digestion, the company takes wastes from food processors, farms and treatment facilities and uses them to produce biogas (60% methane), which can be supplied to natural gas utilities, used to generate electricity, or further processed as compressed natural gas.

Quasar Energy Group

Targeting Competitive Advantage

While some economic development organizations say they promote manufacturing clusters as a whole, the field is increasingly taking a more targeted approach to the concept.

"What we do is retention, expansion and targeted recruitment," says Sean Robbins, CEO of Greater Portland Inc. "Because we don't have endless amounts of resources, we have to pick where we concentrate our activities on clusters where we have competitive advantage or that create ripple effects in our economy when we have a win."

While Robbins notes there was a lot of "moving of chess pieces across the board" in the past as cities and states tried to lure companies from one location to another, he said it makes much more sense to work on developing the firms that are already in a community. He points to the success of companies such as Microsoft (IW 500/15) and Amazon in the Seattle area.

"Seattle didn't get on a plane one day and fly to Tulsa to move those companies. Those companies started in Seattle, were nurtured and cultivated by the entrepreneurs who started them, and were supported by the community. Once upon a time, those companies had five, 10 employees and then over time they grew in Seattle. Key to economic development is picking the winners, picking the horses in your community that will have the products, technology, labor force, and management capacity to be those superstars who you look back on in 20 years and say, ‘Aren't we glad to have them here.'"

While Robbins says it is a mistake to act as if manufacturing in the U.S. is dead, he argues it is also wrong not to acknowledge that some sectors of manufacturing are on a "long and steady decline."

"That being said, there are hot spots and niches of potential future growth in manufacturing that can be leveraged going into the future," says Robbins. "Despite our national conversation that lumps manufacturing into one definition, the reality is that manufacturing is incredibly diverse, sectors are at various stages in their maturity continuum and pieces of it make sense to be in the U.S., not in China."

Hal Sirkin, an analyst with the Boston Consulting Group, recently concluded in a study that received wide attention that there were seven manufacturing sectors that were on the threshold of making economic sense to return to the U.S. from China: computers and electronics; appliances and electrical equipment; transportation goods; plastics and rubber; machinery; furniture; and fabricated metals.

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