Archive for December, 2002

Our top 10 regional investment projects

December 25, 2002

The forerunner to the Cockatoo Group was Clusters Asia Pacific Inc. and it

recently made a submission to the Australian Government when it was looking for

ideas to regenerate the Bush.

The main messages were: 

 §          Three golden rules in generating investment in regions – professionally-prepared financial analysis; networking and access to the right information and people; sheer persistence.

§          Networking aspect is particularly important – to connect the locals to external stakeholders – website addresses and information kiosks are extremely poor substitutes for face-to-face liaison. Networks can take various forms – regional development organisations, regional organisations of councils, industry associations, chambers of commerce, business cooperatives. But some of these networks fold because of cost-cutting measures, and the failure of businesses and the three levels of government to appreciate the importance of collaboration and the alignment of thinking. 

§          Particular constraints to business growth in regional Australia are insufficient critical mass in terms of world-class, dynamic companies; the lack of distinctiveness and the shrouding of local competitive advantage; and the delays and complexity caused by three-tier system of government.

We also provided examples of regional projects (urban and rural) that are instructive

pointers to how regional investments actually happen – each with common

characteristics e.g. lengthy gestation periods, champions, significant constraints,

and the triggering of further investment.

Cairns Airport/City Port – airport development spurred tourism development and

opened up new export markets for seafood and horticulture exports. The CityPort has

transformed the foreshore and CBD.

Honeysuckle urban renewal project (Newcastle) – excellent example of intelligent town planning and cocktail funding across three levels of government and the private sector.

Jervoise Bay (Rockingham, WA) – precinct designed to capture commercial opportunities associated with nearby defence facilities, local engineering companies, concrete platforms for the North West Shelf etc. Lobbying led to a $80 million grant from the Federation Fund.   

Melbourne Docklands and Southbank – transformed this area from an embarrassment to a highlight. It gels with the MCG, the Tennis Stadium and the parkland areas.

Tanunda Convention Centre – located within a Lutheran school complex in the Barossa. A great example of the blending of education, tourism and social needs. The project was going nowhere until a great networker connected the champions.

Yarragon (Vic) – was a nondescript village – a local businessman saw the potential for an antique shop and complementary businesses. Local council invested in some streetscaping and a toilet block. Business investment in food outlets, more antique shops, Bed & Breakfasts etc. resulted.

Port Lincoln Marine Centre – a great example of industry putting its money where its mouth is. A network of professional fishers saw the need to invest in R&D and training, and well-argued submissions backed by business plans attracted federal and state assistance.

Scone Equine Research Centre – champions were local government and breeders – mapped out infrastructure requirements for the industry, developed an ingenious funding mechanism for the research centre. A world-class training track, a TAFE and a convention centre are other elements.

Canberra Airport – its sale in 1998 to a local business group led to an extra $400 million  investment in the terminal, hangars, apron, roads, car parks, and Business Park. Consultancy businesses, freight forwarders, defence contractors etc. now operate on-site.

Wimmera-Mallee water pipeline – underway for around 15 years. Involves the replacement of open channels with an extensive system of water pipelines. The project champions have accessed funding from numerous sources, and it now serves as a best practice model for other regions. 

Full article appeared in LG Focus magazine.

Guatemala’s cluster work

December 25, 2002

Guatemala has been at the forefront of cluster development in central America. The clustering work was initiated in 1998 by PRONACOM, and designed to increase national competitiveness. 

A report a couple of years back indicated the focus, and it is a useful guide to activities associated with developing clusters:

§          Forestry – business trips (2) to Canada and Finland (best practice/benchmarking) plus seminars on Forestry Education.
§          Agriculture – efforts focused on industries that are capable of producing added value products, in order to diversify the risk and make them more competitive; a recent development was the Organic or Differentiated Coffee Initiative – to improve technology and to access international markets. 
§          Tourism – efforts are focused in ecotourism, as well as business and incentives.  One of the principal activities is creating a data base of entrepreneurs involved in the tourism sector. 

The field work is being carried out by students from the Universidad Rafael Landìvar, Universidad del Valle de Guatemala, Universidad Del Istmo.

Web: www.pronacom.org E-mail: info@pronacom.org

Collaborate or die

December 25, 2002

Collaboration is increasingly international. Collaboration is fundamental to innovative solutions in a complex world. But government agencies toss the word around with gay abandon, and the continuing  silo mentality exposes their own rhetoric.

Governments simply MUST spend time more understanding how collaboration can be nurtured. A healthy collaborative environment can be built, just like you can an investment environment.

These and related issues were explored a couple of years back by Donald Beaver, of Williams College, Massachusetts – Reflections on scientific collaboration (and its study): past, present and future, (Scientometrics, Vol. 52, No. 3).

Beaver says that collaboration offers many benefits – speed, power and efficiency of research; breadth and synergy of projects; reduced risk of ventures; and feedback, dissemination, and visibility of results.

His article reviews past research and seeks to understand present thinking about collaboration, and speculates about the future, focusing on technologies like email and the Internet. 

Beaver argues that collaboration was a relatively rare event until World War I, after which it grew at a much more rapid rate. Two facts of interest were apparent early – a collaborative first paper meant above average productivity later, and elite scientific journals published disproportionately more collaborative papers than did less prestigious journals. They still do. Today over 90 percent of papers in some journals are collaborative. 

His key point however is that as globalization and internationalization continue, emphasis on cooperation becomes an increasingly common counterpoint to the current emphasis on competition and individuality.

He also notes that this new interconnectedness has revolutionized how research collaboration occurs and who its participants are, expanding possibilities for international partnerships.

Globalization will lead to greater geographical diversity of collaborators – whether they are individuals, laboratories, or institutes. Physical location is no longer a barrier to the free and easy exchange of information. Indeed, the advent of email had already begun to increase diversity in geographical locations.

Beaver says the value of further study of collaboration would be especially useful to policymakers. We can only agree.

See http://www.newswise.com/articles/2002/5/SCICO.WMC.html?sc=wire 

Connecting with kids

December 25, 2002

Twelve months ago, I first met Melbourne-based Phil Anstey who explained his positive experience in deploying St.Kilda AFL footballers as mentors for youth.

He wondered about the prospects of developing an Australia-wide program using a spectrum of elite athletes, actors etc. Phil explained that if youths feel that they’re not in charge of their lives, they adopt aggressive and anti-social behavioural traits that further harm their employment prospects. While teachers can serve as role models, this has its limits because the school system is unnecessarily confronting and irrelevant to some youth.  

The problem usually stems from family management issues, alienation and rebelliousness, and low neighbourhood attachment – and leads to emotional disorders, substance abuse, delinquency, teen pregnancy, early school-leaving and violence.

Conversely, youth who feel connected to school and family and have positive relationships within the community are less likely to experience these problems.

Mentors can help build the self-esteem of young people, develop their leadership abilities, and thus have a direct impact on their locus of control.  Strong leadership skills place the young person in charge of his or her life. Elite athletes are an untapped resource as mentors for Australian youth. They command respect. Youth will listen and respond to them.

Contrary to popular belief, apart from a few superstars, the bulk of our elite athletes in popular sports – swimming, track and field, cycling, basketball etc. – are not well-paid, and have limited career opportunities once their sporting careers are over.   

The upshot is that Phil’s company, SportConnect, together with Athlete Development Australia (ADA), have formed a joint-venture to develop a program to promote healthy youth development. The emphasis is on teaching life skills, and increasing youths’ connection to community, school and peers.

The initiative has attracted financial support from the Commonwealth Department of Family and Community Services, and the Minister, Senator Amanda Vanstone. The program includes the following features:

§         
Implementation via schools and community sporting clubs over the next 4-5 years.

§          To begin in three regions, then fanning out.

§          A focus is on the emotional health areas of self-esteem, resilience and connectedness.

§          Components  – fostering and maintaining effective team work, managing group dynamics (e.g. confidentiality, boundary issues), leadership skills, goal setting and negotiation skills, problem solving, presentation/facilitation skills, access to employment opportunities.  

Athletes such as Kyle van der Kype (athletics), Sarah Ryan (swimming), Eleanor Sharpe and Narelle Fletcher (basketball) have indicated their wish to be involved. The program will provide a career path for athletes with a strong interest in social issues, and expand to include mentors from the arts and entertainment industry.

The concept is not new – characters like Rex Hunt (of fishing fame), Jim Stynes (ex-Ireland and Melbourne AFL) and Michael Long (ex-Essendon AFL) have been doing similar good things for some years. The aim of SportConnect is to extend and deepen the activity. 

However the federal funding for the program has to be matched – support is therefore required from local and state government and socially-responsible food & lifestyle companies, utilities (telecoms, energy, water) and perhaps TV & film networks. Indeed, the latter might offer up some of their stars to complement the trained facilitators! The sponsors could be at either a national or regional level.

(This program has now finished, but we are currently assisting another Melbourne-based company to continue this work. If you have an interest in the above, please telephone us on 02 – 62317261 or email us at apd@orac.net.au 

Multimedia…biotech…ICT…naval…fabrication – collaborative examples

December 25, 2002

We’re in contact with Tijs Creutzberg, editor of the slick OREDI newsletter – part of the Program on Globalization and Regional Innovation Systems, Munk Centre for International Studies, Univ. Toronto.

He gives examples of collaborative industry initiatives – perhaps some good leads for linking clusters? 

 Multimedia pole in Montbeliard in Franche-Compte (France) – Over the last decade, a territory better known for its automotive industry has developed competencies and employment in multimedia. Each year, over 150 international designers and artists are hosted in the Montbeliard area to develop their projects. The local universities support developments in the engineering of virtual applications. This is a good example of economic modernisation of existing activities by exploiting synergies.
 
Global Village in the Arcadian Peninsular (Canada) – the economy of the Acadian peninsula (francophone rural region) depends on seasonal activities. The population lives in small villages with very few services. An ICT-based program offers “intelligent integrated services” concerning the economy, education, governance, health services and francophone networking in Canada and beyond.
 
ICT for development of peripheral regions (Denmark) – the Danish Ministry for Science, Technology and Innovation launched the “North Digital Program” to develop the ICT industry – 89 projects have been selected, covering digital administration, e-learning and qualification, culture and multi-media, industrial development. The program has helped make the region a dynamic learning territory.

Naval industry, Haute-Normandie (France)
– 24 vertically linked enterprises decided to join forces following the loss of their principal client company in 1999. With the support of the trade unions and public authorities, they created the Industrial and Naval Centre of Normandie. The collective structure
allows them to exploit the knowhow acquired by their employees.

Biotech cluster (Germany)
– in 1996, the Federal Ministry for Research launched the Bio Regio program, and the Rhine Neckar triangle (Bade Wurtemberg Länder) has benefited. On the basis of its scientific resources and of existing enterprises, this cluster has now become one of the most creative in the field of biotechnology.

Mechanical sector cluster – transnational partnership between Tunisia & Languedoc Roussillon (France) –
cooperation is underway between enterprises in the Metal Alliance Club for Industrial Development (CAMDIB) of the Beziers Region and some Tunisian SMEs. Mutual advantages derive from the sharing of markets and through the development of new opportunities on emerging markets.
See Tijs’ newsletter at www.utoronto.ca/onris/newsletterlink50.htm

Australia’s chief scientist understands clusters

December 25, 2002

Australia’s chief scientist, Dr. Robin Batterham, was a keynote speaker at the Global  

Knowledge Economy conference in Sydney in November 2002. His perspective will stand the

test of time. Main points:

    

Australia needs to shape a program that kick-starts new companies and helps them grow towards global opportunities.

The nature of innovation is that technological opportunities just keep coming along.           

It is necessary to look for niches, and some companies might take off and become world brands as with Finland’s Nokia. Australia has success stories like ResMed and Cochlear.

 Western Sydney has the power to develop powerful regional ICT and biotechnology clusters, and become a role model. Regional collaborations which concentrated on innovation and excellence would deliver significant economic results.

A prime example of this approach is the marine science cluster, where a range of organisations have collaborated for work on toxins from cone shells – this cluster has cost about $20 million in funding, but now looks like delivering a return of around $200 million.

Not every venture will be a winner, but when you get the right focus and clustering for critical mass, that is what will happen. 

Italy’s Club of Industrial Districts

December 4, 2002

The OECD LEED Partners Club also includes the Club of Industrial Districts, Italy.  And we make contact with them from time to time. The Club is a very interesting model for those looking at governance structures for industry development agendas. 

Created in 1995, the Club of Industrial Districts was conceived through the association of 24 production systems of the region, essentially formed by SMEs.

Its goal is to promote the exchange of information and experiences between various Italian economic systems that share the characteristics of an industrial district.

The Club promotes the relationship between decision-making centers of theses districts at a local as well as national level, but also aims to:– promote international relations with other districts, economic and cultural organizations;
– sponsor studies and research in the field of economy and links with institutional, economic,  
cultural scientific operators, also in order to encourage widespread awareness of the policies necessary for the development of local systems.
– promote the image and communicate the reality of Italian industry based on industrial districts.
 Club members are industrial or craft associations representing a sector, Chambers of Commerce, company service centres, unions, and businesses run at a local level and involved with local systems.

There are 25 industrial districts are currently associated with the Club, that represent 30,000 companies with over 250,000 employees generating a global turnover of $30 billion (almost 40% of the total turnover of the Italian districts).

 The principal sectors of Italian products are represented:
          wool textiles (Biella and Prato),
          taps and fittings (Lumezzane, Valsesia and Basso Cusio),
          clothing (Empoli), glasses (Cadore), silk textiles (Como),
          metalwork (Treviglio and Lecco), furniture (Altolivenza, Pesaro and Marsciano),
          food and fruit ( San Benedetto del Tronto),
–     
cork ( Calangianus e Tempio, Pausania),
          ski boots and sports footwear (Montebelluna),
         leather goods and footwear (Fermo, Santa Croce and Verona),
–     
goldsmith (Valenza). 

Go to www.clubdistretti.it

Slovenia – motors for innovation

December 4, 2002

The Cluster Seminar in Slovenia held in November 2001 was titled “Motors for Growth and Social Innovation”.

Convened by the Slovenian Ministry of Economy. The seminar grappled, inter alia, with the question why the level of trust was so low among Slovenes preventing the forming of strategic alliances and hindering a functioning bottom-up approach among clustering firms.

Mr Damjan Kavas, Institute for Economic Research, opened the discussion with a summary of a publication pointing out that Slovenes have traditionally had very short-term relations in history and were very individualistic.

The lack of a culture of cooperation (Old Slovenian proverb: “In cooperation, even the dog dies”!), as well as disrespect for the entrepreneurial spirit among the public on the one hand – and a profound mistrust of entrepreneurs in public institutions and in fellow entrepreneurs on the other hand – accounted for the absence of a common social capital.

The Austrian experience was seen as instructive for Slovenia, which means that the regional and local dimension of clustering needs to be appreciated.  

A cluster also has to be integrated into the local community/city. The local political level needs to be implicated in order to avoid problems arising from clusters not being tied to the local economic and political environment.

Three other messages were that neutral clusters advisers need to be found,   the educational setting is vital to encourage innovation, and natural cluster leaders need to emerge.

Finally, it was suggested that the Irish experience showed entrepreneurs were most suitable cluster leaders. 

Governments’ role in clusters

December 2, 2002

The Business Review Weekly recently ran a feature on management gurus and picked up on industry clusters. It suggested that government action was largely irrelevant to building clusters. Given that we have spent 2 years arguing the reverse, I almost choked on my cornflakes.

The BRW kindly agreed to the right of reply in its 26 September edition. I had help from Mike Enright et al. Extract follows: 

It is important that we properly understand the role of government in the cluster debate. 

Governments always will be players in the industrial landscape of Australia through their funding of hard infrastructure, education and research facilities, R&D grants, investment subsidies – as well as letting contracts to private sector players. Alas, State governments compete, government agencies don’t talk to each other, and economic decisions get politicised. This further fragments our industrial structure, misses opportunities to generate scale and locational economies, and sets regions against each other. 

The poor alignment of expenditure on hard and soft infrastructure also doesn’t contribute to the competitive advantage of industries and locations. Clustering concepts are designed to address this coordination failure, and Professor Enright’s published work actually reflects this. 

OECD Ministers agreed in Bologna last year on twelve guidelines to help governments facilitate the clustering phenomenon. They include:
§       ‘Let the private sector lead in cluster-development initiatives, with the public sector playing a catalytic role’.
§       ‘Facilitate the establishment of local partnerships …co-locate complementary public investments with related concentrations of private investment’
§       ‘Targeting market failures provides discipline that reduces the chance that initiatives will become captured by political interests or that public initiatives will stray into areas best served by the market.’
§       ‘Lock‑in benefits of existing or embryonic clusters by ensuring access to specialised infrastructure, communications and transport.’ 

The OECD thus clearly believes that government action is relevant in cluster development. Indeed it has recently joined our organisation, as has UNIDO and other overseas agencies. 

Of course governments shouldn’t try to artificially create industry clusters, but to give credit where it is due, governments have seeded or facilitated high-performing clusters viz. the North Sydney IT software, Monash medical, Scone horse-breeding and Adelaide defence industries.

Meantime in Ireland, clusters have been created through a mix of strategic intervention in education and training, a supportive tax regime, private sector investment and EU funds.

Yours sincerely, 

R. F. Brown
CEO, Clusters Asia Pacific
Canberra