Archive for June, 2003

The rise of the food metanational

June 26, 2003

A major study was completed in 2003. Although initially focussing on South Australia, it was broadened it to include other states and overseas. The analysis identifies the main drivers and idiosyncrasies of food clusters, and assembles national and international contacts to facilitate the linking of clusters.

The report provides a valuable guide to building a successful food cluster, and delves into investment, infrastructure, exports and marketing, innovation etc.

The report was released at the Manufacturing Prosperity conference in Adelaide in September 2003, and at the TCI Annual Conference in Gothenburg, Sweden on 17-19 September. Extract follows: 

The rise of the Metanational 

The principal aim of a global food company was formerly to penetrate world markets from a base in the home nation. This is giving way to strategies to widen the production and technology base to several core nations, and to service third markets from these preferred locations. However the rise of non-tariff barriers to trade (e.g. food standards, quarantine requirements) and the opportunities via globalisation are turning these strategies on their collective heads.  

International development agencies have identified a radically different kind of company – the metanational – that is assuming prominence in some markets. These metanational companies are defined by three core capabilities:

§          being the first to identify and capture new knowledge and technology emerging all over the world.

§          mobilising this globally-scattered technology to out-innovate competitors.

§          turning this innovation into value by producing, marketing, and delivering efficiently on a global scale.

Metanationals are becoming common in the food industry. The basis of their thinking is that in rapidly changing times, the traditional global strategies of multinationals are breaking down. The complexity of world trade is hastening this. There are substantial opportunities for innovative food companies to leverage the growth in globally-dispersed knowledge – and these smaller, fleet-footed metanationals are assuming prominence.

Some are virtual companies. They form partnership alliances to prospect for and access untapped pockets of technology and emerging consumer trends from around the world. They leverage technology held in public research institutions, and mobilise this fragmented knowledge to generate new products, new markets and profits.

Building clusters around the right MNEs

The big multinational conglomerates will continue to be central to the food industry despite the inroads made by the metanationals. Those in the investment attraction game need to better assess the MNEs they are courting…and clusters can assist MNEs in addressing the challenges facing them and the wider industry. There are five main areas.

1.  The supply of differentiated products to increasingly sophisticated consumers.

2. The facilitation of innovation and management of new technologies – while many MNEs have in-house research facilities, they are the first to admit that they depend on growers and consumers for feedback and innovative thinking. Clusters facilitate this.

3. Identification of research priorities and the development of funding of centres of excellence in respect of:
 – platform technologies e.g. biotechnology, functional foods, smart packaging.
– sectors where the region has a competitive advantage and a strong research capacity and skills.

4. Strengthening supply chains.

5. Building better linkages into allied industries e.g. waste management, tourism, services, engineering.

Contact apd@orac.net.au 

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‘Globalisation – another name for the dominant role of the United States (did Kissinger REALLY say that?)

June 26, 2003

 

Mikel Landabaso has kindly forwarded a lively article that mixes research findings on location theory with policy views and prescriptions. The author is Miroslav Jovanovic of the UN Economic Commission for Europe. Extract follows.

New technology, in particular the Internet, telecommunications, computing and data processing can offer some of the greatest economic opportunities ever for increasing living standards in all countries.

Governments and the elite, due to incompetence or indifference, have failed to explain this.

However the process needs to be coupled with balanced policies both in the rich and poor world. Even though global economic integration may be the best end point for the future of the world economy for the proponents of globalisation, it is more likely that other outcomes may be chosen.

Globalisation may be favourable for economic efficiency, but it can be harmful for social goals. Apart from a partial integration of international production, globalisation brings risks and disruptions. Volatile capital flows, speculative attacks on currencies, financial crises and unpredictable reallocation of resources are obvious example of increased economic and social vulnerability of many countries, in particular the developing world.

To wrap up the issue, Henry Kissinger labelled globalisation as ‘another name for the dominant role of the United States’.

The vogue term globalisation has not yet been well or clearly defined. Hence this fuzzy, but powerful metaphor is overused – often abused and very often misleading. Basically it refers to the choices and strategies, as well as the shape, extent, direction and significance of activities of TNCs.

Contact: miroslav.jovanovic@unece.org or http://www.unece.org

Artists as entrepreneurs

June 26, 2003

Creative artists are often an under-appreciated asset for the entrepreneurial economy, and smart regions are finding ways to nurture and support local creative talent. \

A new monograph from Americans for the Arts takes a look at the role of artists in stimulating local economic development.

The report,  Building Creative Economies: The Arts, Entrepreneurship & Sustainable Development summarizes the findings of a conference held last year by the National Endowment of the Arts, the Appalachian Regional Commission, and North Carolina’s Kenan Institute.                      

The report offers interesting case studies of rural regions, such as western North Carolina and Appalachian Ohio, where local arts programs have stimulated community development. Nationwide, the report notes that the non-profit arts industry generates roughly $134 billion in economic activity each year. It concludes with a how-to guide for building a local creative economy.

Available for purchase at:
http://store.yahoo.com/americans4thearts/builcreatec.html

Source NCOE newsletter.

Montana – hustle without the bustle

June 26, 2003

In May 2003, I addressed the Montana Economic Development Summit about the issues facing regional Australia and the cluster agendas taking shape here. This suited me fine because of our interest in linking clusters between Australia and the US, Canada, Europe or wherever.  

Some of the other speakers raised issues of relevance to Australians:
§          Senator Max Baucus spoke of Benjamin Franklin’s dictum ‘Either we hang together, or we hang someone’, the need for Montana folk to ‘hustle’ together and his intention to put investment ‘sales’ teams together and visit New York, Washington, Houston etc.
§          John Morgridge (President of CISCO Systems) then argued that the core elements of economic growth are the workforce; government-industry interaction; a culture of risk-taking; a spirit of community involvement; and infrastructure (high speed Internet access, venture capital, university interaction, strong local institutions)
§          Stuart Rosenfeld (Regional Technology Strategies) explained that clusters are not about scale, but about relationships. They are spawned, not manufactured, and are systems, not membership organisations. The boundaries of clusters are set by the distance people are willing to travel – to work, to associate and to network. 

On the second day, workshops zeroed in on the six industries identified as having the greatest potential to drive the development of Montana – wood-based products, agrifood, information technology, life sciences, creative industries and tourism.

David Dodd (DADCO, Louisiana) was in his element, linking people with people to progress development agendas and specific projects. The Summit featured something I’ve never witnessed before – federal politicians convening workshops! Senator Baucus (Democrat) convened and MC’d the session on health care, Senator Conrad Burns (Republican) handled the session on fuels for the future, while Congressman Denny Rehberg’s session dealt with aerospace, aviation and defense.

Each had prepared well – it contrasts with the situation in Australia where pollies tend to deliver a standard speech and make a hurried exit. Not good form.  

There is substantial potential for Australian organisations to share experiences with Montana. When next visiting the USA, why not lay the groundwork for some long-term development agendas? Check with your accountant, but your costs should be tax-deductible. We can connect you up.  

Flinders Ranges

June 26, 2003

Ron Kysiak, CEO and VP of Northwestern University Evanston Research Park (Illinois, USA) fondly remembers his visit to Adelaide (early 1990s) in the context of the ill-fated Multi Function Polis. He took a trip to the Flinders Ranges, north of Adelaide – which triggered my interest in some news just in via Hugh Forde at SABV 2010.  

Sixty two tourism operators across the Flinders Ranges gathered in Orroroo in March 2003 to present their program for improving Tourism in the Flinders Ranges over the next two years.

The numbers were up from 30 and 50 at the previous forums. The industry has developed their program in forums that started in July 2002 – a process sponsored by Northern Regional Development Board, South Australian Tourism Commission and South Australia Business Vision 2010. 

A blueprint for collaborative self-help initiatives has been developed to improve the foundations for a competitive and prosperous tourism industry in the Flinders Ranges. They include:
§          Marketing Expo: a mobile display and manual for operators to promote Flinders Ranges tourism product at country shows and SATC Familiarisations.
§          Training: a program designed to meet operator needs to comply with food and other regulations and to help attract and retain excellent up-to-date employees.
§          Accreditation of genuine Ecotourism experiences to attract environmentally sensitive tourism.
§          Flinders Service Chains: a program linking Flinders operators in networks of excellence delivering referrals, quality, and longer stays.
§          Flinders Information and Bookings: providing operators and visitors access to up-to-date product knowledge, booking systems for and on On-Line Booking and Information systems.
§          Establishment of membership based tourism associations and local and State government based tourism authorities in Northern Flinders, and Outback SA. 

The leaders at the forum endorsed these proposals, noting the important momentum generated so far, and the need to get on with forming a membership association.  

Post-script – The Flinders Ranges attracts 467,000 visitors annually – half from Adelaide, 19% from elsewhere in SA, 14% from Victoria, 11% from NSW and 48,000 international visitors – Germany 21%, UK 20%, Other Europe 32%, USA/Canada 10% and New Zealand 5%.

 Contact: Rebecca Andrews, Tourism Product Development Officer, NRDB randrews@nrdb.com.au  

Hungary

June 26, 2003

 Before joining the European Union, Hungary started several large development projects, including ‘Support for Enterprise Network Strategies’. For example, the Transdubanie region encourages the development of clusters in four sectors – motor industry, food-processing, electronics and timber.  

A pilot experiment was undertaken in 2000 in motor manufacture, one of the pillars of the Hungarian economy. With the support of the main car manufacturers in Hungary (Audi, GM-Opel, Suzuki, Rada) and the Széchenyi University of Gyor, the PANAC (Pannon Automobile Cluster) was created. This body has begun initiatives e.g. inventory of existing production competencies, internet information portals, management training, inter-enterprise business relations and international conventions. Source: SPL INFO, splinfo@wanadoo.fr More info: Nicolas Széchényi, Président, ERFI at info@erfi.hu

‘Unique power of convocation’ held by government…says Canada

June 25, 2003

Indira Singh (Ministry of Northern Development & Mines – Ontario Government) has

prepared an excellent paper “What the public sector can do for cluster development: the

Canadian Experience”. Relevant to anyone with an interest in clusters. Key points follow.

   

Canadian clusters have been shallow and weak, with few sustainable clusters – although  

there are many potential and emerging clusters.

The cluster agenda is now gaining momentum e.g. National Research Council has

committed $C110 million to expand IT clusters, and action in other government agencies

such as Industry Canada, Ottawa-Carleton (seven export-based clusters), Edmonton and

Calgary, Government of Ontario (biotech), Quebec, Saskatoon (agri-biotech), Alberta (oil),  

Halifax (aquaculture).

Federal and provincial governments have made strategic investments, and public education

system has performed a vital role. Government can use its ‘unique power of convocation’ to  

inspire and create productive dialogue among change leaders.

The Government role in reinforcing cluster development includes:

          provide seed funding for the identifying new clusters and conducting assessments.

          act as a facilitator to bring cluster participants together.

          encourage local agencies to work with local businesses and educational institutions.

          monitor competitive advantage and innovative capacity.

          encourage cross-border cluster specialisation and integration. 

Contact: indira.singh@ndm.gov.on.ca

Picardie region revitalising metals industry

June 25, 2003

The Picardie region is about two hours drive of Paris (Battle of the Somme area). Their attention to the metals industry is noteworthy. When next in France, why not look them up?

The Regional Direction for Industry of the Picardie region (DRIRE) and the Union of the Metal Industry of Le Vimeu (UIMMV) recently launched an “Industrial development plan” to support the development of the metal industry of Le Vimeu, Its aim is to create collective inter-firms dynamics such as “clusters”.

The regional Prefecture, the Chamber of Commerce and Industry of Abbeville and the Regional Council is also involved in this plan. The CCI of Abbeville is in charge of its implementation which will last 7 years  – EUR 8 million budget.

The main objectives are:

– analyse and increase the industrial competitiveness by fostering technological transfer, inter-firm   networks and developing ICT.

– promote firms and the territorial industrial identity.

– improve human resources management and develop training in metal industry.

– deal with environmental questions in the industrial development of firms. The Picardie region has already developed collective dynamics with many local clusters  – the Hydraulic and Mechanical Pole of Albert, the Boiler-making and Maintenance Pole of Ham, the Thiérache Cluster,  and sectoral plans in mechanics, and health.    Contact: kader.amara@industrie.gouv.fr

Systems thinking – its relevance to competitive advantage

June 25, 2003

Professor Peter Senge (Massachusetts Institute of Technology) and Arie De Gues (Chief Planner, Royal Dutch Shell) are pioneers of learning organisations and the application of systems thinking.

They argue that an organisation’s only sustainable competitive advantage in a global economy is the superior performance of its people.  They have taken ‘scenario planning’ and ‘systems thinking’ to new levels to assist management in anticipating change in their environment.

At the core of the work has been the development of learning organisations. They allow you to get beyond the vision statement – by generating widespread, quality interactions that inspire people, stimulate innovation and deliver real results. 

Professor Senge has described systems thinking as “a discipline for seeing wholes.  It is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots.  It is a set of general principles – distilled over the course of the twentieth century, spanning fields as diverse as the physical and social sciences, engineering and management.”  

The Senge-De Gues approach has symmetry at the community level because communities, like organisations, depend on people to make them tick. Moreover, in today’s complex world, there is a need to better identify connections between cause and effect, and identify just what measurement tools should be used at each stage of its development. It also has the potential to provide pointers for improving resource allocation at both the macro and firm level. 

There are other aspects. Communities with strong social capital have systems thinking embedded in them, and are more likely to prosper in a globalised world where value chains, industry collaboration and fleet-footed responses to market opportunities win the day. The capital cities and regional centres have an edge in this regard, because it’s easier for the stakeholders to keep in contact.

 Full article appears in LG Focus magazine (January 2003). To speak to an expert in Australia, contact Jim Bitomsky, Cairns – jim@kleinhardt.com.au 

Targeting clusters – a US view

June 25, 2003

Targeting industry development programs at an industry cluster is based on the assumption that greater benefits will be realised than via a more diverse strategy.

Professors David Barkley and Mark Henry (Clemson University, SC, USA) provide a useful treatment of the pros and cons of interventions to develop clusters in a recent research report.

The advantages of clusters are:

§          Strengthens localisation economies – cost savings to firms in the cluster e.g. greater availability of specialised input suppliers, large pool of trained workers, better gearing of public infrastructure, enhanced technology transfer.

§          Facilitates industrial reorganisation – transition from large firms engaged in mass production to SMEs focused on specialty production.

§          Encourages networking among firms – cooperation occurs more naturally and frequently.

§          Greater focusing of public resources – enables strategic recruitment, retention, expansion of firms and tailoring of development initiatives. 

The shortcomings of clusters are:

§          Regions will have difficulty picking winners – are public officials able to identify regional competitive advantage, select ‘good’ industries to target, or design appropriate programs?

§          Latecomers may not be competitive – can latecomers overcome the inherent advantages of existing clusters? They can if the starting positions are not too unequal, if workers/firms can relocate rapidly, and if localisation economies can be realised early.

§          Supportive institutions are not easily established – the research is remarkably consistent re the importance of the institutional environment to nurture and support clusters. Cooperative behaviour is limited by incomplete information, opportunistic behaviour, committed assets.  

Contact: www.cherokee.agecon.clemson.edu/redrl_rpt3/pdf