Archive for February, 2005

Rural prosperity in USA

February 17, 2005

In its 2004 annual report, The Center for the Study of Rural America reflects on key lessons it has learned about rural development.

Globalization is forcing most rural areas to build new economic engines, which in turn emphasizes the need

  •  for working regionally;

  • finding an economic niche;

  • creating new models for governance and partnerships;

  • taking fresh approaches to public policy.

 Building Rural Prosperity in Regions: The Road Less Traveled Center for the Study of Rural America (PDF file)

Galway gets to heart of matter

February 17, 2005

From the vantage point of the famous Galway racetrack, it is easy to see how this west of Ireland city is now described as one of Europe’s leading industrial clusters.

“Over there, we’ve got the world’s biggest maker of cardiovascular stents,” says Ian Quinn, who runs a family-owned business supplying the big multinationals with specialist parts. “And on that side, we’ve got the second biggest.” Boston Scientific and Medtronic have Galway factories making stents, the tiny metal device which, when it was invented in the 1980s, revolutionised the treatment of coronary heart disease.
“>Galway boasts three of the top four companies in this field, with Abbott the latest arrival, inheriting a stent plant as part of its 1995 takeover of Bio-Compatibles, a UK company. There are now 28 medical devices companies in Galway, employing more than 5,000 people – 350 in leading-edge research and development.

Cluster theory, which was first described by Michael Porter in his book The Competitive Advantage of Nations, holds that when similar companies locate in the same place, they can achieve economies of scale without losing the flexibilities enjoyed by smaller organisations.

“>Fifteen years ago, Digital, the US computer company, was Galway’s biggest employer. It closed in 1993, moving to Scotland. “Everyone said that when Digital closed, Galway was finished,” says Bernard Collins, a well-known figure in Galway’s medical devices industry. “Quite the opposite was the case.”

“Many of the Digital engineers are now working for US medical device companies. In the 1990s they were expanding abroad, overcoming concerns about quality control and lack of protection for inventions. “What was happening was that many of the new medical device products were coming from Europe.

“>Maybe it was the lower risk of litigation. Maybe doctors here are more adventurous. But US companies felt they had to capture that,” says Mr Collins, who set up Boston Scientific’s Galway operation in 1994, in a factory vacated by Digital, which a decade earlier had made tennis rackets for Wilson, the US sports company.

“Creganna, Mr Quinn’s company, was originally set up to supply the local electronics industry. In 1997, it was persuaded by Boston Scientific to start making catheters. Now the world’s largest catheter manufacturer (sales of €26m), employs 270 people in Galway and has a new design/development centre in Boston.”

“In the early days, one of the missing ingredients was the lack of R&D facilities. But in March 2004, Boston Scientific’s Galway facility launched the company’s latest innovation – a drug-coated stent that reduces unwanted patient reactions and inhibits the return of plaque to the arteries.

“Galway University works closely with the companies in areas such as materials testing. Last year, it was given a €19m government grant to set up a regenerative medicine institute, which is part funded by Medtronic and is looking to develop a new generation of devices that can deliver stem cells to rebuild damaged organs inside the body.

“Roy Green, the university’s dean of commerce, who is studying the Galway medical devices cluster, suggests that the Galway phenomenon is likely to continue. This is because the R&D operations of multinational companies need to be closer to their customers than to their corporate headquarters.

“The days when you had one centre for R&D are over,” he says. “With the life cycles of medical devices products so short, it is vital to be close to your customers to keep ahead of competitors.”

OUTCOMES – advanced manufacturing & food, northern Adelaide

February 17, 2005

There is a continual requirement for some cluster groups is to justify themselves.

This has never been a concern of the City of Playford (northern Adelaide) – they just get on with it.

The Playford model is characterised by an emphasis on leading-edge industry analysis, substantial networking to link companies into national agendas, and alliances between key bodies.  

Outcomes include:
§          Creation of Produce Direct Australia Pty. Ltd. – a network of companies employing 350 people, exporting horticultural products to Asia. A true global network with a combined turnover of over $200 million – comprises Comit Farms, Mercorella Group and Freshway Farms. 
§          Formation of the Innovation Network at the Elizabeth West Industrial Precinct – $90 million investment and 200 advanced manufacturing jobs.  The network comprises 12 local and global manufacturing, engineering and automotive design companies.  They work together under one roof, co-located with the City of Playford’s Economic Unit. The PM opened the Innovation Network in 2004.
§          Attraction of Hirotec, a Japanese automotive company, to supply the Holden plant.
§          Centre of Robotics Excellence South Australia (CORESA). First business-based robotics training centre in Australia. Driven by $30 million in robotic-related technology sales. PM launched this initiative.
§          Formation of a local engineering network comprising three companies.  The City of Playford is actively assisting these companies to enter the US and Middle East markets.
§          Advanced Manufacturing CAD CAM Centre – $1.5 million initiative that services 20-30  engineering SMEs across Adelaide. The DOTARS Sustainable Regions program is supporting the Centre. 

Contact: Rodin Genoff – rodin@rodingenoff.com

Act before the horse bolts, says Yorkshire

February 17, 2005

Yorkshire Forward is investing £3.5m in a project to better understand the global pressures leading businesses in the region are under and to assist them with their long-term plans to grow, invest and create jobs in the region.

 UK businesses with more than 250 employees represent just 4% of all firms, but in Yorkshire they account for half of the region’s GDP Over the last two years, decisions by six companies to move operations resulted in 3,200 job losses.  

A Key Account Management Team, to be managed by Yorkshire Forward, will be created to work with 600 top companies to improve the flow of information and help reduce the likelihood of these businesses re-locating elsewhere.

The Key Account Managers will be responsible for communicating the strategic needs of the companies to partner organisations, including councils.  “What want to work with them to make sure that the long-term strategic decisions made here by us and other authorities recognise their aims and aspirations…in some cases in the past, if we had been more aware of the specific problems that led companies to make their decisions, such as skills gaps or productivity constraints, we could have done something about it.

These Key Account Managers will identify those problems early. It is about closing the stable door before the horse has even thought about bolting.  The overall aim of the project is to safeguard 1,500 jobs and create 500 more, while attracting about £40m of private sector investment into the region.

The key businesses will be identified by factors including employment, growth, turnover, profitability and how they work with local and regional suppliers. 

(The Yorkshire initiative is commendable. If you think about it, they are regularising an activity that every local council and development agency should be doing – whatever the size of their companies – Editor)

George W. advocates opportunity zones

February 17, 2005

The IEDC reports that President Bush’s Strengthening America’s Communities Initiative would substantially prune and consolidate 18 existing community & economic development programs into one $3.71 billion unified grant-making program.

The White House Office of Management and Budget (OMB) reviewed federal economic development programs and found many did not “sufficiently demonstrate their measurable impact on economic and community development.” The new proposal will simplify access to economic development funding, set consistent eligibility criteria, and establish better accountability standards. 

HUD’s Community Development Block Grant program is the largest being consolidated (view the list of programs). In FY 2005, CDBG received $4.1 billion. If the Administration’s funding level of $3.71 billion is adopted by Congress, CDBG allocations must therefore decrease substantially. 

(Later report – President Bush has announced new Opportunity Zones to assist America’s transitioning neighborhoods i.e. areas that have lost a significant portion of their economic base. Most interesting – given that they are effectively enterprise zones, as recommended in this newsletter for some years – Editor).