Capes Regional Economic Development Strategy Shire of ... · Figure 1.1. Project Structure Source: AEC group. 1.3 Scope of this Report This report represents the fourth stage of the

Capes Regional Economic Development Strategy

Shire of Augusta – Margaret River

Shire of Busselton

Capes Regional Cluster Model

Working Paper No. 4

Final Draft

September 2009

Capes Regional Economic Development Strategy Working Paper No. 4 - Final Draft Report

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Document Control

Job ID: 15183

Job Name: CAPES REGION - Regional Economic Development Strategy

Project Director: Simon Smith

Project Manager: Michael Campbell

Company: Shire of Augusta – Margaret River Shire of Busselton

Job Contact: Andre Schonfeldt / Paul Martin

Document Name: Capes REDS WP4 Cluster Model Final Draft

Last Saved: 2/9/2009 9:59 PM

Version Date Reviewed PM Approved PD

Draft Report v1.0 26/8/2009 MC SS

Final Draft 2/9/2009 MC SS

Disclaimer:

Whilst all care and diligence have been exercised in the preparation of this report, the AEC Group Limited does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of the AEC Group Limited or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.


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Executive Summary

Background

The Shires of Augusta – Margaret River and Busselton have embarked on the development of a regional economic development strategy for the Capes Region. This report represents the fourth working paper contributing to the overall strategy.

Clusters

Business clusters are a “geographic concentration of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies and trade associations) in particular fields that compete but also cooperate”, according to Michael Porter, an economics and management professor at Harvard Business School, (Porter, 1998). In essence, clusters are a concentration of companies and institutions which are connected to each other through a matrix of market and non-market links. Collaborating as well as competing with each other, clusters are usually associated with a geographic region and characterised by the intermingling of products, services, innovation, knowledge and people.

For economic development, cluster theory removes the industry focus of previous generations (manufacturing, pharmaceuticals, plastics) and replaces it with a concentration on the relationships between companies, industries, government and academia. In such a way, economic development can contribute to growth across numerous sectors within a cluster. For example, the wine industry focuses on the production and sale of wine. A wine cluster would have links to other industries like tourism, accommodation, restaurants and cafes as well as be support through government, education and industry bodies.

Competitive Advantages and Growth Opportunities

Within cluster theory, it is still imperative for a region to focus on its unique strengths and competitive advantages for economic development. AECgroup’s Economic Development Opportunity Analysis uses various analytical tools to examine and identify competitive advantages as well as specific opportunities for economic growth, based on the unique characteristics and strengths of the Capes Region.

• Location Quotient Analysis: Assesses the degree of labour specialisation in an economy and is used to identify industry areas of strengths and weaknesses;

• Strategic Asset Analysis: Identifies the built and natural assets that a region has to offer which can be used to leverage industry or sector opportunities to promote further growth and development of a region;

• Cluster Mapping Analysis: Allows for the identification of growth opportunities in specific industry sectors, where a natural competitive advantage already exists; and

• Opportunity Assessment: Identifies key growth opportunities and linkages with existing competitive advantages and other industry sectors within the region.

Based on this assessment, economic development efforts should be focused around the following opportunities:

• Food & Beverage Manufacturing;

• Agriculture;

• Specialist Building & Furniture;

• Tourism;

• Aged Care;

• Property & Business Services;

• Finance and Insurance;


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• Arts;

• Education; and

• Renewable Energy.

Capes Regional Cluster Model Framework

The power of clusters lies within the interlinked nature of businesses, government and academia across industry sectors. The following diagram highlights the Capes Regional Cluster Model Framework and demonstrates how the industries within the region are linked.

The figure identifies the key industries and the flows of goods and services between them that make up the critical elements of the Capes economy, represented by the blue circle surrounding all of the industries. Flowing into the economy are imported goods and services, while flowing out of the economy are exports of goods and services produced locally.

Each coloured node represents a business sector within the Capes regional economy. Lines connecting these sectors indicate the links between sectors in terms of purchasing patterns, and represent the supply chain. Government and professional services (i.e., services such as legal, accounting, marketing, business management, finance, insurance, property, construction, communications and health), support all of these sectors to some degree, and are highlighted at the top of the figure as an overarching facilitator to economic activity. These sectors will all grow naturally as the other sectors grow. Consumers (both household and Government) are key generators of demand for final goods and services from all sectors, and are represented at the bottom of the figure.


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Figure E.1. Capes Regional Cluster Model Framework

Source: AECgroup.

This diagram demonstrates the symbiotic nature and interlinked relationships of cluster theory, at a regional scale. As one sector grows, so will the other cluster participants, given this unique and intertwined relationship. Under the Capes Regional Cluster Model Framework, growing the economy does not have to mean growing any one specific industry sector. Economic growth will occur through the growth of individual cluster participants and/or through the increase of the linkages between them. As these sectors and linkages increase, the government and professional services will grow and become more specialised. All of this growth will translate to greater economic activity and job growth.

Accommodation, Cafes,

Restaurants

Education

Food Manufacturing

Creative

Tourism

Wine Production

Agricultural Services

Wholesale Trade

Transport & Storage

Government ServicesProfessional Services

Retail Trade

Agriculture

Consumers


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Table of Contents

DOCUMENT CONTROL .......................................................................................... I

EXECUTIVE SUMMARY ........................................................................................ II

TABLE OF CONTENTS........................................................................................... V

1. INTRODUCTION .......................................................................................... 1

1.1 BACKGROUND .................................................................................................. 1 1.2 STRUCTURE OF THIS PROJECT ................................................................................ 1 1.3 SCOPE OF THIS REPORT ....................................................................................... 1

2. CLUSTERS IN THEORY AND REALITY ........................................................... 2

2.1 CLUSTER CASE STUDIES ...................................................................................... 2 2.2 CLUSTERS IN REALITY ......................................................................................... 3

3. CAPES REGIONAL COMPETITIVE ADVANTAGES ........................................... 4

3.1 LOCATION QUOTIENT ANALYSIS ............................................................................. 4 3.2 STRATEGIC ASSET ASSESSMENT ............................................................................. 7 3.3 CLUSTER MAPPING ANALYSIS ................................................................................ 9 3.4 OPPORTUNITIES FOR GROWTH IN THE CAPES REGION................................................... 11

4. CAPES REGIONAL CLUSTER MODEL FRAMEWORK ..................................... 16

4.1 OVERVIEW .................................................................................................... 16 4.2 ROLE OF KEY SECTORS ..................................................................................... 17 4.3 ROLE OF SUPPORTING SECTORS ........................................................................... 18 4.4 ROLE OF FACILITATING SECTORS .......................................................................... 19 4.5 FUTURE GROWTH AND DIVERSITY OF THE CLUSTER MODEL ............................................ 19

5. INDUSTRY LINKS & TRADE WITHIN THE CLUSTER MODEL FRAMEWORK .. 20

5.1 INDUSTRY LINKAGES OF KEY SECTORS ................................................................... 20 5.2 INDUSTRY LINKAGES OF SUPPORT SECTORS ............................................................. 25

6. INFRASTRUCTURE TO ENABLE GROWTH ................................................... 26

6.1 TRANSPORTATION INFRASTRUCTURE ...................................................................... 26 6.1.1 ROAD INFRASTRUCTURE .......................................................................... 26 6.1.2 AIR INFRASTRUCTURE ............................................................................. 26 6.1.3 RAIL INFRASTRUCTURE ........................................................................... 27 6.1.4 PORT / MARINA INFRASTRUCTURE ............................................................... 27

6.2 UTILITY INFRASTRUCTURE .................................................................................. 27 6.2.1 TELECOMMUNICATIONS ........................................................................... 27

REFERENCES ..................................................................................................... 29

APPENDIX A: CLUSTER CASE STUDIES .............................................................. 30

APPENDIX B: INDUSTRY LINKAGES OF SUPPORT SECTORS .............................. 33


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1. Introduction

1.1 Background

The Shires of Augusta – Margaret River and Busselton (the Capes Region) covers some 20 townsites across 3,800 square kilometres. The region has experienced population growth of around 5% per annum in recent years, with in excess of 40,000 people now residing in the Shires of Augusta – Margaret River and Busselton. Population growth is expected to remain high into the future with the Capes Region a major sea change destination.

The rapid population growth has resulted in a significant change in both the community demographic and industry structure of the region. The regional economy has shifted away from its traditional agricultural base to one where tourism is a significant employer, while the population growth resulting from the sea change community has increased demand for community services and facilities.

Externally, climate change, the current financial crisis and continued globalisation are continuing to impact the region. Internally, beyond the population growth pressures there are numerous local issues regarding jobs, economic growth and specific industry trends and pressures. In order to successfully provide a sustainable future that addresses these challenges and maintains the current standard of living, a comprehensive economic development strategy for the Capes Region is needed.

1.2 Structure of this Project

The Capes Regional Economic Development Strategy has been developed in different stages. These stages link together and build on one another as demonstrated below.

Figure 1.1. Project Structure

Source: AECgroup.

1.3 Scope of this Report

This report represents the fourth stage of the project and discusses the future economic growth prospects of the region in terms of a current cluster model. Beyond the analysis of clusters, this report also analyses the competitive advantages of the Capes region and identifies specific opportunities for economic growth in the future.

Specifically, this report considers:

• A practical approach to cluster theory for the Capes Region;

• Specific competitive advantages of the Capes region for future growth;

• Specific opportunities for economic growth in the future based on the competitive advantages and applying cluster theory;

• A specific cluster model framework for the Capes regional economy; and

• Quantified links between industry sectors within the cluster model framework.

1• Working Paper 1: Regional Economic Profile

2• Working Paper 2: Vision, Focus Areas and Growth Projections

3• Working Paper 3: Industry Plans

4• Working Paper 4: Capes Regional Cluster Model Framework

5• Working Paper 5: Capes Regional Economic Development Strategy

6• Working Paper 6: Capes Regional Economic Development Program


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2. Clusters in Theory and Reality

A business or industry cluster can be defined as a concentration of companies and institutions which are connected to each other through a matrix of market and non-market links. Collaborating as well as competing with each other, clusters are usually associated with a geographic region and characterised by the intermingling of products, services, innovation, knowledge and people.

According to Michael Porter, an economics and management professor at Harvard Business School, business clusters are a “geographic concentration of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies and trade associations) in particular fields that compete but also cooperate.” (Porter, 1998). The dynamic nature of clusters, he suggests, is based upon inter-firm local competition, the supply of equipment and services, input factors (human capital, knowledge infrastructure, access to venture capital) and demand factors (sophisticated local users). In this context, clusters are tightly linked input-output systems.

Clusters reach far beyond the physical location and geographic proximity. While cost savings from lower transport through the supply chain is important, clusters are more about the sharing of ideas, innovation and access to specialised services and skills. Clusters allow for firms to easily engage with suppliers and customers end create a business environment that attracts ancillary businesses and organisations such as specialised financial and legal services, university and education organisations, government agencies and industry bodies. Clusters essentially relate to creating and leveraging linkages within an industry rather than simply locating in the same physical location.

2.1 Cluster Case Studies

In order to demonstrate the principles of clusters, AECgroup examined examples of strong industry clusters abroad. Specific aspects of these clusters are highlighted below and a detailed review of these clusters is presented in Appendix A.

• Boston Life Science Cluster: The Boston Life Science Cluster has over 250 companies involved in biotechnology, medical devices and pharmaceuticals and a thriving research environment with major universities and 14 teaching hospitals. It is a great example of how the interaction of private industry and university-based research has enabled a culture of innovation and knowledge in specific industries. The success of these leading companies has encouraged additional developments and specialised services for these companies. Furthermore, the Boston region is well known as a major life science region in the United States for the highly developed nature of this cluster including global companies, sophisticated supply chains, leading research institutions and a highly skilled, specialised workforce.

• Seattle Aerospace Cluster: The Seattle Aerospace Cluster is home to Boeing’s commercial aircraft division and other major aerospace companies including Lockheed Martin, SAFRAN Group, Rolls Royce, Goodrich and GE. The Seattle Aerospace Cluster demonstrates the importance of a highly sophisticated supply chain, workforce and training/research organisations working together with support and encouragement from industry associations and government. The strength of this industry cluster was a major consideration for Boeing to locate the final assembly plant for its new 787 Dreamliner ($700 million/1,200 jobs) to the region in 2003. Much of the leading research and development for the aerospace industry in the US is takes place in the Seattle region.

• Silicon Valley IT Cluster: Silicon Valley is synonymous with high technology and cutting edge innovation. It is home to Hewlett Packard, Google, Sun Microsystems, Cisco Systems, Intel, Apple and Symantec. The Silicon Valley IT cluster demonstrates the power of combining people, research and an innovative culture. It is the creative environment that has evolved over decades combined with the specialised workforce and research capabilities that continues to drive innovation in the Silicon Valley. There is a wide range of associations and specialty service providers that support and


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encourage further development of this cluster as well as global companies, start-ups and cutting-edge technology. The Silicon Valley demonstrates that clusters are not only about geographic proximity, but rather the intermingling of people, ideas, products and services.

• Napa Valley Viticulture Cluster: Napa Valley, located in California, is widely considered one of the top viticultural areas in the United States, and is home to approximately 325 wineries and numerous more brands. The region’s reputation for producing world-class wines is firmly established in a global market. Napa Valley growers and vintners are supported by organisations such as Napa Valley Vintners, which are dedicated to advancing Napa Valley's wines both domestically and abroad, and the Napa Valley Grape Growers Association that funds research and implements programs aimed at strengthening the Napa Valley wine industry's economic viability. Napa Valley also boasts some of the top-rated restaurants in the US, and has strong links with the local vineyards and wineries that provides first-class wine lists and sommeliers skilled with matching entrees to wine. The Napa Valley wine cluster demonstrates the benefits of industry participants working collaboratively to market their product and region, share ideas, and support research and development of innovative, best practice techniques.

2.2 Clusters in Reality

As demonstrated in the above case studies, clusters do exist and they can contribute significantly to the economic development and wellbeing of a region. Clusters entail sophisticated supply chains, strong linkages between suppliers and customers, a well developed and specialised workforce as well as a wide variety of specialised support agencies and services.

In practice, it is often difficult to identify the appropriate clusters and near to impossible to “create” clusters. Realistically speaking, governments need to identify the clusters that exist and determine the most appropriate way to encourage further development and/ or expansion of these clusters. As demonstrated, the benefit of clusters involves the intermingling of companies, people and ideas, which demonstrates the importance of linkages between and within the private sector, academia and government.

Encouraging Clusters: What Governments Can Do

Established only a few years ago, the International Centre for Automotive Research (ICAR) is an outstanding example of government, private sector and academia working together to encourage cluster development and drive economic growth. Located in Greenville, SC (USA), the centre is run by Clemson University and houses the main engineering classrooms offering advanced (master and doctorate) degrees in Automotive Engineering. BMW, Michelin and Sun Microsystems were among the founding private sector members of ICAR. Both BMW and Michelin have significant operations in South Carolina. The South Carolina State Government provided some initial funding for the project.

According to Clemson President Jim Barker, “CU-ICAR brings together the academic and research strengths of a research university, the public support of state government and the private support of an existing strong industry in the region. None of these entities could have created CU-ICAR without the involvement and support of the other two.” Today, there is a long list of private sector companies conducting research at the campus, totalling $225 million in public and private investment and 500 new high-paying, technology-oriented jobs on site.

The ICAR facility has been cited by numerous companies locating to the region as a major reason for investing and creating jobs locally. The ICAR will continue to drive cluster development into the future.

By proactively encouraging strong linkages between cluster participants, governments can encourage further cluster growth, thereby contributing to greater economic development outcomes in the future. Through clusters, companies are able to innovate and grow, making them less susceptible to global competition with low cost producing locations. This is achieved through the production of higher valued goods and services, new product development and offering a higher quality product.


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3. Capes Regional Competitive Advantages

In order to determine the industry subsectors that are important for the future growth of the Capes Region, an economic development opportunity analysis was conducted. This assessment uses the competitive advantages of the Capes Region and examines industry growth trends as well as the unique and specific assets of the South West SD to determine specific industry sector targets for the region. These targets are built on current competitive advantages of the region and consideration of industry growth trends generally. It also focuses on high value-adding, knowledge based activities that will drive and deliver real economic benefits to the community for the future.

The Capes Region currently has a number of strength industries and strategic assets, which have been the key economic drivers of the regional economy to date.

The purpose of this Chapter is to gain an understanding of these strength sectors and the additional economic opportunities which the environment presents for development. These opportunities must leverage existing regional strengths and supply chain relationships in order to inform responsible, sustainable and economically dynamic decision making for the Capes Region in the future.

The analysis tools used include:

• Location Quotient Analysis: Assesses the degree of labour specialisation in an economy and is used to identify industry areas of strengths and weaknesses;

• Strategic Asset Analysis: Identifies the built and natural assets that a region has to offer which can be used to leverage industry or sector opportunities to promote further growth and development of a region;

• Cluster Mapping Analysis: Allows for the identification of growth opportunities in specific industry sectors, where a natural competitive advantage already exists; and

• Opportunity Assessment: Identifies key growth opportunities and linkages with existing competitive advantages and other industry sectors within the region.

3.1 Location Quotient Analysis

In order to demonstrate the specialisation of the economy, location quotients based on employment have been calculated. The location quotients demonstrate the degree to which a local or regional economy is specialised by examining the proportion of employment (by industry sub-sector) compared to a larger economy (Australian economy). Location quotients can be used to indicate strengths and weaknesses of a local or regional economy (i.e., a natural competitive advantage).

For the analysis, Western Australia and the South West SD are compared against the Capes Region. Location quotient of “1” mean that the economies being compared have an equal share of employment (compared to Australia) for a specific industry sector, thus no potential advantage or disadvantage. A location quotient above “1” indicates a specialisation of labour and therefore an area of potential competitive advantage. If the location quotient is below “1”, the area has a weakness in this particular industry sector.

As demonstrated in the figures below, the Capes Region and the broader South West region have significant strengths in the agriculture, forestry & fishing, accommodation, cafes & restaurants, retail trade and construction sectors. The South West region also has a strength in manufacturing and electricity, gas & water sectors.


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Figure 3.1. Location Quotients (1-digit ANZSIC), All Industries by Place of Work, 2008

Source: Australian Bureau of Statistics (2007), Australian Bureau of Statistics (2008), AECgroup (2009).

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

Mining

Communication Services

Property & Business Services

Wholesale Trade

Education

Personal & Other Services

Transport & Storage

Government Administraion & Defence

Electricity, Gas & Water Supply

Cultural & Recreational Services

Health & Community Services

Manufacturing

Construction

Retail Trade

Accommodation, Cafes & Restaurants

Agriculture, Forestry & Fishing

Western Australia

South West SD

Capes Region


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When the manufacturing sector is analysed at the 3-digit ANZSIC code level as in the diagram below (Figure 3.2), the Capes Region has a relative strength in:

• Beverage and malt manufacturing;

• Dairy product manufacturing;

• Petroleum & coal product manufacturing;

• Furniture manufacturing;

• Prefabricated building manufacturing; and

• Oil & fat manufacturing.

These industries are key strengths due to an established wine manufacturing and agriculture industries which support food and beverage manufacturing production activities. Also forestry in the region supports the furniture manufacturing sector.

Figure 3.2. Location Quotients (3-digit ANZSIC), Manufacturing by Place of Work, 2008


0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0

Ceramic Product Manufacturing

Clothing Manufacturing

Other Wood Product Manufacturing

Footwear Manufacturing

Cement, Lime, Plaster and Concrete Product Manufacturing

Non-Metallic Mineral Product Manufacturing, undefined

Glass and Glass Product Manufacturing

Log Sawmilling and Timber Dressing

Other Manufacturing

Oil and Fat Manufacturing

Prefabricated Building Manufacturing

Furniture Manufacturing

Petroleum and Coal Product Manufacturing, nec

Dairy Product Manufacturing

Beverage and Malt Manufacturing

Western Australia

South West SD

Capes Region


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When the agriculture sector is analysed at the 3-digit ANZSIC code level as in the diagram below (Figure 3.3), the Capes Region has a relative strength in:

• Dairy cattle farming;

• Horticulture & fruit growing;

• Commercial fishing;

• Marine Fishing;

• Services to agriculture;

• Other livestock;

• Grain, sheep & beef cattle farming; and

• Forestry & logging.

This highlights the diversity of the agriculture sector in the region which is a traditional industry of the region leveraging the unique environmental assets to produce high quality agriculture produce. With the growth of the wine and dairy industries in the region, services to agriculture has become increasingly prominent in the region, providing viticulture support and services to dairy to drive the development of product.

Figure 3.3. Location Quotients (3-digit ANZSIC), Agriculture by Place of Work, 2008


3.2 Strategic Asset Assessment

The strategic asset assessment builds further on the location quotients to identify additional competitive advantages by highlighting unique and specific assets in the region that can be leveraged for economic development. These assets demonstrate the unique capacity of the local economy and can provide opportunities for significant growth, when combined with other existing competitive advantages.

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Hunting and Trapping

Aquaculture

Other Crop Growing

Poultry Farming

Forestry and Logging

Agriculture, Forestry and Fishing, undefined

Grain, Sheep and Beef Cattle Farming

Agriculture, undefined

Other Livestock Farming

Services to Agriculture

Marine Fishing

Commercial Fishing, undefined

Horticulture and Fruit Growing

Dairy Cattle Farming

Western Australia

South West SD

Capes Region


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A strategic asset assessment of the Capes Region identifies the following locational, geographical and existing industry characteristics that would further support growth opportunities including:

• Strong agriculture sector: The Capes Region agriculture sector has been a traditionally strong sector with strength in horticulture and fruit growing, particularly wine grape growing in the Margaret River, a strong dairy industry and various other sheep, beef, grains and livestock production activities.

• Natural Environment: The Capes Region has a unique natural environment from scenic countryside and towering forests to great sandy beaches. The region leverages soil and water characteristics that allow for the region to produce some of the world’s best known wine.

• Margaret River Brand: Through the established wine and food processing sector, the region has a well established brand that represents quality products. This recognition is important for future marketing of the region as a tourist and business destination.

• Tourism & Lifestyle: The Capes Region is well known for its tourism and lifestyle and is a popular holiday maker destination in proximity to the WA capital, Perth. As a tourism destination, the Capes Region demonstrates a very high quality of life that is necessary to attract tourists, businesses and new residents.

• Jetty Upgrade & Re-Investment: The Busselton Jetty is a tourism landmark in the Capes Region that is over 1800m long and a regional icon. The Jetty is currently surrounded by a number of tourism attractions such as the Cultural Heritage, Museum, Underwater Observatory and state-of-the-art interpretive centre (Busselton Shire Council, 2009). The planned Jetty upgrade & re-investment will restore the existing Jetty infrastructure and further cement the asset as a tourism infrastructure hub of the Capes Region. This investment is valued at $27.1 million (Busselton Jetty, 2009) and will involve the complete replacement and refurbishment of 50% of the existing jetty infrastructure.

The Capes Region can leverage these strategic assets to further advance economic development and investment attraction growth opportunities as highlighted in the table below.

Table 3.1. Capes Region Strategic Asset Assessment

Strategic Asset Assessment

Opportunity it supports How it can be leveraged?

Strong Agriculture Sector

Attraction and support of downstream agriculture product manufacturing industry such as gourmet food processing, dairy products, meat products, etc.

Gourmet food industry will be attracted to the region as it can source its key inputs direct from the local agriculture sector. Additionally, the “clean and green” reputation of the region helps to encourage food production.

Margaret River Brand

Having a recognised branch can support growth in tourism, manufacturing and other business areas.

Additional marketing and leveraging of the brand Margaret River can increase exposure for the region and aid in attracting more tourists, businesses and residents.

Natural Environment The unique blend of natural assets provides both tourism opportunities and a natural environment that supports agriculture and forestry activities.

Promotion of the area as a pristine natural environment will help attract additional tourists and businesses.

Tourism & Lifestyle Having a high quality of life is mandatory for economic development and the growth of all industry sectors.

Having an attractive lifestyle supports development in all industry sectors, because the region is a place in which people want to live. Recruiting workers from other parts of Australia should be relatively easier, given this high quality of life.

Jetty Upgrade & Foreshore Redevelopments

The Buseelton Jetty upgrade will further support the tourism industry by restoring a regional icon. Similarly, the foreshore redevelopments in Busselton and Dunsborough will further support tourism in the region.

The Jetty and foreshore redevelopments can be used to attract additional tourists as well as adding value to Busselton and Dunsborough by contributing to growing the retail sector in the respective CBDs by attracting more people to the area (potential retail customers).

Source: AECgroup (2009).


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3.3 Cluster Mapping Analysis

Cluster mapping builds on the location quotient analysis by portraying the location quotients against industry employment growth over time. By incorporating industry growth, cluster mapping allows for the identification of growth opportunities in specific industry sectors, where a natural competitive advantage already exists.

Industry cluster mapping allows for consideration of industry employment growth over time. The location quotients for each industry sector are “mapped” against the employment growth of that sector between 2003 and 20081. The size of the cluster in the map demonstrates the size of the local workforce in that industry sector.

Industry clusters located above the “1” on the vertical axis indicate an existing industry concentration (strength or competitive advantage, as discussed previously). The industry employment growth is plotted along the horizontal axis, with 0% growth over the five years creating a midline. The farther to the right of this central horizontal axis the industry cluster is, the faster the industry has been expanding. Similarly, the farther to the left of the midline the industry cluster is located, the faster it has been shedding jobs during this five year period. This growth indicator allows for the identification of industry sectors that are growing (and contracting) and where Capes Region has a competitive advantage.

The following cluster maps identify growing industry sectors where Capes Region has a competitive advantage (Current strength / High growth), which make natural industry targets for economic development. At the same time, it demonstrates industry employment sectors that are growing at the national level but have not developed as strong employment clusters in the Capes Region (Current weakness / High growth). Finally the cluster map clearly shows industry employment sectors that are shrinking on a national level, where the Capes Region may have a strength or weakness.

The first two cluster maps focus on the 17 major sectors (1-digit ANZSIC) for the Capes Region. While the following cluster maps focus on agriculture and manufacturing industries (2 & 3-digit) for the Capes Region.

Figure 3.4. Cluster Mapping (1-digit ANZSIC) All Industries, 2008


1 Employment growth has been calculated utilizing a combination of the 2001 and 2006 employment by industry census statistics and the Australian Labour Force Survey growth which has been applied to the most recent years of 2007 and 2008.

Transport & Storage

Education

Agriculture, Forestry

& Fishing

Mining

ManufacturingElectricity, Gas &

Water Supply

Personal & Other

Services

Cultural &

Recreational ServicesHealth & Community

ServicesGovernment

Administraion &

Defence

Property & Business

Services

Finance & InsuranceCommunication

Services

Accommodation,

Cafes & Restaurants

Retail Trade

Wholesale Trade

Construction

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

-20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

Current Strength/Low Growth Current Strength/ High Growth

Current Weakness/ Low Growth Current Weakness/ High Growth

% Change Australia Industry Employment 2003-2008

Clu

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cen

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Loca

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= 600 employees


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Figure 3.5. Cluster Mapping (Inset) All Industries, 2008


Figure 3.6. Cluster Mapping (2-digit & 3-digit ANZSIC) Agriculture & Manufacturing, 2008


Transport & Storage

Education

Manufacturing

Electricity, Gas &

Water Supply

Personal & Other

Services

Cultural &

Recreational Services

Health & Community

Services

Property & Business

Services Finance & Insurance

Retail Trade

Wholesale Trade

Construction

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Current Strength/Low Growth Current Strength/ High Growth

Current Weakness/ Low Growth Current Weakness/ High Growth

% Change Australia Industry Employment 2003-2008

Clu

ste

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on

cen

tra

tio

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00

8 (

Loca

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)

= 700 employees

Horticulture and Fruit

Growing

Dairy Cattle Farming

Commercial Fishing,

undefinedMarine Fishing

Textiles, Clothing and

Footwear

Bev. & Malt Manfg.

Fruit & Vege ProcessingMeat Prduct Manfg

Funiture Manfg. Agriculture, undefined

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

Current Strength/ Low Growth Current Strength/ High Growth

Current Weakness/ High GrowthCurrent Weakness/ Low Growth

Clu

ste

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cen

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8 (

Loca

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% Change Industry Employment 2003-2008

1.0

= 250 employees


11

Figure 3.7. Cluster Mapping (Inset) Agriculture & Manufacturing, 2008


3.4 Opportunities for Growth in the Capes Region

When identifying key industry sectors for growth, it is important to keep in mind the need for high value development (i.e. business activities that bring a high degree of knowledge and generate products and services of a high value). At the same time, it is important that future industry sectors are also sustainable businesses, both in terms of their environmental responsibilities but also in terms of their operations (i.e., that their business operations are competitive in the long term). By focusing on these areas, economic development can generate greater economic returns for the community.

The opportunities for growth highlighted below also demonstrate the potential to generate valuable, full-time employment for local residents in the Capes region. These jobs will offer solid employment opportunities (at above average wages) to residents year round and provide the chance for career progression into the future.

Analysis of the cluster maps above has identified the following key industry sectors for growth in the future:

Manufacturing

• Beverage & Malt manufacturing (including wine);

• Dairy product manufacturing;

• Meat product manufacturing;

• Prefabricated building manufacturing; and

• Specialised furniture manufacturing.

Agriculture

• Horticulture & fruit growing (including wine grapes);

• Dairy cattle;

• Aquaculture;

• Services to agriculture; and

Grain, Sheep and

Beef Cattle FarmingOil & Fat Manfg.

Other Manufacturing

Wood and Paper

ProductsPrinting, Publishing

and Recorded Media

Other Food Manfg.

Bakery prdt Manfg.Fruit & Vege

Processing

Dairy prdt Manfg

Services to

Agriculture

Meat Prduct Manfg

Other Livestock

Farming

Forestry and Logging

Manufacturing

undefined

Machinery and

Equipment

Manufacturing

Metal Product

Manufacturing

Non-Metallic Mineral

Products

Prefabricated building

manfg.

Funiture Manfg.

Other Manfg.

Agriculture,

undefined

Poultry Farming

Other Crop Growing

Agriculture, Forestry and

Fishing, undefined

0.0

0.5

1.0

1.5

2.0

2.5

3.0

-30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0%

Current Strength/ Low Growth Current Strength/ High Growth

Current Weakness/

High Growth

Current Weakness/

Low Growth

Clu

ste

r C

on

cen

tra

tio

n 2

00

8 (

Loca

tio

n Q

uo

tie

nt

Co

mp

ari

son

wit

h A

ust

ralia

)

% Change Industry Employment 2003-2008

= 100 employees


12

• Other livestock farming.

Other Industry

• Specialist property & business services;

• Specialist finance & insurance services;

• Tourism;

• Aged care;

• Renewable energy;

• Arts; and

• Education.

The selection of these industry sectors for future growth does not exclude growth from occurring in other sectors. These areas simply represent where growth is the most achievable and beneficial for the Capes Region, given its unique competitive advantages and general industry growth trends. By focusing economic development efforts on these sectors, the Shires will be able to achieve the most success and gain the highest return on investment for money spent in economic development.


13

Table 3.2. Opportunities for Growth in the Capes Region (Food & Beverage, Agriculture, Furniture Crafts and Art, Aged Care, Property Business and Financial Services, Renewable Energy)

Sector Industry Activity Why the Capes Region?

Food & Beverage Manufacturing

• Beverage & Malt Manufacturing: Includes manufacturing or blending of wine, fermented cider or beer.

• Dairy Products: Includes manufacturing butter, cheese, condensed, concentrated or evaporated milk, milk powder, milk, cream and yoghurt.

• Sweet Goods: Includes gourmet cookies, chocolate manufacturing, cocoa butter, cocoa products, confectionery, crystallised or glace fruit and sweet drinks (flavoured milk).

• Fruit and Vegetable Processing: Includes the processing or packaging of fruits and vegetables (stone fruit, avocadoes, olives, local produce)

• Meat and Meat Products: Includes small good processing, exotic meats (ostrich, emu, venison) and general slaughtering & packing of meat, meat extracts.

• Foods for Healthy Living: Organic food and beverage production.

Existing Industry: The region boasts strong existing industries and supply chains. Linkages with other key industry sectors such as tourism and agriculture. Production of unique specialised food and wine products. Margaret River Brand: The Margaret River Brand is already associated with high quality and natural food and beverage products. The value of this brand means that consumers will often pay a higher price to purchase goods labelled “Margaret River” because of the reputation of the area as clean and green as well as the high quality associated with products from the area. This brand will be attractive to new food and beverage producers. Workforce: An established workforce with specialist skills in food and beverage processing as well as specialty training opportunities in food and beverage related courses. Market Potential: For many products/product ranges such as chicken and chicken products, cheeses and chips, as well as other niche food products there is identified market potential in WA and export markets. As healthy living through food and lifestyle become more important to the general population, there will be new market demand for healthy food and beverage products.

Agriculture • Horticulture & fruit growing: Including wine and table grapes, avocadoes, olives and other stone fruits.

• Dairy Cattle Farming (milk production). • Aquaculture: Specialty aquaculture developments for fish and/or

other marine meat products. • Services to Agriculture: Dairy herd testing, farm irrigation service,

fertiliser spreading, fruit picking and other horticulture services, particularly services related to viticulture.

• Other livestock farming: Including deer (venison) farming, dairy goat farming and other unique livestock farming such as emu’s, ostriches, etc.

• Organic food production: Growing organic meats, eggs, fruit and vegetable.

Established Industry: A historical strength in agriculture, forestry and fishing means that the industry is well established within the Capes region with the necessary support sectors for growth and development. Unique Environmental Assets: The characteristic climate, water resources and soils of the Capes Region allow for a broad range of agricultural production. As drought cripples many of the traditional growing areas of Australia, the Capes region can grow its agricultural production. Specialist Education & Research Centres: Specialist technology and supporting education and training institutes in the region (particularly surrounding viticulture and wine production) provide a strategic advantage for the ongoing product development in the region. Market Potential: Production of organic products for food manufacturing will become more popular as the healthy food and lifestyle trend is adopted by more households. The Capes Region has the ability to benefit from this expanding market through its ability to produce healthy, high quality agriculture produce with organic branding. Additionally, as other food and beverage production increases locally, demand for the necessary agricultural products increases as well.

Specialist Building & Furniture

• Specialised furniture manufacturing: Includes wood and upholstered (household specialty furniture such as couches bedroom suites, kitchen design, etc.) and custom made wood furniture.

• Structural wood products for building: Timber frames, trusses and other structure wood products as well as decorative wood features

Available Resources: The Capes Region and the South West SD has an abundance of building materials and available resources such as wood products from forestry and logging industry and structural metal products currently supporting the mining industry in the South West. Workforce: The Capes Region has a strong existing workforce for furniture manufacturing. Creative Industries Base: Capes Region provides a popular lifestyle for artists, artisans and designers. As such specialist building and furniture in the region is likely to add to the creative regional branding through the development of unique and custom design furniture and building products.


14


Tourism • Tourism: Includes a wide variety of visitors from Perth, interstate and from overseas that are drawn to the region for many different experiences.

Existing Brand: “Margaret River” and “Geographe” are well established brands and the area is already a popular tourist destination in WA. Existing Infrastructure: There is a variety of existing infrastructure for tourism including good road access to the region, a diversity of accommodation, existing tourism associations and a list of existing annual events. Future Potential Infrastructure: An upgrade to the Busselton Airport could results in increased accessibility to the region, which could increase the number of visitors. Workforce: Analysis indicates that there is already a large, existing workforce for tourism from the accommodation, restaurant and cafes and retail sectors.

Aged Care • Aged Care Services: Aged care facilities, nursing home services, general residential care for aged population, aged care support services (e.g. blue care), nursing.

Ageing Population: The population of Australia continues to age and there will be growth in the older population over the next decades. The Capes region has already seen an increase in the amount of retirees moving to the area. Lifestyle: The lifestyle in the Capes region is attractive to many retirees and can be used to develop aged care facilities. Additionally, the lifestyle of the area can assist in attracting the highly sought after professionals needed for these facilities.

Property & Business Services Finance and Insurance

• Specialist property & business services and specialist finance and insurance: Including architecture, property development, property management and sales, business administrative and accounting services as well as personal wealth advisors, niche financial management companies and insurance providers.

Lifestyle: Given the high quality of life, the Capes Region has the potential to attract small, specialty business advisory companies. These types of companies do not have to provide their services directly to their clients on site and can use the internet to conduct much of their business. The lifestyle in the Capes region could be attractive to these types of businesses that are interested in a lifestyle change and currently located in Perth or another capital city. Demand: Compared to the Australian average, the Capes Region is currently underserviced in these sectors.

Arts • Arts: Musical composition, the literary arts, and visual arts such as painting, drawing, sculpture, pottery, etc.

Lifestyle: The Capes Region fosters a creative arts lifestyle which appeals to many artistic talents. Natural Environment: The natural beauty of the region is inspirational to artists. Tourism: The tourism industry and its regional branding providing a forum for the promotion of artist works through various galleries, museum and creative activities. Tourism also brings many customers to the region for local artists, providing a larger pool of potential customers than other parts of Australia.

Education • Education: Specialised education colleges to support existing industry. Ideally these schools would be developed as state-of-the-art facilities attracting an international standard reputation. Education colleges could include gourmet food and wine institute or creative arts institute.

Unique industry strengths: The Capes Region has strengths across a number of creative and exotic industries combining a unique blend of wine growing and manufacturing, gourmet foods, tourism and the arts. As such, the Capes Region provides the perfect location for the development of unique education and training institutes.


15


Renewable Energy

• Green Electricity Generation: Renewable energy generation through use of wind turbines, solar technology and/or gas fired turbines.

Market Demand: With increasing concerns of the impacts of climate change and increasing regulation for renewable energy, there is an increasing market demand for renewable energy resources. As the population grows, there is increasing demand for power. Environmental Values: The Capes Region has a community which fosters strong environmental values which supports renewable energy generation. Existing Renewable Energy Generation: On the outskirts of the Capes Region a $100 million wind farm has been developed contributing 65 megawatts to the electricity grid- enough energy to power 50,000 homes (Margaret River Mail, 2002). There are plans for a $160 million wind farm in Augusta Margaret River (currently undergoing consultation and planning) (Margaret River Mail, 2009) highlighting the real opportunities for wind farming in the region.

Source: AECgroup.


16

4. Capes Regional Cluster Model Framework

4.1 Overview

The linkages between specific industries within the Capes regional economy were examined in order to identify “clusters” of industries and the strength of inter-industry supply chains. A previously developed transaction table of the Capes regional economy was used in this analysis. This table represents the purchasing patterns between sectors of the regional economy, and their level of imports and exports.

The following figure (Figure 4.1) identifies the nodes and connections that make up the current Capes Regional Cluster Model Framework. The figure aims to identify the key industries and the flows of goods and services between them that make up the critical elements of the Capes economy and provide the greatest opportunity for expansion. As such, it is not intended to provide an overview of the entire Capes economy.

In the figure below (Figure 4.1), the circle surrounding all of the industries represents the Capes regional economy. Flowing into the economy are imported goods and services, while flowing out of the economy are exports of goods and services produced locally.

Each coloured node represents a business sector within the Capes regional economy. Lines connecting these sectors indicate the links between sectors in terms of purchasing patterns, and represent the supply chain. Government and professional services (i.e., services such as legal, accounting, marketing, business management, finance, insurance, property, construction, communications and health), support all of these sectors to some degree, and are highlighted at the top of the figure as an overarching facilitator to economic activity. These sectors will all grow naturally as the other sectors grow. Consumers (both household and Government) are key generators of demand for final goods and services from all sectors, and are represented at the bottom of the figure.


17

Figure 4.1. Capes Regional Cluster Model Framework

Source: AECgroup.

The figure above provides a graphic representation of the current connections and flows of goods and services between key sectors of the Capes regional economy.

The challenge for the Capes Region is to determine:

• Existing flows that can be increased;

• Where new connections between existing sectors can be established; and

• New industry nodes that can be established and the goods and services they can provide to existing industry sectors.

Once the answers to these questions are known, Shire actions to facilitate these changes can be identified, prioritised and ultimately implemented to generate greater economic activity, additional investments and job creation.

4.2 Role of Key Sectors

The Capes region has a strong, traditional agricultural base, which is linked directly to wine manufacturing and food and beverage production within the region. Tourism has also grown in recent years to become a significant employer in the region. A brief description of each of these key sectors of the Capes regional economy is provided below:

• Agriculture: The agriculture sector in the Capes regional economy is primarily comprised of horticulture, beef cattle, dairy cattle and services to agriculture. There is also some forestry and commercial fishing undertaken in the region, although these industries are not as prominent;

• Wine manufacturing: Wine manufacturing is one of the Capes region’s key economic drivers, producing and exporting 22 million bottles of wine from the region;

Accommodation, Cafes,

Restaurants

Education

Food Manufacturing

Creative

Tourism

Wine Production

Agricultural Services

Wholesale Trade

Transport & Storage

Government ServicesProfessional Services

Retail Trade

Agriculture

Consumers


18

• Food and beverage manufacturing: While wine manufacturing is the predominant form of food and beverage manufacturing in the Capes region, the region also boasts important production of other food and beverages such as beer manufacturing, fruit and vegetable processing, meat products and dairy products; and

• Tourism: Tourism is a key driver of economic activity in the Capes regional economy, in particular taking advantage of its sea-side location, climate and significant wine industry. The tourism sector is highly diverse and comprises a broad range of specific components of other, ‘traditional’ industries in the Capes regional economy.

These key sectors drive the Capes regional economy, providing significant employment and incomes for residents as well as generating considerable demand for goods and services from other sectors of the economy. However, the role of these key sectors is greater than just the direct economic activity they generate – through the demand and supply linkages with each other, as well as other supporting industries, the key sectors of agriculture, wine manufacturing, food and beverage manufacturing and tourism stimulate economic growth across the entire Capes regional economy and provide the central hub of the Capes cluster framework.

For example, if the tourism industry sector expands, then there would be more visitors to the region. These visitors would stay in local hotels and resorts, thereby increasing activity in the accommodation, cafes and restaurant sector. Similarly, if the wine industry expands, there would be a greater demand for transportation and storage services in order to export the wine.

4.3 Role of Supporting Sectors

The key sectors (or central hub) of the Capes cluster framework have strong ties to other sectors of the Capes regional economy, through the demand and supply of goods and services. Key support sectors, as identified through examination of ACIL Tasman’s Input-Output model and consultation, include:

• Retail trade: The retail trade sector provides an important link between local producers and final consumers;

• Accommodation, cafés and restaurants: With a thriving wine tourism sector and quality local food and beverage products, the accommodation, cafés and restaurants sector provides considerable support to local food and beverage producers as well as the tourism sector;

• Wholesale trade: Wholesale trade acts as a facilitator of inter-industry transactions by providing the link between demand and supply of products across the economy. As such, wholesale trade provides an important link in any economy;

• Transport and storage: As with wholesale trade, the transport and storage sector provides a key link in matching local industry supply with demand through the movement of goods and services within, into and out of the region. The transport and storage sector in the Capes region is comprised predominantly of road transport and services to transport;

• Education: The education sector plays an important foundation role in facilitating the development of skills, increasing the knowledge base and improving productivity within the Capes regional economy. Through specialised training, the education sector can be directly linked to other important sectors within the framework; and

• Creative industries: Creative industries, for the purposes of this report, are defined as media services, music, museums, crafts and the arts (visual and performing).

These support sectors provide important roles in regional economic growth and development of the Capes cluster model framework by providing linkages between the key sectors and consumers of their goods and services, as well as fostering an environment of knowledge development, innovation and growth.

As the key sectors grow, the support sectors will also expand, given their close relationship. At the same time, the existence of the support sectors also provides for the growth opportunities of the key sectors. In essence, without their support, growth in the key sectors would be difficult. For example, it would be hard for the agricultural sector to


19

grow without the agricultural services sector or the transport sector. Equally, if the creative industries (arts) sector expands, these new artists could contribute to the attraction of new tourists, expanding this sector. Expansion of the retail sector, perhaps by adding new niche retail outlets, could also contribute to growing the tourism sector. Again, as the tourism industry sector expands, growth is stimulated across the economy through the cluster framework.

The synergies and nexus between the key sectors and supporting sectors are crucial for the future expansion of the regional economy within the cluster framework.

4.4 Role of Facilitating Sectors

In addition to the above support sectors, a number of other industry sectors exist within the regional economy that provide for growth within the economy. These sectors include:

• Government services;

• Professional services (e.g., financial, legal, accounting, property, marketing and business management services);

• Communication services;

• Construction;

• Health and social services;

• Recreation services; and

• Personal and other services.

These areas provide crucial services to the industries highlighted in the Capes cluster model framework and are important for growth. However, these sectors generally provide goods or services to any and all of the sectors within the cluster model framework. These industries (and the businesses within them) support and enable growth in the overall economy and thereby help to facilitate economic development. As the key sectors and supporting sectors grow, these facilitating sectors will also naturally grow.

4.5 Future Growth and Diversity of the Cluster Model

The degree to which the key sectors and support sectors respond to future growth will be largely determined by the strength of the linkages between sectors within the Capes cluster model framework.

As the Capes regional economy develops into the future, the cluster model framework will grow and change. As industry sectors become more and more specialised it would be possible for the sector to split into two new sectors within the current cluster framework. Additionally, it is likely the new linkages would form amongst the cluster participants.

For example, the food manufacturing sector may split in the future. Dairy products may become substantial enough to stand on its own (as wine production currently does). As it forms, new linkages with education providers may form as they provide specialty training for dairy manufacturing. At the same time, a dairy products industry association may form (similar to the Margaret River Wine Association).

These developments are indicative of cluster theory and practice, as noticed in numerous regions around the world and highlighted in the cluster case studies (Section 2.1). The benefit of working within the cluster framework for economic development is this natural progression and evolution as well as the intimate linkages across sectors. The true power of clusters is the growth and development that takes place from the linkages and synergies of the cluster participants and their cooperative growth.


20

5. Industry Links & Trade within the Cluster Model Framework

The following sections identify the key monetary flows of goods and services between each of the key sectors within the Capes cluster framework utilising the previously developed transaction table2.

5.1 Industry Linkages of Key Sectors

The following diagrams depict the key transactions (flow of goods and services in terms of dollars) between industry sectors within the Capes Region. The main goal of these diagrams is to demonstrate the key linkages between industry sectors within the Capes cluster framework as well as the reliance each sector has on these linkages. In so much, these diagrams highlight the nature of the goods and services provided and the extent to which each sector is reliant upon its supplier/purchaser.

The industries are highlighted in the various boxes. The black arrows depict the flow of goods and services in the supply chain from key supply industries (upstream) to key customer industries (downstream). The dollar amount depicted represents the amount of goods and services being transacted (purchased) from one sector to another. The percentages in the diagrams on either side of the dollar flows indicate the percentage of sales or purchases. The percentage figure on the left hand side of the dollar figure represents the percentage of total sales from the corresponding industry sector. The percentage figure on the right hand side of the dollar figure demonstrates the percentage of total purchases that this same dollar figure amounts to for the corresponding industry sector. In such a way, the level of reliance that each industry sector has on the other can be demonstrated.

For example, in Figure 5.1, the ‘services to agriculture’ sector sells $2.8 million in goods and services to the ‘other agriculture’ sector. The $2.8 million represents 55.0% of total sales from the ‘services to the agricultural’ sector and at the same time represents only 31.6% of total purchases of the ‘other agricultural’ sector. In this example the ‘services to agricultural’ sector is slightly more reliant on the ‘other agricultural’ sector, than the ‘other agricultural’ sector is reliant on the ‘services to agricultural’ sector, because sales from ‘services to agriculture’ sector represent over half (55%) of all sale but only 31.6% of all purchases for the ‘other agriculture’ sector. These tables provide a wealth of insight into the relationship between various industry sectors within the cluster model.

It is important to note that the flows described are all within the Capes Region and do not include goods and services produced or used outside of the regional economy. Only the key supply and customer industries were selected, so the percentages will not total. In the full transaction table, there are minuscule relationships or linkages with many different sectors.

2 All calculations are based on a transaction table developed by Acil Tasman. The data should be considered indicative only.


21

Agriculture

The figure below provides a graphic representation of the key elements of the agriculture sector supply chain within the Capes regional economy. The figure shows that:

• For horticulture (which is defined under “other agriculture” by the Australian Bureau of Statistics in their transaction tables):

o Approximately 60% of its inputs (not including imports) are purchased from the industries of services to agriculture, retail trade and other agriculture itself. However, consultation suggests that “other agriculture” purchases a considerably higher value of inputs from services to agriculture than indicated in the figure;

o Wine, spirits and tobacco purchases over three quarters of total local sales of other agriculture (horticulture);

• Services to agriculture is the main supplier of local goods and services to the beef and dairy cattle industries;

• Meat product manufacturing and dairy product manufacturing comprise over 95% of local inter-industry purchases of goods from the beef and dairy cattle industries, respectively, demonstrating that the beef and dairy cattle industry sectors are very reliant on the meat product manufacturing sector;

• Services to agriculture sells and purchases predominantly from the other agriculture (horticulture) industry;

• Exports comprise approximately $122.9 million of total agricultural product sales; and

• Local consumers purchased $6.4 million of agricultural products.

Figure 5.1. Agriculture Sector Supply Chain

Note: Consultation suggests that “other agriculture” purchases a considerably higher value of inputs from services to agriculture than indicated in the figure above. Source: ACIL Tasman (2009b), AECgroup.

Other Agriculture

Services to AgricultureWines, Spirits & Tobacco

55.0% $2.8m 31.6%76.7% $19.6m 23.0%

Other Agriculture

Fruit & Veg Processing

5.8% $1.5m 16.5%

0.7% $0.2m 3.6%Retail Trade

Services to Agriculture

2.4% $1.0m 11.6%

5.3% $1.4m 45.5%

Services to Agriculture Meat & Meat ProductsBeef Cattle14.2% $0.7m 27.9% 96.0% $6.3m 50.3%

Services to Agriculture Dairy ProductsDairy Cattle10.3% $0.5m 18.1% 99.4% $2.0m 46.1%

Other Agriculture Services to Agriculture

5.3% $1.4m 45.5% 55.0% $2.8m 31.6%

AGRICULTURE

CONSUMERS$6.4 m

Other Agriculture

IMPORTS$63.4 m

EXPORTS$122.9 m

UPSTREAM DOWNSTREAM

5.8% $1.5m 16.5% Other Agriculture


22

Wine Manufacturing Sector

The figure below provides a graphic representation of the wine manufacturing (which is defined under “wine, spirits and tobacco” by the Australian Bureau of Statistics in their transaction tables) sector supply chain within the Capes regional economy. The figure shows that:

• Approximately 40.1% of local inputs to the wine, spirits and tobacco sector are purchased from itself and 23.0% are purchased from other agriculture, in particular wine grapes. In the transaction tables it is probable that some wine manufacturers own their own vineyards, which could explain why there are so many purchases from itself;

• Sales between wine manufacturing enterprises represent over three quarters of local inter-industry sales, with 19.8% sold to the accommodation, cafés and restaurants sector;

• Imports comprise approximately $190.0 million of total inputs to production;

• Exports comprise approximately $396.9 million of total wine manufacturing product sales, highlighting the importance of exports to the sector; and

• Local consumption accounts for $6.5 million in purchases.

Figure 5.2. Wine Manufacturing Sector Supply Chain

Source: ACIL Tasman (2009b), AECgroup.

Wine, Spirits & Tobacco

Wines, Spirits & Tobacco Wines, Spirits & Tobacco78.5% $34.3m 40.1% 78.5% $34.3m 40.1%

Other Agriculture Accomm., Cafés & Rest.76.7% $19.6m 23.0% 19.8% $8.6m 25.1%

WINE, SPIRITS & TOBACCO

CONSUMERS$6.5 m

IMPORTS$190.0 m

EXPORTS$396.9 m

UPSTREAM DOWNSTREAM


23

Food and Beverage Manufacturing Sector

The figure below provides a graphic representation of the food and beverage sector supply chain (excluding wine) within the Capes regional economy. The figure shows that:

• For beer manufacturing:

o Approximately 34.1% of its locally sourced inputs (i.e., not including imports) are purchased from itself, with a further 13.1% purchased from accommodation, cafés and restaurants;

o Approximately 36% of all sales from beer manufacturing flow through to accommodation, cafés and restaurants;

• Fruit and vegetable processing predominantly purchases and sells to itself;

• Meat product manufacturing purchases over half its locally sourced inputs from beef cattle, and sells intermediate inputs (i.e., products that are then used by another local industry as part of their production process) predominantly to either itself or the retail trade sector;

• Dairy product manufacturing purchases just under half its locally sourced inputs from dairy cattle, while the majority of its local inter-industry sales are to itself and the accommodation, cafés and restaurants sector;

• Imports comprise approximately $31.3 million of total food and beverage manufacturing (excluding wine) production inputs;

• Exports comprise approximately $57.5 million of food and beverage manufacturing (excluding wine) product sales; and

• Local consumers purchased $8.1 million from the food and beverage manufacturing sector (excluding wine).

Figure 5.3. Food & Beverage Manufacturing Sector (Excluding Wine) Supply Chain

Source: ACIL Tasman (2009b), AECgroup.

Beer Manufacturing

Beer Manufacturing Beer Manufacturing62.4% $1.9m 34.1% 62.4% $1.9m 34.1%

Accomm., Cafés & Rest. Accomm., Cafés & Rest.3.4% $0.7m 13.1% 36.0% $1.1m 3.2%

Fruit & Veg. Processing Fruit & Veg. Processing86.3% $2.2m 41.5% 86.3% $2.2m 41.5%

Road Transport Accomm., Cafés & Rest.

Fruit & Veg. Processing

2.9% $0.6m 11.6% 7.0% $0.2m 0.5%

Beef Cattle Meat Product ManufacturingMeat Product Manufacturing

96.0% $6.3m 50.3% 39.4% $2.1m 16.7%

Meat Product Manufacturing


39.4% $2.1m 16.7% 27.5% $1.5m 3.3%

FOOD & BEVERAGE MANUFACTURING

CONSUMERS$8.1 m

Retail Trade

IMPORTS$31.3 m

EXPORTS$57.5 m

UPSTREAM DOWNSTREAM

99.4% $2.0m 46.1%

44.2% $1.0m 21.8%

44.2% $1.0m 21.8%

24.0% $0.5m 1.5%

Dairy Cattle



Accomm., Cafés & Rest.


24

Tourism Sector

The tourism sector is highly diverse and comprises a broad range of specific skills and experience within aspects of the ‘traditional’ industries. However, the contribution of the tourism sector to economic activity is often ‘embedded’ in and masked by the reporting of statistics for traditional industries, with little quantifiable information to inform the level of contribution the tourism sector makes to the Capes regional economy.

For the purposes of this assessment, the economic contribution of the tourism sector to the Capes regional economy has been estimated by “splitting out” tourism’s contribution to each of the ‘traditional’ industries examined in the Input-Output tables. This has been done based on tourism’s contribution to Western Australian Gross State Product in 2006-07 for each industry, as examined in the publication entitled “Tourism Satellite Accounts 2006-07: Western Australia” (Sustainable Tourism Cooperative Research Centre, 2008).

The figure below provides a graphic representation of the tourism sector supply chain within the Capes regional economy. The figure shows that:

• The tourism sector purchases input from a number of local industries. The top five suppliers of local goods and services to the tourism sector are:

o Wine, spirits and tobacco (15.7% of total local purchases);

o Retail trade (11.9%);

o Other property services, which predominantly comprises of real estate agents (11.2%);

o Wholesale trade (5.8%);

o Professional services, including legal, accounting, marketing and business management (5.8%);

• Over half (57.3%) of all local inter-industry sales from the tourism sector are to the accommodation, cafés and restaurants sector. Retail trade (11.6%) is also a key local industry purchaser of tourism sector products and services;

• Imports comprise approximately $46.0 million of total inputs to production; and

• Exports comprise approximately $79.4 million of total tourism sector sales.

Figure 5.4. Tourism Sector Supply Chain

Note: “Professional Services” includes legal, accounting, marketing and business management services. Source: ACIL Tasman (2009b), Sustainable Tourism Cooperative Research Centre (2008), AECgroup.

Tourism

10.8% $4.7m 15.7%

8.1% $3.6m 11.9%

3.4% $3.4m 11.2%

5.7% $1.7m 5.8%


Retail Trade

Other Property Services

Wholesale Trade

Professional Services


Retail Trade



Other Business Services4.2% $1.7m 5.8%

57.3% $17.1m 49.9%

11.6% $3.5m 7.8%

5.5% $1.6m 13.1%

3.2% $0.9m 1.1%

2.7% $0.8m 5.9%

TOURISM

CONSUMERS$23.2 m

IMPORTS$46.0 m

EXPORTS$79.4 m

UPSTREAM DOWNSTREAM


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5.2 Industry Linkages of Support Sectors

Analysis of industry linkages of support sectors of the Capes cluster framework is detailed in Appendix B. This assessment shows that the support sectors of retail trade, accommodation, cafés and restaurants, wholesale trade, transport and storage, education and creative industries are all highly interlinked with each other and the key sectors of the economy, as well as final consumers and facilitating sectors such as professional services.


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6. Infrastructure to Enable Growth

Infrastructure is critical for an economy to grow. Having sufficient infrastructure capacity is important to facilitate the movement of products and people and to enable companies to grow. In order to avoid having insufficient infrastructure that will hamper growth, it is important to balance the provision of infrastructure to match demand in a timely fashion.

Key transport and telecommunications infrastructure needs to be progressively upgraded to meet increased demands and improve connectivity within the region and to other regions, both domestically and internationally. Where this does not occur, the existing infrastructure will act as an impediment to growth in the region by restricting accessibility to and from the region.

6.1 Transportation Infrastructure

6.1.1 Road Infrastructure

• The Capes region is linked to the entire south west region through an extensive road network. Main road links to the north of the Capes region are via the South Western Highway and Old Coast Road, both of which link to the Bussell Highway in Bunbury. The Bussell Highway connects Bunbury to the Shires of Busselton and Augusta-Margaret River.

• Major highways in the Capes region include:

o Bussell Highway: The Bussell Highway bisects the Shires of Augusta-Margaret River and Busselton north-south and provides a direct 2.5 to 3 hour link to Perth to the north (once the Mandurah bypass is complete).

o Vasse Highway: The Vasse Highway runs southeast from Busselton, connecting Busselton to Nannup and Pemberton before meeting up with the South Western Highway near Manjimup.

o Brockman Highway: The Brockman Highway runs east from Augusta, through Nannup to Bridgetown.

• The road network from the main towns of Busselton, Margaret River, Dunsborough and Augusta to outlying towns and properties is generally in good condition, consisting primarily of sealed roads.

Upgrades to the regional road network are already underway, including the New Perth Bunbury Highway, Mandurah bypass and ongoing upgrades to the Bussell Highway and South Western Highway. This program of works will improve access to and reduce travel times from the Shires of Busselton and Augusta-Margaret River to Perth. However, as population and economic growth in the Capes region continues into the future, additional investment will need to be made into developing the regional road network south of Bunbury.

6.1.2 Air Infrastructure

• The Busselton Regional Airport is located 6.5 kilometres from the town centre of Busselton and is 220 kilometres south/ southwest from the Perth International Airport. The facility is owned and operated by the Shire of Busselton. Access is currently provided from the Vasse Highway, however, there is potential to develop the land surrounding the airport which will provide an option for access from Bussell Highway.

• Busselton Regional Airport has a single, 1,800 metre runway and both ends are suitable for continuous landings by BAE 146 aircraft (a medium-sized commercial aircraft).

• There is currently no regular passenger transport (RPT) service provided from the Busselton Regional Airport. It is estimated that the average number of aircraft using the Busselton Regional Airport on a daily basis is between seven and ten aircraft (resulting in between 14 and 20 daily aircraft movements), of which most are charter


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flights for fly-in, fly-out mining operational staff but also some tourism flights (House of Representatives, 2009).

• The Western Australian Government have budgeted $77,500 in 2009/10 for upgrading Busselton Regional Airport. Works at Busselton Regional Airport include $27,500 to extend the runway and safety area and a further $50,000 for research and planning activities necessary to ensure appropriate future development of the airport.

In the long term, the development of the Capes regional economy, in particular the tourism industry, will be greatly enhanced by the introduction of regular passenger traffic (RPT) service to the region. A current study conducted on behalf of the WA Government and the Shires of Augusta – Margaret River and Busselton highlights the benefits to tourism of regular passenger traffic (RPT). The report further highlights the opportunity to increase interstate tourism with direct air access from east coast markets and the long-term development of direct international services. However, in order to receive this traffic, significant upgrades to the airport need to be made in the form of lengthening and strengthening of the runway, associated aeronautical infrastructure for safety and passenger terminals.

6.1.3 Rail Infrastructure

• There is currently no operational rail infrastructure within the Shires of Augusta-Margaret River and Busselton. Rail infrastructure connecting Busselton to Bunbury has been closed since 1957. The nearest passenger rail terminal is in Bunbury, approximately 52 kilometres to the north.

The potential to provide high-speed light rail between Perth and Bunbury is currently under investigation. If this were to proceed, there may be an opportunity in the future to extend this rail link to Busselton, and potentially to Margaret River and Augusta. This increased accessibility would assist in bringing more tourists to the region, which would contribute to economic growth.

6.1.4 Port / Marina Infrastructure

• Port Geographe Marina in Busselton provides long and short term floating marina berths, exclusive private jetty berths, boat lifter and hard stand, boat maintenance, servicing and emergency repairs, yacht and boat brokerage, 24 hour fuel service, chandlery, villa style serviced holiday accommodation, and a tavern and restaurant.

Port Geographe has capacity to expand in the future. Additionally, investigations are well underway to provide expanded marina infrastructure in Augusta for small leisure craft, including upgrading the current infrastructure on the Blackwood River and the potential for a boat harbour at Flat Rock.

6.2 Utility Infrastructure

6.2.1 Telecommunications

ACIL Tasman (2009a) identify that the Capes region is currently under-serviced by telecommunications, inhibiting current business, new investment and residential choices. The map below shows that ADSL availability is largely distributed according to population in the South West region. Although not continuous, there is a relatively higher density of ADSL enabled exchanges near Bunbury and along the coast to Busselton. Spot checks indicate that ADSL may be available over a wider area than mapped between Busselton and Margaret River (ACIL Tasman, 2009c). Consultation with industry confirms that high speed internet connections in the Capes region are not at an adequate level to encourage further economic development and business growth.


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Figure 6.1. ADSL enabled exchanges in the South-West Region

Source: ACIL Tasman (2009a).

As population and the regional economy grow, and the Capes region becomes increasingly linked to the global economy, demands for faster and more reliable telecommunications infrastructure and greater coverage will increase. There is an immediate need to expand telecommunications infrastructure, and this expansion should be undertaken in such a manner to provide for the region’s telecommunications needs well into the future.

The Capes region is also currently serviced for electricity and gas supply. Currently, Western Power supplies the region with two 132 kV power transmission lines (to Busselton and Beenup) and a 66 kV power transmission line into Margaret River (Western Power, 2009). This infrastructure is sufficient for economic growth and can be upgraded as needed in the future.

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ADSL enabled exchange

Possible ADSL enabled exchange

ADSL coverage (3.6 km)

RDC regional boundary


29

References

ACIL Tasman (2009a). Capes Regional Economic Development Strategy – Industry Plans. Working Paper No. 3. Report prepared by ACIL Tasman for the Shires of Augusta-Margaret River and Busselton.

ACIL Tasman (2009b). Capes Regional Input-Output Transaction Tables, 2004-05. Unpublished data prepared by ACIL Tasman for the Shires of Augusta-Margaret River and Busselton.

Australian Bureau of Statistics (2008). Labour Force, Australia, Detailed, Quarterly, August 2008. Cat. No. 6291.0.55.003, ABS, Canberra.

Australian Bureau of Statistics (2007). 2006 Census of Population and Housing. Cat. No. 2068.0, 2006 Census Tables, ABS, Canberra.

Busselton Shire Council (2009). Busselton Jetty Experience. Busselton Shire Council. Available from: http://www.busseltonjetty.com.au/. Last accessed: 3rd August, 2009.

Dishman, L. (2008). CU-ICAR drives the future. SC Biz Magazine, 23 June, 2008, Mt. Pleasant, SC.

House of Representatives (2009). Aviation Legislation Amendment (2008 Measures No. 2) Bill 2008, Second Reading. Speech for the Commonwealth of Australia House of Representatives, Main Committee, 5th February 2009.

Margaret River Tourism (2009). Margaret River Tourism Information. Available from: http://www.mymargaretriver.com.au/Tourism/Margaret%20River%20Culture%20&%20Lifestyle. Last accessed: 4th August, 2009.

Porter, M. (1998). On Competition. Harvard Business School, Boston.

Sustainable Tourism Cooperative Research Centre (2008). Tourism Satellite Accounts 2006-07: Western Australia. Sustainable Tourism Cooperative Research Centre, Centre for Economics and Policy.

Washington State Government (undated), Washington State Aerospace Advantages. Department of Community, Trade & Economic Development. Available from http://www.choosewashington.com/industries/detail.asp?i=18. Last accessed: 8th June 2009.

Western Australian Government Department of Planning and Infrastructure (2005). Small Boat Harbour at Flat Rock: A Preliminary Assessment. Available from: http://www.amrsc.wa.gov.au/infra/files/050912flatrockprelim.pdf. Last accessed: 6th August, 2009.

Western Australian Government Department of Treasury and Finance (2009). Economic Forecasts – Major Economic Aggregates, Western Australia. Available from: http://www.dtf.wa.gov.au/cms/content.aspx?id=604. Last accessed: 6th August, 2009.

Western Power. A Growing Network. Available from: http://www.wpcorp.com.au/documents/networks/SWISMap.pdf. Last accessed: 8th August, 2009.

Capes Regional Economic Development Strategy Working Paper No. 4 - Draft Report v1.0

30

Appendix A: Cluster Case Studies

Boston Life Science Cluster

The life science cluster in Boston, Massachusetts is one of the largest in the United States. The second largest hub for life science companies in the country, the greater Boston region has more than 250 companies involved in research and production within the fields of biotechnology, medical devices and pharmaceuticals. The region also has a renowned hospital and university network (14 teaching hospitals within the Boston area) and a large venture capitalist community. The life sciences sector contributes approximately $9 billion (2007 figure) annually to the state economy.

While Asian-based companies are geographically predisposed to set up North American headquarters in San Francisco, the Boston area offers ease of access that makes the region a favourite location for some prominent European-based companies. Accounting for approximately three quarters of the 20,000 employees within Boston’s medical cluster are the following global companies:

• Boston Scientific;

• Tyco Healthcare;

• Haemonetics;

• Philips Medical Systems;

• Smith & Nephew Endoscopy;

• DePuy Inc. (Johnson & Johnson company);

• Novartis; and

• Straumann AG.

The small town of Andover (population 31,000), 20 miles north of Boston, is home to the U.S. headquarters for three such European companies: Smith & Nephew Endoscopy, Philips Medical Systems and Straumann AG. All three companies are clustered in Minuteman Park, a former dairy farm that is now home to a growing set of medical device and life sciences companies.

Key Learnings

The Boston Life Science Cluster is a great example of how the interaction of private industry and university-based research has enabled a culture of innovation and knowledge in the biotechnology, medical device and pharmaceutical industries. The success of these leading companies has encouraged additional developments and specialised services for these companies. Furthermore, the Boston region is well known as a major life science region in the United States for the highly developed nature of this cluster including global companies, sophisticated supply chains, leading research institutions and a highly skilled and specialised workforce.

Seattle Aerospace Cluster

Home to Boeing's commercial airplane division, the Seattle region comprises the world's largest aerospace cluster. Specialising in the engineering and production of large commercial aircraft (including the new Boeing 787 Dreamliner), the cluster is also comprised of industries involved in the design and manufacture of civil and military aircraft, aircraft parts and auxiliary equipment and the businesses who represent their key product life cycle supply chains, including post-production support, maintenance and modifications.

The Seattle Aerospace cluster is based largely around Boeing, who has approximately three-quarters of its commercial airplane division, or 60,000 employees, based within the region. Large jet aircraft produced by Boeing represent more than a quarter of Washington’s total exports, and as the world’s leading manufacturer of large commercial aircraft, Boeing has consistently been the nation’s leading exporter. Lockheed Martin,


31

the world’s largest defence contractor and manufacturer of military aircraft also has a significant presence within the region. Other significant aerospace operations include SAFRAN Group, Rolls Royce, Goodrich and GE.

While Boeing and other major aerospace companies represent the largest and perhaps most visible aerospace presence in the region, hundreds of small and medium-sized companies are aligned to provide a comprehensive supply chain necessary for the final production of aerospace products.

These companies provide raw materials, parts and components, avionics and navigation systems, communication and in-flight entertainment systems, computer components and software systems, systems design and engineering, advanced materials and composites, tooling, sheet metal, parts production and sub-assembly, and a myriad of other products and processes to the global marketplace.

Beyond the large specialized workforce that supports these activities, there are customized training and research institutions catering to the specific needs of the aerospace industry, including:

• University of Washington Department of Aeronautics and Astronautics;

• FAA: Air Transportation Center of Excellence for Advanced Materials;

• Everett & Edmonds Community College Materials and Process Development Center;

• Community College Center for Manufacturing Excellence; and

• Customized Training and Job Skills Programs.

Additionally, there are numerous industry associations in the region for aerospace and the State Government has a variety of incentive tools to encourage the further development of this cluster.

The industry’s primary customers include original equipment manufacturers (OEMs), commercial airlines, the U.S. Department of Defense, and NASA.

Key Learnings

The Seattle Aerospace Cluster demonstrates the importance of a highly sophisticated supply chain, workforce and training/research organisations working together with support and encouragement from industry associations and government. The strength of this industry cluster was a major consideration for Boeing to locate the final assembly plant for its new 787 Dreamliner ($700 million/1,200 jobs) to the region in 2003. Much of the leading research and development for the aerospace industry in the US takes place in the Seattle region.

Silicon Valley IT Cluster

Comprising the region between Northern California’s two largest cities, San Francisco and San Jose, the Silicon Valley is synonymous with the State’s high tech sector and continues to be the world’s leading high-tech IT hub due to the size and depth of the industry cluster in the region. With its origins originally in the design and production of semiconductors and computers, the Silicon Valley IT cluster today comprises of a large number of firms involved with the design and engineering of computer operating systems and software, technical support firms and has attracted venture capitalists and other financing institutions that specialise in high risk loans. It is estimated that more than a quarter million people within the San Francisco Bay Area are employees within these high technology industries. Today, Silicon Valley is often used as a case study for cluster theory.

The Silicon Valley has been intricately linked with more than a dozen universities within the region, and most notably with Stanford University, University of California (Berkeley) and San Jose State University. Combined with a highly skilled and innovative workforce as well as a culture for creativity and entrepreneurship, Silicon Valley continues to drive innovation and high tech developments, which generate a significant amount of value for the regional economy.


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Companies headquartered in the Silicon Valley include:

• Hewlett Packard;

• Google;

• Sun Microsystems;

• Cisco Systems;

• Intel;

• Apple; and

• Symantec.

Key Learnings

The Silicon Valley IT cluster demonstrates the power of combining people, research and an innovative culture. It is the creative environment that has evolved over decades combined with the specialised workforce and research capabilities that continues to drive innovation in the Silicon Valley. There is a wide range of associations and specialty service providers that support and encourage further development of this cluster as well as global companies, start-ups and cutting-edge technology. The Silicon Valley demonstrates that clusters are not only about geographic proximity, but rather the intermingling of people, ideas, products and services.

Napa Valley Wine Cluster

Napa Valley, located in California, is widely considered one of the top wine areas in the United States, with a history dating back to the nineteenth century. The Napa Valley's first commercial winery was established in 1861, and by the end of the nineteenth century there were more than 140 wineries in operation. Today, there are 325 wineries.

The Napa Valley wine industry has been working collaboratively for many years. Dating back nearly 70 years, the wineries have been exchanging ideas and sharing experience through the Napa Valley Vintners (NVV), a trade organisation dedicated to advancing Napa Valley's wines both domestically and abroad. Together with the Napa Valley Grape Growers Association both growers and vintners collaborate on projects of common interest, including an active marketing program. The Napa Valley Grape Growers Association funds research and implements programs aimed at strengthening the Napa Valley wine industry's economic viability, promoting environmentally and socially sustainable agriculture, and communicating the quality and character of Napa Valley vineyards.

Napa Valley also boasts some of the top-rated restaurants in the US, including French Laundry, Bouchon, Redd, ad hoc, and The Restaurant at Meadowood. These restaurants are recognised as among the best in the world, and have strong links with the local vineyards and wineries that provides first-class wine lists and sommeliers skilled with matching entrees to wine.

Today, Napa Valley is recognised across the country and the world as a major wine region that has a thriving culture built on high quality food and wine.

Key Learnings

The Napa Valley wine cluster demonstrates the benefits of industry participants working collaboratively to market their product and region, share ideas, and support research and development of innovative, best practice techniques. The success of the region can be attributed to the strong development of its wine cluster, which has brought together a wide range of participants including private sector industry, support services, industry associations and other ancillary services (like restaurants) to generate value for the community.


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Appendix B: Industry Linkages of Support Sectors

Retail Trade Sector

The retail trade sector is an important link between local producers and final consumers. The figure below provides a graphic representation of the retail trade sector supply chain within the Capes regional economy. The figure shows that:

• The retail trade sector purchases input from a number of local industries. The top five suppliers of local goods and services to the retail trade sector are:

o Retail trade itself (17.2% of total local purchases);


o Other property services, which predominantly comprises real estate agents (14.6%);

o Other business services, such as employment placement services, cleaning services, etc. (12.2%); and

o Wholesale trade (9.4%);


• Local inter-industry sales from the retail trade sector are to:

o Retail trade itself (17.4%);

o Road transport (10.8%);

o Accommodation, cafés and restaurants (10.6%);

o Wine, spirits and tobacco (8.9%);

o Other property services (6.5%);

• Local consumers comprise approximately $126.0 million of total retail trade sales, or 58.6% of total sales, highlighting the important link the retail trade sector provides to consumers; and

• Exports comprise approximately $45.0 million of total retail trade sales.

Figure B.6.1. Retail Trade Sector Supply Chain

Note: “Professional Services” includes legal, accounting, marketing and business management services. Source: ACIL Tasman (2009b), AECgroup.

Retail Trade

Retail Trade 17.4% $7.7m 17.2%

Professional Services 16.0% $6.6m 14.8%

Other Property Services 6.6% $6.5m 14.6%

Other Business Services 14.2% $5.4m 12.2%

Wholesale Trade

Retail Trade

Road Transport



Other Property Services13.7% $5.2m 9.4%

17.4% $7.7m 17.2%

10.8% $4.8m 38.4%

10.6% $4.7m 13.6%

8.9% $3.9m 4.6%

6.5% $2.9m 3.9%

RETAIL TRADE

CONSUMERS$126.0 m

IMPORTS$76.2 m

EXPORTS$45.0 m

UPSTREAM DOWNSTREAM


34

Accommodation, Cafés & Restaurants Sector

With a thriving wine tourism sector and quality local food and beverage products, the accommodation, cafés and restaurants sector provides considerable support to local food and beverage producers as part of the supply chain. The figure below provides a graphic representation of the accommodation, cafés and restaurants sector supply chain within the Capes regional economy. The figure shows that:

• Over 50% of the accommodation, cafés and restaurants sector’s local purchases are from the industries of wine, spirits and tobacco, retail trade and other property services (i.e., real estate agents);


• Just under 60% of total local inter-industry sales from the accommodation, cafés and restaurants sector are to the wine, spirits and tobacco sector, highlighting the strong linkages between these two sectors, in particular through their ties to tourism;

• Exports comprise approximately $92.8 million of total accommodation, cafés and restaurants sales; and

• Local consumers comprise approximately $50.0 million of total accommodation, cafés and restaurants sales, or 30.5% of total sales.

Figure B.1.2. Accommodation, Cafés & Restaurants Sector Supply Chain




Retail Trade


Construction Trade Services

Wholesale Trade



Other Business Services

Retail Trade

Beer Manufacturing

19.8% $8.6m 25.1%

10.6% $4.7m 13.6%

4.3% $4.2m 12.1%

1.7% $1.9m 5.6%

5.1% $1.6m 4.5%

59.8% $12.8m 15.0%

7.4% $1.6m 7.6%

3.8% $0.8m 5.9%

3.6% $0.8m 1.7%

3.4% $0.7m 36.0%

ACCOMMODATION, CAFÉS & RESTAURANTS

CONSUMERS$50.0 m

IMPORTS$58.7 m

EXPORTS$92.8 m

UPSTREAM DOWNSTREAM


35

Wholesale Trade Sector

Wholesale trade acts as a facilitator of inter-industry transactions by providing the link between demand for intermediate inputs by industry and the supply of those inputs. As such, wholesale trade provides an important link in any economy. The figure below provides a graphic representation of the wholesale trade sector supply chain within the Capes regional economy. The figure shows that:

• The wholesale trade sector purchases inputs from a number of local industries. The top five suppliers of local goods and services to the wholesale trade sector are:

o Other property services, which predominantly comprises real estate agents (23.3% of total local purchases);

o Services to transport, such as freight forwarding (13.5%);


o Wholesale trade itself (8.9%);

o Other business services, such as employment placement services, cleaning services, etc. (8.1%);


• As a key facilitator of matching industry supply with demand, the wholesale trade sector has a broad range of industries that it sells to. The top five industries that wholesale trade sells to locally are:

o Retail trade (13.7% of total local inter-industry sales);

o Wholesale trade itself (7.8%);

o Wine, spirits and tobacco (5.1%);


o Road transport (4.8%);

• Local consumers comprise approximately $19.3 million of total wholesale trade sales, or 34.4% of total sales; and

• Exports comprise just $6.1 million of total wholesale trade sales, highlighting the wholesale trade sector’s important role in supplying goods to local industry.

Figure B.1.3. Wholesale Trade Sector Supply Chain


Wholesale Trade

6.4% $6.3m 23.3% 13.7% $4.2m 9.4%

21.9% $3.6m 13.5% 7.8% $2.4m 8.9%

7.9% $3.3m 12.2% 5.1% $1.6m 1.8%

7.8% $2.4m 8.9% 5.1% $1.6m 4.5%


Services to Transport


Wholesale Trade


Retail Trade

Wholesale Trade



Road Transport5.7% $2.2m 8.1% 4.8% $1.5m 11.9%

WHOLESALE TRADE

CONSUMERS$19.3 m

IMPORTS$22.7 m

EXPORTS$6.1 m

UPSTREAM DOWNSTREAM


36

Transport & Storage Sector

As with wholesale trade, the transport and storage sector provides a key link in matching local industry supply with demand through the movement of goods and services within, into and out of the region. The transport and storage sector in the Capes region is comprised predominantly of road transport and services to transport (such as freight forwarding services). The figure below provides a graphic representation of the transport and storage sector supply chain within the Capes regional economy, and shows that:

• Road transport’s local purchases are primarily from the retail trade sector (38.4%), with wholesale trade (11.9%), road transport itself (10.1%) and professional services such as legal, accounting, marketing and business management (9.2%) other key local suppliers;

• As with wholesale trade, given its role as a facilitator of matching inter-industry demand with supply, the road transport sector provides services to a wide range of sectors, and is not overly reliant on any one sector. The top four industries that road transport sells to locally are:

o Wine, spirits and tobacco (14.1% of total local inter-industry sales);

o Construction trades services (8.1%);

o Meat product manufacturing (6.8%);


• Local purchases of the services to transport industry are predominantly from the services to transport sector itself (21.1%), other property services (15.5%), scientific and technical services (11.4%) and other business services (10.8%);

• In terms of local inter-industry sales, the services to transport industry primarily provides services to itself (22.5%) and wholesale trade (21.9%);


• Exports comprise approximately $32.3 million of total transport and storage sector sales.

Figure B.1.4. Transport & Storage Sector Supply Chain


Road Transport

10.8% $4.8m 38.4%

4.8% $1.5m 11.9%

6.1% $1.3m 10.1%

2.8% $1.1m 9.2%

22.5% $3.7m 21.1%

TRANSPORT & STORAGE

CONSUMERS$16.0 m

IMPORTS$20.7 m

EXPORTS$32.3 m

UPSTREAM DOWNSTREAM


2.8% $2.7m 15.5%

11.2% $2.0m 11.4%

5.0% $1.9m 10.8%

Retail Trade

Wholesale Trade

Road Transport




Scientific & Tech. Services


14.1% $2.9m 3.4%

8.1% $1.7m 2.3%

6.8% $1.4m 11.3%

6.7% $1.4m 4.0%

22.5% $3.7m 21.1%

21.9% $3.6m 13.5%

7.3% $1.2m 1.6%

6.4% $1.1m 1.2%


Construction Trade Services




Wholesale Trade




37

Education Sector

The education sector plays an important role in facilitating the development of skills, increasing the knowledge base and improving productivity within the Capes regional economy. The figure below provides a graphic representation of the education sector supply chain within the Capes regional economy. The figure shows that:

• Education purchases from a wide range of local suppliers of goods and services, including itself (14.6%), wholesale trade (11.3%), retail trade (8.0%), furniture manufacturing (6.5%) and communication services (6.4%);


• Education is a labour intensive industry, and wages and salaries comprise over 70% of total production costs;

• In terms of local inter-industry sales, education sells predominantly to itself (20.4%), other business services such as employment services and cleaning services (9.4%), professional services such as legal, accounting, marketing and business management (8.5%), other property services such as real estate agents (8.3%), and Government administration (7.2%);

• Education sells primarily to local consumers, which constitute 78.7% of total sales from the education sector ($57.3 million);

• Exports comprise just $10.4 million of total sales from the education sector.

Figure B.1.5. Education Sector Supply Chain


Education

20.4% $1.0m 14.6%

2.7% $0.8m 11.3%

1.3% $0.6m 8.0%

12.2% $0.5m 6.5%

Education

Wholesale Trade

Retail Trade

Furniture Manufacturing

Communication Services

Education




Government Administration2.8% $0.5m 6.4%

20.4% $1.0m 14.6%

9.4% $0.5m 3.5%

8.5% $0.4m 2.1%

8.3% $0.4m 0.6%

7.2% $0.4m 2.4%

EDUCATION

CONSUMERS$57.3 m

IMPORTS$10.8 m

EXPORTS$10.4 m

UPSTREAM DOWNSTREAM


38

Creative Industries

Creative industries, for the purposes of this report, are defined as television and media services, and cultural services and the Arts. The figure below provides a graphic representation of the creative industries supply chain within the Capes regional economy. The figure shows that:

• Local purchases and sales of the television and media services are primarily from (37.5%)/ to (25.8%) itself;

• Other key local industry purchasers of television and media services include accommodation, cafés and restaurants (17.3%), retail trade (11.3%) and other property services (9.9%);

• Cultural services and the Arts purchases from and sells to a range of local industries. Key suppliers include professional services (12.7%), other business services (11.7%), other property services (10.9%) and cultural services and the Arts itself (10.8%). Key purchasers of cultural services and the Arts include education (19.7%), accommodation, cafés and restaurants (17.0%), professional services (12.4%) and cultural services and the Arts itself (11.5%).


• Exports comprise approximately $2.4 million of total creative industry sales, while local consumers comprise approximately $2.8 million of total creative industry sales.

Figure B.1.6. Creative Industries Supply Chain


Television & Media

25.8% $0.6m 37.5%

0.1% $0.1m 8.0%

0.3% $0.1m 7.0%

0.3% $0.1m 6.5%

0.6% $0.2m 12.7%

CREATIVE INDUSTRIES

CONSUMERS$2.8 m

IMPORTS$2.4 m

EXPORTS$2.4 m

UPSTREAM DOWNSTREAM

Culture & the Arts

0.6% $0.2m 11.7%

0.2% $0.2m 10.9%

11.5% $0.2m 10.8%

Television & Media



Wholesale Trade




Culture & the Arts

25.8% $0.6m 37.5%

17.3% $0.4m 1.2%

11.3% $0.3m 0.6%

9.9% $0.2m 0.3%

19.7% $0.4m 5.0%

17.0% $0.3m 0.9%

12.4% $0.2m 1.1%

11.5% $0.2m 10.8%

Television & Media


Retail Trade


Education



Culture & the Arts


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Capes Regional Economic Development Strategy Shire of ... · Figure 1.1. Project Structure Source: AEC group. 1.3 Scope of this Report This report represents the fourth stage of the