Upload
morley
View
31
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Industry Clusters and Inner City Economic Revitalization. National Governors’ Association Atlanta, Georgia June 6-7, 2002. Alen Amirkhanian VP, Research and Strategy Initiative for a Competitive Inner City (ICIC). Contents . - PowerPoint PPT Presentation
Citation preview
Industry Clusters and Inner City Economic Revitalization
Alen AmirkhanianVP, Research and Strategy
Initiative for a Competitive Inner City (ICIC)
National Governors’ AssociationAtlanta, GeorgiaJune 6-7, 2002
2
Contents
• The role of clusters in comprehensive inner city economic development strategy
• Examples of inner city cluster-led strategies
• Recommendations for State government action
3
Initiative for a Competitive Inner City
ICIC Mission:
Transform thinking, reinvigorate market forces, and engage the private sector in fostering healthy economies in America’s inner cities that create jobs, income, and wealth opportunities for inner-city residents.
Seven years of pioneering research on inner-city business growth opportunities, including the ICIC/Inc. Magazine Inner City 100
Advisory services to many cities through the City Advisory Practice Program to engage 350 urban business schools Affiliates in 3 cities to catalyze on-the-ground private sector activity Private equity fund (Inner City Ventures)
4
• Poverty at least 1.5 times MSA poverty
• MHI at least half of MSA MHI
• Unemployment at least 1.5 times MSA unemployment
Or
• Poverty > 20%
And
• Exclude Central Business Districts (CBDs)
.-,270
.-, 70
.-,64
.-,44
.-, 55
.-, 55
.-, 64
Illinois
Missouri
St. Louis
ILLINOIS
East St. Louis
MISSOURI
Defining Inner City
5
Housing
Health Education
Business & Wealth
Healthy Inner-City
Communities
The business agenda is a complementary part of the building economically healthy inner cities
6
A Sustainable Model for Inner-City Business Development
1) A strategy based on competitive advantages and genuine business opportunities
2) A shift from a focus on community deficiencies (subsidies) to market opportunities (investment)
3) A comprehensive strategy for inner city business growth focused on private sector engagement
4) A framework that links the inner city economy to regional business clusters
Objective: widen prosperity to all of our citizens
7
What is our Intended Outcome?
Critical mass of initiatives and improvements that will:
a) Position the inner city to compete for jobs and investment within the regional economy
b) Make inner cities a better place in which to live and work
c) Increase job, income, and wealth opportunities of inner-city residents
Thinking about inner city economic growth in this way avoids misguided debates
Place vs. people Place and people
Retention vs. attraction Retention and attraction
They will be about ... Strategies will not be ...
Government vs. business Government and business
8
Inner-city
Strategic location
Located near regional transportation and telecommunications infrastructure nodes
Underserved local market
$85 billion of annual retail spending power
540 thousand businesses with more than $80 billion in commercial services demand
Underutilized Workforce
Largest pool of available workers in the US amid a tight labor market
Linkage to industrial/regional clusters
Opportunity to leverage proximity to regional and industrial clusters
Inner City Competitive Advantages
9
Inner City 100 Companies Build on Competitive Advantages
Vital Statistics: 2002 Winners
• Average five year growth rate 1996-2000:
• Average sales in 2000:
• Average hourly wage:
• Percent minority-owned:
• Percent living in the inner city:
539%
$19.0 M
$12.44
Employment among the Inner City 100 doubledbetween 1996 and 2000, creating 7,984 jobs
Total IC 100
33%
44%
20% of senior management29% of Midlevel/skilled employees50% of Rank & File employees
10
Microenterprise strategy
Small-businesses strategy
Cluster strategy, Underutilized assets, business environment, ...
Time
Gro
wth
Tra
ject
ory
(Em
ploy
men
t, re
venu
e, w
ages
, and
util
ized
real
es
tate
)
Business Development Strategy:Alternative Growth Strategies for Inner-City Neighborhoods
Today
No-growth strategy
11
Developing an Inner City Business Development Strategy
Understand the business base & quality of business
environment
Identify market opportunities and
underutilized assets
Institutionalize efforts in the public and private
sectors
Address Barriers to Competitiveness and
Growth
Create a leadership group for action
12
Components of Inner City Economic Growth Strategy
A comprehensive view of inner city business and wealth growth
Bus. Environ. Improvements
Addressing cross-cutting issues that impact company competitiveness regardless of cluster
Wealth Creation
Strategies
• Facilitating employer-assisted asset-building;
• Encouraging savings;
• Homeownrshp
• Linking inner-city assets with regional cluster and growth opportunities;
• Harnessing agglomoration economies
• For local services clusters, reversing outmigration
Positive ImageStrategies
• Media coverage of inner city businesses that are succeeding
• Inner City 100
Cluster-led Strategies
13
Defining Clusters and Explaining Regional Economies• A cluster is a geographically proximate group of interconnected companies
and associated institutions in a particular field, including producers, service providers, suppliers, and universities.
• Clusters arise out of the linkages or externalities that span across industries in a particular location.
• Clusters are both a descriptive tool and a prescriptive tool.
• Export products beyond their region--driving economies
• Higher than average concentration of inter-related industries
• Examples: Automotive, Footwear, Wine
• 36% of US employment
• $41,678 Avg. wage
Traded Clusters
• Serve local demand
• No higher than average concentration--similar business prevalent in most localities
• Examples: Local Personal Services, Local Retail, Local Construction
• 64% of US employment
• $26,049 Avg. wage
Local “Clusters”
• Natural Resource-Driven industries are location-specific industries that depend upon the availability of scare resources.
• Examples: Mining, oil & natural gas exploration, forestry
• 0.8% US employment• $31,264 Avg. wage
Natural Resource Clusters
14
Components of Inner City Economic Growth Strategy
A comprehensive view of inner city business and wealth growth
Bus. Environ. Improvements
Wealth Creation
Strategies
Positive ImageStrategies
Cluster-led Strategies
• Everything in traded and more
• Local unmet demand
• Population growth
Traded Local
• Growth opportunities• Supplier relationships• Cooperative activities• Specialized business resources
• Entrepreneurship• Cross-cutting business environment issues
15
St. Louis MSA Business Base
Notes: (1) The St. Louis MSA includes St. Louis City, St Louis, St. Charles, Franklin, Jefferson, Warren, Lincoln, Madison-IL, St. Clair-IL , Monroe-IL, Clinton-IL, and Jersey-IL. (2) The employment estimates exclude public-sector jobs including the US Postal Service.
Source: 1999 ABI data; 1999 St. Louis Business Journal Book of Lists; ICIC analysis.
1999 Profile
MSA1City Total
Inner City
EstablishmentsShare of MSA (%)Share of City(%)
Employment2 (K)Share of MSA (%)Share of City (%)
Est. revenues (B)Share of MSA (%)Share of City (%)
85,600
1,325
$157.8
13,09915.3%
28021%
$34.422%
7,8549.2%60%
16813%60%
$21.213%62%
Remainder of MSA (79%)
St. Louis Inner City (13%)
St. Louis City (21%)
Percent of Employment/Revenue
Inner-City St. Louis represents 60% of the City’s employment and revenue
16
Notes: (*) Retail, Commercial Services, Personal Services, and Professional Services are not included in Harvard Cluster Mapping Project. (***) Percentages will not total 100 due to overlapping of industries among clusters.
0%
5%
10%
15%
20%
25%
30%
0% 5% 10% 15%
55%
70%
21%
Medical Sciences
Retail
Beverages
Chemical Products
Communications & Utilities
Education & Knowledge Creation
Tourism & Entertainment
Personal Services
Professional Services
Financial Services
Metal Mfg. Construction
Services & Materials
Transportation & Logistics
Commercial Services
Approx 1,000 estab.
St. Louis Inner-City Clusters (1999)Inner-City Share of MSA Employment in the Cluster (%)
Cluster Share of Total Inner-City Employment** (%)
17
Cluster Prioritization Criteria
• Economic engines • High growth potential• Less vulnerable to business
cycles
• Derive competitive advantages from IC location
• Job opportunities that match skills
• Entrepreneurial potential• Quality of jobs
Economic Performance
Inner-City Fit
• Ultimately all clusters must be analyzed. Economic Development professionals should not be picking winners.
• But as a first step, given limited resources focus clusters can be selected that offer the most immediate opportunities for inner-city job and business growth
18
Average Annual Employment Change* (1993-1998)St. Louis Inner City and MSA
-5%
-3%
-1%
1%
3%
5%
7%
9%MEDICAL SCIENCES RETAIL
TOURISM ANDENTERTAINMENT
EDUCATION ANDKNOWLEDGE
CREATION PERSONAL SERVICES
-5%
-3%
-1%
1%
3%
5%
7%
9%
TRANSPORTATIONAND LOGISTICS
COMMUNICATIONSAND UTILITIES BEVERAGES
PROFESSIONALSERVICES PUBLISHING/PRINTING
-5%
-3%
-1%
1%
3%
5%
7%
9%
COMMERCIALSERVICES FOOD PROCESSING
PAPER AND WOODPRODUCTS
AEROSPACE ANDDEFENSE FURNITURE
Source: Missouri Department of Economic Development; Michael E. Porter Cluster Mapping Project; ICIC analysis. Note: (*) Changes reflect data for core industries within each cluster.
12.5%
-5%
-3%
-1%
1%
3%
5%
7%
9%FINANCIAL SERVICES CHEMICAL PRODUCTS
CONSTRUCTIONSERVICES/PRODUCTS AUTOMOTIVE
METALMANUFACTURING
% Change in MSA Employment (Total Average +2.1%)
% Change in Inner-City Employment (Total Average +1.1%)
19
Notes: (*) Retail, Commercial Services, Personal Services, and Professional Services are not included in Harvard Cluster Mapping Project. (***) Percentages will not total 100 due to overlapping of industries among clusters.
0%
5%
10%
15%
20%
25%
30%
0% 5% 10% 15%
55%
70%
21%
Medical Sciences
Retail
Beverages
Chemical Products
Communications & Utilities
Education & Knowledge Creation
Tourism & Entertainment
Personal Services
Professional Services
Financial Services
Metal Mfg. Construction
Services & Materials
Transportation & Logistics
Commercial Services
Approx 1,000 estab.
St. Louis Inner-City Clusters (1999)Inner-City Share of MSA Employment in the Cluster (%)
Cluster Share of Total Inner-City Employment** (%)
FOCUS CLUSTERS
20
Case Studies
– Case 1: Bridgeport META (cluster upgrading)
– Case 2: St. Louis Construction (cluster-led workforce training)
21
0
2
4
6
8
10
12
14
16
18
20
22
24
0 2 4 6 8 10 12 14 16 18
Metal Manufacturing Is Bridgeport, CT’s Most Prominent Cluster
Cluster’s Share of Total City Revenue* (%)
Cluster’s Share of Total City Employment* (%)
~500estab.
Financial Services
Transportation & Logistics
Retail Services**
Commercial Services**
Metal Manufacturing
Medical Devices & Health Services
Construction
Pharmaceuticals
Info. Technology
Plastics
Entertainment & TourismOffice Services
Social Services
22
Bridgeport, CT’s Metal Manufacturing Cluster Was Not Performing Up to National Standards
Potential to retain existing companies and jobs and build on this strong manufacturing base.
KEY CHALLENGE: How can Bridgeport’s metal manufacturers become more
competitive and share in national growth?
Opportunity
Threat
Despite national growth in metal manufacturing, Bridgeport’s metal manufacturing cluster remained stagnant from 94-99
Bridgeport will lose an essential part of its economic base if metal manufacturers do not adapt to the new market
23
Bridgeport Formed the Metal Manufacturing Education & Training Association To Increase Firm Competitiveness
Workforce Development
Lean ManufacturingPurchasingMarketing
Joint Business Opportunities
Shared Marketing Costs
Utilities
Benefits & Insurance
Cutting Supplies
Waste
Transportation
Cluster-Specific Skills Training
Job Placement
Apprenticeships
Expert-Led Workshops
Shared Learning
Technology/ Automation
METAL
24
Bridgeport METAL: Progress• 11 companies, 1579 employees, over $235 million in annual sales • Secured over $2 million dollars in funding• Companies continue to invest time (over 1,500 hours to date) and money (over
$160,000) notwithstanding the deep recession in manufacturing.• Facilitated the transfer of “best practices” across company lines• Increased the willingness of small manufactures to collaborate with government to
improve competitiveness
Workforce Development
Lean Manufacturing
• Completed a needs assessment and gap analysis of the workforce • Conducted 34 customized training classes for 400 employees • Training has resulted in a 53% increase in proficiency overall, • Companies also noted immediate benefits in morale and motivation.• METAL has been a catalyst for institutional change -Housatonic Community College
(HCC), • Training is helping employees retain their jobs
• Conducted over 30 kaizen/training events at 7 companies• Lean Program has (1) reduced work in process by 50%, (2) reduced set-up times on
machines by 50%, (3) reduced floor space for shipping and receiving by 20%-25%, and (4) reduced parts travel distances by 25%
• Developed a Lean Expert Certification Program
Overall
25
Case Studies
– Case 1: Bridgeport META (cluster upgrading)
– Case 2: St. Louis Construction (cluster-led workforce training)
26
0
10,000
20,000
30,000
40,0002000 2001 2002 2003 2004
Non-union Apprentices Union Journeymen Labor Gap
Tota
l Con
stru
ctio
n Jo
bs
Year
Construction Labor Gap
2,695 4,562 6,563 9,2793,383
Source: 1999 F.W. Dodge; Missouri Depart of Transportation; ICIC analysis.
St. Louis Construction Labor Supply Gap
• Construction jobs pay up to $24 per hour plus benefits, and do not require advanced education.
• Existing union membership is projected to decline over the next several years due to retirement and a relatively small number of apprentices (approximately 3,000).
• With training, there will be significant opportunity for inner-city residents to step into these positions.
Increase number of inner-city and minority workers in the construction tradesRecommendation
27
St. Louis Construction Unions & Industry Are Working Together To Address This Issue
Implementation vehicle:Chair of working group: Craig Schnuck, CEO, Schnuck MarketsMembers of working group:
– Head of St. Louis Unions– CEOs of two major
construction firms– East-West Gateway
Coordinating Council
Progress to date:• Working on the standardization of apprenticeship application processes across trades
• Information outreach on construction career opportunities to inner city schools and community centers in 2000
• PRIDE, a consortium of unions, contractors and others, has funded a $10,000 project to better understand barriers to minorities entering the construction field. (Completed in Nov 2001)
• Currently pushing for a city ordinance that will strongly encourage the use of apprentices on public works projects, and public/private partnerships
28
From Opportunity to Action
Identify Opportunity
Make Recommendations
Identify Implementation
Vehicle
Drive to Action
Chicago Railroads
• Industry-designed training
• Labor shortage due to aging workforce
• 800-1000 jobs opening
• Over 90% of graduates placed
• Public/private partnership with local community college
St. Louis Metal Mfg
• Exceptionally high-quality metal manufacturer’s which were lagging national trends in sales and employment
Capitalize on St. Louis metal manufacturing by •Marketing of regional strength•Joint marketing by companies in city
Boston Zoo
• Develop plan to turn zoo into major urban attraction
• Weak link to strong tourism cluster
• Underperforming vs. other metro zoos
• Creation of eco-tourism destination
• Attendance doubled and revenues tripled
• Zoo task force • Mayor’s office
• Public/private partnership b/w state, local technical college, private and non-profit representatives
• Marketing program with 3-year timeline developed
• Launch contingent on funding from state or other source
29
Recommendations for State Economic Development Policy
Overall
• Make inner city business and job competitiveness and growth a key component of regional economic development strategies that the State government supports
• Make cluster-led growth strategies a critical part of inner city economic growth strategies adopted by regions and localities -- inner cities have assets; inner cities will grow by linking to growth
• Ensure economic development strategies focus on other factors key to business and job growth: business environment improvements, positive image strategies, and wealth creation strategies.
30
Recommendations for State Economic Development Policy
Overall
• Invest in improved economic intelligence -- map clusters, benchmark performance
• Encourage private-sector leadership in devising and implementing cluster-based networks or collaborative efforts -- both within the inner city and regionally
• Encourage partnerships between local academic institutions, governments, community groups and business to spur cluster growth
• Prioritize investment in cross-cutting business environment issues that arise from cluster working groups -- workforce, infrastructure, capital, marketing, etc.
• Market inner city success -- inner city success stories are critical battling misperception
31
WWW.ICIC.ORG