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Exploring Opportunities for

a Stronger Regional Economy

Module

Six


Reflecting on the Previous Session

• What did you find most useful or valuable?

• What progress have you made since then?

• Any questions or clarification needed?


COMMUTING PATTERNS


COMMUTING PATTERNS


Overview of Module Six

• Explore basic concepts of competitive

advantage

• Provide an overview of tools and data

available to detect regional competitive

advantage

• Examine strategies for building stronger

regional economies


BASIC CONCEPTS OF

COMPETITIVE ADVANTAGE


Competitive Advantage: Four Factors

Business shapes the economic value of a

region, but places can help shape, nourish and

sustain local enterprises and industry.

What determines competitive advantage?

• Firm Strategy, Structure and Rivalry

• Factor Conditions

• Related and Supporting Industries

• Demand Conditions


How many

competitors?

What is the threat

of new entry?

Firm Strategy:

3 hospitals

7 full-time doctors

Industry determined by

university-owned hospital,

located 100 miles away

Local customer

base? What do

people want?

Related and Supporting

Industry:

25% of durable supplies

can be purchased locally

0% of non-durable supplies

can be purchased locally

Health

Care

Industry

Demand Conditions:

Unemployed and

underemployed seeking

low-cost health care

Higher income leaving the

region for large urban

hospital

What value

chains or

clusters exist

in our region?

Factor Conditions:

Low rent

Inexpensive unskilled labor

Difficult to retain medical

professionals

How does place

influence the

quantity, quality

and cost of input

factors?


DETECTING REGIONAL

COMPETITIVE ADVANTAGE


What Are the Keys to

Economic Growth?

• People

• Place

• Businesses

• Innovation

Clusters or branding


First Key to Economic

Growth: People

• Who are our workers?

• Skill level, education, occupation

• Work ethic

• Who are our residents?

• History and culture

• Long time residents, newcomers


People: The Residents

• Who are the people that live in this region?

• How long have they lived here?

• How many generations have lived here?

• Where did they originate?

• Why did they come?

• Why do they like living here?

• Social conditions

• Cultural factors

• Economic prospects


People: The Workforce

• Who are our workers?

• Basic demographics

• Experience

• Work ethic

• Is our workforce adapting to change?

• Technology

• Recognizing needs


Second Key to Economic Growth:

Place

• What amenities does

our region offer?

• Why would people want

to live here?

• Why would businesses

relocate here?


Place: Industrial Indicators

• Current leading employers

• New and expanding companies and industries

• Research facilities, R & D

• Available land and buildings

• Existing infrastructure

• Access to transportation networks

• Tax structure


Place: People & Quality

of Life Indicators

• Population and labor force

• Education

• Health care

• Recreational opportunities

• Shopping

• Crime, weather, etc.


Third Key to Economic Growth:

Business

• What is the portfolio of businesses (small,

medium, large)?

• What does entrepreneurship look like?

• What’s the mix of industrial sectors?


Industries & Occupations:

Looking at Your Region’s Data

• What types of industries/

businesses currently exist?

• What are key occupations?

• How have these businesses

fared, particularly during the

recent economic downturn?


Business Assistance in the Region

What type of programs, assistance

or incentives are offered to:

• Support expanding businesses?

• Recruit new businesses?

• Foster the growth of

entrepreneurs or small, locallyowned

businesses?


Identifying Entrepreneurs

Social

Entrepreneurs

People with

underutilized talent

Small

businesses

Unemployed

Entrepreneurship

High growth

businesses

Youth

Self- Employed

Innovators


Who Is an Innovator/Entrepreneur?

Identifying Innovators &

Entrepreneurs

Solution

Problem/Opportunity

New

Old

New YES YES

Old YES NO

Entrepreneur: one whose goal is to

create or capitalize on new economic

opportunities through innovation.


Assessing Entrepreneurship Capacity

• Community surveys

• Existing programs

• Community readiness

• Leadership

• Networks

• One-on-one interviews with local

entrepreneurs

• Assess ambitions and needs

• Identify local/regional constraints


Assessing Entrepreneurship Capacity

Inventory of Entrepreneurship:

• BEA-REIS data

• Census (non-employer statistics)

• County Business Patterns

• Panel Study on Entrepreneurial

Dynamics

• Business owners survey

Capacity for New Entrepreneurs:

• Educational attainment

• Immigration and diversity

• Financial resources

• Business resources


Fourth Key to Economic Growth:

Innovation

"Innovation . . . the successful

introduction of a new thing or

method . . . Innovation is the

embodiment, combination or

synthesis of knowledge in original, relevant,

valued new products, processes or services.”

Luecke and Katz, 2003


How Nurturing is Your Region?

Three Phases of Innovation

Conception Implementation Marketing

Business

Process

• Idea Generation

• Project Planning

• Development

• Prototype Dev

• Testing

• Production

• Launch

Regional

Capacity

• Education

• Technical

Assistance

• R&D centers

• Universities

• Industrial Parks

• Capital Availability

• Community Support

Source: Tawari, Buse and Herstatt, 2007


Your Region’s Capacity for Innovation

• Research & Development (R&D) assets

• Regional universities or community

colleges

• Other resources that foster innovation


Fifth Key to Economic Growth:

Clusters or Branding

Cluster – making the whole greater than the

sum of the parts

• Branding – consolidating the essential

characteristics of the individual identity into a

brand core


Industry Cluster Analysis

• Views firms and industries, as

interdependent, not isolated

• Identifies value chains

• Discovers collections of businesses

producing similar outputs


What Can Regional

Cluster Analysis Tell Us?

Where we have . . .

• Gaps

• Growing industries/clusters

• Declining industries/clusters


Data Needs

• Industry sector data: number of

establishments (over time), number of

employees, payroll, earnings

• Potential linkages to determine value

chains


You Think There Is a Regional Cluster,

• Map the cluster

So Now What?

• Determine if growing or declining

• Evaluate regional capacity

• Identify potential leakages

& opportunities

• Determine potential strengthening

strategies


MAPPING THE CLUSTER


Value Chain Cluster Example

Grape stock

Fertilizers,

Pesticides,

Herbicides

Grape

harvesting

equipment

Irrigation

technology

Growers/

Vineyards

Wine

State government

agencies

Wineries/

Processing

facilities

Educational, Research

& Trade organizations

Winemaking

equipment

Barrels

Bottles

Caps & Corks

Labels

Public

Relations &

Advertising

Specialized

publications

California

Agricultural Cluster

Food

Cluster

Tourism

Cluster

Source: California Department of Food and Agriculture


Cluster Illustration: Bubble Chart

Source: EMSI.com


Identify Potential Leakages and

Business Opportunities

For the cluster, determine the:

• Current regional capacity

• Industry potential

• Future growth of industry

• Types of skills needed


Identify Potential Leakages and

Opportunities for New Businesses

Grapes

Fertilizer

Advertising

Wine

Research

Zero inputs available regionally

Small % of inputs available regionally

Large % of inputs available regionally

100% of inputs available regionally


Let’s look at the data for

the Region

• Yesterday we looked at data that

describes the people and the place.

• Today we are going to look at the data

that describe the workers and the

businesses

– Workforce Data

– Industry Data


The Workforce

• Who are the workers in this region?

• Are they blue collar or white collar?

• What types of occupations have done

well lately?

• Do you attract the creative class?

• What are the skills or education needs

for targeted occupations?

• What industries hire particular

occupations?


Occupation 2011 Jobs Growth (2002-2011)

Real Estate Brokers and

Sales Agents

Securities,

Commodities, and

Financial Services

Financial Analysts and

Advisors

Fast Food and Counter

Workers

Miscellaneous

Managers

Nursing, Psychiatric and

Home Health Aides

Accountants and

Auditors

6,751 82%

4,437 73%

6,788 67%

6,305 27%

4,055 45%

3,420 36%

3,286 32%


The Creative Class

• Should be attracted and

retained

• Develop, design or create new

applications, ideas,

relationships, systems or

products

• Considered “footloose”

• Attracted to amenities

Florida, 2002


Where is the Creative Class in the US?

How "creatively-driven" is your economy compared to the national average?

Dark-blue is the least creative and dark-red the most creative areas.


INDUSTRY OVERVIEW


Examining Clusters in Your Region


Cluster Choices

• Advanced Materials

• Agribusiness, Food Processing &

Technology

• Apparel & Textiles

• Arts, Entertainment, Recreation & Visitor

Industries

• Biomedical/Biotechnical (Life Sciences)

• Business & Financial Services

• Chemicals & Chemical Based Products

• Communications

• Computer & Electronic Product

Manufacturing

• Computers & Software

• Construction Materials

• Defense & Security

• Education & Knowledge Creation

• Electrical Equipment, Appliance &

Component Manufacturing

• Energy

• Energy (Fossil & Renewable)

• Fabricated Metal Product Manufacturing

• Food Products & Services

• Forest & Wood Products

• Glass & Ceramics

• Health

• Information

• Information Technology & Telecommunications

• Machinery Manufacturing

• Manufacturing Super Cluster (6 sub-clusters)

• Metals & Machining

• Mining

• Primary Metal Manufacturing

• Printing & Publishing

• Transportation & Logistics

• Transportation Equipment Manufacturing


GOVERNOR’S CLUSTERS

• Tourism, Gaming, and Entertainment

• Clean Energy

• Health and Medical Services

• Aerospace and Defense

• Mining, Materials, and Manufacturing

• Business IT Ecosystems

• Logistics

• Agriculture

• Intangibles and Financial Enterprises

• Water Technology


Example: NV Manufacturing Cluster


Total 22,991 19,017 $79,021 817

NV Manufacturing Cluster

NAICS

Code

Description

2002 Jobs 2011 Jobs

2011

Average

Earnings

2011

Establishments

311 Food Manufacturing 1,328 1,739 $57,382 62

312 Beverage and Tobacco Product Manufacturing 154 126 $65,605 3

313 Textile Mills 212 22 $30,691 3

314 Textile Product Mills 349 179 $47,027 18

315 Apparel Manufacturing 94 91 $15,349 2

316 Leather and Allied Product Manufacturing 50 22 $32,253 4

321 Wood Product Manufacturing 675 524 $56,857 28

322 Paper Manufacturing 204 345 $63,081 13

323 Printing and Related Support Activities 1,762 1,149 $63,866 65

324 Petroleum and Coal Products Manufacturing 106 157 $157,491 7

325 Chemical Manufacturing 404 613 $97,538 30

326 Plastics and Rubber Products Manufacturing 2,070 1,192 $66,129 45

327 Nonmetallic Mineral Product Manufacturing 1,203 822 $82,232 43

331 Primary Metal Manufacturing 548 653 $102,122 13

332 Fabricated Metal Product Manufacturing 3,366 2,802 $66,184 157

333 Machinery Manufacturing 1,072 943 $86,365 54

334 Computer and Electronic Product Manufacturing 2,930 2,328 $86,993 68

335

Electrical Equipment, Appliance, and Component

Manufacturing

374 201 $77,622 13

336 Transportation Equipment Manufacturing 1,399 1,176 $74,086 42

337 Furniture and Related Product Manufacturing 856 490 $60,973 54

339 Miscellaneous Manufacturing 3,833 3,444 $104,242 95


NV Manufacturing Cluster

NAICS Code Description 2002 Jobs 2002 LQ 2011 LQ

339 Miscellaneous Manufacturing 3,833 2.34 2.34

326 Plastics and Rubber Products Manufacturing 2,070 1.10 0.88

323 Printing and Related Support Activities 1,762 1.08 1.03

327 Nonmetallic Mineral Product Manufacturing 1,203 1.04 1.01

332 Fabricated Metal Product Manufacturing 3,366 0.99 0.95

334 Computer and Electronic Product Manufacturing 2,930 0.90 0.96

314 Textile Product Mills 349 0.75 0.68

337 Furniture and Related Product Manufacturing 856 0.62 0.60

321 Wood Product Manufacturing 675 0.52 0.65

331 Primary Metal Manufacturing 548 0.50 0.78

333 Machinery Manufacturing 1,072 0.40 0.41

311 Food Manufacturing 1,328 0.39 0.55

336 Transportation Equipment Manufacturing 1,399 0.35 0.40

335 Electrical Equipment, Appliance, and Component Manufacturing 374 0.34 0.25

325 Chemical Manufacturing 404 0.20 0.35

Total 22,170 0.68 0.73


Looking Deeper into Misc

Manufacturing Cluster


Distribution of Jobs Across Region


Strengthening the Miscellaneous

Manufacturing Sector


Regional Occupations Related to Production


EXPLORING

POSSIBLE

ECONOMIC

DEVELOPMENT

STRATEGIES


Strategies to Strengthen a Cluster or Brand

• Targeted attraction of industry

• Business retention and expansion

• New firm creation/entrepreneurship

• Attraction of the creative class

• Network development and

meta-business creation


Targeted Attraction of Industry

• Past: Blindly attracting industry

• Now: Targeting businesses likely to be

successful in the region

• Strategies:

Cluster mapping

• Location models

• Community Business Matching

model


Location Models

Employs place specific data to:

• Analyze the probability of an

industry moving to the region

• Evaluate the region’s ability to

respond to industry needs

• Select industries with the

highest likelihood of success


Community Business Matching Model

Community

Assets

Goals

The

Ideal

Compatibility

Desirability

Needs

Profile

Business

Source: Cox et al., 2009


Business Retention & Expansion

• Lets businesses know they are valued

• Helps solve local business issues

• Improves community awareness

• Connects businesses to community

resources

• Creates connections between community

organizations

• Fosters job retention & growth


How BR&E Works

• Planning Phase

• Action Phase

• Recruit volunteer visitors

• Visit local businesses

• Follow-up

• Respond to concerns

• Plan for future


Regional Strategies to

Increase Entrepreneurism

• Community-based training options

• Weekend boot camps

• FASTRAC or other 13-week programs

• Short-term targeted business training

• Access to business coaching

• Youth entrepreneurship: 4H,

Scouts, in-school programs


Entrepreneurial Communities or Regions

Openness to

new ideas and

intellectual

stimulation

Capital: Equity and Debt

Education: K-22

Community

Support

Conception

Birth

Information

Connections +

Networking

Services and Amenities

Infrastructure

Source: Based on Reynolds, et. al., Small Business Economics 23: 263–284, 2004.


Attracting the Creative Class

The creative class is ‘footloose’ and tends to

congregate in places with a high quality of life.

Potential to Affect

• Networking

• Retain/attract youth

• Recreational activities

• Cultural diversity, tolerance and

inclusiveness

• Infrastructure

• Population density

• Proximity to metropolitan areas

• Natural amenities (esp. mountains, forest)


Business Network Development

A formal or informal collaboration or cooperation

among either competing firms or

firms that are part of a value chain

for the purpose of

creating a net benefit for all involved


Network Examples

Workforce Development Example

• Milwaukee Seven Water Council:

Transform the workforce system and create high

performance talent pipelines within the region

Entrepreneurship Network Example

• The Entrepreneurs Network:

Promote job growth and business creation


Meta-Business Formation

Strategies for generating revenue that

support all local business

Examples:

• Local coupons

• Local credit/debit cards

• Local currency

• Business directories

• Local stock exchange

• Businesses that support other businesses


What’s Next?

• Consider other potential strategies that

could be successful in the region

• Further examine the regional data


Final Reflections

• What topics did you

find most helpful?

• What did you find

confusing?

• What other data do

you need?

• Other items you want

to mention?


Looking Ahead: Module Seven

We will:

• Examine regional assets

• Explore the region’s seven

capitals

• Take an honest look at

potential barriers

• Take steps to link assets to

your potential regional goals

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