Industry clusters were once believed to be the economic development “Holy Grail,” but over the years they have produced mixed results. Still, industry experts believe that an effective clustering strategy is a proven recipe for regional and statewide economic success.
Harvard Business School Professor Michael E. Porter found that location characteristics play an important role in the success of a region’s industries. He believed that by implementing a targeted approach of industry clusters, firms could achieve a competitive advantage by promoting common interests. A Brookings Institution report was also in favor of industry clusters. It showed that “strong clusters foster innovation through dense knowledge flows and spillovers; strengthen entrepreneurship by boosting new enterprise formation and start-up survival; enhance productivity, income levels, and employment growth in industries; and positively influence regional economic performance.”
Charlotte, N.C. was praised for its energy cluster at the Forum on American Competitiveness. About 240 energy-related companies employ some 24,000 people in the Charlotte region. The sector has grown on the base of established companies such as Duke Power, Siemens AG and The Shaw Group, and includes many other major industry players. They’re supported by research centers at the University of North Carolina at Charlotte and the Electric Power Research Institute.
In addition to the Charlotte area’s energy clustering strategy, foreign investors have discovered that the region, specifically the International Business Park, is a great place to build complex machines. As a result, international companies with a focus on high tech manufacturing have chosen Charlotte area business parks to expand their North American production.
Ronak Bhatt, a consultant with McKinsey & Co., stated that industry clusters show value in a variety of ways – “They enhance productivity because companies have more access to experienced, mobile work-forces Connections among peers accelerate innovation, accelerating job growth and tax revenues.”
Of course, regions interested in establishing a strong industry cluster must tailor training, education and incentive programs that build on existing clusters or foster the development of new ones in order to thrive in the “next economy.”