An Industry-Led Cluster for a Sustainable Economy

Successes from private-public collaboration

Northwest Food Processors AssociationBy Dave Klick, Cluster Outreach Executive

503-327-2207 dklick@nwfpa.org

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Southeast Alaska Economic SummitJuneau, Alaska, December 13, 2011

12/20/2011

Northwest Food Processors AssociationCelebrating 98 Years of Leadership

Established 1914 Advocate &

Resource for the 3rd Largest NW Manufacturing Industry

150 NW Member Processing Plants

400+ Members

20 Staff, 125+ yrs experience

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Washington, Oregon & Idaho

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How big is the Pacific Northwest Compared to Alaska?

1. 23%2. 43%3. 63%4. 83%5. 103%

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Mutual Interests of SE Alaska (JEDC) and ID, OR, WA (NWFPA)

Pioneering Spirit Targeted Clusters◦ Forest Products ◦ Ocean Products (Processing)◦ Renewable Energy (Efficiency)◦ Tourism

Similar Issues for Business and Industry

● Concentrations of seafood processors

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Seafood Shorebased Processing Plants in SE Alaska

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1. Alaska General Seafoods – Ketchikan2. Alaska Seafood Company – Juneau3. E.C. Phillips – Ketchikan, Craig4. Hoonah Cold Storage – Juneau5. Icicle Seafoods – Petersburg6. Icy Straits Seafoods – Juneau 7. Island Packing Company – Metlakatla 8. North Pacific Seafood – Sitka 9. Pacific Seafood – Wrangell 10. Ocean Beauty Seafoods – Petersburg,

Excursion Inlet 11. Silver Bay Seafoods - Sitka12. Trident Seafoods – Ketchikan, Petersburg,

Wrangell 13. Yakutat Seafood Processing – Yakutat 14. Kake Fish-Processing – Kake

Challenges: Globalization, Aging Plants, Mergers, Closures, Margins and Markets

New Zealand

Think Globally, Act Regionally12/20/2011 6

Industry Malaise1997 – 2007 … a threat to allProfits down, margins down . . . 50+ food mfg. mergers, closed - lost in ID, OR, WA

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Why a Cluster?

The Northwest Food Processors Cluster Initiative is Launched

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See Cluster Brochure

Prioritize: One Big, Hairy, Audacious Goal

NWFPA is Champion of the

Northwest Industry-Wide Revitalization Initiative:

Reposition NW Food Processors to better compete globally as anINDUSTRY CLUSTER.

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An Economic Cluster is a set of firms: In the same or related field Located in the same geographic area Linked by service or supplier

relationships, common customers and/or supporting institutions

Reliant on a shared regional labor market

Complementary but also competitive with one another

Productively advantaged from their mutual proximity

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External Drivers

Markets

Marketing Initiatives

Specialized Infrastructure

Specialized Suppliers

Cluster Firms/Traded Sectors

Consolidation of Buyers Limited Resources Globalization Worldwide Economic GrowthExport and Import Policies Healthy Food as MedicineMarket Segmentation

Regional Branding Trade Shows

Publications Industry Associations

Economic Development

Food Service Wholesalers / Distributors

Retailers Re‐manufacturers

OR State / WA State / University of Idaho / Research Institutes

Industry Associations / Trade Groups

Water / Telecom / Electricity / Sewage Treatment

Distribution Infrastructure Rail, Roads, Airports, Ports/Waterways

Federal, State and Local Government Agencies

Farms

Food Processing Machinery, Packaging

Specialized Labor/ Workforce Development

Engineering / Chemicals /Energy ● Finance, legal

Warehousing / Distribution

Seafood

Dairy

Wine & Beer

Fruits/Vegetables/Specialty (including cranberries, potatoes, stone fruits, berries)

CLUSTER MAP

Applied Development Economics, 2005

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The Northwest Food Processing Cluster Initiative – A Process

1. Condition 7. Prioritization

2. Passion 8. Formal Training

3. Organization 9. Tangibility

4. Understanding 10. Legitimacy

5. Coordination 11. Sustainability

6. Collaboration

Industry-Driven Strategic Direction NW Food Processing ClusterTri-State Cluster Assessment & Roadmap

2005 - 2006

Priorities (Private-Public)Cluster Advisory Strategy Team (CAST)

1. Innovation Infrastructure 2. Transportation Services3. Pipeline of Qualified Workers4. Strategic Alliances5. Operational Productivity

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PRODUCTIVITY (What We Accomplish)

Producing the highest quality goods and serviceswith the most efficient use of labor, materials, capitals, and utilities

Doing something betterthan anyone else◦ Stabilizing event◦ Profitable◦ Sustainable◦ Management philosophy◦ High impact

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NWFPA Productivity Collaborations

High-Performance Audits Continuous Improvement – Strategy

& Training Performance Measurement Systems◦ Plant and company level◦ A system to identify & Prioritize opportunities.

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NWFPA Productivity (Objectives) Matrix

Key Performance Indicators (KPI’s)

Scale -5 to +10 What Could be

Circles –How Doing

Weighting to 100%

Productivity and Cost Reduction are Necessary but not Sufficient

If productivity optimization is not balanced with innovation, it can carry you into the “aging” phase

Growing

Courtship

EarlyBureaucracy

Aristocracy

StablePrime

Adolescence

Go-GoInfant Bureaucracy

x

Aging

CORPORATE LIFECYCLE MODEL Dr. Ichak  Adizes

12/20/2011 17• Copyright ©2011 Northwest Food Processors Association

Death

INNOVATION (What We Pursue)

Conversion of knowledge and ideas into a benefit for commercial use or public good

Doing something that nobody else does

A destabilizing event Applies horizontally across all

business functions

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Innovation Infrastructure

Strategic InnovationUniversity/Private Research and Industry R&D Partnerships

Innovation Climate Assessments Emerging Technologies Innovation Training Employee Creativity Input Vehicles

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Stay at Prime by Balancing Productivity with Innovation

•Productivity: optimize your returns and streamline your processes

• Innovation: create new value and regenerate your business Copyright ©2011 Northwest Food Processors Association

Courtship Death

EarlyBureaucracy

Adolescence

Go-Go

Infant

Bureaucracy

x

Growing Aging

Regeneration viaInnovation

Stable

Prime

Aristocracy

CORPORATE LIFECYCLE MODEL Dr. Ichak Adisez  

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Death

“Innovation is the Key”

Business ModelProcessesCustomer Solution InnovationProducts

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Innovation Results

Increased RevenueReduced CostsIncreased ProfitsSaved over 100 jobs in 2009Adding between 40 – 45 FTE in 2011

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Oregon Cluster Results ‘07 – ‘11 Success Breeds Success

Added 600+ JOBS in Recession

Improved Industry Profitability $13 million savings, cost avoidance $100 million plus

“Knowledge-based” strategies, not cost-based

Improved Political Clout

Developed/Developing New Products/Services

Built a Sustainable Model, funding continues

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Tri-State Cluster Funding 2/3 Private and 1/3 Public

NWFPA Membership, Events, Services Private Contributions Oregon Legislature Through ORInC

$5MM Jump-Start over Two Biennia Utilities Funding for Energy Program Federal Funding for Sustainability,

Energy, Rural, & Other Programs Establishment of an NWFPA

Subsidiary-

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Industry 2011 Survey --Winners are Innovators

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Innovation: ABSOLUTELY“More is Better” ... “Do or Die”

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Innovation Strategy?Fewer than half

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No Innovation Leaders? Silence Speaks Volumes

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Emerging Issues

1. Key Staff Retirement (53%)

2. International Trade (49%)

3. Aging Facilities (46%)

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Four Programs Seeking to Change the Industry’s Culture

Energy Management Industry Goal “25 InTENsity”

Sustainability Guide Environmental, Economic & Social

● Innovation Training–Executive, Business, Suppliers (Co-Innovation) Full Company Innovation

● Innovation Marketplace connecting buyers & sellers with collaboration

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NWFPA Innovation Program Funded in part by the Oregon

Legislature Focused on Business Innovation with

four pillars:◦ Executive Leadership◦ Business Model Innovation◦ Co-Innovation Throughout the Value Chain◦ Engaging Whole Company in Innovation

Goals◦ Create 100 New Jobs ◦ Advance Food Processors to a Higher Level on NWFPA’s Innovation Maturity Scale

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• Common 5‐stage framework• Adaptable to each company and program• Progressive Scale of Development

NWFPA Industry “Self Assessment” Growing Toward Collaboration

Inside your company Outside your company

1Ad Hoc

Reactive

2Local

Processes,Growing

3ManagedMeasuredPlanned

4Industry

Collaborative

5IndustryLeader

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Innovation Marketplace to Launch January 15-18, 2012 at NW Expo

Connect & Collaborate 24 / 7 access of buyers and sellers Private & public learn about issues and needs◦ Processing / Facility Improvements◦ Energy Management◦ New Opportunities in Marketing & Sales

Beta testing: 220 survey respondents; 50 companies are indicating “this is a winner!”

A replicable cross-industry model

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Seven Key Cluster Lessons

1. Passionate champions and/or leadership team

2. Buy-in from the industry leaders

3. Understanding of the strengths and weaknesses

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Seven Cluster Lessons Continued

4. A goal to unite the cluster and a collaborative strategy (roadmap)

5. Funding to implement the strategy and roadmap actions

6. Infrastructure

7. Outreach and a willingness to share!

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Cluster Summary“Reposition to Compete Globally”

Recognized Problem Necessity is the Mother of Innovation (Spread the word)

Found Passionate Leadership – “Cheerleader-ship” Enthusiasm and focus are Keys to Success

Understood the Problem and Planned “Those who plan get funded!”–◦ NW Food Processing Cluster Roadmap

Recruited Innovators Enlisted experts as necessary

Resourced For Success Motivated core industry group – Identified key supporters Adequately funded activities – $5MM Grant over 4 years Established clear objectives – Innovation TF / Exec. Comm.

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2003‐2011 Cluster Highlights

2003 2004 2005 2006 2007 2008 2009 2010 2011

Cluster Initiative launched to revitalize  

Tri‐State Food Processing Industry

New Private‐Public Cluster Partnerships

Tri‐State Food Processing Cluster Two‐Year Study

Tri‐State Cluster Dinner with 

National Speakers

Governor’s from Oregon and 

Washington Address Industry Cluster

Tri‐State Cluster Assessment and 

Roadmap

Energy Efficiency National Satellite Teleconference  for U.S and Canada

NWFPA Education & Research 

Institute (501) (c) (3)

$3.4 Million State of  Oregon 

Innovation Grant

Launched Knowledge Exchange

Visioning Summit  for CEO’s;

Energy Roadmap Workshop

Tri‐State Energy Roadmap

Tri‐State Sustainability Guide

Innovation Curricula for Business Growth

Visioning Summit for CEO’s

Energy Roadmap Workshop

First AnnualTri‐State Energy 

Summit

U.S. DOE MOU w/ NWFPA for Sector‐wide Energy Savings 

Goals (25%‐10)

600 jobs and $13 Million  “saved” for Oregon Companies

U.S. EDA “Finalist” for 2010 Regional Cluster of theYear Award

12/20/2011

Dave Klick, NWFPA Cluster Outreach Executivedzepponi@nwfpa.org 503.327.2207

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98th Annual NW Food Manufacturing & Packaging EXPO and Conference"Northwest Connections: Partnering for Profit“January 15 – 18, 2012 Portland, Oregon Convention Center

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3,500 attendees420 exhibit booths

30 sessions 4th Annual NW

Industrial Energy Summit

Synergies with Oregon Cluster

Network

You are all invited … “Come on down!”

Seafood Shorebased Processing Plants in SE Alaska

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1. Alaska General Seafoods – Ketchikan2. Alaska Seafood Company – Juneau3. E.C. Phillips – Ketchikan, Craig4. Hoonah Cold Storage – Juneau5. Icicle Seafoods – Petersburg6. Icy Straits Seafoods – Juneau 7. Island Packing Company – Metlakatla 8. North Pacific Seafood – Sitka 9. Pacific Seafood – Wrangell 10. Ocean Beauty Seafoods – Petersburg,

Excursion Inlet 11. Silver Bay Seafoods - Sitka12. Trident Seafoods – Ketchikan,

Petersburg, Wrangell 13. Yakutat Seafood Processing – Yakutat 14. Kake Fish-Processing – Kake