Final Cluster Analysis

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TRANS-BORDER CLUSTERS OF RUSSIAN NORTH-WEST

AND ESTONIAN NORTH-EAST

2009

This project is funded bythe European Union

PROJECT: CLUSTER DEVELOPMENT AND B2B INTERNATIONALIZATION IN ESTONIAN-RUSSIAN BORDER REGIONS

This publication has been produced with the assistance of the European Union.

The contents of this publication are the sole responsibility of project “EstRuClusters Development” experts

and can in no way be taken to reflect the views of theEuropean Union.

TRANS-BORDER CLUSTERS OF RUSSIAN NORTH-WEST

AND ESTONIAN NORTH-EAST

CONTENTS

INTRODUCTION...........................................................5

TRANS-BORDER CLUSTERS....................................6

HOSPITALITY CLUSTER ..............................................9

CHEMICAL CLUSTER...............................................12

METALWORKING CLUSTER .................................16

WOODWORKING CLUSTER.................................19

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INTRODUCTION

The present publication is based on 4 potential trans-border clusters which have been identi-fied as a result of research and implementationof the international EstRuClusters Development project: hospitality, metalworking, woodwork-ing, and chemical industry clusters. In reality, these clusters are still latent, i.e. not developed or formalized, but they have every opportunity of developing into competitive clusters provided proper conditions are created by local authorities and entrepreneurs themselves are willing.

In this document, a trans-border cluster is de-fined as a ‘geographically concentrated networkof cooperating companies in complimentary sectors and supporting institutions in the trans-border region of Estonian North-East and Russian North-West’.

In the project framework, four business con-tact meetings have been carried out for entre-preneurs in these cluster sectors. The meetings corroborated the research and detected the en-trepreneurs’ willingness to unite into clusters. Participants of the contact meetings were 125 Estonian and Russian businessmen and 40 offi-cials representing partner municipalities of the project.

The objective of this document is to visualize these four potential trans-border clusters of Es-tonian North-East and Russian North-West. Sug-gested development models of individual clus-ters as well as subjects of future clusters are only included in this document by way of recommen-dation.

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TRANS-BORDER CLUSTERS

Out of the eight sectors researched, four sectors have been selected eventually based on the results of the Final Cluster Analysis (2008) and in consistence with the objectives of the EstRuClusters Development project. Con-sequently, these sectors were used as a basis to identify 4 prospective trans-border clusters that possess suffi-cient potential for development in the regions of Ida-Virumaa county, Estonia, and Leningrad region including the city of St. Petersburg, Russia.

HOSPITALITY CLUSTER

Ida-Virumaa• 109 enterprises or 5,6% of the total number of all Estonian companies in the sector • 10th most agile sector in Ida-Virumaa • 8% of all employees in the sector in Estonia • 434 million EUR turnover in Estonia

Leningrad region• 1075 companies • Over 1 billion RUB turnover • 7379 employees in the sector

St. Petersburg• 57230 employees

Cluster includes following branches: Hotels, resorts and restaurants; tour operators and travel agents; excursion operators; PR companies; transport companies, etc

CHEMICAL CLUSTER

Ida-Virumaa• 12 enterprises or 11,1% of the total number of all Estonian companies in the sector • 7th most agile sector in Ida-Virumaa • 62% of all employees in the sector in Estonia • 425 million EUR turnover in Estonia

Leningrad region• 151 companies • 19 billion RUB turnover • 9686 employees in the sector

St. Petersburg• 561 companies • 19 billion RUB turnover • 14948 employees

Cluster includes following branches: Manufacture of basic chemicals, manufacture of rubber and plastic products, mining and quarrying of chemical materials, companies dealing with packaging, manufacturers of oil shale fuel, food industry, construction, etc.

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METALWORKING CLUSTER

Ida-Virumaa• 90 enterprises or 8,6% of the total number of all Estonian companies in the sector • 5th most agile sector in Ida-Virumaa and Estonia • 21% of all employees in the sector in Estonia • 851 million EUR turnover in Estonia

Leningrad region• 295 companies • 15 billion RUB turnover • 12302 employees in the sector

St. Petersburg• 1352 companies • 42 billion RUB turnover • 39044 employees

Cluster includes following branches: Metalworking companies, welding companies, manufacturers of machinery and equipment, construction companies and other related sectors.

WOODWORKING CLUSTER

Ida-Virumaa• 71 enterprises or 5,8% of the total number of all Estonian companies in the sector • 6th most agile sector in Ida-Virumaa and Estonia • 6% of all employees in the sector in Estonia • Over 1 billion EUR turnover in Estonia

Leningrad region• 549 companies • 9 billion RUB turnover • 8266 employees in the sector

St. Petersburg• 660 companies • Over 6 billion RUB turnover • 8760 employees

Cluster includes following branches: Manufacture of wood and of products of wood and cork, furniture; manufacture of articles of straw and plaiting materials, forestry industry, manufacture of veneer sheets; manufacture of plywood, and other panels and boards, sawing industry and other sectors related to woodworking

Although the clusters mentioned refer to specific sectors, effectiveness of cluster formation also depends ontheir inter-sector cooperation, where relevant innovative tension and products can be created at the intersec-tion of sectors.

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Woodworking

TRANS-BORDER CLUSTERS

Moreover, interaction with such topic platforms as IT, education, industrial design, etc can make clusters strong-er and more competitive.

Based on the selection of four clusters, target two-day business contact meetings were organized for entrepre-neurs in each of these sectors. As part of these contact meetings, Russian and Estonian experts also conducted training sessions for entrepreneurs acquainting them with the cluster approach and business internationaliza-tion measures.

ICT

SCIENCE AND EDUCATION

INNOVATIVE CULTURE INCL. INDUSTRIAL DESIGN

AB

C

D

E

CLUSTERS

SUPPORTIVE THEMES

Metalworking Hospitality Chemical industry

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HOSPITALITY CLUSTER

On December 4 and 5, 2008, business contact meetings and training sessions took place in the town of Kingi-sepp, Leningrad region. The events were titled ‘Cluster as a modern tool of increasing competitive ability in a global economy’ and intended for Russian and Estonian entrepreneurs engaged in the hospitality sector. Over 25 businesses participated in the training session: representatives of travel agencies, hotels, restaurants, trans-port companies, museums, etc. from Kohtla-Järve, Sillamäe, Narva (Estonia), Ivangorod, Slantsy, and Kingisepp (Russia).

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TRANS-BORDER HOSPITALITY CLUSTER

State structures (support of cluster development

and investment programmes)

Travel agencies Hotels and restaurants

Tourism institute, tour guide training courses

Developers of tourist product

Product suppliers

Hotel equipment

Leusure centres

Excursions companies

Organizationof corporate events

Visiting sites

PR and advertising

Recreation services

Industrial clusters

Logistics clusterOther hospitality clusters

Based on the region’s natural conditions and the presence of a number of unique objects which emerged as re-sults of industrial activity, participants generated a common viewpoint that formation of hospitality cluster may proceed through the development of extreme tourism and sports.

The chart below represents a model of interaction between companies within a potential trans-border hospi-tality cluster.

Below is a list of companies and potential participants in the cluster:

No. Organization Type of activity

Narva, Estonia

1 Keeping OÜ hotel, accommodation, catering

2 Heino Tours OÜ travel agency, hosting tourists in Estonia

3 Travel Balt OÜ hotel, accommodation, catering

4 Viru Media OÜ organization of corporate events, production of souvenirs,web design

Kohtla-Järve, Estonia

5 Silver Dream OÜ services for arriving and departing tourists, entertainment and recreation, visa processing

6 Svetlana Vetrova FIE producing single copies of author’s decorative dolls

7 Karipso Reis OÜ travel agency

8 Ethel Merman OÜ catering

9 Voyage OÜ passenger operations in Europe and CIS countries

10 Bon-Hi OÜ catering

Sillamäe, Estonia

11 Ekskurs OÜ travel agency, organization of recreation – group and individual tours in Estonia, Russia, and Europe

12 Sillamäe Town Museum organization of exhibitions and excursions in the town

13 Avtograf OÜ advertising and souvenir publications, production of souvenirs

14 CrioNova OÜ designing and producing visual advertising, designing andproducing web-based virtual tours

Slantsy, Russia

15 Slantsy District Tourist Information Centre

social and business centre

16 Areol ZAO cafe, catering services

17 Kostromitina Yelena Gumarovna IP deli and convenience foods

Kingisepp, Russia

18 Germanika OOO travel agency

19 Luzhsky Bereg OOO hotel, accommodation, restaurant

20 Kingisepp Local History Museum organization of exhibitions

21 Roza Vetrov Kingisepp OOO travel agency

Ivangorod, Russia

22 Vityaz restaurant restaurant, catering

23 Ivangorod hotel accommodation

24 Yelena cafe catering

25 Vityaz hotel accommodation

26 Kapriz cafe catering

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CHEMICAL CLUSTER

A contact event for representatives of local municipalities and companies of Russian North-West and Estonian North-East engaged in the chemical sector took place in Kohtla-Järve, Ida-Virumaa, on February 26-27, 2009. The meeting brought together representatives of petrochemical and oil shale mining industry, producers of electric power, experts in construction and maintenance works at industrial facilities, carriers of petrochemical products, staff of research institutes and universities.

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Contacts between entrepreneurs resulted in tentative agreements of cooperation. In particular, negotiations were carried out on commercialization of innovations – utilization of oil shale waste materials and production of fertilizers in Russia with the participation of the Estonian company that is enabled to certify the products un-der EU regulations.

Presented below is structure of interaction within a potential chemical cluster.

TRANS-BORDER CHEMICAL CLUSTER

State structures(support of cluster development and investment

programmes)

Manufacturers of chemical product

Chemical industry technolologies

Tallinn Technical University, Virumaa College

Mining of raw materials

Supplies of raw materials

Expert assessment

Utilization of industrial and organic waste

Trading companies

Oil shale industry

Production of polymers

Design of prototypes

Port services

Industrialclusters

Transportationcluster

Other chemical clusters

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Below is a list of companies and potential participants in the cluster:

No. Organization Type of activity

Narva, Estonia

1 Baltford Technology Engineering OÜ design and production of prototypes, running-in and taking technologies and equipment utilizing hydrocarbon waste to industrial design levels

2 Synest OÜ development and adoption of new technologies, technical guidance

Kohtla-Järve, Estonia

3 Novotrade Invest AS production of styrene-indene resin, petroleum polymer resin, furnace oil, straight-run petrol, diesel fractions

4 Osterley Ehitus OÜ construction, demolition of old buildings, road maintenance, transportation services

5 Järve Boal OÜ supply of materials and equipment for chemical industry

6 Genovique Specialties AS production of benzoic acid, food supplements

7 VKG AS oil shale processing chemical company, gums and glues, shale oil, etc

8 Eesti Põlevkivi AS oil shale mining company

9 Tallinn Technical University, Virumaa College

educational institution

Jõhvi, Estonia

10 Ferdmaster OÜ general construction work, installation of ventilation systems, food industry, facade construction

11 Digiinfo Systems OÜ advertising service

Sillamäe, Estonia

12 Sfinks KN OÜ materials for railway upper structure (supply)

13 Sillamäe Sadam AS port services, ground rent, railway services, transportation and infrastructure

14 ALTT AS production of ready-mix concrete and concrete solutions, production of ferroconcrete foundation blocks, paving tile elements, kerbs

15 SilSteve AS cargo transfer, cargo loading and unloading, cargo bundling, packaging arrangements, sorting, labelling

Slantsy, Russia

16 Leningradslanets OAO oil-formating shales, construction detritus, railway transportation services

17 Slantsy plant OAO petroleum coke tempering, industrial production based on petrochemical raw materials, chemical-recovery production, electricity production

18 Polimer plant OAO car components, railway padding, rubber boots, galoshes

19 Hors-Silikon ZAO car components, silicone gaskets, silicone baking pans, pressed moulds

20 PKF Dizain OOO metal and plastic windows, doors, ferroconcrete products, crosspieces, blocks

21 Ekoprom OOO containers for collection and transportation of solid waste, special transportation

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Kingisepp, Russia

22 Allniko ZAO coagulants

23 Komplen OOO polymerous products for agriculture and construction

Ivangorod, Russia

24 OOO EKSIM export and import customs clearance

25 IP Rakcheev S.A. international motor transportation

26 OOO ERG cargo customs clearance

St. Petersburg, Russia

27 Torgovyi Dom Antei ZAO production of soil, packing of fertilizers, gardening wares

28 Reprom ZAO development and production of cutting liquids

29 St. Petersburg Chamber of Com-merce and Industry

support of St. Petersburg’s economical development, assistance for development of international economic cooperation

30 Institute of Silicate Chemistry, centre of innovation and technology ‘New Materials and Chemical Technologies’

design of new materials and chemical technologies in the area of glass and ceramics, fibre optics, filters, fuel cells,development of alternative fuel

31 Komsomolskaya Pravda plastic processing plant OOO

manufacture of fluoroplastic products throughcompression moulding, extrusion moulding, and injection moulding; tool production, research activity

32 NPL metropir ZAO design and production of model equipment

33 Asphaltic cement plant ZA production of asphalt

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METALWORKING CLUSTER

The third round of business contact meetings took place in Slantsy, Leningrad region, on April 23-24. This event was aimed at establishing cooperation between entrepreneurs in metalworking sector, providing them with information about possible ways of successful collaboration, assisting creation of and strengthening links be-tween businesses including the cluster method.

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Contacts between entrepreneurs resulted in tentative agreements of cooperation based on a more significantinnovative component as innovations in the area of metalworking are rarely used or unfamiliar to them at the present time. The role of a St. Petersburg company as a leading innovative enterprise in a possible trans-border cooperation was also discussed.

Below is a possible model of interaction between members of a potential trans-border metalworking cluster.

TRANS-BORDER METALWORKING CLUSTER

State structures (support of cluster and investment programmes)

Manufacture of fabricated metals

Metalworking technologies

Universities and colleges

Subcontractors

Suppliers of raw materials

Expert assessment

Suuply of equipment

Repair works

Equipment rent

Equipment maintenance

Electric works

Commercial services

Industrial clusters

Transportation clusters

Other metalworking clusters

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Below is a list of companies who participated in the business contact meetings and are able to form a poten-tial cluster:

No. Organization Type of activity

Narva, Estonia

1 Estimak OÜ turning and milling works, manufacture of fabricated metals, equipment for metalworking

2 Sata OÜ printing works

Kohtla-Järve, Estonia

3 Ilmakaar OÜ construction and wholesale trade

4 Elektro-Sistem AS electric works, construction of overhead lines, maintenance of electrical installations

5 Stako Diler OÜ manufacture and mounting of fabricated metals

6 Ahtme Vagon OÜ manufacture and mounting of fabricated metals, plasma, shot blasting, painting, maintenance of railcars

7 Vesboard OÜ manufacture of fabricated metals

8 VKG OIL AS oil shale processing plant

Sillamäe, Estonia

9 Norwes Metall AS manufacture of fabricated metals, containers, press containers

10 Auto-gamma F&F OÜ mechanical treatment, fabricated metals

Slantsy, Russia

11 Slantsy-elektromontazh OOO manufacture of fabricated metals, wiring works, etc.

12 Sevzapremservis ZAO maintenance and modernization of power plants

13 Kontakt OOO maintenance and modernization of power plants

14 Slantsy reinforcing plant OOO production of class В 5000 cold-worked reinforcements, grids and frames

15 Construction components plant OOO

production and assembly of metal hardware intended for construction purposes

16 Slantsy project and construction company OOO

manufacture of fabricated metals

Kingisepp, Russia

17 Rem-Vest OOO manufacture, installation, commissioning, safety evaluation, maintenance

18 SMP-Pobedit OOO

19 Metall Resurs OOO assorted metal-roll, manufacture of fabricated metals

20 Angor OOO preliminary project and design work

21 Elektrik-servis OOO installation, repair and maintenance of electrical equipment, etc.

St. Petersburg, Russia

22 TD Mikron OOO welding equipment

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WOODWORKING CLUSTER

The final round of business contact meetings took place on June 18-19 in Narva-Jõesuu, Ida-Virumaa; they wereaimed at the sector of woodworking and furniture industry. The event was attended by representatives of com-panies engaged in the following areas: wood sawing and dressing, timber production, manufacture of wooden building structures and joinery, manufacture of wooden tools and souvenirs, furniture production, etc.

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The majority of participants endorsed the vision of the cluster already in the formation stage in Narva. The vi-sion is as follows:

The cluster established in Narva is the core of furniture and woodworking industry in Ida-Virumaa; its Estonian and Russian members export on a global scale, use sparing technologies and renewable energy, and are a cen-tre of innovations in their sector.

A model of interaction between participants of a potential woodworking and furniture industry cluster is pre-sented below.

TRANS-BORDER WOODWORKING AND FURNITURE INDUSTRY CLUSTER

State structures(support of clusters development

and investment programmes)

Funiture production

Manufacture of wooden structures

Universities and colleges

Subcontractors

Suppliers of raw materials

Expert assessment

Production and supply of drying

equipment

Timber production

Design companies

Manufacture of wooden houses

PR and marketing

Commercial services

Construction cluster

Hospitality clusterOther woodworking clusters

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Below is a possible list of businesses participating in a trans-border woodworking and furniture industry clus-ter.

No. Organization Type of activity

Narva, Estonia

1 NTT AS manufacture, woodworkingproduction of table tennis equipment

2 Woodland OÜ furniture production

3 Virelton OÜ furniture production, woodworking

4 Rik Suur OÜ manufacture of wooden products

5 Narova-Pro AS furniture production

6 Estobir Trading OÜ supplying wood for furniture production

7 Narva Sisustus OÜ production of office furniture

8 Elcomnet OÜ telecommunications, alarm systems

9 Bamilone OÜ production of cabinet furniture

10 Junista OÜ manufacture of wooden products (windows, doors, furniture)

11 Infotec ERPsystem OÜ information and analytical support

12 Euralum OÜ furniture production

Kohtla-Järve, Estonia

13 Virumaa Innovatsiooni Projekt OÜ design, construction

14 AL-KEDER AS woodworking, timber production and processing, construction of wooden buildings

15 Fore & Grupp OÜ woodworking, production of garden houses, cottages, saunas, and residential buildings from laminated wood

16 Plastikest OÜ manufacture of furniture and furniture panes

17 Institute of Economics and Management

education

Sillamäe, Estonia

18 Arrierum OÜ production of woodworking equipment

19 Jumikas OÜ timber supply

20 Sim-Still OÜ furniture production

21 Antony OÜ production of cabinet furniture

22 Balt KOMZ Service AS production of drying equipment

23 Sillamäe Sadam AS port and infrastructure services

Slantsy, Russia

24 Sevzapremservis ZAO timber production

25 Fitles OOO timber processing

26 Plyussa-les OOO lumbering, timber processing

27 Kristall OOO furniture production

28 IP Yuri Krupka furniture production

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Kingisepp, Russia

29 Rubezh OOO manufacture of wooden building structures and joinery

30 Stroi OOO construction, woodworking

31 Sevzapventilator plant OOO sawing, woodworking

32 IP Alekseyev R.V. timber production

33 VDCK ООО manufacture of building materials

Ivangorod, Russia

34 Kodry OOO manufacture of wooden structures

35 Pyotr Shuparsky IP wood sawing and dressing

St. Petersburg, Russia

36 VLC OAO wholesale and export trade of veneer and plywood

37 St. Petersburg Chamber of Commerce and Industry

support of St. Petersburg’s economical development, assistance for development of international economic cooperation

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