Www.uaheconomicdevelopment.org ©The University of Alabama in Huntsville The North Alabama Region A Globally Competitive Community Industry Clusters The

www.uaheconomicdevelopment.org ©The University of Alabama in Huntsville

The North Alabama RegionA Globally Competitive

CommunityIndustry Clusters

The Foundation of Innovative & Dynamic Economies

May 23, 2005

Bill Killingsworth,Lauren Jennings,

Jeff Thompson

Center for Management & Economic ResearchUniversity of Alabama in Huntsville


Clusters Enhance Competitiveness, Productivity Gain, and Economic

Growth by:• Improving productivity via efficient access

to suppliers, information, and training.• Promoting innovation by increasing the

ability to envision opportunities for new products, services, and process and for meeting new needs.

• Assisting the commercialization process by facilitating the creation of spin-offs, new businesses, and new product lines in established firms.


Clusters also contribute to:

• The presence of cluster-knowledgeable financial institutions, venture capitalists, and attorneys.

• The formation of new firms, new business units, and new product lines which reinforce increased productivity and promote innovation.


What is an Industry Cluster?

Groups of interrelated companies and institutions in a specific discipline which are located within the same economic region or

geographic area.

(Institute for Strategy & Competitiveness, Harvard Business School)


Why are Industry Clusters Relevant?

• Economic development can arise from the birth of a new cluster or the growth of an existing cluster.

• Clusters cut across traditional industry classifications which can encourage innovation and increases in productivity.


Entertainment

Hospitalityand Tourism

Transportationand Logistics

Heavy Machinery

Plastics

Oil andGas

Chemical Products

FinancialServices

Publishing and Printing

Pharma-ceuticals

PowerGeneration

Lightning &Electrical

Equipment

Aerospace Vehicles and

Defense

MedicalDevices

Cluster Overlap inThe United States Economy

Common Industries Across Broad Clusters

Source: Porter, Michael E. , Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

Textiles

AgriculturalProducts

ProcessedFood

Jewelryand

PreciousMetals

Tobacco

Forest Products

Fishingand

FishingProducts

ApparelLeather

andSporting

Goods

Footwear

InformationTechnology

Communi-cations

Equipment

AnalyticalInstruments

Educationand

KnowledgeCreation

PowerTransmission

and Distr.

BusinessServices

DistributionServices

Heavy Construction

Services

ConstructionMaterials

PrefabricatedEnclosures

FurnitureBuildingFixtures,

Equipmentand

Services

AerospaceEngines

Automotive

ProductionTechnology

Metal Manufacturing

Motor DrivenProducts



Chemical Products

FinancialServices

Major Traded Clusters in Alabama’s Economy 2001

Adapted from work by: Porter, Michael E. , Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

Textiles

ProcessedFood

Forest Products

Apparel

BusinessServices


Heavy Construction

ServicesPrefabricated

Enclosures

BuildingFixtures,

Equipmentand

Services

Automotive

Metal Manufacturing


Plastics


Educationand

KnowledgeCreation

Entertainment


Plastics

Oil andGas

AerospaceEngines


Heavy Machinery

Chemical Products

FinancialServices


Pharma-ceuticals

PowerGeneration


Equipment


Defense

MedicalDevices

Alabama Major Clusters Relative to

The United States Economy


Textiles


ProcessedFood

Jewelryand

PreciousMetals

Tobacco

Forest Products

Fishingand

FishingProducts

Apparel Footwear


Communi-cations

Equipment


PowerTransmission

and Distr.

BusinessServices


Heavy Construction

Services




Equipmentand

Services

Automotive


Metal Manufacturing


Educationand

KnowledgeCreation

Leatherand

SportingGoods

Key: Red dots = Alabama Clusters


Economic Region 74

Bureau of Economic Analysis


Heavy Machinery

AerospaceEngines

Entertainment



PowerGeneration


Equipment

Plastics

Oil andGas

Chemical Products

FinancialServices


Pharma-ceuticals


Defense

MedicalDevices

Cluster Overlap inThe United States Economy

Common Industries Across Broad Clusters


Textiles


ProcessedFood

Jewelryand

PreciousMetals

Tobacco

Forest Products

Fishingand

FishingProducts

ApparelLeather

andSporting

Goods

Footwear


Communi-cations

Equipment


Educationand

KnowledgeCreation

PowerTransmission

and Distr.

BusinessServices


Heavy Construction

Services




Equipmentand

Services

Automotive


Metal Manufacturing

Key - Blue dots = In No. AL #74

Entertainment



Communi-cations

Equipment





Chemical Products

FinancialServices

Major Traded Clusters in Alabama’s Economy 2001

Adapted from work by: Porter, Michael E. , Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

Textiles

ProcessedFood

Forest Products

Apparel

BusinessServices


Heavy Construction


Enclosures

BuildingFixtures,

Equipmentand

Services

Automotive

Metal Manufacturing

Plastics

Educationand

KnowledgeCreation

Key

Blue dots = In No. AL #74

Red Dash/Dot = In No Al #74, not major AL


Defense


Economic Area 74Job Creation by Traded Cluster 1990-2001


Plastics

FinancialServices


Textiles

ProcessedFood

Forest Products

Apparel


Communi-cations

Equipment


Educationand

KnowledgeCreation

BusinessServices


Heavy Construction


Enclosures

BuildingFixtures,

Equipmentand

Services

Automotive


Metal Manufacturing


Major Traded & Target Clusters in theHuntsville Economic Area Economy 2001

Pharma-ceuticals

Medical Devices

Transportation& Logistics

AerospaceEngines


Automotive**


**

AerospaceVehicles &

Defense**


Clusters Turn Ideas into Prosperity1

• They act as the incubators of innovation.• They draw on local networks that link

technology, resources, information and talent.

• Regions with successful clusters enjoy higher average wages, productivity, rates of business formation, and innovation.

1 Council on Competitiveness


The New Rules

• Innovative firms need innovative talent and support to prosper.

• Low cost and low value are no longer competitive advantages in a global marketplace.

• Economic growth incentives must move beyond low wages and tax issues to establish incentives that foster innovation.

• Metrics of economic performance must be examined and/or developed relative to global competition.


EA 74 & U.S. Employment 1990-2003

370

380

390

400

410

420

430

440

450

460

47019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Th

ou

san

ds

100,000

105,000

110,000

115,000

120,000

125,000

130,000

135,000

140,000

145,000

Th

ou

san

ds

EA 74 Huntsville-Decatur United States


EA 74 & U.S. Average Annual Wage 1990-2003

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,00019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003



Manufacturing toTotal Employment 1990-2000

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%1

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00



EA 74 & U.S. Population Growth 1990-2003

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003



Population By MSA 1940 - 2003

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1940 1950 1960 1970 1980 1990 2000 2003

Popu

latio

n

Atlanta

Austin

Birmingham

Charlotte

Huntsville

Mobile

Nashville

Raleigh-Durham


Population By MSA 1940 - 2003 (excluding Atlanta)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1940 1950 1960 1970 1980 1990 2000 2003

Popu

latio

n

Austin

Birmingham

Charlotte

Huntsville

Mobile

Nashville

Raleigh - Durham


Earnings Per JobPeer Metros 1995 1996 1997 1998 1999 2000 2001 2002 2003

Annual %

Change 95 - 03

Austin $29,152 $30,594 $32,811 $37,180 $40,754 $42,814 $43,383 $42,451 $43,988 5.28

Raleigh $29,054 $29,970 $31,180 $32,463 $34,672 $37,005 $40,070 $40,846 $42,105 4.75

Durham $33,709 $34,690 $36,351 $37,948 $40,675 $44,892 $44,459 $44,774 $46,376 4.07

Charlotte $32,487 $33,752 $34,900 $37,203 $38,942 $41,073 $42,865 $44,617 $46,194 4.50

Lexington $28,885 $30,256 $31,401 $33,263 $34,784 $36,146 $36,879 $38,393 $40,369 4.27

Birmingham $30,778 $31,819 $32,503 $33,750 $35,375 $37,130 $39,286 $41,024 $42,769 4.20

Nashville $30,502 $31,172 $32,222 $33,517 $35,284 $37,004 $39,029 $40,885 $42,737 4.31

Macon $27,899 $28,567 $29,629 $30,486 $31,445 $32,006 $33,594 $34,761 $35,297 2.98

Knoxville $28,191 $28,899 $29,994 $31,342 $32,182 $33,560 $34,667 $35,947 $37,553 3.65

Montgomery $28,037 $28,725 $29,482 $30,517 $31,776 $32,891 $34,744 $36,474 $38,252 3.96

Chattanooga $28,022 $28,753 $30,169 $30,773 $32,305 $33,407 $34,072 $35,468 $37,072 3.56

Huntsville $34,900 $34,833 $35,529 $36,625 $37,292 $38,921 $40,492 $42,805 $45,360 3.33

Peer Average* $29,701 $30,654 $31,877 $33,495 $35,290 $37,084 $38,459 $39,604 $41,156 4.16

Source: Bureau Of Economic Analysis

Table CA30-Regional Economic Profile, Local Personal Income

* Huntsville not included


Earnings Per JobAnnual % Change 1995 - 2003

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Austin, TX

Raleigh, NC

Charlotte, NC

Durham, NC

Huntsville, AL


Patents per 10,000 Employees, 2001

30.217.7

9.28.5

6.13.53.2

2.62.11.7

1.27.7

0 5 10 15 20 25 30 35

Austin, TX

Raleigh-Durham, NC

Lexington, KY

Huntsville, AL

Knoxville, TN

Charlotte, NC-SC

Chattanooga, TN-GA

Nashville, TN

Birmingham, AL

Macon, GA

Montgomery, AL

National

MS

A


Summary & Next Steps

• Understand the collective strengths of the region;• Identify gaps in our innovation support network;• Inventory and build the talent base for today and

tomorrow;• Think in terms of economics not political

boundaries;• Invest in research;• Strengthen infrastructure; • Create a regional visioning organization to focus

beyond the horizon.

Adapted from the Regional Innovation Guide, Council on Competitiveness ©2005

Documents

Www.uaheconomicdevelopment.org ©The University of Alabama in Huntsville The North Alabama Region A Globally Competitive Community Industry Clusters The