GEOStrategy

“Using Cluster Strategies to Recruit and Retain Quality Jobs”

Cluster strategies have been embraced by economic developers coast to coast. A cluster is a geographic concentration of related companies, specialty suppliers and service providers, and associated institutions in a particular field. Clusters increase the productivity by giving a location a way to differentiate itself from competitor locations, by giving employers read access to better workers and better suppliers, and giving workers more flexibility to choose between like employers in a given community.

The Metro Atlanta Chamber, as an example, created a successful cluster strategy focused on the logistics industry in the region. A complete compendium of logistics-related companies, advanced programs, infrastructure assets, knowledge assets, etc. was documented; a baseline was established and a directory created that lent itself to industry recruitment through targeted marketing efforts. The organization focused specifically on knowledge jobs within the industry: supply chain software, smart-rack facilities, RFID technology- the wireless distribution environment, etc. Once the directory was created, the organization went back and examined where patents related to the logistics industry were filed, and determined that Atlanta was one of five centers of logistics innovation in the US.

The New Growth Theory of Economic Development posits that the production of knowledge is the driving force behind long-term economic development. Knowledge is different from all other goods because it is no rival: ideas can be shared and reused. Investing in knowledge production, human capital and entrepreneurship are interrelated strategies focused on knowledge development. Once a community has R&D capabilities at the university level and the ability to use venture and seed capital to encourage the birth and growth of companies, the number of educated and professional workers in the community increases. As other companies see the cluster developing, they will evaluate that community for investment, knowing the talent base exists to support their needs.

For most companies, talent is the most critical success driver and one of the highest cost categories. Locating in a community that cannot support a company’s workforce needs is frustrating at best for the company and devastating at worst. We have watched communities attempt to recruit pharmaceutical manufacturers by pointing at brewery workers. Meanwhile, the communities that already possessed a critical mass of pharma workers and had instituted bio-manufacturing degrees into their secondary institutions won the jobs. The company knew it was not entering a workforce wasteland, and workers knew that if the new company shipped their jobs offshore, there were 10 other facilities in the vicinity where they could make application.

Michael Porter has mapped four interactive dimensions that measure cluster competitiveness: factor conditions, demand conditions, firm strategy and rivalry, and supporting industries. The way firms in the cluster compete and cooperate is key to the success of the cluster. Innovation usually wins over cost reduction in a cluster. Innovation can in turn pull additional companies into the cluster as the destination is seen as a well for innovative thinking. Silicon Valley CA is the textbook case for cluster development: a mature community rife with innovative thinking, talent, and venture capital.

Economic developers can address common issues faced by businesses across clusters (venture financing, workforce training, infrastructure, etc.) through cluster interventions, collaboration events and information products delivered as a result of targeted research to determine bottlenecks and needs in the community. By working within the cluster to bolster its health and development from nascent through mature, the professional is also supporting industry expansion and retention: as the cluster goes, existing jobs in the community follow.