Understanding Regional Economies and Clusters: The Eastern Region

Transcription

1 Understanding Regional Economies and Clusters: The Eastern Region High Tech Business Workshop Robinson College, Cambridge 28th May 2003

2 Some locally distinctive businesses eg Cromer Crab Co Occasional star that becomes a national company eg Adnams, Geest, Norwich Union Small businesses Privately owned/managed Local factors of production Approx 200,000 >10 employees in Eastern Region ~20,000 <250 employee companies in Eastern Region Part of national economy No particular location reason Many of them services Usually lowish value added Many lifestyle businesses Geographic markets limited Local town and district Little replicability - local niche Local firms

3 Only 60 PLCs in Eastern Region Usually functional units of national groups eg shops, sales and service offices Number of national service units in Eastern Region unknown Also important production units eg Marconi at Chelmsford Large investments with big impacts on local economic factors eg labour, space, infrastructure National company units Location reflects, rather than creates, regional factors and capabilities eg motorways, labour, local markets, Cost and return driven Eventually mobile eg financial services Little local intelligence Tactical responses to national orders/ marketing strategies Limited local sourcing Local firms

4 Multinational operating units National companies units Similar to national units Part of international marketing or production plan Little local intelligence Can have very big impacts on regional economic factors eg Ford at Brentwood, GM at Luton, GSK at Stevenage Cost and return driven Eventually mobile Local firm Location reflects local factors eg labour, space Grant sensitive Only 1400 multinational plants in Eastern Region Mostly in A1/M1/M25 corridor

5 Multinational operating units Started, managed and usually owned within region Produce primarily intermediate goods/services of a specialist nature Approx 5,000 in Eastern Region Operate and initially sell within region, usually to other companies in same or adjacent sectors Can internationalise sales quickly, but again in specialised industrial sectors Customers are frequently national National companies units or multinational companies Regional cluster firms Usually co-locate/cluster around a source of supply, but sometimes of demand West Yorks wool: supply of water and coal City of London: port and Govt borrowing Hull caravans: ship repair skills and static Local firm caravan parks demand Yarmouth oil and gas: North Sea rigs demand Cambridge Phenomenon:supply of university research

6 Eastern Region - National and Multinational Layers King s Lynn Peterborough CAMBS NORFOLK Norwich Great Yarmouth Bedford BEDS Luton Stevenage HERTS St Albans Hertford Watford Cambridge Stansted ESSEX Harlow Chelmsford Basildon Bury St Edmunds SUFFOLK Ipswich Colchester Southend-on-Sea Clacton-on-Sea Lowestoft Multinational National

7 Eastern Region - Regional Clusters King s Lynn Peterborough NORFOLK Norwich Great Yarmouth CAMBS Lowestoft Bedford BEDS Luton Stevenage HERTS St Albans Hertford Watford Cambridge Stansted ESSEX Harlow Chelmsford Basildon Bury St Edmunds SUFFOLK Ipswich Colchester Southend-on-Sea Clacton-on-Sea ICT Finance and Business Services Media Biotech/pharmaceutical Engineering Oil and Gas Environment/water Food

8 How do these layers interact? Little local sourcing Multinational operating units National company units Regional cluster firms Local firms Acquisition of regional cluster companies Bring in money and management expertise Income and purchasing multipliers eg taxis, printers Transport companies Factor competition eg labour and land costs Welfare impacts eg pollution, congestion

9 How do clusters work? Co-operation and competition between participants drives technical advancement Common interest in sales promotion and cost economies Build-up of supply base and fragmentation into specialists Expansion of training and other ancillary support services - the peri polloi eg lawyers, accountants, finance, advertising, PR, technical authors More a distinctive supply response rather than demand pull, although strong growth helps

10 How do clusters work? Expansion of numbers of participants and fragmentation of specialisms normal in growth phases Clusters are risk management systems for participants - resilience through spreading risk Enables the incubation of managerial experience about how to grow companies Specialisation and supporting services also lower the risk of start up Clusters breed new patterns and high rates of new capital formation/investment

11 The Cambridge example Non-linear development of the organism National/International Incomers/Acquirers Hard Companies Industrial Spin Outs Hardening Process Research Spin Outs Soft Companies Research Spin Outs Research Base

12 How do other clusters get going? Non-technology clusters similar Importance of steady source of supply - keep building the base Must be easy to start Low initial risk of failure/ kindling Risk management skills grow over time Continued source of demand

13 Clusters can die Eg West Yorkshire wool - technological changes - demand dwindles - cost structures change Overheating risks

14 Can clusters be transferred? Can t transpose existing clusters Can push out geographic edges Within existing clusters, some experience of sector cross-overs: from wool weaving to steam boilers and engines from hardware/software to telephony services to biotech Key role of peri polloi / Innovation Establishment

15 Can clusters be transferred? Start up techniques can be transferred to other suitable sites Again, key role of peri polloi/ Innovation Establishment

16 Corridors grow up between centres

17 Conclusions 4 layers of regional activity Shift in policy focus away from local and multinational layers towards clusters Clusters are the most interactive and innovative layer multiplier effects on local firm activity attract national and multinational incomers and acquirers attract money and uprate management pool stronger anchor on national and multinational inward investors Able to spread clusters out geographically Possible to transfer start up techniques geographically and sectorally

18 Eastern Region Clusters - 5 years time? King s Lynn Peterborough NORFOLK Norwich Great Yarmouth CAMBS Lowestoft Bedford BEDS Luton Stevenage HERTS St Albans Hertford Watford Cambridge Stansted ESSEX Harlow Chelmsford Basildon Bury St Edmunds SUFFOLK Ipswich Colchester Southend-on-Sea Clacton-on-Sea ICT Finance and Business Services Media Biotech/pharmaceutical/agritech Engineering Oil and Gas Environment/water Food