Philadelphia Competitiveness Profile

Transcription

1 Philadelphia Competitiveness Profile Innovation Leadership Speaker Series Fox School of Business, Temple University Michael E. Porter, Harvard Business School Mercedes Delgado, Fox School of Business Rich Bryden, Harvard Business School March 11, 2014 For further material on regional competitiveness and clusters: 1

2 What is Competitiveness? A nation or region is competitive to the extent that firms operating there are able to compete successfully in the regional and global economy while maintaining or improving wages and living standards for the average citizen Competitiveness depends on the long-run productivity and efficiency of a location as a place to do business - The productivity of existing firms and workers - The ability to achieve high participation of citizens in the workforce Competitiveness is not: - Low wages - A weak currency - Jobs per se 2

3 Geographic Influences on Competitiveness Nation States Regions Metropolitan Areas 3

4 Regions and Competitiveness Economic performance varies significantly across sub-national regions (e.g., provinces, states, metropolitan areas) Many essential levers of competitiveness reside at the regional level Regions specialize in different sets of clusters Regions are a crucial unit in competitiveness Each region needs its own distinctive strategy and action agenda Business environment improvement Cluster upgrading Improving institutional effectiveness 4

5 Prosperity GDP per Capita, Philadelphia Performance Scorecard Start Position Trend Current Position Wages Average Private Wage, Labor Mobilization Proportion of Working Age Population in the Workforce, Job Creation Private Employment Growth, and Labor Productivity GDP per Labor Force Participant, New Business Formation Traded Cluster Establishment Growth, and Innovation Patents per Employee, Cluster Strength Employment in Strong Clusters, Leading Clusters by employment size, 2011 (national rank versus all metro areas) Distribution and Electronic Commerce (133,049, rank 6) Education and Knowledge Creation (118,814, rank 6) Financial Services (78,239, rank 6) Insurance Services (42,971, rank 5) Marketing, Design, and Publishing (28,093, rank 10) 5 Rank vs. Top 50 Metro Areas

6 $85,000 $80,000 $75,000 Comparative Metro Prosperity Performance High but declining versus U.S. Bridgeport, CT U.S. Metro GDP per Capita Real Growth Rate: +0.57% San Jose (2.8%, $90,528) High and rising prosperity versus U.S. Gross Domestic Product per Capita, 2012 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 Houston Boston Seattle New York Portland Hartford (3.8%, $62,028) Dallas Denver New Orleans Minneapolis Philadelphia Salt Lake City Charlotte Chicago Los Angeles Columbus Indianapolis Milwaukee Richmond San Diego Austin Kansas City Baltimore Atlanta Nashville Birmingham Cleveland Raleigh Memphis Pittsburgh Detroit Cincinnati Louisville U.S. Metro GDP per Las Vegas Orlando Oklahoma City Capita: $45,604 Phoenix St. Louis Virginia Beach Miami Jacksonville Sacramento Tampa Providence Low and declining versus U.S. Notes: Source BEA. Data in 2005 constant dollars; compound annual growth rate on real values. 50 largest MSAs displayed. San Antonio Real Growth in Gross Domestic Product per Capita, 2001 to San Francisco Washington Low but rising versus U.S. $25,000 Riverside (-1.1%, $22,411) $20, % -0.5% 0.0% 0.5% 1.0% 1.5% 2.0%

7 Proportion of Working Age Population in the Workforce, % 70% 65% 60% Comparative Metro Labor Mobilization Performance High but declining labor force participation versus U.S. Columbus Las Vegas Cincinnati Richmond Orlando Tampa Riverside Phoenix Low and declining labor force participation versus U.S. Charlotte Virginia Beach St. Louis Birmingham Denver Atlanta Milwaukee Sacramento Washington Salt Lake City Seattle Hartford San Francisco Bridgeport Philadelphia Los Angeles Portland U.S. Change in Labor Force Participation Rate: -2.3% Cleveland Jacksonville Kansas City, MO San Jose Providence Detroit Minneapolis Boston New Orleans Dallas New York Austin Nashville Chicago Oklahoma City San Diego San Antonio Baltimore Miami High and rising labor force participation versus U.S. Pittsburgh Memphis, TN Indianapolis Houston Louisville U.S. Labor Force Participation Rate: 63.7% Low but rising labor force participation versus U.S. 55% -7% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% Change in Proportion of Working Age Population in the Workforce, Source: BLS. 50 largest MSAs displayed. 7

8 $70,000 Comparative Metro Wage Performance U.S. Average Wage Growth Rate: +2.8% Bridgeport, CT (+3.0%, $77,922) San Jose (+3.3%, $89,857) $65,000 High but declining versus U.S. New York San Francisco High and rising wages versus U.S. $60,000 Boston Washington Average Wage, 2011 $55,000 Notes: Average wage for private, non-agricultural employment. Growth calculated as compound annual growth rate. 50 largest MSAs displayed. Source Census CBP Metro Competitiveness Rich Bryden Hartford Chicago Philadelphia 8 Minneapolis Seattle Houston Detroit Los Angeles $50,000 (+1.95%, $48,621) Denver Dallas San Diego Baltimore Atlanta Portland Charlotte Milwaukee Austin Richmond Kansas Cleveland Cincinnati $45,000 Indianapolis City, MO Raleigh New Orleans U.S. Average Wage, Pittsburgh St. Louis, MO Nashville (+4.2%, $44,485) 2011: $45,535 Phoenix Birmingham Sacramento Jacksonville Miami Memphis Salt Lake City Louisville $40,000 Tampa Providence Oklahoma City (+3.8%, $40,113) Orlando San Antonio Las Vegas Columbus Low and declining Low but rising Riverside Virginia Beach versus U.S. versus U.S. $35, % 2.5% 3.0% 3.5% Growth in Average Wage, 2001 to 2011

9 $140,000 Comparative Metro Labor Productivity Performance Bridgeport, CT (-.071%, $155,918) San Francisco San Jose (+4.7%, $191,781) Gross Domestic Product per Labor Force Participant, 2011 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 High but declining versus U.S. Low and declining versus U.S. Atlanta Houston Charlotte Denver Indianapolis Chicago New York Richmond Detroit Cleveland Birmingham Raleigh Columbus Virginia Beach Phoenix Pittsburgh Las Vegas Louisville Cincinnati St. Louis Sacramento Orlando Miami Jacksonville San Antonio Riverside (-.74%, $53,858) Hartford Memphis Real Growth in Gross Domestic Product per Labor Force Participant, Sources: BEA, BLS. Notes: GDP in real 2005 dollars. Growth rate is calculated as compound annual growth rate. 50 largest MSAs displayed. 9 Seattle Washington Dallas Philadelphia Boston Los Angeles San Diego Minneapolis Milwaukee Kansas City Providence Nashville Baltimore Tampa Salt Lake City Oklahoma City U.S. GDP per Labor Force Participant Real Growth: +0.77% New Orleans Portland (+4.7%, $118, 578) Highly productive and productivity rising versus U.S. Austin U.S. GDP per Labor Force Participant: $85,331 Low but rising versus U.S. $60, % -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

10 Prosperity GDP per Capita, Philadelphia Performance Scorecard Start Position Trend Current Position Wages Average Private Wage, Labor Mobilization Proportion of Working Age Population in the Workforce, Job Creation Private Employment Growth, and Labor Productivity GDP per Labor Force Participant, New Business Formation Traded Cluster Establishment Growth, and Innovation Patents per Employee, Cluster Strength Employment in Strong Clusters, Leading Clusters by employment size, 2011 (national rank versus all metro areas) Distribution and Electronic Commerce (133,049, rank 6) Education and Knowledge Creation (118,814, rank 6) Financial Services (78,239, rank 6) Insurance Services (42,971, rank 5) Marketing, Design, and Publishing (28,093, rank 10) 10 Rank vs. Top 50 Metro Areas

11 Traded Establishments per 10,000 Employees, High but declining versus U.S. Sources: Growth rate is calculated as compound annual growth rate. 50 largest MSAs displayed. Comparative Metro Business Formation New York New Orleans San Francisco Los Angeles 11 Denver Oklahoma City Portland Charlotte Atlanta Tampa Sacramento Jacksonville Raleigh San Diego Riverside Miami (+7.0%, 876) Austin High and rising versus U.S. 450 Bridgeport, CT Chicago Providence Birmingham Richmond Baltimore Houston Orlando Washington Philadelphia Phoenix 400 Minneapolis Indianapolis Salt Lake City Cleveland Dallas Seattle Detroit St. Louis Kansas City Boston Nashville Virginia Beach 350 Low and declining Louisville versus U.S. Hartford Cincinnati San Antonio Low but rising versus U.S. Memphis Columbus Pittsburgh Milwaukee Las Vegas San Jose U.S. Traded Establishments Growth: +0.41% 300-2% -1% 0% 1% 2% 3% 4% Growth in Traded Establishments, U.S. Traded Establishments per 10,000 Employees: 456

12 50 45 Comparative Metro Innovation Performance U.S. Change in Patents per 10,000 Workers: +2.0 San Jose (+44.9, 104) 40 High and declining innovation High and improving innovation rate versus U.S. Patents per 10,000 Workers, Philadelphia (-.49, 8.1) Rank: 17 Detroit Bridgeport Minneapolis Austin Raleigh Boston Portland San Diego San Francisco Seattle 10 Cincinnati Los Angeles U.S. Patents per 10,000 Employees: Milwaukee Oklahoma City Tampa Atlanta Kansas City, MO Memphis, TN Low and declining innovation Change in Patents per 10,000 Workers, 2001 to Low and improving innovation Notes: Median number of patents per 10,000 workers among top 50 Metro Areas in 2011 is Source: USPTO utility patents granted, Bureau of Labor Statistics. = 700 patents in 2011

13 18 16 Comparative Metro Innovation Performance U.S. Change in Patents per 10,000 Workers: +2.0 Bridgeport Minneapolis Patents per 10,000 Workers, High and declining innovation U.S. Patents per 10,000 Employees: 9.6 Milwaukee Low and declining innovation Cincinnati Washington Oklahoma City Dallas Miami St. Louis, MO Riverside New Orleans Philadelphia (-.49, 8.1) Rank: 17 Virginia Beach New York Houston Detroit Phoenix Chicago Cleveland Sacramento Indianapolis Baltimore Orlando San Antonio Louisville Salt Lake City Pittsburgh Providence Columbus Charlotte Las Vegas Nashville Jacksonville Denver Birmingham Hartford Tampa Richmond Memphis, TN High and improving innovation rate versus U.S. Atlanta Kansas City, MO Los Angeles Low and improving innovation Notes: Median number of patents per 10,000 workers among top 50 Metro Areas in 2011 is Source: USPTO utility patents granted, Bureau of Labor Statistics. Change in Patents per 10,000 Workers, 2001 to = 700 patents in 2011

14 Comparative Innovation Performance Patents per 10,000 Workers U.S. Philadelphia Metro Top 50 Metro Areas Source: USPTO utility patents granted, Bureau of Labor Statistics. 14

15 Organization Patents by Organization Philadelphia Metro Cluster Patents Issued* E. I. Du Pont De Nemours And Company Chemical Products Metrologic Instruments Inc. Information Technology and Analytical Instruments University Of Pennsylvania Education and Knowledge Creation Merck + Co., Inc. Biopharmaceuticals Rohm And Haas Company Chemical Products Wyeth LLC Biopharmaceuticals Lutron Electronics Company, Inc. Lighting and Electrical Equipment Interdigital Technology Corporation Information Technology and Analytical Instruments Siemens Medical Solutions USA, Inc. Medical Devices Bristol-Myers Squibb Company Biopharmaceuticals Lockheed Martin Corporation Aerospace Vehicles and Defense Janssen Pharmaceuticals, Inc. Biopharmaceuticals General Instrument Corporation Communications Equipment and Services JP Morgan Chase Bank, N.A. Financial Services Smithkline Beecham Corporation Biopharmaceuticals Lyondell Chemical Technology, L.P. Chemical Products Rohm And Haas Electronic Materials Cmp Holdings Chemical Products Synthes (U.S.A.) Medical Devices Unisys Corporation Business Services Gore Enterprise Holdings, Inc Alcatel-Lucent USA Inc. Communications Equipment and Services Zenith Products Corporation Furniture Medical Components, Inc. Medical Devices Lucent Technologies Inc. Communications Equipment and Services AT&T Corporation Communications Equipment and Services 42 * Patents with inventors addresses in Philadelphia Metro Area. Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. 15

16 Top Patenting Universities and Research Institutes Rank Organization Patents Issued University of California, The Regents of 1,469 2 Massachusetts Institute of Technology Harvard College, President And Fellows Stanford University Wisconsin Alumni Research Foundation California Institute of Technology University of Texas University of Illinois Johns Hopkins University University of Michigan Columbia University Cornell Research Foundation Inc Georgia Tech Research Corp University of South Florida Battelle Memorial Institute University of Central Florida University of Pennsylvania University of Washington University of Florida Research Foundation, Incorporated Research Foundation of State University of New York Drexel University Temple University The Children's Hospital of Philadelphia 21 Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. 16

17 What is a Cluster? A geographically concentrated group of interconnected companies and associated institutions in a particular field Traded Clusters Local Clusters Compete to serve national and international markets Serve almost exclusively the local market 36% of employment 64% of employment 17

18 Strong Clusters Drive Regional Performance Research Findings Presence of strong clusters (based on employment and innvation) Breadth of industries within each cluster Strength in related clusters Presence of a region s clusters in neighboring regions Job growth Higher wages Higher patenting rates Greater new business formation, growth and survival New regional industries The initial employment and patenting strength of a cluster each has a positive effect on the employment and patenting growth of the constituent industries Multiple types of externalities arise among firms participating in clusters (knowledge, skills, input-output linkages, and others) Economic diversification usually occurs within clusters and across related clusters Source: Delgado/Porter/Stern (2010, 2012), Porter (2003) 18

19 Prosperity GDP per Capita, Philadelphia Performance Scorecard Start Position Trend Current Position Wages Average Private Wage, Labor Mobilization Proportion of Working Age Population in the Workforce, Job Creation Private Employment Growth, and Labor Productivity GDP per Labor Force Participant, New Business Formation Traded Cluster Establishment Growth, and Innovation Patents per Employee, Cluster Strength Employment in Strong Clusters, Leading Clusters by employment size, 2011 (national rank versus all metro areas) Distribution and Electronic Commerce (133,049, rank 6) Education and Knowledge Creation (118,814, rank 6) Financial Services (78,239, rank 6) Insurance Services (42,971, rank 5) Marketing, Design, and Publishing (28,093, rank 10) 19 Rank vs. Top 50 Metro Areas

20 Philadelphia Metro Wages in Traded Clusters vs. National Benchmarks Electric Power Generation and Transmission Financial Services Information Technology and Analytical Instruments Business Services Oil and Gas Production and Transportation Communications Equipment and Services Insurance Services Upstream Metal Manufacturing Aerospace Vehicles and Defense Upstream Chemical Products Lighting and Electrical Equipment Biopharmaceuticals Distribution and Electronic Commerce Marketing, Design, and Publishing Downstream Chemical Products Construction Products and Services Production Technology and Heavy Machinery Video Production and Distribution Paper and Packaging Transportation and Logistics Jewelry and Precious Metals Metalworking Technology Vulcanized and Fired Materials Education and Knowledge Creation Plastics Downstream Metal Products Printing Services Automotive Nonmetal Mining Hospitality and Tourism Medical Devices Recreational and Small Electric Goods Performing Arts Environmental Services Livestock Processing Furniture Leather and Related Products Wood Products Textile Manufacturing Agricultural Inputs and Services Water Transportation Apparel Food Processing and Manufacturing l Indicates average national wage in the traded cluster Philadelphia average traded wage: $73,350 U.S. average traded wage: $64, ,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90, , , , , Wages, 2011 Note: Wages are not available in all clusters due to data suppression to protect confidentiality. Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.

21 Metro Area Productivity Depends on How a Metro Competes, Not What Industries It Competes In Metro Traded Wage versus National Average Cluster Mix Effect Relative Cluster Wage Effect Metro Area Metro Traded Wage versus National Average Cluster Mix Effect Relative Cluster Wage Effect Bridgeport +68,598 10,066 58,532 Milwaukee San Jose +66,434 5,693 60,741 Pittsburgh ,436-2,246 New York +38,651 5,079 33,572 Kansas City ,879 San Francisco +36,126 3,870 32,256 Indianapolis -1, ,201 Boston +26,924 5,327 21,597 Nashville -1, ,287 Houston +24,602 4,548 20,054 Portland -1, ,972 Washington +24,449 4,475 19,974 St. Louis -2, ,007 Hartford +14,949 3,292 11,658 Cincinnati -3, ,627 Austin +11,678 5,412 6,266 Birmingham -4, ,939 Denver +10,917 3,548 7,369 Oklahoma City -6,527 3,011-9,538 Chicago +10, ,694 Cleveland -6, ,213 Minneapolis +10,490 2,024 8,466 Columbus -6,808 1,275-8,083 Seattle +8,377 4,350 4,026 Miami -7,253-1,031-6,223 Philadelphia +7,671 3,991 3,681 Sacramento -8, ,546 San Diego +5, ,350 Jacksonville -8,604 5,193-13,797 Atlanta +5,350 1,471 3,879 Salt Lake City -10, ,046 Dallas +4,702 4, Phoenix -10,388 1,187-11,575 Los Angeles +3, ,735 San Antonio -10,789 2,978-13,766 Detroit +3, ,411 Providence -11,578-2,945-8,633 Baltimore +2,332 2, Tampa -12,226 3,491-15,718 Charlotte +1, ,176 Louisville -12,286-3,607-8,679 Raleigh +1,308 3,340-2,032 Virginia Beach -13,307-2,700-10,607 Richmond ,132-3,507 Orlando -18,052-6,178-11,874 New Orleans ,410 1,148 Riverside -20,720-5,679-15,041 Memphis ,437 2,086 Las Vegas -21,758-16,500-5,258 On average, cluster strength is much more important (77.8%) than cluster mix (22.2%) in driving performance in the 50 largest metro areas Note: All data are Census CBP 2011; author s analysis. Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director. 21

22 Philadelphia Metro Employment by Traded Cluster, 2011 Rank in U.S. Business Services 8 Distribution and Electronic Commerce 6 Education and Know ledge Creation 6 Financial Services 6 Insurance Services 5 Hospitality and Tourism 15 Marketing, Design, and Publishing 10 IT and Analytical Instruments 10 Transportation and Logistics 13 Aerospace Vehicles and Defense 8 Construction Products and Services 9 Printing Services 5 Food Processing and Manufacturing 6 Biopharmaceuticals 5 Production Technology and Heavy Machinery 11 Plastics 8 Metalw orking Technology 9 Dow nstream Chemical Products 4 Paper and Packaging 4 Performing Arts 9 Automotive 13 Livestock Processing 3 Lighting and Electrical Equipment 8 Medical Devices 8 Electric Pow er Generation and Transmission 1 Communications Equipment and Services 19 Dow nstream Metal Products 12 Furniture 7 Water Transportation 11 Upstream Metal Manufacturing 14 Oil and Gas Production and Transportation 10 Recreational and Small Electric Goods 9 Upstream Chemical Products 5 Video Production and Distribution 7 Vulcanized and Fired Materials 10 Wood Products 12 Textile Manufacturing 8 Apparel 7 Agricultural Inputs and Services 2 Environmental Services 6 Nonmetal Mining 13 Tobacco 3 Music and Sound Recording 9 Jew elry and Precious Metals 13 Leather and Related Products 18 Trailers, Motor Homes, and Appliances 29 Footw ear 12 Forestry 20 Fishing and Fishing Products 22 Metal Mining 36 Coal Mining 26 Note: Ranks are across top 50 Metro Areas. Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director ,971 37,039 28,093 23,455 23,187 14,497 14,410 13,352 13,104 12,637 11,873 11,757 7,834 7,775 7,418 6,997 6,820 6,352 5,688 5,514 5,492 5,348 4,791 4,773 4,545 4,191 4,088 3,544 2,872 2,582 2,475 2,339 2,268 2,173 1,917 1, , , , ,120 Philadelphia overall employment rank = , , , , ,000 Employment, 2011

23 Traded Cluster Composition of the Philadelphia Metro, % Overall change in the Philadelphia Share of US Traded Employment: -.104% Biopharmaceuticals (+.65%, 5.5%) Philadelphia National Employment Share, % 3.0% 2.0% Electric Power Generation and Transmission Employment Added Jobs Lost Jobs Insurance Services Philadelphia Overall Share of US Traded Employment: 2.25% Water Transportation Marketing, Design, and Publishing Business Services Education and Knowledge Creation Printing Services Distribution and Electronic Commerce Performing Arts Change in Philadelphia Share of National Employment, 2001 to 2011 Financial Services Downstream Chemical Products Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director Fox School of Business, Temple University Competitiveness Presentation (Porter, Delgado, Bryden) 23 Aerospace Vehicles and Defense Information Technology and Analytical Instruments Agricultural Inputs and Services Upstream Chemical Products Furniture Communications Equipment Transportation and Logistics and Services Upstream Metal Manufacturing Textile Manufacturing 1.0% Leather and Related Products Jewelry and Precious Metals Vulcanized and Fired Materials Automotive Footwear Wood Products Oil and Gas Production Nonmetal Mining and Transportation Trailers, Motor Homes, and Appliances Fishing and Fishing Products Forestry 0.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Employees 7,000 =

24 Traded Cluster Composition of the Philadelphia Metro, % Printing Services Overall change in the Philadelphia Share of US Traded Employment: -.104% Philadelphia National Employment Share, % 2.0% 1.5% Marketing, Design, and Publishing Apparel Business Services Video Production and Distribution Plastics Environmental Services Medical Devices Distribution and Electronic Commerce Construction Products Paper and Packaging and Services Music and Sound Recording Food Processing and Metalworking Technology Manufacturing Production Technology and Heavy Machinery Performing Arts Recreational and Small Electric Goods Furniture Philadelphia Overall Share of US Traded Employment: 2.25% Lighting and Electrical Equipment Transportation and Logistics Downstream Metal Products Employment Livestock Processing Textile Manufacturing Added Jobs Jewelry and Hospitality and Tourism Vulcanized and Precious Metals Fired Materials 1.0% Lost Jobs -0.5% -0.4% -0.3% -0.2% -0.1% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% Change in Philadelphia Share of National Employment, 2001 to 2011 Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director Fox School of Business, Temple University Competitiveness Presentation (Porter, Delgado, Bryden) 24 Employees 7,000 =

25 Philadelphia National Employment Share, 2011 Traded Cluster Composition of Philadelphia Metro, % 4.0% 3.0% 2.0% 1.0% Biopharmaceuticals (-4.4%,5.5%) Philadelphia Overall Share of US Traded Employment: 2.25% Apparel Electric Power Generation and Transmission (-1.5%) Education and Knowledge Creation Marketing, Design, and Publishing Environmental Services Water Transportation Communications Equipment and Services Oil and Gas Production and Transportation Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director. 25 Downstream Chemical Products Printing Services Medical Devices Financial Services Insurance Services Distribution and Electronic Commerce Overall change in the Philadelphia Share of US Traded Employment:.0021% Lighting and Electrical Equipment Business Services Performing Arts Change in Philadelphia Share of National Employment, 2006 to 2011 Aerospace Vehicles and Defense Information Technology and Analytical Instruments Recreational and Small Electric Goods Construction Products Plastics and Services Paper and Metalworking Technology Upstream Chemical Products Packaging Transportation and Logistics Music and Sound Recording Livestock Food Processing Processing Furniture and Manufacturing Video Production and Distribution Upstream Metal Vulcanized & Hospitality and Tourism Production Technology Manufacturing Fired Materials Downstream Metal Products and Heavy Machinery Nonmetal Mining Jewelry and Precious Metals Leather and Related Products Textile Manufacturing Automotive Footwear Wood Products Trailers, Motor Homes, and Appliances Tobacco (+1.4%, 5.2%) Agricultural Inputs and Services Employment Added Jobs Forestry Lost Jobs Fishing and Fishing Products 0.0% -1.0% -0.5% 0.0% 0.5% 1.0% Employees 13,000 =

26 Philadelphia Metro Job Creation in Traded Clusters ,000 20,000 15,000 10,000 5, ,000-10,000-15,000-20,000 Job Creation, ,000 Net traded job creation, : -66,764 Indicates expected job creation given growth in subclusters nationally.* -30,000 Business Services Education and Knowledge Creation Aerospace Vehicles and Defense Information Technology and Analytical Performing Arts Agricultural Inputs and Services Transportation and Logistics Hospitality and Tourism Livestock Processing Video Production and Distribution Fishing and Fishing Products Footwear Tobacco Music and Sound Recording Trailers, Motor Homes, and Appliances Coal Mining Forestry Jewelry and Precious Metals Production Technology and Heavy Machinery Leather and Related Products Environmental Services Metalworking Technology Recreational and Small Electric Goods Upstream Chemical Products Medical Devices Nonmetal Mining Lighting and Electrical Equipment Downstream Metal Products Electric Power Generation and Transmission Wood Products Food Processing and Manufacturing Vulcanized and Fired Materials Textile Manufacturing Oil and Gas Production and Transportation Upstream Metal Manufacturing Furniture Paper and Packaging Communications Equipment and Services Downstream Chemical Products Plastics Construction Products and Services Water Transportation Apparel Marketing, Design, and Publishing Automotive Printing Services Insurance Services Distribution and Electronic Commerce Biopharmaceuticals Financial Services * Percent change in national benchmark times starting regional employment. Overall traded job creation in this region, if it matched national benchmarks, would be -51,158. Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director. 26

27 Philadelphia Recovery in Traded Cluster Employment Post-Recession vs. Pre-Recession (2011 vs. 2006) Indicates national recovery level >1 Recovered to 2006 level US traded employment: 0.93 recovery PHL traded employment: 0.93 recovery Agricultural Inputs and Services Aerospace Vehicles and Defense Performing Arts Business Services Information Technology and Analytical Instruments Education and Knowledge Creation Livestock Processing Transportation and Logistics Hospitality and Tourism Video Production and Distribution Tobacco Production Technology and Heavy Machinery Metalworking Technology Music and Sound Recording Distribution and Electronic Commerce Footwear Food Processing and Manufacturing Medical Devices Lighting and Electrical Equipment Recreational and Small Electric Goods Insurance Services Marketing, Design, and Publishing Upstream Chemical Products Downstream Metal Products Electric Power Generation and Transmission Construction Products and Services Environmental Services Trailers, Motor Homes, and Appliances Plastics Paper and Packaging Financial Services Downstream Chemical Products Printing Services Furniture Communications Equipment and Services Jewelry and Precious Metals Wood Products Upstream Metal Manufacturing Oil and Gas Production and Transportation Ratio of Post- to Pre- Recession Employment (2011/2006) Vulcanized and Fired Materials Textile Manufacturing Water Transportation Nonmetal Mining Leather and Related Products Automotive Forestry Biopharmaceuticals Apparel Note: Includes clusters with more than 100 employees Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director. 27

28 Cluster Specialization by Economic Area, 2011 Education and Knowledge Creation Philadelphia-Camden-Vineland Employment:121,836; Share: 4% 28 High Employment Specialization and Share High Employment Specialization High Employment Share Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75 th percentile; High Employment Share must have a Share of National Cluster Employment greater than the 90 th percentile; High Employment Specialization and Share meet both criteria Source: Defining Clusters of Related Industries, Delgado, Porter, Stern, 2013

29 Potential Inter-Regional Spillovers: Education and Knowledge Creation Increased Employment Decreased Employment Scranton, PA Harrisburg-Carlisle-Lebanon, PA New York-Newark-Bridgeport Philadelphia-Camden-Vineland Washington-Baltimore- Northern Virginia Dover, DE High Employment Specialization and Share High Employment Specialization High Employment Share Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75 th percentile; High Employment Share must have a Share of National Cluster Employment greater than the 90 th percentile; High Employment Specialization and Share meet both criteria Source: Defining Clusters of Related Industries, Delgado, Porter, Stern,

30 Cluster Specialization by Economic Area, 2011 Biopharmaceuticals Philadelphia-Camden-Vineland Employment:12,747; Share: 5.6% 30 High Employment Specialization and Share High Employment Specialization High Employment Share Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75 th percentile; High Employment Share must have a Share of National Cluster Employment greater than the 90 th percentile; High Employment Specialization and Share meet both criteria Source: Defining Clusters of Related Industries, Delgado, Porter, Stern, 2013

31 Potential Inter-Regional Spillovers Biopharmaceuticals Increased Employment Decreased Employment Scranton, PA Harrisburg-Carlisle-Lebanon, PA New York-Newark-Bridgeport Philadelphia-Camden-Vineland Washington-Baltimore- Northern Virginia Dover, DE High Employment Specialization and Share High Employment Specialization High Employment Share Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75 th percentile; High Employment Share must have a Share of National Cluster Employment greater than the 90 th percentile; High Employment Specialization and Share meet both criteria Source: Defining Clusters of Related Industries, Delgado, Porter, Stern,

32 Summary: Philadelphia Cluster Employment Performance Following a pattern seen in many regions of the U.S., Philadelphia s traded employment in 2011 has declined to 93% of the level in 2006 Strong clusters that have lost jobs and underperformed the U.S. over the period : Biopharmaceuticals, Financial Services, Insurance Services, and Distribution and Electronic Commerce Clusters that have created many jobs over the period : Business Services, Education and Knowledge Creation, Aerospace Vehicles and Defense, and IT and Analytical Instruments 32

33 U.S. Cluster Mapping Project Data and Tools The U.S. Cluster Mapping Project is a joint initiative between the U.S. Department of Commerce, Economic Development Administration and Harvard s Institute for Strategy and Competitiveness The goal of the project is to improve U.S. competitiveness based on a bottom-up, regional perspective on economic development, and to support evidence-based decision making and thought leadership on cluster-driven economic policies US Cluster Mapping Project website will launch in late May/early June This highly optimized, modern website will provide access to: Actionable cluster and regional data reflecting the state of today s economy User contributed repository of cluster initiatives, studies, and news Community platform and registry for organizations The research is driven primarily by Harvard, MIT and Temple. Key research updates include improved cluster definitions: Cluster categories are groups of related industries based on co-location patterns across regions, input-output links and skill links Clustering methodology: Delgado, Porter and Stern (2013), Porter (2003) 33