Dr. Stan Higgins' Column : How Companies Can Best Contribute To Local Economic Development
Posted On : 3rd December 2014

The World Bank states that economic cluster development brings focus to the encouragement and support of inter-firm collaboration, institutional development in targeted industrial sectors. It also notes these are indeed sophisticated economic development strategies that should only be undertaken following indepth research.

Clearly the sectors that are targeted should be those offering the most local economic development potential. This of course means that strategic choices have to be made and it is unlikely that local authorities on their own have the ability or political will to make such choices. It is hard for Governmental bodies to say no or discourage one particular sector above another. However committing to strategic choices and supporting only these choices is in fact vital to success, as public resources are always limited. Furthermore, the World Bank states that a local economy with existing industry clusters may provide a more targeted approach to improving economic development activity by leveraging resources in the direction of greatest potential return. These days, there are in fact a number of "standard", tried and tested, approaches and activities that can be undertaken to build a significant proactive cluster activity. At the end of the day all such activity should be focusing on growth and sustainability. We at NEPIC believe that these activities are in fact are critical steps to be taken that should ensure success.

CLUSTER DEVELOPMENT STANDARD APPROACH

  1. Identify and engage with potentialcluster leaders
  2. Carry out a cluster analysis
  3. Identify strategic choices
  4. Developing brokerage and networking activity
  5. Provide cluster specific information
  6. Identify and promote growth opportunities
  7. Build SME support programmes
  8. Support collaborative research & innovation activity
  9. Develop cluster focused public procurement and purchasing
  10. Develop cluster related marketing efforts
  11. Develop demand led skills and education training programs
  12. Build in country and international cluster – cluster interactions and collaborations

NEPIC is a chemical process industry based cluster, abroad cross section of industries which include Petrochemical, Commodity Chemical, Fine & Speciality Chemical Polymer Biotechnology, Pharmaceutical and Steel companies. Early during NEPIC's cluster analysis phase it was recognised that these organisations had so many common interests, across several cross cutting themes, that they really had to work together for the good of the local economy. As an example all these industries have very similar skills needs. Following its formative days NEPIC has existed in more or less its current form for over 10 years. As cluster it has performed the above "standard" activities to a varied degree of success. But what we can say is that the overall impact has been very successful indeed. The industrial members of NEPIC have reviewed its cluster strategy several times in the intervening years and following the most recent review in 2012 the industrialists agreed the following 8 strategic themes, from which it still clear that NEPIC continues to adhere to many of the "standard" Cluster approaches.

NEPIC'S CURRENT STRATEGIC THEMES

  1. Continue NEPIC's Growth Activities by attracting developing investment
  2. Support NSAPI Skills Activities and grow apprenticeships
  3. Develop or Support innovative projects for the rejuvenation, sustainability and growth of the industries in the process sector
  4. Continue to provide a Voice for the sector
  5. Grow Membership and- develop supply chain interaction and sales
  6. Improve connectivity and help bring alignment with other UK industry bodies
  7. Grow participation of SMEs in all the strategic themes of the sector
  8. Increase International awareness of the industry in the region

The industrial leadership of the NEPIC cluster has always insisted that the performance of cluster activities be measured and NEPIC's Key Performance Indicators (KPIs) all now relate to each of the above 8 strategic themes. There are too many measures to discuss here but ultimately NEPIC is focused on growth and it can show how since this industry, academia and Government collaboration started NEPIC as a cluster has captured over 83 significant investments supporting 4000 jobs and generating over £2 Billion per annum of gross value add for its regional and UK economy. Furthermore, the clusters collaborative programmes to help SMEs and strengthen its local supply chain through its industry mentoring activity, known as the Business Acceleration for SMES, has in only 2 years delivered 350 jobs in the local supply chain. In respect of international awareness, NEPIC was delighted to accept an invitation to speak about cluster development at the Global Economic Summit on clustering in Mumbai during September 2013.

By keeping accurate records of meetings and contact activity, from the inception of the NEPIC can show that its Industry collaborators have put in over £18 million of in-kind and £6 million of cash into the NEPIC project. At the same time the Cluster has received £6m of support from UK public programmes. With £2 Billion of Gross Value Added (GVA) per annum now returned to the local economy there has been a huge return on investment for the tax payer and a very significant leverage of individual company contributions.

In summary, the World Bank states "The purpose of local economic development is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and nongovernmental sector partners work collectively to create better conditions for economic growth and employment generation." As the NEPIC example shows that committing and actively participating in a local industrial cluster activity is an effective way for companies to take on their share of this responsibility.

DR. STAN HIGGINS is CEO of the Northeast of England Process Industry Cluster (NEPIC), a leading European Cluster for the chemical process industries see www.nepic.co.uk. NEPIC and ICC work closely on business development projects. Any opinions expressed in this column are those of Dr. Higgins alone.

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