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Hamilton Countys Comparative and Competitive Advantages

COMMUNITY COMPASS SPECIAL RESEARCH REPORT NO. 3-6 BUSINESS AND INDUSTRY CLUSTERS, 2003
Hamilton County, Ohio

April 2004

ABSTRACT Community COMPASS Special Research Report 3-6 Hamilton Countys Comparative and Competitive Advantages: Business and Industry Clusters, 2003 Identification and analysis of business and industry clusters in Hamilton County, Ohio. Explanation and discussion of the business and industry cluster approach to strategic economic development planning. December, 2003 Hamilton County Regional Planning Commission 807, County Administration Building 138 East Court Street Cincinnati, OH 45202 513-946-4500 (Phone) 513-946-4475 (Fax) info@rpc.hamilton-co.org www.hamilton-co.org/hcrpc This report uses data from the US Bureau of Census, County Business Patterns, and many reports issued by States, Cities, Universities, and other organizations and individuals in the US and elsewhere to make a preliminary identification of Industry Clusters that are present in Hamilton County and the region, and to outline the components and methods of an industry cluster approach to economic development for Hamilton County. The report is part of a series of research reports providing technical information to support Community COMPASS (Comprehensive Master Plan and Strategies for Hamilton County, Ohio). The content of this paper does not necessarily reflect the official views or policies of the Hamilton County Regional Planning Commission

Title: The Planning Partnership is the long-range collaborative planning and coordinating committee of the HCRPC. Its mission is to bring together public, private and civic sector organizations engaged in community planning in Hamilton County so that mutual goals related to physical, economic and social issues can be planned for comprehensively and achieved collaboratively. For more information on the Planning Partnership, please visit the website: www.planningpartnership.org.

Subject:

Date: Source of Copies:

Community COMPASS is the Comprehensive Master Plan and Strategies for Hamilton County, Ohio. It is a major initiative of the Planning Partnership. For more information on Community COMPASS please visit the website: www.communitycompass.org. Project Team Christine Nolan, Author and Principal Researcher Jesse Hartman, Michael Steele, Maps K.D. Rex, Andrew A. Dobson, Maps Harry Blanton, Reviewer, Gary Conley, Reviewer, Johnathan Holifield, Reviewer, David Main, Reviewer, Marge Rotte, Reviewer, Howard Stafford, Ph.D., Reviewer Richard Stevie, Ph.D., Reviewer Nick Vehr, Reviewer, George Vredeveld, Ph.D., Reviewer Karen Ambrosius, Paul Smiley, Design and Layout Caroline Statkus, AICP, Planning Services Administrator Ron Miller, AICP, Executive Director

Synopsis:

Notes:

Community COMPASS Components

Table of Contents
Glossary of Technical Terms...................................................................iii 1. Introduction ........................................................................................ 1 2. What are Clusters? ............................................................................ 2 3. Benefits of a Cluster Approach to Economic Development................ 5 4. Challenges of a Cluster Approach to Economic Development........... 9 5. Defining, Identifying and Measuring the Performance of Regional Clusters ............................................................................ 10 6. Implementing a Cluster Strategy...................................................... 15 7. Conclusion Where Do We Go From Here? The Next Steps ................................................................................ 18 Appendix A: Appendix B: Appendix C: Appendix D: Appendix E: Hamilton County Cluster Analysis ................................. 19 Current Issues in Industry Classification Systems......... 47 Example of a Cluster Strategy ...................................... 49 Benchmarking Guide for Clusters ................................. 55 Further Reading and Resources ................................... 57

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Glossary of Terms
Term
Sector

Meaning
Sector is the name for groups of similar types of industries in an economy, for example the manufacturing sector, the retail trade sector, the construction sector and so on. Appendix B contains a list of all the sectors in the economy. Industries in sectors are classified from broad to detailed definitions. For example, the Manufacturing Sector is the broad classification that includes all manufacturing industries. Within the broad sector, manufacturing industries can be more and more narrowly specified, until a specific sub-sector is reached, for example Transportation Equipment manufacturing, or Soap and Detergents manufacturing and so on. Standard Industrial Classification system, or code (not in use after 1997). North American Industrial Classification System, or code (in use from 1998). Industry X represents a greater share of the local economy than the share of Industry X in the US economy as a whole. Industry X is specialized in that particular location. A geographically limited critical mass (i.e., sufficient to attract specialized services, resources, and suppliers) of companies that have some type of relationship to one anothergenerally a complementariness or similarity in product, process, or resource (A Governors Guide to Cluster-Based Economic Development p. 37) Within large clusters there are often sub-groupings of similar industries with their own specialized needs in addition to the needs of the broad cluster. These are sub-clusters. An example might be Machinery manufacturing, or Transportation Equipment manufacturing within the broad Advanced Manufacturing Cluster. At each step of the production process, value is added to the final product. Some products and services fetch a greater price than others and require a greater amount of skill to produce hence, we have high value-added products and services, and lower value-added products and services. When goods and services are produced, they require inputs along the way to the final product. Sometimes the needed inputs are not available locally, and they must be imported from other areas. This means that some of the value of the product leaks out of the region in the form of payments for these imported inputs. If needed inputs can be produced locally, this leakage can be reduced. Substituting local inputs for imported inputs is termed Import Substitution. These are the industries that export goods and services to other regions and nations. Money earned from exports is new and additional money to the home region. Therefore, it is said that driver industries are the chief creators of new wealth in a county or region. These are the businesses and industries that provide inputs and support to the driver industries. They may include services such as accounting, legal advice, advertising and also lower paid activities such as janitorial services, catering and so on. They also include government services such as specialized infrastructure, clean water supply and hazardous waste disposal. They include distribution and warehousing services, as well as products such as packaging, furniture and paper. It is easy to see that businesses large and small can provide a large amount of support activity in addition to what they themselves produce, and that this support activity also generates income. Multipliers refer to the amount of money generated in the region for each $1 spent by the cluster industries in the region, or to the number of additional jobs generated by the addition of jobs in the cluster driver industries. Multipliers are calculated by the US Bureau of Economic Analysis, based upon the 5-year Economic Census. Stocks of social trust, norms, and networks that people can use to solve common problems. Networks of civic engagement, such as business and neighborhood associations and cooperatives are an essential form of social capital. The denser these networks, the more likely members of a cluster will cooperate for mutual benefit. ( A Governors Guide to Cluster-Based Economic Development , p.38).

Sub-Sector

SIC Code NAICS Code Specialized Industries Clustered Industries

Sub-Clusters

Value-Added

Import Substitution

Driver Industries

Support Industries

Multiplier Effects

Social Capital

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1. Introduction
This report considers the potential effectiveness of a cluster approach in providing long-range economic benefits for Hamilton County residents and businesses. In a cluster approach, economic development is viewed through a lens that focuses on groups of industries that are connected to each other and interdependent in a variety of ways. Each group forms a business or industry cluster. Cluster strength is thought to be what drives the creation of wealth in an area or region, and because of this the cluster approach seeks to undertake a sequence of steps designed to maintain or increase the competitive strength of the clusters that are present (or desired) in the area. In todays environment of increasing globalism, metropolitan regions and localities struggle for ways to establish or maintain a competitive advantage and economic vitality. Many want to maintain both a competitive edge locally, and yet collaborate for regional economic wellbeing. Sometimes these aims conflict with each other. Public policy and planning attempt to support these goals, yet there are few established mechanisms for achieving them. The business and industry cluster approach to economic development can be a useful tool to help in solving some of these thorny problems because it provides a framework for collaboration. At the same time it allows localities to capitalize on their economic strengths and specializations to maintain a vital and competitive economy. Across the US, and in several foreign countries1, states, regions and localities are adopting economic development strategies that focus on a areas specialized industries, its clustered industries, and/or its industries that combine specialization with regional clustering. This special report brings Hamilton County into the arena by making a preliminary identification of homegrown business and industry clusters and explaining how the industry cluster approach can be made to work to the advantage of Hamilton Countys jurisdictions, businesses and even households. As part of its foundation research for the economic development component of the county plan, Community COMPASS2, Hamilton County Regional Planning Commission (HCRPC) has conducted an analysis of trends in the structure and composition of the county economy and labor market, in the context of the Cincinnati metropolitan region.3 In addition, HCRPC has researched the classification and composition of business and industry clusters identified in a number of other US metropolitan regions, and has used this taxonomy to make a preliminary and provisional identification of ten clusters present in Hamilton County. In this effort, HCRPC considers both high- and lower-value added clusters and specialized industries, in the interests of providing job and income opportunities across the full range of county residents and business owners. Hamilton Countys clusters are described in this report.
1 See Appendix B for an Australian example; some other examples include the States of Arizona, Minnesota, New York and Connecticut; St. Louis, Louisville, Cleveland, Pittsburgh, Tucson; Santa Fe; San Diego, Minneapolis-St Paul and Portland, Oregon. 2 Comprehensive Master Plan and Strategies for Hamilton County, Ohio. 3 State of the County Report: Economy and Labor Market, Community COMPASS Report No. 16-1, Hamilton County Regional Planning Commission, July 2003

WHY ADOPT A CLUSTER BASED ECONOMIC DEVELOPMENT STRATEGY?


Improved Cluster Competitiveness Leads to better jobs and a stronger economy Brings key industry stakeholders together Creates significant opportunities for places and regions

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All of the clusters found for Hamilton County are present in one or more of the comparison regions, where they are stronger in some and weaker in others. There are undoubtedly many more clusters that exist in Hamilton County and the region. Additionally, the clusters identified by HCRPC may need to be broken down into smaller subclusters or even separate clusters in order for the analysis and data to be most effective and useful. WHY CONDUCT CLUSTER ANALYSIS?
To Improve: Understanding of the economy Relations between suppliers and customers Local infrastructure Strategic targeting of resources Image of the region as a world-class competitor Job/skills match in a region

The cluster strategies and experience of other regions suggest that the final identification of the composition of a regions most important clusters should take place in collaboration with business leaders and representatives of cluster member industries who, after all, can be expected to be the most knowledgeable about the relationships of industries within the clusters.4 HCRPCs cluster research and analysis is intended as a starting point for a broad community economic development initiative to understand the economy, and to enable targeting of scarce resources towards those sectors that will produce the most benefit for County households, businesses and government revenue streams. The cluster analysis is provided as a basis for longer-term strategic economic development planning for Hamilton County as recommended in the countywide plan Community COMPASS. Specifically, the analysis addresses needs within the following elements of the county plan: Initiative 4: Comprehensive Economic Development Plan Initiative 5: Business Attraction, Retention, Startups and Spinoffs Initiative 6: Regional Development Initiatives Initiative 27: Revitalization, Including First Suburbs

Anticipated practical benefits from the application of knowledge obtained through carrying out this project include: Improving the capacity of local economic development officials to target jobs and industries (retention, expansion and attraction) that will benefit their residents and jurisdiction tax-bases. Construction of a long-range framework for sustaining and enhancing economic vitality in an older Midwestern metropolitan region (Hamilton County and the Cincinnati CMSA). Enhancing the efficiency and effectiveness of taxpayer-generated economic development resources.

2. What are Clusters?


Industry clusters are geographic concentrations of competing, complementary, or interdependent firms and industries that do business with each other and/or have common needs for talent, technology, and infrastructure. The firms included in the cluster may be both competitive and cooperative. They may compete directly with some members of the cluster, purchase inputs from other cluster members, and rely on the services of other cluster firms in the operation of their business.5 The industries that make up a cluster are not necessarily the same types of industries. For example, the cluster will contain support industries such as business services, plus a number of industries that supply inputs needed for production and industries that purchase the products that are created. However, a cluster will usually contain several or even many driver industries that do, or produce, essentially the same thing. They compete with each other, but at the same time all benefit from both the competition and the agglomeration6 economy that they form. Figure 1 gives an example of industries that are part of the Biomedical/Biochemical Cluster, showing how they are connected with each other.
4 Technical analysis (specifically Input-Output analysis) can indicate which sets of industries are most closely tied together in the processes of production and marketing, however the expert knowledge of economic development community stakeholders, including planning and economic development experts in the county and region is considered invaluable and necessary in the process of cluster definition. 5 University of Minnesota Extension Service, 1999 6 Agglomeration economies are spatial concentrations of like industries examples would be Silicon Valley, Los Angeles and the movie industry and (a more local example) Kings Automall in Hamilton County.

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Clusters form around firms that drive wealth creation in an area or region, primarily through export of goods and services. These core exporting firms bring new money into the area, and their needs support the development of local industries. Industries in a cluster are located close to each other, in the same city, county or region. Because of this, they have both the opportunity and potential to develop synergies with each other (interactions that include the sparking of new ideas, new ways of doing things, new products and technologies) due to opportunities for continual close contact and information sharing. These types of benefits are called spillovers. Because cluster members are geographically close together, they can experience cost efficiencies for example, transportation costs are minimized. Figure 1 MODEL OF A BIOMEDICAL/BIOCHEMICAL CLUSTER

SUPPORT INDUSTRIES
Testing Laboratories Computer and Data Processing Services Universities Biological and Medical R&D Finance Intellectual Property Attorneys

SUPPLIERS
Medical Plastics Glass Manufactures Metal Manufacturers Basic Organic and Inorganic Chemicals Manufacturers

BIOMED/BIOTECH CLUSTER

Core Industries
Pharmaceuticals and Medicines Diagnostic Substances Biological Products Medical Instruments Medical Equipment and Supplies Industrial Chemicals Medical Chemicals Botanicals

BUYERS
Doctors and Dentists Hospitals and other Medical Facilities Wholesalers/Exporters Retailers: Druggists, specialty stores Military Other Industries

Because of the spatial SPECIALIZED location aspect of industry INFRASTRUCTURE Clean Water Supply clusters, an opportunity Hazardous Waste Disposal emerges for counties and Wholesale and Distribution Services localities to link their Specialized Construction and Real Estate economic development efforts more closely together. They can link economic development more Source: Hamilton County Regional Planning Commission strongly to the kind of land use planning they want, as well as to their land and infrastructure resources. To assist in enabling this process to occur, HCRPC has produced maps showing the approximate location of Hamilton Countys clusters by zip code area in the county (see Appendix A). Clusters occur and grow naturally in regional and national economies. Nevertheless, studies of famous clusters such as Silicon Valley show that clusters can develop even more strength and innovative power when they are active or organized, meaning that the firms within the clusters consciously work together to improve their competitive position and address common problems. However, organized industry clusters are far more than just narrowly focused trade associations. They can contribute broadly to the well-being of the region by addressing workforce recruitment and training issues, developing needed infrastructure, and establishing research and training programs at universities and technical colleges, to name a few.7 CLUSTERS ARE:
Local concentrations of competitive firms that: Buy and sell from each other Use similar technologies Share a labor pool Share supply chains Include supporting services and specialized infrastructure Include both high and lowvalue added employment Drive the creation of wealth in a region

The Importance of Emerging Clusters


Clusters are dynamic. The relative strength and importance of industries changes over time. Businesses and industries often experience changes that are due to life-cycle effects. For example, a company offering a new product or service will likely go through a period where its product is in very high demand due to its novelty and relative scarcity. This is the superprofit period. Gradually, this high-demand period diminishes and smoothes out and other companies join in the competition to sell the product. Prices even out, and the industry becomes mature. The industry may even go into decline and die after a while, as need for its products and services dwindles because of changes in taste or technology. A good example of this would be the death of the steamboat-building industry in Cincinnati. Alternatively, an industry may
7 Ibid.

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decline due to successful competition from other regions at home or abroad, as in the case of the steel industry in the Midwest. Whole clusters, as well as individual industries, display these kinds of behaviors and effects. Because of the life-cycle effect, businesses and industries are constantly seeking (or creating) new needs for new products and technologies. They must innovate constantly in order to stay alive. Because of the need for constant innovation and improvement in business and industry (now made even greater because of increased competition from overseas), it becomes extremely important for localities to identify and encourage their emerging clusters because they are the economic drivers of the future they will replace older and fading industries. Research, strategic action planning and resource allocation are essential to identify, maintain and further develop our industry clusters. The more active linkages that exist (i.e. are physically located) between the industries in a cluster in the County and region, the greater the amount of value-added to the products of the County and region. The amount of value-added to a product within county or regional boundaries makes a big difference when the final product is shipped off for export to another region or country. This value-added will return as new and additional income to the region. It will affect the amount of the Gross Regional Product (income).

HOW IS THIS APPROACH DIFFERENT?


Traditional economic development: One firm at a time Individual problems and needs Clusters offer an alternative: Solve groups of industry problems/needs Build sustained businessto-business connections Invest and assist groups of firms to build synergy and economic impact

What is the Cluster Approach?


Not so long ago, regional planners and economic analysts used economic base analysis as their major tool for understanding which industries were the main drivers or creators of wealth in an area. Basic industries were those that exported goods to places outside the city or region. Because additional, new money can only come into an area from outside that area, industries that produce for export are the ones that can add to an areas aggregate wealth. Formerly, only manufacturing and primary resource-based industries (such as mining, forestry and agriculture) were considered as basic industries. Now, due to the changing nature of service industries, some of these too are considered as exporting industries. Some examples of these might be professional services such as consulting services, industrial design services, engineering and advertising. The more recent approach to understanding how a local or regional economy works, and what are the drivers or engines of economic growth and prosperity, is to detect and analyze local business and industry clusters. Techniques to support and strengthen the regions existing clusters, and its emerging clusters are then undertaken to maintain, stabilize or grow the local economy. The methods and tools8 used to distinguish the existence of clusters and emerging clusters in a local or regional economy are not much different from those used to determine basic industries. However, the results and the approach are said to be more useful because they reveal much more about how the economy actually works. This makes it much more likely that attempts to improve or strengthen local economies will be successful. The cluster method has evolved out of several years of research and observation by microeconomists and regional economic analysts, such as Michael Porter at the Harvard Business School. Many states, cities and metropolitan areas or regions are now undertaking cluster analyses and strategies as part of overall economic development efforts to boost their competitiveness in both the national and global economies. These initiatives are usually undertaken in partnerships among government, private business, universities and/or research organizations, and are often embedded in an overall community economic development plan (for example, Santa Fe, NM) or a state economic development plan (Louisiana, Arizona). In developing its database and preliminary cluster analysis, HCRPC has researched the composition of clusters identified in the following metropolitan areas: 1. Portland, OR 5. Tucson, AZ 2. Minneapolis-St. Paul, MN 6. Cleveland, OH 3. St. Louis, MO 7. Louisville, KY 4. Pittsburgh, PA 8 San Diego, CA HCRPCs research benefited from the work done in cluster development strategies by the National Governors Association, Harvard Business Schools Institute for Strategy and
8 Input-Output analysis, Shift-share analysis, and location quotients, for example.

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Competitiveness, the Battelle Institute in Ohio, and the States of Connecticut and New York among others.

3. Benefits of a Cluster Approach to Economic Development


In the Cincinnati metropolitan region, the Greater Cincinnati Chamber of Commerce and the Hamilton County Regional Planning Commission are working in conjunction to produce the technical analyses necessary for developing a cluster strategy that can be tailored to the needs and resources of each county within the Cincinnati CMSA and to the metropolitan region as a whole. Among the many benefits of a cluster approach to economic development is its versatility and the range of benefits and outcomes that can be achieved. Although it is often stressed that the region is the correct level for implementation of a cluster strategy, it is argued here that even the smallest locality can benefit by taking advantage of cluster research and the economic intelligence that it provides. Some of the identified benefits are described below.

3.1 Benefits to Established and Emerging Industries


Most cluster studies stress the importance of business and industry leadership and commitment in implementing a cluster strategy. Consequently, most studies are very clear about the potential benefits that business and industry can obtain from participation in such an effort. The major benefit to firms is, of course, an increase in their Figure 2 competitive edge and therefore in their ability to Hard Benefits of Clusters generate profits. Both established and emerging industry clusters can benefit through an active cluster strategy, through access to information flows and extensive networks, as well as to specialized services and coordinated service delivery, better communications and a constructive relationship with governments, and an improved capacity to set priorities.
Asset Local supply chains Specialized workforce Specialized service Choice of inputs Range of firms Soft Benefits of Clusters Asset Association Trust Learning (1) Learning (2) Informal labor markets

Benefits Design efficiencies Higher productivity Faster and easier access Lower costs, higher quality Joint ventures, network opportunities

Benefits Collective vision, planning, influence Inter-firm collaboration and networks Technology transfer and innovation Tacit knowledge and know-how Efficiencies, career ladders

Source: A Governors Guide to Cluster-Based Economic Development, NGA, 2002, p.10

Another example of identified cluster benefits comes from the Center for Best Practices of the National Governors Association, shown in Figure 2.

3.2 Targeting, Marketing, Start-Ups, Expansion and Retention


Adoption of a cluster strategy can present significant opportunities to localities, regions, entrepreneurs and the business community. Identification of specific business and industry clusters can help local economic developers target their efforts towards firms that would benefit from moving to the region due to the presence of clusters that fit their operation. The presence of an industry cluster in an area provides evidence that the location is attractive to these types of manufacturers.9 Similarly, economic developers can use cluster data and information to convince firms that might wish to move away that they are better off where they are by demonstrating the competitive advantage this cluster has in the locality. Conversely, an economic developer

9 Barkley and Henry, Clemson University, South Carolina, 2002.

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may judge that a retention effort is of little value, if the cluster analysis shows that the business or industry is in fact declining. Chambers of Commerce and others wishing to boost their city, county or region to outsiders can market the presence of strong or emerging clusters, together with a pool of labor that serves them. An example is shown in Figure 3, adapted from New York States economic development website NY State nylovesbiz.com. Opportunities for expansion open up with the economic intelligence that is developed through the technical part of a cluster analysis. For example, a business or industry that is supplying a cluster driver industry can see that there are several more of the same type of driver industry in the area (county or region) and may decide to try and gain more business, or to expand its line of products. Entrepreneurs wishing to start a new business can find a niche or supply a gap (industries that are necessary but missing) in the local clusters. These activities also have the effect of providing import substitution in the local economy, and increase the value-added to regional products. The economic intelligence generated by a cluster analysis is invaluable to those seeking to begin or expand their businesses. Research has shown that industry clusters have greater potential for new firm spin-offs than groupings of unrelated firms.10

Figure 3 NEW YORK STATE NYLOVESBIZ WEBSITE

New York State - Home to Business

Industry Clusters
Industry clusters are groups of related industries located in one or more regions of the state. Empire State Development (ESD) has identified 13 major industry clusters, including manufacturing clusters, services clusters, and a few that are hybrids of both. ESD uses industry clusters as a framework for understanding the state and regional economies, and guiding economic development policy and initiatives. ESD and its partners have employed cluster-based analysis in the development of business marketing, export promotion, workforce policy development, regional economic planning, and other activities.

New York State Industry Clusters List



Computer Hardware & Electronics Industrial Machinery & Systems Transportation Equipment Bio Medical Business Services Communication & Media Services Financial Services Materials Processing Optics & Imaging Software Industries Food Processing Distribution

Industry Clusters List High Tech Economy Investing in NYS New York State Economy Productive Workforce Superior Infrastructure Quality of Life

To the right are links to profiles of New York State's industry clusters. Each profile provides a formal definition of the cluster, a summary of national and international market trends affecting the cluster, trends in New York cluster employment, and a summary of the cluster's presence in the state's economic development regions.
Source: http://www.nylovesbiz.com/NYS_Home_To_Business/Industry_Clusters/default.asp

3.3 Workforce Development


Clustered industries benefit from pooled labor markets that is, over time a pool of workers develops that have the skills and experience to work in those industries. The industries can draw upon this pool as they need when one industry needs workers, another may be letting go workers so that each can benefit. Workers benefit too, by having a pool of industries that they can use to switch jobs. A rich, or thick industry cluster stabilizes the labor force by providing
10 Barkley and Henry, ibid.

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workers with the assurance they can likely find another job if they need to without having to move away from the area. Knowing that this possibility exists can be an attractor for workers to move to, or stay in, the region. Another benefit relates to workforce training: clusters can more easily make their needs for particular skills and training programs known to workforce development specialists and education institutions. Education institutions, knowing that a particular cluster is attempting to expand in certain directions, can design specialized training programs accordingly.

3.4 Efficient and Effective Service Delivery


A benefit to public agencies is claimed to be an increase in the efficiency and effectiveness of public resources used for economic development. Rather than directing resources in a scattershot fashion at individual businesses and industry sectors, the cluster approach can address the common needs of whole groups of industries. Individual industries will still require assistance and attention, of course, and no incoming, expanding or startup industry need be turned away because it does not belong to an identified cluster. However, broad strategies to advance cluster groups can be devised to address cluster-wide needs for example, workforce development and infrastructure such as transportation, waste disposal, power and telecommunications. Cluster authority Michael Porter has noted that there is an expanded role for local and regional governments in working with the cluster concept and strategy for economic development. He writes that: Governments more decisive influences are often at the microeconomic level. Removing obstacles to growth and upgrading of existing and emerging clusters should be a priority. Clusters are a driving force in increasing exports, and magnets for attracting foreign investment.11 In addition to the activities recommended by Porter, government agencies can provide services by Studying the economy to identify emerging or Figure 2 existing clusters POLICY OPTIONS FOR STATE, COUNTY AND LOCAL GOVERNMENTS Conducting research to Organize service delivery around clusters Strengthen networking and build bridges help the clusters define Establish or recognize cluster organizations Aggregate, collect, and sort information themselves and alliances by cluster Facilitating the meeting of Facilitate external linkages Form cross-agency quick-response teams cluster members Encourage cluster communications channels Encourage and support multifirm activity Responding to cluster Build incentives for multifirm applications to funding programs priorities with appropriate and requested assistance Target investments to clusters Develop human resources for clusters Helping to coordinate the delivery of services to the Develop a skilled and specialized labor force Invest in cluster R&D and innovation Engage community-based employment Invest in cluster technology centers or parks clusters intermediaries Support cluster entrepreneurial activity Developing broad Qualify people for cluster employment Market clusters and build cluster markets strategies to complement Establish cluster skills centers existing industries in an Support regional skill alliances area Adapted from: A Governors Guide to Cluster-Based Economic Development, NGA, 2002, p.21 Identifying available land; providing appropriate zoning and streamlining the development process

A broad range of other policy options is also available at various levels of government, as shown in Figure 4. Many of these strategies could be pursued at the level of the local jurisdiction, economic development department or chamber of commerce.

3.5 Improve Local and County Government Revenue Streams


Improving local revenue streams is a potent motivator for local and county governments to support a cluster strategy. Job creation is associated with improved earnings tax receipts, and can be improved even further when quality, high-paying jobs are the targets for attraction. Job growth is also associated with improved sales tax receipts at the county level. Increases in the number and kind of firms operating in an area are also associated with improved property taxes,
11 Porter:1990:198-9

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provided the jurisdiction does not give away these benefits as part of a package to attract a business. Researchers at Clemson State University have shown that: The multiplier effects associated with attracting new firms to a cluster generally are greater than those resulting from noncluster firms. Members of industry clusters have stronger employment growth over time than firms that are not in clusters.12

3.6 Build Social Capital through Networks and Linkages


If implemented fully, a cluster strategy for economic development would have as an effect building and strengthening networks and linkages in the county and region. Current theory speculates that it is through such mechanisms that knowledge and information are spread, and innovations are hastened and facilitated. In other words, implementation of a cluster strategy could enhance the formation of social capital in the county and region. Current theory concerning social capital can be summarized as follows: Social capital is broadly defined as the network of social ties or associations an individual acquires, and the level of trustworthiness and reciprocity that exists across those connections.13 Social capital is built by bonding or bridging. Bonding describes the degree of interactions a member has with other group members. Bridging deals with a groups interactions with other groups.14 The greater the degree of bonding, the greater the sense of self-worth and purpose. The greater the degree of bridging, the greater the ability to diffuse and acquire new information. It follows that increasing either or both of these facets will in turn increases social capital15 (emphasis added). These types of activities and outcomes apply also to businesses and cluster partners, as can be seen when considering the role recommended for businesses participating in an active cluster: Participate in defining the cluster Organize cluster activities Establish cluster priorities, partner with government and others Work with member industries to maximize competitive advantage Create economic prosperity in the region

An excellent example of social capital building that is currently occurring in Hamilton County is the Planning Partnership formed by HCRPC in May, 2000. This organization, which includes 30 government jurisdictions and 13 affiliate organizations, is building social capital by regularly convening representatives county-wide to share in planning and development efforts, share knowledge and insights, and through the vehicle of the Community COMPASS Plan to build collaborative efforts to move the County forward in the twenty-first century. This is an activity that has not occurred before. Adoption of a cluster strategy to implement the Economic Prosperity goal of the countywide plan could be expected to increase bonding and bridging activities between localities and the business community in Hamilton County.

4. Challenges of a Cluster Approach to Economic Development


During the mid 1990s, the Minneapolis Metropolitan Council and the State of Minnesota began to expend considerable effort on the development of a cluster approach for their long range economic development initiatives. In this process, they outlined the challenges they expected to face in implementing a cluster strategy as shown in Figure 5:
12 Barkley and Henry, ibid.

13 For more on the differences between Civic Engagement and Social Capital, see The Greater Cincinnati Foundation. Social Capital in Greater Cincinnati. The Institute for Policy Research, University of Cincinnati. 2003. http://www.greatercincinnatifdn.org/page225.cfm 14 For additional information see: The Greater Cincinnati Foundation. Social Capital in Greater Cincinnati. Op. cit. 15 Adapted from HCRPC Report on Social Capital, forthcoming 2003.

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The caution shown by the Minnesota analysts is helpful in clarifying issues that are important to consider in adopting the cluster approach. For example, business people and economic development specialists may find it difficult to buy in. Some reasons for this difficulty include: A belief that anything that has a longer-term time horizon is of little use in the world of economic development, because planning by businesses is not usually done in the public eye (therefore it is unpredictable), but once the business planning process is complete, business decisions have to move quickly. Government, however, moves only slowly. The political climate can change quickly and completely owing to the election process. Externally-generated events can comprehensively change the economic development climate (for example, natural disasters; financial crises; wars; terrorist acts and so on). Figure 5 BENEFITS AND CHALLENGES OF A CLUSTER STRATEGY
Key Benefits Key Challenges

In response to these challenges, the cluster approach asserts that the state of a local or regional economy does not have to be entirely determined by fixed resources, by external conditions, or by habitual ways of thinking and acting. Instead, areas can choose to exert at least some influence over economic conditions, and choose to expand their resources, for their own benefit. The longer term strategic planning process for cluster development is flexible, and should include continuous monitoring of economic conditions in order to take advantage of new opportunities (for example, identifying emerging clusters) and address changes such as downward trends.

Creates a framework for collaboration Relies on an existing organizational infrastructure Helps build a common agenda Helps achieve economies of scale Uses workforce shortage to focus on higher wage and competitive advantage industries Focuses and coordinates existing resources Provides information for educators (job descriptions) Facilitates developing a higher competence level Mitigates inter-industry competitive fears (builds trust and cooperation) once implemented

Needs to be industry driven Defining the industry cluster could be a challenge Selecting scale of strategy (regional, county, local) Avoid creating factions in the business community There may be private industry skepticism The nature of the political system and traditional educational institutions may be a challenge There may be a risk of dominance by big business Public sector response must be quick There may be institutional barriers to implementing such a strategy

Another challenge is that Risks picking winners and losers cluster development is time Defining government's role consuming, labor intensive and demands patience and Setting the criteria to define a cluster persistence over quite long periods. Many economic Source: Twin Cities Industry Cluster Study, Minneapolis Metropolitan Council, 1995. development agencies and chambers of commerce might feel that they do not have the manpower or capacity to devote to this process. Even if this is the case, however, it is not generally recommended that the process be handed over entirely to external consultants. Local expertise is thought to be the best source of cluster information. A response to this challenge might be that in implementing a cluster approach, collaboration and task-sharing is key no one agency, business or locality has to (or perhaps even should), go it alone. Additionally, the idea that a cluster strategy risks picking winners and losers also deserves consideration. In free market economics, the market is assumed to be the best determinant of the success or failure of firms and industries. In fact, many industries world-wide are known to be supported by government in one way or another, and across the globe regions are preparing to compete fiercely, based upon their competitive advantages. The cluster approach does not advocate leaving any business or industry out in the cold. It does, however, recommend focusing resources upon key clusters.
Community COMPASS 9

Finally, a major challenge faced by cluster developers is that of measuring the success of the strategy. Many cluster programs are still in the process of developing, and have not been in implementation long enough to draw many solid conclusions about whether the strategy has been successful in its goals. The State of Arizona, however, has been pursuing a cluster strategy since 1992, and a recent report on their efforts documents considerable success in generating millions of dollars in new sales through the restructuring and consolidation of programs to promote exports in three of the states identified clusters.16 The South Australian Business Vision 2010 group (Appendix C) has recently issued an evaluative review17 of its cluster strategy, and has concluded that the region has benefited by a cumulative amount $(A)475 million, for a cumulative cost of $(A)15 million since 1995. Monitoring and evaluation of cluster programs would be an important part of any implementation initiatives in Hamilton County, and are part of the Results Accountability component of the Community COMPASS Plan. Appendix C gives a model benchmarking and indicator system for measuring cluster strategy progress. This model is drawn from the National Governors Associations report A Governors Guide to Cluster-Based Economic Development (2002).

5. Defining, Identifying and Measuring Regional Clusters


How Are Clusters Identified?
In this study, HCRPC has made a preliminary and provisional identification of ten clusters in Hamilton County by studying the component industries in clusters identified in other metropolitan regions in the US. In this task, HCRPC researched published lists of identified clusters together with the types of industries they contained (see below), in eight US metropolitan areas (page 9). HCRPC grouped together similar clusters from each metro area, studied the component industry lists, and finally developed an aggregate list of industry components for each cluster. This cluster classification, or taxonomy, was then used to identify clusters in the Hamilton County economy. The cluster descriptions and the geographic location of cluster industries in Hamilton County are shown in Section 8. Over time, more cluster definitions can be added to this cluster list, as desired and as revealed by the technical analysis. Working with the cluster taxonomy as a guide, HCRPC has identified the following clusters:

Hamilton County Preliminary Cluster and Cluster Component Identification


Advanced Business and Financial Services (contains the following sectors and their subsectors: Monetary authorities - central bank; Depository credit intermediation; Nondepository credit intermediation; Activities related to credit intermediation; Security and commodity contracts intermed and brokerage; Other financial investment activities; Other investment pools and funds; Insurance carriers; Agencies and other insurance related activities; Management, scientific and technical consulting services; Advertising and related services; Other professional, scientific, technical service; Management of companies and enterprises; Office administrative services; Facilities support services; Employment services; Business support services; Other support services; Activities related to real estate; Commercial, industrial equipment, rental and leasing; Lessors of other nonfinancial intangible assets; Legal services; Accounting, tax preparation, bookkeeping, payroll services; Architectural, engineering and related services; Specialized design services; Computer systems design and related services) Advanced Manufacturing (contains the following sectors and their sub-sectors: Primary metal manufacturing; Fabricated metal product manufacturing; Machinery manufacturing; Computer and electronic product manufacturing; Electrical equipment, appliance and component manufacturing; Transportation equipment manufacturing)

16 Mary Jo Waits, op. cit., pp47-48 17 http://www.clusters.com.au/Documents/blandyrviewExecSum.pdf

10 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

Advanced Materials (contains the following sectors and their sub-sectors: Basic chemical manufacturing; Nonferrous (excluding aluminum) production and processing; Photographic & photocopying equipment manufacturing; Semiconductor and other electronic component manufacturing; Navigation, measuring, medical, control instruments manufacturing; Resin, synthetic rubber, artificial and synthetic fibers, filaments manufacturing) Arts, Entertainment and Recreation (contains the following sectors and their sub-sectors: Travel arrangement and reservation services; Performing arts, spectator sports, and related industries; Museums, historical sites and like institutions; Amusement, gambling and recreation industries; Traveler accommodation; Food services and drinking places; Passenger car rental and leasing; Sporting and athletic goods manufacturing; Doll, toy and game manufacturing; Sporting and recreational goods and supply wholesale; Scenic and sightseeing water transportation ) Biomedical/Biotechnical (contains the following sectors and their sub-sectors: Commercial and service industry machinery manufacturing; Pharmaceutical and medicine manufacturing; Electromedical apparatus manufacturing; Analytical laboratory instrument manufacturing; Irradiation apparatus manufacturing; Medical equipment and supplies manufacturing; Dental laboratories; Drugs and druggists' sundries wholesale; Testing laboratories; Scientific R&D services; Medical and diagnostic laboratories; General medical and surgical hospitals) Chemicals(contains the following sectors and their sub-sectors: Basic chemical manufacturing; Pesticide, fertilizer and other agricultural chemical manufacturing; Paint, coating and adhesive manufacturing; Soap, cleaners and toilet preparation manufacturing; Other chemical product and preparation manufacturing; Plastics product manufacturing; Rubber product manufacturing; Other nonmetallic mineral product manufacturing; Chemical and allied products wholesale; Petroleum bulk stations and terminals; Petroleum prod wholesale (excluding bulk stations, terminals)) Food Processing and Technology (contains the following sectors and their sub-sectors: Animal food manufacturing; Grain and oilseed milling; Sugar and confectionery product manufacturing; Fruit and vegetable preserving and specialty food manufacturing; Dairy product manufacturing; Animal slaughtering and processing; Bakeries and tortilla manufacturing; Other food manufacturing; Beverage manufacturing) Information, Communications and Media(contains the following sectors and their subsectors: Newspaper, periodical, book, database publishers; Motion picture and video industries; Sound recording industries; Radio and television broadcasting; Cable networks and program distribution; Information services; Printing and related support activities) Information Technology (contains the following sectors and their sub-sectors: Mechanical power transmission equipment manufacturing; Computer and electronic product manufacturing; Electrical equipment manufacturing; Other communication and energy wire manufacturing; Current-carrying wiring device manufacturing; All other miscellaneous electrical equip and component manufacturing; Computer and peripheral equip and software wholesale; Other electronic parts and equipment wholesale; Software publishers; Telecommunications; Data processing services; Professional, scientific and technical services; Computer systems design and related services; Management, scientific and technical consulting services; Scientific R&D services) Transportation, Distribution and Logistics (contains the following sectors and their subsectors: Air transportation; Water transportation; Truck transportation; Transit and ground passenger transportation; Scenic and sightseeing transportation; Transportation support activities; Couriers and messengers; Warehousing and storage)

Detailed characteristics of these clusters are described in Appendix A of this report, and it is stressed that the current analysis is provisional and preliminary only. This initial cluster identification is provided as a basis for future refinement by cluster working groups or advisory committees.

How are Clusters Measured and Evaluated?

Community COMPASS 11

Three principal methods for measuring and evaluating clusters are discussed below. These methods are: Location Quotient analysis, Shift-Share analysis and Input-Output analysis. This report includes the results of the first two types of analysis, and recommends that Input-Output analysis be conducted once a decision has been reached to pursue a cluster strategy.

Location Quotient Analysis


Measurement of growth rates and location quotients18 for each industry or group of industries in a region is the first step towards determining where the regions comparative advantage lies. Location quotients show where industry sectors in particular localities (like Hamilton County) are more strongly represented than they are in the nation as a whole. If a sectors location quotient is greater than 1, then it is said that the locality is more specialized in that industry than the nation is, and that the industry is likely producing for export as well as local consumption. The dynamics of specialization can also be measured by comparing changes in the location quotients of sectors and sub-sectors from year to year. Location quotients are usually calculated using total employment or total income for each industry or industry group as a basis. However, several other bases (occupations, for example) could be used depending upon the purpose of the analysis. Calculation of growth rates is also important for obtaining an initial idea of likely trends in any particular industry or group of industries. The first task in cluster identification and analysis is to assemble two (or more) sets of data from different time periods in the study region or county, calculate the location quotients for each sector and sub-sector, and measure changes over time in the size of the location quotients. In this project, we used data from the US Bureau of Census County Business Patterns annual data sets, with a base year of 1998, and comparison years of 2000/2001. The base year of 1998 was chosen because this is the year when the US Department of Commerce switched from using the Standard Industrial Classification system (commonly known as the SIC codes) to the North American Industrial Classification System (NAICS codes). This switch and its implications are described in Appendix A. When the location quotients for each sector and sub-sector in the local economy have been calculated, together with the changes from the beginning period to the ending period, the sectors are then sorted according to a method developed by the Boston Consulting Group to show which sectors and clusters are more or less specialized than the nation, and whether they are increasing or decreasing in their degree of specialization. According to this method of sorting the data, sectors and clusters will fall into one of the following four categories: 1. 2. 3. 4. Specialized, and becoming increasingly specialized (Stars) Not specialized, but becoming increasingly specialized (Emerging) Specialized, but decreasing in degree of specialization (Transforming) Not specialized and decreasing in degree of specialization (Declining)

This initial analysis of economic sectors and clusters begins to give policymakers and other stakeholders some idea of what is happening in the local economy, and which industries and clusters might need support to mitigate decline or to give an extra boost to growth. Figure 6 shows the relative positions of Hamilton Countys identified clusters, as compared to the same clusters nation-wide, from 1998 to 2000.

(R1/R2) Location Quotient = (N1/N2) Where: R1 = Regional Employment In Industry X R2 = Total Regional Employment N1 = National Employment In Industry X N2 = Total National Employment If L.Q. < 1, Region is less specialized in industry X, and needs to import goods to satisfy local demand If L.Q. = 1, Region produces just enough in industry X to satisfy local demand If L.Q. > 1, Region is more specialized in industry X and exports goods to other regions

18

12 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

The location quotients for each cluster in 2000 are shown along the bottom axis of the chart. A location quotient of 1 means that the cluster industries are present in Hamilton County to exactly the same degree as they are in the nation. Larger location quotients (right hand side of the chart) indicate that the cluster presence is more concentrated in Hamilton County compared to the nation the county is more specialized in those industries and clusters. This is the position of the Food Processing, Chemicals, Advanced Business and Financial Services, Advanced Manufacturing, Information, Communications and eMedia and the Biomedical/Biotechnical clusters in Hamilton County. The larger the location quotient, the more specialized is the cluster. However, while Food Processing, Chemicals, Advanced Services, and Advanced Manufacturing were increasing in specialization from 1998-2000 (Stars), Biomedical/Biochemical and Information, Communications and eMedia were decreasing in their degree of specialization in the area (Transforming). Conversely, the clusters with smaller overall location Figure 6 quotients (left hand side of HAMILTON COUNTY PRELIMINARY CLUSTER SPECIALIZATION MATRIX the chart) are less concentrated in Hamilton "EMERGING" "STARS" POSITIVE CHANGE IN LOCATION QUOTIENTS County than in the nation. Their presence is weaker. Advanced Business and Information Technology They may need to be Financial Services 27,947 Employees 62,356 Employees strengthened if they are Chemicals 13,807 Employees thought to be of strategic importance to the county economy. Two clusters Arts, Entertainment, Recreation and Advanced Manufacturing Visitor Industries 27,975 Employees Information Technology and 49,521 Employees Food Processing and Technology Arts and Entertainment 8,741 Employees were increasing their specialization from 1998"DECLINING" "TRANSFORMING" 2000. They are (or, at least, NEGATIVE CHANGE IN LOCATION QUOTIENTS were until the onset of the Information, Communications and eMedia 2001 recession) Emerging 25,767 Employees Transportation, Logistics and Distribution clusters. However, the 16,017 Employees Advanced Materials cluster, and the Transportation, Biomedical/Biochemical 32,567 Employees Logistics and Distribution Advanced Materials cluster, were not only 4,148 Employees unspecialized in the county, 2.25 1 1.75 0 0.5 0.75 1.25 1.5 2 but also decreasing in 0.25 2000 LOCATION QUOTIENTS specialization (Declining). This is bad news, especially Source: Hamilton County Regional Planning Commission, County Business Patterns. when considering Advanced Note: The size of the circles reflects the size of the cluster in terms of number of employees. Materials, which is a high technology cluster capable of producing the materials and technology of the future. This cluster may be a candidate for support, but will require further analysis to determine the likely costs, benefits and outcome of such a strategy.
(Not Specialized/Increasing Concentration) (Specialized/Increasing Concentration) (Not Specialized/Decreasing Concentration) (Specialized/Decreasing Concentration)

The size and direction of the change in location quotients of the clusters, adds a dynamic element to the analysis, enabling a preliminary evaluation of current cluster performance and providing some guidance as to which clusters might be candidates for targeting. The process for selecting candidate clusters for targeting is discussed further in the next section.

Criteria for Selecting Target Industries and Clusters


In successfully implementing a cluster strategy, prioritization of cluster components (business and industry sectors and sub-sectors) for allocation of resources is a must if resources are to be used efficiently. It is usually recommended that prioritization of allocation of resources for the development or strengthening of specific clusters or cluster components take place within a partnership or other type of collaborative group of stakeholders.

Community COMPASS 13

In selecting clusters and industries within them to be targeted by a development strategy, policy makers and planners can choose from amongst the following list of selection criteria,19 adding other criteria as necessary and desired in the locality

Industry/Cluster is or has
Average per capita payroll wages at or higher than the national industry average Relative immunity to recessions e.g. food, household products, pharmaceuticals and medicines etc. High total earnings High potential to generate tax revenues Export products, or potential for export Potential for import substitution (fills a need that is presently being supplied from outside the region) A high amount of value-added in the region A high industry multiplier (amount of money generated in the region for each $1 spent by the cluster industries in the region; or additional jobs generated ) A cluster location quotient larger than 1 Experiencing or has experienced both national and regional employment growth Growth in the cluster and its industries is attributed more to regional factors than national or industry mix factors as demonstrated by shift-share analysis Positive local employment projections Part a category of industries targeted by the State for development, or capable of attracting State attention.

Shift-Share Analysis
Although location quotients are useful in giving an initial picture of strengths and weaknesses in a local economy, they do not explain the sources of change, give a full picture of how the composition of local employment differs from national patterns or explain how the performance of the local economy differs from that of the nation. Shift-Share analysis can help to provide this missing information. The results of the Shift-Share analysis for Hamilton Countys clusters is shown in Appendix A of this report. Shift-Share analysis seeks to explain changes in an economy by decomposing actual changes that have occurred into three main sources: 1. The influence of national growth (or decline) on industry or cluster X. This is called the National Share. For example, between 1998 and 2000, total employment in the US as measured by the County Business Patterns data grew 5.5 percent. The national share applies this 5.5 percent to Hamilton County employment in the base year (1998) and estimates how employment would be expected to expand if the national influence were felt by every industry. For example, if manufacturing grew locally at the same rate as national employment overall, 4,075 jobs would have been added between 1998 and 2000.20 The influence of industry share on the growth (or decline) of industry or cluster X. Industry share refers to the rate of growth in each industry at the national level, for example how much all manufacturing industries grew from 1998 to 2000 throughout the nation. Industry share measures the effect of the national growth in each industry reflected in local changes in employment. As with the national component, the change in employment by the industry overall is applied to the total change in local employment in the industry. Continuing with the manufacturing example, one would have expected local manufacturing to decline by 6,138 jobs based on national performance of the manufacturing sector.

2.

19 Some of these criteria have been adapted from a 1996 study Greater Cincinnatis Target Industries, done for the Cincinnati Gas and Electric Company (Cinergy) by the University of Cincinnati Center for Economic Education, which identified industries in the Greater Cincinnati area that would be most likely to be successful in the region and (to) enhance the economic efficiency of the existing industry structure. 20 This section on shift-share analysis is largely adapted or reproduced from the excellent explanation given in Greater Cincinnatis Target Industries, Center for Economic Education, University of Cincinnati, September, 1996.

14 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

3.

The Regional Share effect on growth (or decline) of industry or cluster X. The National share and the Industry share reveal the changes that would have occurred in the local economy if it corresponded exactly to national and industrial structure and trends. When these two (computed) shares are subtracted from the actual shift in employment, a residual change remains. This is the change in employment that cannot be explained by either general economic conditions (the national share) or industrial trends (the industry share). This change, the regional share, reveals the effects on local employment of factors that are special to Hamilton County. The regional share effect tells us that certain industries enjoy advantages (or disadvantages in the case of declines) from the regional economy, from factors such as labor force skills, access to transportation, excellent supply chains, effective and efficient service delivery and so on.

In shift-share analysis, industries that are the best targets for economic development efforts are those with the largest regional share effect on growth. The same holds true for shift-share analysis of business and industry clusters, but with some important additional considerations. First, clusters do not usually represent just one industry or one industry sector there will be several industries and subsectors within a cluster, and they can be expected to differ in their regional share effects. These SHIFT SHARE ANALYSIS differences can reveal to a cluster developer where to focus Actual Shift in Employment in Industry X efforts to strengthen and build the cluster. Secondly, a locality - Shift due to national change or region may decide to target resources to a cluster even if, - Shift due to industrial trend in industry X overall, the regional share effect is small or even negative. = Shift due to regional trends and conditions This could happen, for example, if the State has decided to Source: Center for Economic Education, University of Cincinnati, 1996. allocate large resources to development of corresponding sectors state-wide, and these sectors happen to be weak in a local economy.

Input-Output Analysis
The final part of the technical analysis to identify clusters and to measure their strength and likely impacts on a local or regional economy is the Input-Output analysis. Input-Output analysis is a highly technical exercise, based upon the development of multipliers (for jobs and earnings) for each sector and sub-sector of the economy. Input-Output tables, developed by the Bureau of Economic Analysis (BEA) of the US Department of Commerce, are used not only to calculate the impacts (output) of each input in the economy, they are also used to show the strength of interactions (purchases and sales) between related sectors of the economy. Because of this, input-output analysis is used to evaluate the strength of the interrelationships between industries within a cluster. The Input-Output tables are known as RIMS II, (Regional InputOutput Modeling System), and are available on a county or regional basis from the BEA. InputOutput tables for counties and regions are also available from private consulting firms, such as the Minnesota IMPLAN Group, Inc., or the REMI model. Input-Output analysis will provide final technical definition of the cluster. Input-output analysis has not been conducted in this study. HCRPC has applied for grant monies to perform this part of the technical cluster analysis at a later date, when and if a decision is taken to pursue a cluster strategy locally.

6. IMPLEMENTING A CLUSTER STRATEGY


While there are an increasing number of comprehensive documents available that detail how to implement a cluster strategy, there are no exact blueprints that can be followed. Part of the challenge is that while there are a large number of common elements and strategies available for implementing a cluster initiative, each locality or region is unique in its different needs, structural characteristics, political landscapes, histories, economic, cultural and human resource endowments. This means that if Hamilton County and the Cincinnati Metropolitan Region wish to undertake a cluster approach to economic development, the initiative and strategies will have to be customtailored to local structure, capacity and needs. However, the cluster approach is flexible and adaptive enough to accomplish this.

Community COMPASS 15

Drawing upon a number of reports21 from areas that are implementing a cluster strategy, HCRPC has synthesized an approach that can used for developing and implementing a cluster program:

Step 1: Assess potential benefits and challenges, and gather support for the cluster strategy
1.1. Conduct research to identify a workable approach and the benefits and challenges of implementing a cluster strategy (this task has been done for Hamilton County, in this report). Many areas reporting on cluster strategy implementation stress the importance of gathering political and business support for the considerable effort involved in putting a cluster program into effect. Support at the State level is generally stressed as a highly important (though not crucial) element in the success of cluster programs. Buy-in from business community leaders, local elected officials and senior economic development specialists and planners is crucial and can make or break a cluster endeavor.

1.2.

1.3. 1.4.

Step 2: Identify the Clusters22


2.1 2.2 Gather industry and employment data and make a preliminary identification of clusters (this task has been done for Hamilton County, in this report). Measure local cluster strength and growth trends relative to the clusters in the national economy (Location quotient and shift share analysis. This task has been done for Hamilton County in this report). Measure strength of linkages between industries in each cluster (input-output analysis). Appoint or recruit cluster working groups or cluster advisory groups for each of the identified clusters. Convene working groups to give expert local knowledge and input for refinement of cluster identities, cluster strengths and cluster weaknesses. 2.5.1 Catalog the key components of the clusters and map interrelationships among firms (combination of input-output analysis and local knowledge). Refine cluster analysis and cluster content (i.e. which industries really do belong in each cluster). Identify clusters that are not present in the county or regional economy, but which might have a good fit and whose presence would be beneficial to the area.

2.3 2.4 2.5

2.6 2.7

Step 3: Activate the Clusters


3.1 Convene cluster working groups or cluster advisory groups to articulate an achievable vision of what the cluster can become during the desired planning horizon (10, 20, 30 years). Convene working groups to select cluster development strategies. 3.2.1 Identify opportunities for growing the cluster in the desired direction by expanding existing companies, starting new companies and attracting outside companies. 3.2.2 Identify needs for specific support actions and strategies. Identify opportunities for more synergy within each cluster. Provide assistance and resources to facilitate cluster activity (places to meet, facilitators, cluster experts, recorders, logistics etc), at least to begin with, or until each cluster has established itself.

3.2

3.3 3.4

21 A Governors Guide to Cluster-Based Economic Development National Governors Association, Washington DC, 2002. http:/www.nga.org/center/ Cluster-Based Community Development Strategies Carnegie Mellon Center for Economic Development, Pittsburgh, PA, 2002. http://www.heinz.cmu.edu/ced/ The Added Value of the Industry Cluster Approach Waits, M.J, Economic Development Quarterly, Feb. 2000 Industry Clusters, An Economic Development Strategy for Minnesota, University of Minnesota Extension Service, Jan. 1999
22 Most of Steps 2 through 4 are attributable to A Governors Guide to Cluster-Based Economic Development, NGA, 2002

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Step 4: Support and Expand the Clusters


4.1 Target investments to clusters, according to identified needs and with sensitivity to the life-cycle stage of the cluster (for example, an emerging cluster will have different needs than a mature cluster). 4.1.1 Identify and inventory the types of sites and buildings needed by industry clusters. 4.1.2 Identify the geographic location of cluster industries and re-orient community land use planning and zoning to encourage more clustering. 4.1.3 Assess and attend to the infrastructure needs of clusters. Invest in cluster R&D23 and innovation, using funds from private, State and Federal sources. Establish cluster-specific technology centers or parks. 4.3.1 Go after talent. 4.3.2 Find anchor tenants. 4.3.3 Build on existing amenities. Support cluster-based entrepreneurial activity (for example, cluster spinoffs). 4.4.1 Attract similar and related firms to business incubators. 4.4.2 Embed entrepreneurial education into cluster activities. 4.4.3 Establish cluster expertise at small business assistance centers. 4.4.4 Form networks of entrepreneurs. Market clusters and build cluster markets. 4.5.1 Use the support structure developed by the cluster strategy to attract additional cluster firms and to retain and expand existing firms. 4.5.2 Assign marketing staff on a cluster basis. 4.5.3 Use cluster data and knowledge in marketing materials. Provide new data and analysis on a publicly accessible website for the benefit of cluster groups and new entrepreneurs. Strengthen networking and associative behavior. 4.7.1 Establish and recognize cluster associations and alliances (Government recognition is said to be particularly effective). 4.7.2 Facilitate external connections and participation in global networking (to promote exports, assist smaller firms that lack resources to do this on their own). Encourage intercluster communications channels, using newsletters, websites, magazines, networking events and partnering formats. Develop human resources for clusters. 4.9.1 Obtain State support for the development of a more skilled and specialized labor force. 4.9.1.1 Contextualize education (relate education to cluster needs). 4.9.1.2 Establish cluster skills centers (can be virtual centers). 4.9.1.3 Build career paths and ladders that qualify people for cluster employment. 4.9.2 Support Regional Skills Alliances or Supply-Chain Training Associations to cut costs of specialized training programs and retain cluster industries in the region.

4.2 4.3

4.4

4.5

4.6 4.7

4.8 4.9

Step 5: Monitor and Evaluate Cluster Progress


5.1 The county or regional economy should be kept under continuous observation to track cluster performance, progress towards building critical mass, and to identify new or emerging clusters. Request cluster working groups to report out annually, support the reporting process with hard data. Request feedback from cluster advisory groups regarding the adequacy and success of support efforts. Encourage and assist in forming new cluster groups as the opportunity arises.

5.2 5.3 5.4

23

R&D Industry research and development activities Community COMPASS 17

7. CONCLUSION WHERE DO WE GO FROM HERE?


Because of its versatility, the cluster approach to economic development is both useful and popular. Used to its broadest extent, a cluster strategy can potentially hit many targets at once and address different issues at the same time (for example, workforce training, education curricula, as well as infrastructure, communications and energy issues). Additionally, it can serve as a vehicle for collaboration and increase the cohesiveness of public policy initiatives. A decision to develop and implement a cluster strategy for the long-range economic vitality of Hamilton County and its jurisdictions must come from a broad range of elected officials such as the County Commissioners, Township Boards of Trustees and municipal Councils, as well as Economic Development specialists and planners, in coalition with Chambers of Commerce and business and industry leaders in the County. Hamilton County Regional Planning Commission has prepared the necessary groundwork for the launching of a cluster initiative, if such is desired by the community. The Greater Cincinnati Chamber of Commerce (GCCC) is currently funding a cluster analysis project for the remaining counties in the Cincinnati CMSA. When this project is complete, the region as a whole will possess an invaluable set of knowledge and tools upon which to base its economic development planning and strategies.

Next Steps
Following the cluster how to outlined in Section 6 of this report, a valuable next step towards implementing a cluster strategy would be the engagement of a leadership group composed of business community leaders, elected officials and senior economic development specialists and planners to champion the initiative and move it along. As the Greater Cincinnati Chamber of Commerce is preparing a cluster analysis for the Cincinnati region, (based upon many of the insights generated by HCRPCs study of Hamilton County), scheduled to be completed early in 2004, the Chamber may be the logical leader in carrying out this step. However, the Chambers efforts could be greatly strengthened by support from the Boards of County Commissioners in each county of the Cincinnati CMSA. Hamilton County is continuing its effort to educate and inform its jurisdictions and economic development planners about the benefits and challenges of cluster development by means of publication of this report, as well as data and maps on the HCRPC website, and a cluster how to workshop scheduled for December 12th, 2003. For Hamilton County, a logical next step might be to initiate a pilot project to select and activate a cluster, using the experience to prepare the path for a full-scale regional cluster development strategy. If this step is undertaken, the County would need partners including the Chambers of Commerce, business and industry leaders from the cluster that is selected, and jurisdictions within the County. This would entail the formation of a cluster advisory group or cluster working group, as outlined in Section 6, Step 2.4. A working group should be convened to give expert local knowledge and input for refinement of cluster identities, cluster strengths and cluster weaknesses and input-output analysis should be performed to catalog the key components of the cluster and map interrelationships among firms. The cluster should then be activated and supported, according to its needs, as outlined earlier. Publication of the Greater Cincinnati Chamber of Commerces region-wide cluster study will play a vital role in the implementation and potential success of the strategy that has been discussed in this report. Until the publication of the regional study, however, Hamilton County and its jurisdictions can continue to make incremental efforts that will assist in building a basis for long-range economic vitality for the County and its communities, and this experience will assist other counties in the region if they choose to become part of the cluster initiative.

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Appendix A: Hamilton County Cluster Analysis


This section includes maps, showing Zip Code area locations of cluster industries, brief commentaries on cluster industry performance from 1998 to 2000, and tables showing detailed indicators for cluster industries.

Community COMPASS 19

20 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

HAMILTON COUNTY ZIP CODE AREAS

Community COMPASS 21

22 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

HAMILTON COUNTY JURISDICTIONS AND NEIGHBORHOODS

HAMILTON COUNTY INDUSTRY CLUSTERS, 2003

Community COMPASS 23

24 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

ADVANCED BUSINESS AND FINANCIAL SERVICES CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis As might be expected, business establishments in this cluster are heavily concentrated in and around the Central Business District in the City of Cincinnati and in the Northeast quadrant of Hamilton County where client businesses and industries are concentrated. Star performers in this cluster include Interior, Graphic and Industrial design services; specialized real estate and investment and insurance financial services; accounting; testing laboratories, and custom computer programming services. Emerging industries in this cluster also include specialized financial services, legal services (law offices), services related to sales and marketing, and human resources services. Industries in this cluster that depend upon face-to-face contacts can be expected continue to remain heavily concentrated around central business districts and centers of government, although this picture may change if client industries move outwards. It is also uncertain what the effects of increasing electronic communications will be on the location choices of these industries.

Community COMPASS 25

Table 1 ADVANCED BUSINESS AND FINANCIAL SERVICE CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Annual Payroll Employees, Employees, Quotients for in Location ($1,000), per Capita, Hamilton County Hamilton County Employment, by Quotients for Hamilton County Hamilton County 2000 1998-2000 Sector, Hamilton Employment, 2000 2000 County, 2000 Hamilton County, 1998-2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 514 Information & data processing services 52 Finance and Insurance (less Commercial Banking) 5313 Activities related to real estate 533110 Lessors of other nonfinancial intangible asset 541 Professional, scientific & technical services TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 541410 Interior design services 523930 Investment advice 541614 Process, phys dist & log consulting services 541620 Environmental consulting services 524292 Insurance & pension funds, third party admin 541430 Graphic design services 52429 Other insurance related activities 524210 Insurance agencies & brokerages 541380 Testing laboratories 524113 Direct life Insurance carriers 541511 Custom computer programming services 541420 Industrial design services 522292 Real estate credit 541191 Title abstract & settlement offices 541211 Offices of certified public accountants 522310 Mortgage & nonmortgage brokers Non-Specialized, increasing specialization and positive regional shift 531390 Other activities related to real estate 523991 Trust, fiduciary & custody activities 522390 Other credit intermediation activities 522220 Sales financing 522320 Financial clearinghouse & reserve activities 533110 Lessors of other nonfinancial intangible asset 541320 Landscape architectural services 523110 Investment banking & securities dealing 541613 Marketing consulting services 523120 Securities brokerage 541519 Other computer related services 522294 Secondary market financing 541219 Other accounting services 541214 Payroll services 524126 Direct property & casualty insurance carriers 541110 Offices of lawyers 541612 Human res & exec search consulting services Specialized, decreasing specialization and negative regional shift 541512 Computer systems design services 541330 Engineering services 531312 Nonresidential property managers 522291 Consumer lending 541310 Architectural services 53131 Real estate property managers 541611 Admin & gen management consulting services 514199 All other information services Non-specialized, decreasing specialization and negative regional shift 525990 Other financial vehicles 52413 Reinsurance carriers 524130 Reinsurance carriers 522298 All oth nondepository credit intermediation 5313 Activities related to real estate 531320 Offices of real estate appraisers 523999 Miscellaneous financial investment activities 541370 Surveying, mapping (exc geophysical) services 541340 Drafting services 524127 Direct title insurance carriers 541213 Tax preparation services 514210 Data processing services 523910 Miscellaneous intermediation 531311 Residential property managers 524114 Direct health & medical insurance carriers 525930 Real estate investment trusts 52412 Other direct insurance carriers 523140 Commodity contracts brokerage 541199 All other legal services 524291 Claims adjusting 523920 Portfolio management 541490 Other specialized design services 541513 Computer facilities management services 514 Information & data processing services 541360 Geophysical surveying & mapping services 524298 All other insurance related activities 541618 Other management consulting services 5141 Information services 514110 News syndicates 541350 Building inspection services 514191 On-line information services 51419 Other information services 514120 Libraries & archives 522293 International trade financing 523130 Commodity contracts dealing

(1) 556,563 1,476 20,029 2,420 109 38,322 62,356

(2) 25,435 -48 1,951 107 42 4,211 6,263

(3) 1.00 0.57 0.98 0.84 2.22

(4) 0.0% -28.8% -3.1% 39.8% 4.5%

(5) 19,359,336 67,688 85,163 5,586

(6) 34,784 45,859 35,191 51,248

(7) -0.71% -40.03% -4.12% 45.55%

(8) 24,896 76 228 12

375 433 251 546 1,113 1,204 1,265 2,946 556 5,513 5,571 279 1,285 407 2,478 499

200 253 107 167 299 286 246 439 68 51 1,368 4 184 29 190 -29

1.74 1.34 1.43 2.06 1.85 3.30 1.27 1.01 1.27 2.30 2.33 4.11 1.11 1.53 1.19 1.54

79.2% 72.8% 45.9% 30.1% 28.4% 21.3% 19.9% 15.8% 14.8% 13.8% 7.5% 5.6% 0.8% 0.7% 0.6% 0.4%

(D) 16,080 9,204 22,396 39,172 66,061 44,981 121,657 19,858 251,601 358,516 14,935 49,179 13,147 120,458 21,585

(D) 37,136 36,669 41,018 35,195 54,868 35,558 41,296 35,716 45,638 64,354 53,530 38,272 32,302 48,611 43,257

(D) 100.41% 54.03% 32.54% 29.51% 22.27% 19.86% 15.32% 14.05% 11.66% 8.43% 4.71% 0.12% 0.05% -0.06% -0.30%

56 45 20 32 28 102 49 489 35 87 142 11 109 30 208 54

251 175 273 750 111 109 133 175 374 1,319 272 10 683 446 2,032 4,576 525

196 115 98 375 51 42 32 0 109 503 129 0 131 50 41 179 89

0.85 0.62 0.82 1.00 0.36 0.84 0.71 0.26 0.87 0.72 0.58 0.18 0.94 0.22 0.68 0.92 0.74

280.4% 171.0% 86.7% 83.2% 51.3% 39.8% 36.8% 19.3% 18.0% 17.9% 17.6% 13.5% 10.6% 5.6% 1.5% 1.2% 1.1%

10,507 (D) 7,076 (D) 2,975 5,586 3,364 (D) 17,214 109,266 20,477 (D) 19,394 19,772 94,341 243,580 30,323

41,861 (D) 25,919 (D) 26,802 51,248 25,293 (D) 46,027 82,840 75,283 (D) 28,395 44,332 46,428 53,230 57,758

335.57% (D) (D) (D) (D) 45.55% 34.79% (D) 20.74% 23.65% 27.32% (D) 11.12% 5.26% 0.79% 0.55% 0.46%

21 7 39 31 7 12 13 11 69 94 43 1 79 11 99 484 87

2,658 5,556 901 487 953 2,002 1,688 175

833 52 -23 -93 35 -83 104 -200

1.04 1.40 1.60 1.07 1.09 1.01 1.16 3.54

-0.2% -0.9% -0.9% -3.7% -8.2% -10.3% -10.8% -71.4%

171,207 268,125 33,835 24,076 50,366 68,932 107,637 (D)

64,412 48,259 37,553 49,437 52,850 34,432 63,766 (D)

-1.28% -1.62% -1.59% -3.82% -10.02% -11.79% -13.72% (D)

136 242 45 37 104 155 129 1

10 10 10 175 2,420 167 10 60 10 60 863 1,013 80 1,101 1,511 60 1,750 10 29 50 638 10 136 1,476 4 102 48 463 32 31 175 411 20 0 0

10 10 10 0 107 -6 0 0 0 -2 43 -20 12 -60 -288 0 -303 0 -5 -26 -54 0 -58 -48 -6 -27 -28 -28 -28 -29 0 -22 -40 -10 -10

0.48 0.13 0.13 0.69 0.98 0.87 0.35 0.21 0.20 0.26 0.99 0.70 0.47 0.77 0.96 0.48 0.54 0.12 0.55 0.23 0.84 0.30 0.44 0.57 0.12 0.56 0.57 0.41 0.58 0.46 0.20 0.45 0.12 0.00 0.00

0.0% 0.0% 0.0% -0.7% -3.1% -4.9% -5.1% -5.2% -7.2% -8.2% -9.4% -10.9% -12.4% -14.5% -14.6% -15.0% -15.8% -18.2% -22.1% -23.4% -23.5% -28.1% -28.1% -28.8% -32.9% -35.2% -47.1% -51.4% -52.8% -53.7% -55.3% -56.7% -76.0% -100.0% -100.0%

(D) (D) (D) (D) 85,163 5,724 (D) (D) (D) (D) 4,387 51,826 8,041 35,097 79,062 (D) (D) (D) 697 1,987 61,099 (D) 6,959 67,688 112 3,822 2,273 15,862 554 1,046 (D) 14,800 508 -

(D) (D) (D) (D) 35,191 34,275 (D) (D) (D) (D) 5,083 51,161 100,513 31,877 52,324 (D) (D) (D) 24,034 39,740 95,766 (D) 51,169 45,859 28,000 37,471 47,354 34,259 17,313 33,742 (D) 36,010 25,400 (D) (D)

(D) (D) (D) (D) -4.12% -5.62% (D) (D) (D) (D) -11.72% -12.80% -17.57% -16.86% -15.05% (D) (D) (D) -24.98% -20.68% -29.19% (D) -28.11% -40.03% (D) -43.82% -57.01% -101.10% (D) (D) (D) -125.74% (D) (D) (D)

2 2 2 7 228 52 1 11 2 12 55 41 25 110 23 5 111 1 4 13 51 1 12 76 3 8 16 35 3 10 26 27 5 -

26 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

ADVANCED MANUFACTURING CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis Industries in this cluster are largely concentrated in the I71-I75 industrial corridor. Hamilton County is highly specialized in transportation equipment manufacturing (includes aircraft engines and engine parts, and transmission and power train parts for motor vehicles). The county is also specialized in fabricated metal product manufacturing, a broad sector that includes boiler, tank and shipping containers, metal window and door manufacturing and machine shops. With a location quotient of 7.1 and a regional shift effect of 102.9% indicating a high level of competitive advantage, boiler, tank and shipping container manufacturing was a star performer in the county economy between 1998 and 2000. The sector more than doubled its employment during this time. Metal window and door manufacturing and the entire fabricated metal product sector also performed highly. Amongst emerging industries in this cluster radio, TV broadcast and wireless communication equipment manufacturing stands out in growth and increasing specialization.

Community COMPASS 27

Table 2 ADVANCED MANUFACTURING CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 (1) 556,563 1,764 11,891 9,399 1,760 3,161 12,307 (2) 25,435 -277 1,764 -1,519 44 286 2,744 (3) 1.00 0.60 1.36 1.40 0.23 1.10 1.35 (4) 0.0% -11.0% 19.9% -9.1% 11.5% 13.1% 32.2% (5) 19,359,336 62,746 423,708 425,333 78,652 116,352 775,566 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 35,570 35,633 45,253 44,689 36,809 63,018

(7) -0.71% -11.37% 18.82% -9.31% 9.93% 12.10% 30.72%

(8) 24,896 25 262 140 48 38 29

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 331 Primary metal mfg 332 Fabricated metal product mfg 333 Machinery mfg 334 Computer & electronic product mfg 335 Electrical equip, appliance & component mfg 336 Transportation equipment mfg

TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 332321 Metal window & door mfg 332313 Plate work mfg 332214 Kitchen utensil, pot & pan mfg 3314 Nonferrous (exc alum) production & processing 333131 Mining machinery & equipment mfg 3324 Boiler, tank & shipping container mfg 336 Transportation equipment mfg 3333 Commercial & service industry machinery mfg 332 Fabricated metal product mfg 335 Electrical equip, appliance & component mfg 33281 Coating, engrave, heat treating & oth activity 333298 All other industrial machinery mfg 3327 Mach shops, turn prod, screw, nut, bolt mfg 332322 Sheet metal work mfg Non-Specialized, increasing specialization and positive regional shift 33111 Iron & steel mills & ferroalloy mfg 33422 Radio, TV broadcast & wireless comm equip mfg 33299 All other fabricated metal product mfg 33411 Computer & peripheral equipment mfg 333291 Paper industry machinery mfg 33221 Cutlery & handtool mfg 333111 Farm machinery & equipment mfg 3359 Other electrical equipment & component mfg 33329 Other industrial machinery mfg 334 Computer & electronic product mfg 33431 Audio & video equipment mfg 332116 Metal stamping 33531 Electrical equipment mfg 333120 Construction machinery mfg 33211 Forging & stamping Specialized, decreasing specialization and negative regional shift 333292 Textile machinery mfg 332618 Other fabricated wire product mfg 333613 Mechanical power transmission equipment mfg 33291 Metal valve mfg 333293 Printing machinery & equipment mfg 333 Machinery mfg 3315 Foundries 3339 Other general purpose machinery mfg 33351 Metalworking machinery mfg Non-specialized, decreasing specialization and negative regional shift 33429 Other communications equipment mfg 332510 Hardware mfg 33451 Nav, measuring, medical, control instruments mfg 332312 Fabricated structural metal mfg 332323 Ornamental & architectural metal work mfg 331316 Aluminum extruded product mfg 33341 HVAC & commercial refrigeration equipment mfg 332114 Custom roll forming 333220 Plastics & rubber industry machinery mfg 33461 Mfg & reproducing magnetic & optical media 331 Primary metal mfg 336399 All other motor vehicle parts mfg 33441 Semiconductor & oth electronic component mfg 332311 Prefab metal building & component mfg 333294 Food product machinery mfg SECTORS WITH SUPPRESSED DATA 3361 Motor vehicle mfg 336120 Heavy duty truck mfg 3362 Motor vehicle body & trailer mfg 336211 Motor vehicle body mfg 336212 Truck trailer mfg 336312 Gasoline engine & engine parts mfg 336321 Vehicular lighting equipment mfg 336340 Motor vehicle brake system mfg 336350 MV transmission & power train parts mfg 336370 Motor vehicle metal stamping 336411 Aircraft mfg 336412 Aircraft engine & engine parts mfg 336413 Other aircraft part & auxiliary equipment mfg 336612 Boat building 336999 All other transportation equipment mfg

40,609

3,008

1.41

13.2%

1,750 175 60 375 60 3,254 12,307 835 11,891 3,161 1,047 642 2,533 683

1,000 39 0 0 0 1,597 2,744 164 1,764 286 53 -32 -19 41

4.39 1.38 1.92 1.03 1.02 7.10 1.35 1.33 1.36 1.10 1.38 2.59 1.23 1.01

110.7% 33.9% 25.6% 13.0% 13.0% 111.4% 32.2% 24.8% 19.9% 13.1% 8.6% 7.4% 5.1% 2.4%

(D) (D) (D) (D) (D) 98,488 775,566 28,166 423,708 116,352 40,579 29,053 100,885 29,269

(D) (D) (D) (D) (D) 30,267 63,018 33,732 35,633 36,809 38,757 45,254 39,828 42,854

(D) (D) (D) (D) (D) 102.87% 30.72% 24.05% 18.82% 12.10% 7.69% 6.00% 4.13% 1.78%

6 5 1 4 3 7 29 11 262 38 42 11 107 22

10 375 337 10 60 113 10 834 750 1,760 10 130 802 10 203

10 201 139 0 0 17 0 94 0 44 0 7 -30 0 -3

0.01 0.52 0.34 0.01 0.87 0.30 0.03 0.79 1.00 0.23 0.07 0.28 0.83 0.03 0.25

0.0% 127.0% 76.8% 26.3% 25.7% 22.5% 17.3% 13.2% 11.6% 11.5% 9.7% 4.6% 2.5% 0.5% 0.2%

(D) (D) 11,651 (D) (D) 2,986 (D) 36,848 (D) 78,652 (D) 4,285 31,104 (D) 6,802

(D) (D) 34,573 (D) (D) 26,425 (D) 44,182 (D) 44,689 (D) 32,962 38,783 (D) 33,507

(D) (D) 73.27% (D) (D) 20.94% (D) 12.48% (D) 9.93% (D) 3.92% 1.76% (D) -0.46%

1 4 19 3 2 5 1 11 21 48 1 6 19 1 10

60 750 327 1,074 96 9,399 1,343 3,554 3,289

60 0 -34 -142 -24 -1,519 -229 -690 -885

1.07 3.20 3.23 1.82 1.06 1.40 1.23 2.13 2.90

0.0% -1.4% -2.2% -7.9% -8.6% -9.1% -11.1% -11.8% -12.9%

(D) (D) 12,394 38,742 3,929 425,333 45,356 152,803 172,226

(D) (D) 37,902 36,073 40,927 45,253 33,772 42,995 52,364

(D) (D) -2.65% -8.23% -8.15% -9.31% -11.37% -11.89% -12.33%

1 4 4 10 4 140 19 42 46

10 60 977 261 175 60 387 60 60 134 1,764 71 296 60 10

10 0 -81 -4 0 0 -5 0 0 -41 -277 -10 -79 -21 -50

0.08 0.16 0.43 0.55 0.99 0.37 0.44 0.74 0.58 0.63 0.60 0.08 0.11 0.42 0.11

0.0% -1.4% -1.5% -2.7% -4.7% -4.9% -4.9% -7.2% -8.5% -9.8% -11.0% -11.4% -18.2% -29.5% -82.9%

(D) (D) 45,236 10,597 (D) (D) 15,720 (D) (D) 4,002 62,746 2,454 9,594 (D) (D)

(D) (D) 46,301 40,602 (D) (D) 40,620 (D) (D) 29,866 35,570 34,563 32,412 (D) (D)

(D) (D) -2.08% -3.37% (D) (D) -5.82% (D) (D) (D) -11.37% -11.93% -18.24% (D) (D)

1 4 21 12 7 1 10 2 1 5 25 6 13 2 3

20-99 20-99 100-249 20-99 20-99 0-19 20-99 0-19 2,500-4,999 250-499 20-99 5,000-9,999 20-99 0-19 0-19

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

1 1 3 2 1 1 2 1 1 3 1 6 2 1 1

28 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

ADVANCED MATERIALS CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis The Advanced Materials cluster may be regarded as a separate cluster, or a sub-cluster of the Advanced Manufacturing cluster as needed. In Hamilton County, this cluster is small and not specialized compared to the cluster at the national level. There is only one large firm employing over 500 workers in the county. Cluster components include basic chemical manufacturing, plastics materials and resin, nonferrous metal production, semiconductors and other electronic components, photographic and photocopying equipment, and specialized measuring, medical and control instruments. Of these broad components, only basic chemicals and plastics are specialized in the county. In the basic chemicals sector, synthetic dye and pigment manufacturing is highly specialized, with a location quotient of 10.95, however this specialization is declining. Because of strong industry presence in the Advanced Manufacturing cluster, Hamilton County should, if it wishes, be able to build a stronger Advanced Materials Cluster.

Community COMPASS 29

Table 3 ADVANCED MATERIALS CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments Hamilton Co., 2000

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 3251 Basic chemical mfg 325211 Plastics material & resin mfg 3314 Nonferrous (exc alum) production & processing 333315 Photographic & photocopying equipment mfg 3344 Semiconductor & oth electronic component mfg 33451 Nav, measuring, medical, control instruments mfg TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 325211 Plastics material & resin mfg 325188 All other basic inorganic chemical mfg 334512 Automatic environmental control mfg 33142 Copper rolling, drawing, extruding & alloying 334516 Analytical laboratory instrument mfg 3251 Basic chemical mfg 325192 Cyclic crude & intermediate mfg Non-Specialized, increasing specialization and positive regional shift 3314 Nonferrous (exc alum) production & processing 325120 Industrial gas mfg 334419 Other electronic component mfg 33141 Nonferrous (exc aluminum) smelting & refining 333315 Photographic & photocopying equipment mfg 331423 Secondary smelting, refining, alloying of copper 331419 Other nonferrous metal prim smelting, refining 331491 Other nonferrous metal roll, draw, extruding 334517 Irradiation apparatus mfg 334513 Industrial process control mfg Specialized, decreasing specialization and negative regional shift 32513 Synthetic dye & pigment mfg 334417 Electronic connector mfg 331421 Copper rolling, drawing & extruding Non-specialized, decreasing specialization and negative regional shift 334412 Bare printed circuit board mfg 334413 Semiconductor & related device mfg 33451 Nav, measuring, medical, control instruments mfg 334514 Total fluid meter & counting device mfg 3344 Semiconductor & oth electronic component mfg 334519 Other measuring & controlling device mfg 334510 Electromedical apparatus mfg 334515 Electricity measuring, testing instrument mfg 334416 Electronic coil, transformer, oth inductor mfg

(1) 556,563 2,394 750 421 60 296 977 4,898

(2) 25,435 -105 0 -277 0 -79 -81 -313

(3) 1.00 2.56 2.31 0.60 0.58 0.11 0.43 0.64

(4) 0.0% 3.9% (D) (D) 16.1% -18.2% -1.5% -1.3%

(5) 19,359,336 116,580 (D) (D) (D) 9,594 45,236

(6) 34,784 48,697 (D) (D) (D) 32,412 46,301

(7) -0.71% 2.99% (D) (D) (D) -18.24% -2.08%

(8) 24,896 18 2 4 1 13 21

750 375 115 375 175 2,394 60

0 128 1 0 0 -105 0

2.31 1.44 1.17 2.89 1.04 2.56 1.67

(D) 62.4% 26.4% 9.2% 6.9% 3.9% 2.3%

(D) (D) 3,779 (D) (D) 116,580 (D)

(D) (D) 32,861 (D) (D) 48,697 (D)

(D) (D) 20.52% (D) (D) 2.99% (D)

2 5 4 2 1 18 2

421 10 95 10 60 10 10 60 10 181

-277 5 35 0 0 0 0 0 0 -28

0.60 0.17 0.22 0.16 0.58 0.94 0.21 0.51 0.16 0.89

(D) 115.6% 66.6% 27.2% 16.1% 12.6% 8.5% 8.4% 2.9% 2.7%

(D) (D) 3,479 (D) (D) (D) (D) (D) (D) 8,876

(D) (D) 36,621 (D) (D) (D) (D) (D) (D) 49,039

(D) (D) (D) (D) (D) (D) (D) (D) (D) 1.68%

4 4 7 1 1 1 1 1 1 6

873 181 175

-82 -194 -200

10.95 1.08 1.78

-1.8% -44.3% -49.3%

42,468 5,589 (D)

48,646 30,878 (D)

-2.29% (D) (D)

3 3 1

10 10 977 60 296 175 175 10 10

10 10 -81 0 -79 -47 -200 -32 -50

0.03 0.01 0.43 0.75 0.11 0.88 0.66 0.03 0.11

0.0% 0.0% -1.5% -1.5% -18.2% -32.2% -53.6% -74.5% -81.4%

(D) (D) 45,236 (D) 9,594 (D) (D) (D) (D)

(D) (D) 46,301 (D) 32,412 (D) (D) (D) (D)

(D) (D) -2.08% (D) -18.24% (D) (D) (D) (D)

1 1 21 1 13 4 2 2 1

30 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

ARTS, ENTERTAINMENT, RECREATION & VISITOR CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis While this cluster largely serves the local population, it can be considered as an exporting cluster since it also serves the regional population and visitors from outside the region. Patrons of these industries who come from outside Hamilton County bring new money into the county. This cluster is not specialized compared to the concentration of similar industries in the nation as a whole, however between 1998 and 2000 the cluster grew slightly in terms of employment and degree of specialization. This growth was due to increases in food service industries rather than the broad arts, entertainment and recreation sector. The museums, zoos and botanical gardens sectors suffered slight declines in specialization during the period. Amongst the cluster industries classified as star performers is the spectator sports sector. This sector has the highest per capita payroll income in the county at $248, 940 per annum. Amongst emerging sectors in this cluster, cafeterias, golf courses and country clubs and other travel arrangement and reservation services increased the most in specialization and competitive advantage. A persistent problem in this cluster, however, is low rates of pay.

Community COMPASS 31

ARTS, ENTERTAINMENT, RECREATION & VISITOR CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000 (EXCLUDING EATING AND DRINKING PLACES)

Note This map offers another view of the Arts, Entertainment, Recreation & Visitor Industry Cluster by excluding eating and drinking establishments.

32 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

Table 4 ARTS, ENTERTAINMENT, RECREATION & VISITOR INDUSTRY CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 (1) 556,563 1,062 6,599 3,901 10 10 10 10 49 20,933 12,284 110 1,384 604 1,518 488 336 53 60 90 10 49,521 (2) 25,435 -154 544 -133 0 0 8 0 -82 940 979 67 257 102 21 -262 11 -8 0 -1 0 2,289 (3) 1.00 0.71 0.78 0.58 0.09 0.44 0.05 0.10 0.64 1.10 0.85 0.32 0.82 1.14 0.95 0.84 1.29 0.16 0.46 0.32 0.16 0.88 (4) 0.0% -15.0% -0.2% -5.1% -10.2% -10.7% 377.1% -6.5% -61.4% 0.2% 6.8% 216.3% 4.9% -5.5% -0.5% -38.7% -0.1% -4.6% 15.8% -0.4% -4.5% 0.6% (5) 19,359,336 33,156 260,441 73,830 (D) (D) (D) (D) 582 232,547 113,755 1,404 14,330 7,477 13,197 14,810 14,839 1,111 (D) 3,031 (D) Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 31,220 39,467 18,926 (D) (D) (D) (D) 11,878 11,109 9,260 12,764 10,354 12,379 8,694 30,348 44,164 20,962 (D) 33,678 (D)

(7) -0.71% -16.07% -0.97% -5.94% (D) (D) (D) (D) -60.18% -0.54% 6.20% 174.39% 4.96% -7.90% -1.23% (D) -0.79% -4.82% (D) -1.03% (D)

(8) 24,896 111 323 102 2 2 4 2 15 632 620 11 137 32 275 11 20 5 3 18 1

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 5615 Travel arrangement & reservation services 71 Arts, entertainment & recreation 721110 Hotels (exc casino hotels) & motels 72119 Other traveler accommodation 721199 All other traveler accommodation 72121 RV parks & recreational camps 721214 Recreational, vacation camps (exc campgrounds) 721310 Rooming & boarding houses 722110 Full-service restaurants 722211 Limited-service restaurants 722212 Cafeterias 722213 Snack & nonalcoholic beverage bars 722320 Caterers 722410 Drinking places (alcoholic beverages) 532111 Passenger car rental 532120 Truck, utility trailer & RV rental & leasing 33992 Sporting & athletic goods mfg 33993 Doll, toy & game mfg 421910 Sporting & recreational goods & supply whsle 487210 Scenic & sightseeing transportation, water TOTALS CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 561599 All oth travel arrange & reservation services 711211 Sports teams and clubs 71121 Spectator sports 713950 Bowling centers 7121 Museums, historical sites & like institutions 722110 Full-service restaurants Non-Specialized, increasing specialization and positive regional shift 72121 RV parks & recreational camps 722212 Cafeterias 56159 Oth travel arrangement & reservation services 713910 Golf courses & country clubs 33993 Doll, toy & game mfg 713110 Amusement & theme parks 713940 Fitness & recreational sports centers 711110 Theater companies & dinner theaters 7139 Other amusement & recreation industries 722211 Limited-service restaurants 722213 Snack & nonalcoholic beverage bars 711190 Other performing arts companies 712120 Historical sites Specialized, decreasing specialization and negative regional shift 532120 Truck, utility trailer & RV rental & leasing 561591 Convention and visitors bureaus 722320 Caterers 711120 Dance companies 712110 Museums 712130 Zoos & botanical gardens 711310 Promoters of entertainment events with facility 711510 Independent artists, writers & performers 7113 Promoters of entertainment events Non-specialized, decreasing specialization and negative regional shift 71 Arts, entertainment & recreation 421910 Sporting & recreational goods & supply whsle 722410 Drinking places (alcoholic beverages) 487210 Scenic & sightseeing transportation, water 33992 Sporting & athletic goods mfg 721110 Hotels (exc casino hotels) & motels 711212 Racetracks 721214 Recreational, vacation camps (exc campgrounds) 713290 Other gambling industries 72119 Other traveler accommodation 721199 All other traveler accommodation 711219 Other spectator sports 5615 Travel arrangement & reservation services 7111 Performing arts companies 7132 Gambling industries 711410 Agents, managers for artists & other public figures 713930 Marinas 561520 Tour operators 712190 Nature parks & other similar institutions 713990 All other amusement & recreation industries 561510 Travel agencies 532111 Passenger car rental 7131 Amusement parks & arcades 711320 Promoters of entertainment events without facility 713120 Amusement arcades 711130 Musical groups & artists 721310 Rooming & boarding houses

375 375 564 453 913 20,933

315 53 137 25 132 940

1.06 2.11 1.15 1.06 1.70 1.10

433.6% 5.5% 20.9% 4.9% 2.9% 0.2%

(D) (D) 140,402 4,746 20,138 232,547

(D) (D) 248,940 10,477 22,057 11,109

(D) (D) 22.07% 4.29% 2.53% -0.54%

11 5 9 22 18 632

10 110 357 1,410 60 60 1,486 207 3,595 12,284 1,384 10 10

8 67 222 315 0 0 259 29 543 979 257 0 0

0.05 0.32 0.87 0.97 0.46 0.12 0.80 0.67 0.77 0.85 0.82 0.25 0.25

377.1% 216.3% 130.5% 17.6% 15.8% 12.5% 9.4% 9.4% 7.8% 6.8% 4.9% 3.5% 2.0%

(D) 1,404 15,109 30,333 (D) (D) 16,596 4,587 56,718 113,755 14,330 (D) (D)

(D) 12,764 42,322 21,513 (D) (D) 11,168 22,159 15,777 9,260 10,354 (D) (D)

(D) 174.39% 148.96% 18.55% (D) (D) 9.68% 9.24% 7.75% 6.20% 4.96% (D) (D)

4 11 13 44 3 3 102 10 204 620 137 2 1

336 60 604 60 750 375 517 187 613

11 0 102 0 0 0 2 -10 -83

1.29 1.09 1.14 1.15 2.04 3.75 2.39 1.02 1.75

-0.1% -1.2% -5.5% -10.0% -11.8% -14.2% -21.3% -21.8% -28.6%

14,839 (D) 7,477 (D) (D) (D) 7,987 6,281 9,472

44,164 (D) 12,379 (D) (D) (D) 15,449 33,588 15,452

-0.79% (D) -7.90% (D) (D) (D) -28.00% -27.33% -36.03%

20 2 32 1 15 1 12 26 26

6,599 90 1,518 10 53 3,901 60 10 10 10 10 10 1,062 535 10 24 11 28 10 235 677 488 175 96 60 175 49

544 -1 21 0 -8 -133 0 0 0 0 0 0 -154 -59 0 -2 -2 -8 0 -54 -368 -262 -200 -85 -115 -200 -82

0.78 0.32 0.95 0.16 0.16 0.58 0.27 0.10 0.04 0.09 0.44 0.11 0.71 0.87 0.01 0.31 0.09 0.14 0.33 0.47 0.76 0.84 0.29 0.71 0.58 0.82 0.64

-0.2% -0.4% -0.5% -4.5% -4.6% -5.1% -5.7% -6.5% -9.5% -10.2% -10.7% -13.7% -15.0% -15.2% -17.1% -17.1% -20.5% -23.9% -25.4% -30.8% -34.0% -38.7% -46.0% -54.7% -54.8% -56.4% -61.4%

260,441 3,031 13,197 (D) 1,111 73,830 (D) (D) (D) (D) (D) (D) 33,156 21,757 (D) 768 201 710 (D) 4,842 17,337 14,810 (D) 1,485 (D) (D) 582

39,467 33,678 8,694 (D) 20,962 18,926 (D) (D) (D) (D) (D) (D) 31,220 40,667 (D) 32,000 18,273 25,357 (D) 20,604 25,609 30,348 (D) 15,469 (D) (D) 11,878

-0.97% -1.03% -1.23% (D) -4.82% -5.94% (D) (D) (D) (D) (D) (D) -16.07% -16.90% (D) -19.83% -22.54% -25.12% (D) -37.06% -34.01% (D) (D) -64.77% (D) (D) -60.18%

323 18 275 1 5 102 2 2 1 2 2 2 111 25 1 7 4 4 1 32 94 11 7 14 4 12 15

Community COMPASS 33

BIO-MEDICAL / BIO-TECHNICAL CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis This cluster, also sometimes known as the Life Sciences cluster, is seen as a target of opportunity in many areas of the United States and overseas. Because of this, policy makers choosing to target growth in this cluster need to be aware of the competition they face, and of their own particular competitive advantages (if any). For example, the pharmaceutical and medicine manufacturing sectors in neighboring Indiana are also highly specialized. Hamilton Countys chief advantages lie within the pharmaceutical and medicine manufacturing sub-sectors, commercial and service industry machinery manufacturing, testing laboratories and surgical and medical instrument manufacturing. The countys specialization in the surgical and medical instrument manufacturing sector is weak, however, although the supports for strengthening are present in the county economy (for example, the fabricated metal products and plastics products sectors are strong). General medical and surgical hospitals usually provide the bulk of employment in the Biomedical/Biotechnical cluster, as they and their clients are generally the largest producers and consumers of medical and research products and services. This sector declined slightly in Hamilton County over the study period, and may continue to decline as hospital groups extend their services into the suburban counties.

34 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

Table 5 BIO-MEDICAL/BIO-TECHNICAL CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Percent Change Annual Payroll Location Total Mid-March Change inTotal ($1,000), in Location Quotients for Employees, Employees, Hamilton Employment, by Quotients for Hamilton Hamilton County 2000 Employment, Sector, County 2000 County 1998Hamilton Hamilton 2000 County, 1998County, 2000 2000 (1) 556,563 835 1,475 977 1,106 766 556 889 193 25,770 32,567 (2) 25,435 164 314 -81 63 -184 68 155 -49 -1,985 -1,535 (3) 1.00 1.33 1.33 0.43 0.74 (D) 1.27 0.51 0.26 1.14 1.02 (4) 0.0% 24.8% 22.1% -1.5% 3.7% (D) 14.8% 5.2% -17.5% -6.8% -4.8% (5) 19,359,336 28,166 62,851 45,236 37,760 40,703 19,858 39,215 9,964 848,468 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 33,732 42,611 46,301 34,141 53,137 35,716 44,111 51,627 32,925

(7) -0.71% 24.05% 22.28% -2.08% 3.12% -27.35% 14.05% 5.22% -17.52% -7.45%

(8) 24,896 11 12 21 39 25 35 44 33 12

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 33331 Commercial & service industry machinery mfg 32541 Pharmaceutical & medicine mfg 33451 Nav, measuring, medical, control instruments mfg 33911 Medical equipment & supplies mfg 422210 Drugs & druggists' sundries whsle 541380 Testing laboratories 5417 Scientific R&D services 62151 Medical & diagnostic laboratories 622110 General medical & surgical hospitals TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 32541 Pharmaceutical & medicine mfg 33331 Commercial & service industry machinery mfg 541380 Testing laboratories 339112 Surgical & medical instrument mfg Non-Specialized, increasing specialization and positive regional shift 33911 Medical equipment & supplies mfg 541710 R&D in physical, engineering & life sciences Specialized, decreasing specialization and negative regional shift 622110 General medical & surgical hospitals Non-specialized, decreasing specialization and negative regional shift 339116 Dental laboratories 33451 Nav, measuring, medical, control instruments mfg 621512 Diagnostic Imaging centers 62151 Medical & diagnostic laboratories 339113 Surgical appliance & supplies mfg 621511 Medical laboratories SECTORS WITH SUPPRESSED DATA 325412 Pharmaceuticals preparations 325413 In Vitro Diagnostic substances 325414 Biological products excluding diagnostic 334510 Electromedical apparatus mfg 334516 Analytical laboratory instrument mfg 334517 Irradiation apparatus mfg 339111 Laboratory apparatus & furniture mfg 339114 Dental equipment & supplies mfg 339115 Ophthalmic goods mfg 422210 Drugs & druggists' sundries whsle 541720 R&D in social sciences & humanities

1,475 835 556 624

314 164 68 34

1.33 1.33 1.27 1.23

22.1% 24.8% 14.8% 4.1%

62,851 28,166 19,858 23,099

42,611 33,732 35,716 37,018

22.28% 24.05% 14.05% 3.46%

12 11 35 8

1,106 854

63 156

0.74 0.55

3.7% 6.1%

37,760 37,804

34,141 44,267

3.12% 6.24%

39 37

25,770

-1,985

1.14

-6.8%

848,468

32,925

-7.45%

12

128 977 88 193 108 105

8 -81 -9 -49 -3 -40

0.59 0.43 0.34 0.26 0.25 0.22

-1.1% -1.5% -22.1% -17.5% -2.5% -18.3%

3,670 45,236 4,887 9,964 2,052 5,077

28,672 46,301 55,534 51,627 19,000 48,352

-1.91% -2.08% -26.53% -17.52% -3.18% -16.79%

19 21 19 33 4 14

1,000-2,499 0-19 20-99 100-249 100-249 0-19 100-249 0-19 0-19 766 35

(D) (D) (D) (D) (D) (D) (D) (D) (D) -184 -1

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) 40,703 1,411

(D) (D) (D) (D) (D) (D) (D) (D) (D) 53,137 40,314

(D) (D) (D) (D) (D) (D) (D) (D) (D) -27.35% -17.00%

8 2 2 2 1 1 4 3 1 25 7

Community COMPASS 35

CHEMICALS CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis The chemicals cluster is composed of industries manufacturing many products for which the Cincinnati area is well-known. These include cosmetics and lotions (325620 Toilet preparation manufacturing); paint, coating and adhesive manufacturing; polish and other sanitation goods manufacturing, printing inks and synthetic organic dye and pigment manufacturing, as well as plastics products. The cluster as a whole is specialized compared to the nation, though not highly specialized, and increased its specialization slightly from 1998 to 2000. Star sectors within the cluster during the study period include ground or treated mineral and earth manufacturing, polish and other sanitation goods, paints and coatings, synthetic organic dye and pigments (with a massive location quotient of 22.9), all other miscellaneous chemical product and preparations and all other basic organic and inorganic chemicals. Plastics products manufacturing grew and increased in specialization, while soap, cleaners and toilet preparations and printing ink manufactures declined in specialization. Average annual per capita payroll incomes in these industries are fairly high ($40,000 plus).

36 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

Table 6 CHEMICALS CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Percent Change Annual Payroll Location Total Mid-March Change inTotal ($1,000), in Location Quotients for Employees, Employees, Hamilton Employment, by Quotients for Hamilton Hamilton County 2000 Employment, Sector, County 1998County 2000 Hamilton Hamilton 2000 County, 1998County, 2000 2000 (1) 556,563 8,528 3,390 201 255 1,064 218 47 13,703 (2) 25,435 244 419 -6 11 -393 19 -24 270 (3) 1.00 1.97 0.82 0.19 0.66 1.31 0.46 0.28 1.21 (4) 0.0% 10.1% 8.8% -0.9% 5.0% -49.3% 5.2% -14.1% 3.7% (5) 19,359,336 404,299 109,665 4,849 9,404 50,784 8,895 2,264 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 47,408 32,350 24,124 36,878 47,729 40,803 48,170

(7) -0.71% 4.60% 11.51% -5.19% 7.28% -28.17% 11.79% -34.25%

(8) 24,896 99 49 7 10 93 11 8

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 325 Chemical mfg 3261 Plastics product mfg 3262 Rubber product mfg 3279 Other nonmetallic mineral product mfg 4226 Chemical & allied products whsle 422710 Petroleum bulk stations & terminals 422720 Petroleum prod whsle (exc bulk sta, terminals) TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 327992 Ground or treated mineral & earth mfg 325998 All oth misc chemical product & prep mfg 325612 Polish & other sanitation goods mfg 325510 Paint & coating mfg 325199 All other basic organic chemical mfg 3255 Paint, coating & adhesive mfg 325132 Synthetic organic dye & pigment mfg 325188 All other basic inorganic chemical mfg 327999 All oth misc nonmetallic mineral product mfg 325 Chemical mfg 3251 Basic chemical mfg 325314 Fertilizer (mixing only) mfg 325620 Toilet preparation mfg 325613 Surface active agent mfg 3259 Other chemical product & preparation mfg 325192 Cyclic crude & intermediate mfg Non-Specialized, increasing specialization and positive regional shift 325311 Nitrogenous fertilizer mfg 325120 Industrial gas mfg 3261 Plastics product mfg 325991 Custom compounding of purchased resin 422710 Petroleum bulk stations & terminals 3279 Other nonmetallic mineral product mfg 3253 Pesticide, fertilizer & oth ag chemical mfg 326299 All other rubber product mfg 327910 Abrasive product mfg 325992 Photo film, paper, plate & chemical mfg Specialized, decreasing specialization and negative regional shift 325520 Adhesive mfg 325211 Plastics material & resin mfg 3256 Soap, cleaners & toilet preparation mfg 325910 Printing ink mfg 4226 Chemical & allied products whsle 422690 Other chemical & allied products whsle 325611 Soap & other detergent mfg Non-specialized, decreasing specialization and negative regional shift 3262 Rubber product mfg 326212 Tire retreading 327991 Cut stone & stone product mfg 326291 Rubber product mfg for mechanical use 422720 Petroleum prod whsle (exc bulk sta, terminals) 325212 Synthetic rubber mfg 422610 Plastics materials & basic forms, shapes whsle 325920 Explosives mfg

175 375 333 766 1,750 1,085 873 275 100 8,528 2,394 60 750 60 750 60

115 281 83 138 0 142 -82 28 4 244 -105 0 0 0 0 0

3.57 2.06 3.04 2.95 4.40 2.94 22.86 1.05 1.66 1.97 2.56 1.39 2.42 1.41 1.32 1.67

244.8% 151.5% 78.4% 53.4% 42.1% 37.5% 32.0% 16.9% 14.5% 10.1% 9.7% 8.1% 7.4% 7.4% 6.2% 3.7%

(D) (D) 12,753 31,474 (D) 45,678 42,468 (D) 2,848 404,299 116,580 (D) (D) (D) (D) (D)

(D) (D) 38,297 41,089 (D) 42,100 48,646 (D) 28,480 47,408 48,697 (D) (D) (D) (D) (D)

(D) (D) 33.62% 21.41% (D) 14.01% 0.67% (D) 8.47% 4.60% 2.99% (D) (D) (D) (D) (D)

2 11 7 12 4 19 3 5 3 99 18 2 2 3 26 2

10 10 3,390 10 218 255 60 60 24 10

10 5 419 10 19 11 0 0 -1 0

0.39 0.17 0.82 0.07 0.46 0.66 0.34 0.24 0.26 0.07

38.8% 9.1% 8.8% 7.5% 5.2% 5.0% 2.0% 1.7% 1.4% 1.1%

(D) (D) 109,665 (D) 8,895 9,404 (D) (D) 1,028 (D)

(D) (D) 32,350 (D) 40,803 36,878 (D) (D) 42,833 (D)

(D) (D) 11.51% (D) 11.79% 7.28% (D) (D) 4.67% (D)

1 4 49 1 11 10 3 2 3 2

319 750 2,170 441 1,064 860 931

4 0 -240 -38 -393 -340 -291

2.91 2.37 3.57 6.93 1.31 1.45 6.36

-0.7% -5.2% -25.7% -30.0% -49.3% -57.3% -153.1%

14,204 (D) 108,269 17,783 50,784 41,646 44,713

44,527 (D) 49,894 40,324 47,729 48,426 48,027

-0.92% (D) -7.15% -4.64% -28.17% -29.07% -18.99%

7 2 19 11 93 62 7

201 10 60 175 47 0 204 10

-6 0 0 0 -24 -10 -53 -50

0.19 0.25 0.76 0.59 0.28 0.00 0.94 0.27

-0.9% -2.2% -4.8% -5.4% -14.1% -16.6% -26.5% -129.8%

4,849 (D) (D) (D) 2,264 9,138 (D)

24,124 (D) (D) (D) 48,170 (D) 44,794 (D)

-5.19% (D) (D) (D) -34.25% (D) -23.10% (D)

7 1 2 4 8 31 1

Community COMPASS 37

FOOD PROCESSING AND TECHNOLOGY CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis

Overall, this sector is only slightly specialized in Hamilton County compared to the nation. However, certain industries within the cluster are very highly specialized. These highly specialized industries include cookie, cracker and pasta manufacturing, seasoning and dressing manufacturing, soft drink and ice manufacturing and meat processing. The county is highly specialized in seasonings and dressings, including the manufacture of spices and extracts. It is also known that the county is highly specialized in flavoring syrups and concentrates, although data has been suppressed for the years in question. Snack foods and dairy products (most likely icecreams) are also specialized and growing sectors of productivity. Because of its strengths in chemicals, life sciences, industrial design, marketing, and machinery making, it is likely that Hamilton County could significantly enhance the strength of the food processing and technology cluster by encouraging the manufacture of specialty foods along with ingredients such as flavors, spices and extracts. New industries such as nutraceuticals and cosmeceuticals could benefit the county economy and be a good fit with existing industries.
38 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

FOOD PROCESSING AND TECHNOLOGY CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000 (MANUFACTURERS ONLY)

Note This map offers another view of the Food Processing and Technology Cluster by presenting manufacturers only.

Community COMPASS 39

Table 7 FOOD PROCESSING AND TECHNOLOGY CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 (1) 556,563 7,284 1,457 8,741 (2) 25,435 -120 -18 -138 (3) 1.00 1.02 1.76 1.09 (4) 0.0% -1.2% 1.6% 0.01 (5) 19,359,336 264,553 61,584 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 36,320 42,268

(7) -0.71% -1.88% 0.90%

(8) 24,896 91 9

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 311 Food mfg 312 Beverage & tobacco product mfg TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 311919 Other snack food mfg 31182 Cookie, cracker & pasta mfg 31194 Seasoning & dressing mfg 31211 Soft drink & ice mfg 311612 Meat processed from carcasses 3119 Other food mfg 312 Beverage & tobacco product mfg Non-Specialized, increasing specialization and positive regional shift 3115 Dairy product mfg 3116 Animal slaughtering & processing Specialized, decreasing specialization and negative regional shift 311 Food mfg 3118 Bakeries & tortilla mfg 311812 Commercial bakeries 31181 Bread & bakery product mfg 311811 Retail bakeries Non-specialized, decreasing specialization and negative regional shift 3114 Fruit & veg preserving & specialty food mfg SECTORS WITH SUPPRESSED DATA 312111 Soft drink mfg 311412 Frozen specialty food mfg 311821 Cookie & cracker mfg 311941 Mayonnaise, dressing & oth prepared sauce mfg 311520 Ice cream & frozen dessert mfg 311930 Flavoring syrup & concentrate mfg 311211 Flour milling 311225 Fats & oils refining & blending 311511 Fluid milk mfg 311615 Poultry processing 311822 Flour mixes & dough mfg from purchased flour 311942 Spice & extract mfg 311991 Perishable prepared food mfg 311999 All other miscellaneous food mfg 312120 Breweries 312140 Distilleries 3113 Sugar & confectionery product mfg 311340 Nonchocolate confectionery mfg 311421 Fruit & vegetable canning 311611 Animal (except poultry) slaughtering 311920 Coffee & tea mfg 312113 Ice mfg 312130 Wineries 31111 Animal food mfg 311119 Other animal food mfg 333294 Food product machinery mfg 31199 All other food mfg 3112 Grain & oilseed milling

184 1,046 675 1,097 1,674 1,610 1,457

48 175 140 33 162 22 -18

1.16 3.69 5.20 2.80 3.55 2.22 1.76

46.9% 29.6% 21.1% 5.1% 5.0% 3.7% 1.6%

7,301 45,857 27,323 48,260 66,318 64,113 61,584

39,679 43,840 40,479 43,993 39,616 39,822 42,268

42.55% 26.77% 21.25% 4.35% 4.60% 2.97% 0.90%

5 5 9 4 19 9 4

535 1,893

92 200

0.83 0.79

21.1% 7.5%

12,805 71,292

23,935 37,661

20.36% 7.08%

3 16

7,284 2,176 844 1,130 286

-120 -199 -229 -374 -145

1.02 1.52 1.13 1.04 1.10

-1.2% -4.4% -19.3% -21.9% -26.3%

264,553 78,135 27,500 32,278 4,778

36,320 35,908 32,583 28,565 16,706

-1.88% -4.85% -19.49% -21.76% -24.25%

91 41 14 36 22

719

-70

0.88

-6.1%

28,232

39,266

-6.63%

1,000-2,499 500-999 500-999 500-999 250-499 250-499 100-249 100-249 100-249 100-249 100-249 100-249 100-249 100-249 100-249 100-249 20-99 20-99 20-99 20-99 20-99 20-99 20-99 0-19 0-19 0-19 415 308

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) 1.39 1.05

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) 12,269 8,797

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) 29,564 28,562

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

3 2 3 3 2 2 3 1 1 2 2 2 2 5 3 1 2 2 3 5 1 1 1 1 1 3 7 4

40 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

INFORMATION, COMMUNICATIONS AND MEDIA CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis

The Cincinnati area has long been known for printing, publishing and paper industries, as well as broadcasting and telecommunications. The printing industry in the area has been in adjustment for some time due to changing technology and other factors. However, there are signs of new, stronger sub-sectors coming into being. An example is the rapid increase in book printing employment, and an increase in periodical publishing employment. The telecommunications and broadcasting sector has increased in specialization over the study period, and has increased employment by approximately 20%. Per capita payroll income in this broad sector is comparatively high, at $54,299 per annum. Motion picture and video industries, which had been performing relatively well, declined over the period, while sound recording industries (though employing relatively few people) grew very quickly.

Community COMPASS 41

Table 8 INFORMATION, COMMUNICATIONS AND MEDIA CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 (1) 556,563 5,619 2,527 9,991 1,476 5,653 441 60 25,767 (2) 25,435 78 -566 1,917 -48 -757 -38 0 586 (3) 1.00 1.07 1.70 1.25 0.57 1.42 6.93 0.87 1.20 (4) 0.0% -4.5% -23.8% 11.7% -28.8% -7.8% -4.2% 25.7% -5.6% (5) 19,359,336 293,145 47,900 541,805 67,688 232,649 17,783 (D) Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 52,170 18,955 54,229 45,859 41,155 40,324 (D)

(7) -0.71% -5.47% -26.29% 983 -40.03% -8.06% -4.64% (D)

(8) 24,896 120 68 64 76 224 11 2

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 511 Publishing industries 512 Motion picture & sound recording industries 513 Broadcasting & telecommunications 514 Information & data processing services 323 Printing & related support activities 325910 Printing ink mfg 333291 Paper industry machinery mfg TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 51229 Other sound recording industries 323117 Book printing 51213 Motion picture & video exhibition 512132 Drive-in motion picture theaters 323112 Commercial flexographic printing 323121 Tradebinding & related work 513 Broadcasting & telecommunications 323115 Digital printing 323114 Quick printing 323118 Blankbook, loose-leaf binder & device mfg Non-Specialized, increasing specialization and positive regional shift 5122 Sound recording industries 512120 Motion picture & video distribution 51224 Sound recording studios 512131 Motion picture theaters (except drive-ins) 333291 Paper industry machinery mfg 511120 Periodical publishers Specialized, decreasing specialization and negative regional shift 51119 Other publishers 513112 Radio stations 323111 Commercial gravure printing 513111 Radio networks 514199 All other information services 51219 Postprod & other movie & video industries 325910 Printing ink mfg 5111 Newspaper, periodical, book, database publishers 51 Information 511 Publishing industries 323110 Commercial lithographic printing 511130 Book publishers 32312 Printing support activities 32311 Printing 3231 Printing & related support activities 323122 Prepress services 323113 Commercial screen printing 512 Motion picture & sound recording industries 5121 Motion picture & video industries 323119 Other commercial printing 323116 Manifold business form printing 512110 Motion picture & video production 51311 Radio broadcasting 513120 Television broadcasting Non-specialized, decreasing specialization and negative regional shift 51222 Integrated record production, distribution 511110 Newspaper publishers 511199 All other publishers 514210 Data processing services 513220 Cable & other program distribution 513210 Cable networks 51114 Database and directory publishers 5132 Cable networks & program distribution 514 Information & data processing services 5141 Information services 514110 News syndicates 514191 On-line information services 51419 Other information services 514120 Libraries & archives

60 375 750 10 408 214 9,991 75 308 100

50 200 375 0 67 21 1,917 -2 11 -15

2.89 1.58 1.07 1.22 2.61 1.38 1.25 2.82 1.17 1.32

261.8% 128.2% 85.2% 14.2% 13.4% 13.0% 11.7% 7.3% 6.5% 2.8%

(D) (D) (D) (D) 14,942 5,120 541,805 1,612 7,653 2,347

(D) (D) (D) (D) 36,623 23,925 54,229 21,493 24,847 23,470

(D) (D) (D) (D) 13.41% 12.06% 12.18% 6.05% 5.67% 1.77%

2 5 12 1 13 8 211 3 45 4

66 10 10 505 60 510

40 0 0 151 0 85

0.49 0.15 0.25 0.73 0.87 0.77

145.0% 95.4% 32.5% 31.7% 25.7% 17.6%

2,632 (D) (D) 3,825 (D) 19,939

39,879 (D) (D) 7,574 (D) 39,096

149.53% (D) (D) 33.64% (D) 17.24%

9 3 5 11 2 22

750 750 175 175 175 207 441 3,740 19,613 5,619 2,722 736 822 4,831 5,653 608 394 2,527 2,461 188 242 1,746 811 675

0 0 0 0 -200 6 -38 -81 1,381 78 -256 -83 -145 -612 -757 -166 -97 -566 -606 -113 -236 -748 -45 -302

2.28 1.37 1.65 3.84 3.54 1.24 6.93 1.02 1.13 1.07 1.38 1.73 2.22 1.34 1.42 2.83 1.14 1.70 1.82 1.02 1.07 4.23 1.37 1.05

-1.4% -3.1% -4.1% -31.3% -71.4% -1.3% -4.2% -4.3% -4.0% -4.5% -5.3% -6.2% -6.8% -7.6% -7.8% -9.4% -20.7% -23.8% -25.5% -31.2% -41.5% -47.2% -10.3% -32.2%

(D) (D) (D) (D) (D) 8,093 17,783 152,115 950,538 293,145 132,890 35,680 32,037 200,612 232,649 26,917 10,405 47,900 45,268 6,214 8,298 33,145 57,586 31,864

(D) (D) (D) (D) (D) 39,097 40,324 40,672 48,465 52,170 48,821 48,478 38,974 41,526 41,155 44,271 26,409 18,955 18,394 33,053 34,289 18,983 71,006 47,206

(D) (D) (D) (D) (D) -2.01% -4.64% -5.04% -5.28% -5.47% -5.81% -6.58% -6.80% -7.98% -8.06% -8.78% -21.59% -26.29% -28.13% -29.00% -36.51% -63.51% -11.59% -33.57%

8 3 1 0 1 17 11 66 475 120 72 13 37 187 224 29 22 68 59 16 6 27 17 9

10 1,539 60 1,013 750 60 175 664 1,476 463 32 175 411 20

10 -24 0 -20 0 0 0 -57 -48 -28 -28 0 -22 -40

0.23 0.76 0.25 0.70 0.89 0.31 0.78 0.64 0.57 0.41 0.58 0.20 0.45 0.12

0.0% -3.6% -6.2% -10.9% -15.2% -16.5% -17.2% -22.1% -28.8% -51.4% -52.8% -55.3% -56.7% -76.0%

(D) 63,866 (D) 51,826 (D) (D) (D) 25,859 67,688 15,862 554 (D) 14,800 508

(D) 41,498 (D) 51,161 (D) (D) (D) 3,039 45,859 34,259 17,313 (D) 36,010 25,400

(D) -4.34% (D) -12.80% (D) (D) (D) -194 -40.03% -101.10% (D) (D) -125.74% (D)

2 16 7 41 -1 -3 7 -4 76 35 3 26 27 5

42 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

INFORMATION TECHNOLOGY CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis

Information technology industries in Hamilton County are tightly clustered in the Central Business District of the City of Cincinnati and in the Northeast quadrant of the county. This cluster includes computer and electronic products manufacturing, power transmission equipment, electrical equipment and component manufacturing, software publishing, data processing, systems design and telecommunications and others. Jobs in this cluster are relatively highly-paid. The county has a high degree of competitive advantage and specialization in telecommunications and related manufacturing and services, and many of these sub-sectors are growing. However, the national downturn in the information technology sector has affected industries related to computers, computer components and software. In this broad sector, only essential services such as systems design and custom programming services have remained strong.

Community COMPASS 43

Table 9 INFORMATION TECHNOLOGY CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Total Mid-March Change inTotal Location Percent Change Annual Payroll Employees, Employees, Quotients for in Location ($1,000), Hamilton Hamilton Employment, by Quotients for Hamilton County 2000 County 1998Sector, Employment, County 2000 2000 Hamilton Hamilton County, 2000 County, 19982000 (1) 556,563 327 1,760 10 750 802 834 10 645 175 2,079 967 1,879 7,841 1,013 8,637 218 27,947 (2) 25,435 -34 44 10 0 -30 94 10 57 23 600 -19 159 2,321 -20 2,272 -132 5,355 (3) 1.00 3.23 0.23 0.14 2.56 0.83 0.79 0.04 2.94 0.83 1.19 0.63 1.16 1.38 0.70 1.51 1.33 0.97 (4) 0.0% -2.2% 11.5% 0.0% -2.2% 2.5% 13.2% 0.0% 11.5% 22.5% 29.3% -8.2% -6.0% 27.7% -10.9% 1.9% -44.9% 15.7% (5) 19,359,336 12,394 78,652 (D) (D) 31,104 36,848 (D) 26,366 (D) 149,244 64,230 141,030 426,496 51,826 557,159 6,996 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 37,902 44,689 (D) (D) 38,783 44,182 (D) 40,878 (D) 71,786 66,422 75,056 54,393 51,161 64,508 32,092

(7) -0.71% -2.65% 9.93% (D) (D) 1.76% 12.48% (D) 10.64% (D) 31.13% -9.53% -7.81% 30.09% -12.80% 1.57% -51.50%

(8) 24,896 4 48 1 4 19 11 1 5 5 89 61 54 175 41 333 19

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 333613 Mechanical power transmission equipment mfg 334 Computer & electronic product mfg 33511 Electric lamp bulb & part mfg 33512 Lighting fixture mfg 3353 Electrical equipment mfg 3359 Other electrical equipment & component mfg 335929 Other communication & energy wire mfg 335931 Current-carrying wiring device mfg 335999 All oth misc electrical equip & component mfg 421430 Computer & peripheral equip & software whsle 42169 Other electronic parts & equipment whsle 511210 Software publishers 5133 Telecommunications 51421 Data processing services 54151 Computer systems design & related services 611420 Computer training TOTAL CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 513330 Telecommunications resellers 513322 Cellular & other wireless telecommunications 51332 Wireless telecom carriers (exc satellite) 421430 Computer & peripheral equip & software whsle 5133 Telecommunications 513310 Wired telecommunications carriers 335931 Current-carrying wiring device mfg 541690 Oth scientific & technical consulting services 541511 Custom computer programming services 54151 Computer systems design & related services 5416 Management, sci & tech consulting services Non-Specialized, increasing specialization and positive regional shift 334220 Radio, TV broadcast & wireless comm equip mfg 334419 Other electronic component mfg 33411 Computer & peripheral equipment mfg 335999 All oth misc electrical equip & component mfg 334119 Other computer peripheral equipment mfg 541519 Other computer related services 3359 Other electrical equipment & component mfg 334 Computer & electronic product mfg 334310 Audio & video equipment mfg 541710 R&D in physical, engineering & life sciences 5417 Scientific R&D services 334513 Industrial process control mfg 3353 Electrical equipment mfg Specialized, decreasing specialization and negative regional shift 541512 Computer systems design services 333613 Mechanical power transmission equipment mfg 33512 Lighting fixture mfg 511210 Software publishers 334417 Electronic connector mfg 611420 Computer training Non-specialized, decreasing specialization and negative regional shift 33511 Electric lamp bulb & part mfg 513340 Satellite telecommunications 334290 Other communications equipment mfg 335929 Other communication & energy wire mfg 334111 Electronic computer mfg 334412 Bare printed circuit board mfg 334413 Semiconductor & related device mfg 42169 Other electronic parts & equipment whsle 3346 Mfg & reproducing magnetic & optical media 51421 Data processing services 33441 Semiconductor & oth electronic component mfg 513321 Paging 541513 Computer facilities management services 334515 Electricity measuring, testing instrument mfg 334416 Electronic coil, transformer, oth inductor mfg 513390 Other telecommunications

750 997 1,281 2,079 7,841 6,021 645 358 5,571 8,637 3,790

690 679 531 600 2,321 1,159 57 60 1,368 2,272 608

2.82 1.57 1.30 1.19 1.38 1.42 2.94 1.03 2.33 1.51 1.09

850.4% 124.2% 37.9% 29.3% 27.7% 17.2% 11.5% 10.7% 7.5% 1.9% 1.3%

(D) 49,149 60,500 149,244 426,496 339,252 26,366 13,265 358,516 557,159 202,312

(D) 49,297 47,229 71,786 54,393 56,345 40,878 37,053 64,354 64,508 53,380

(D) 172.72% (D) 31.13% 30.09% 17.48% 10.64% 10.86% 8.43% 1.57% 0.78%

14 28 49 89 175 109 5 51 142 333 404

375 95 10 175 10 272 834 1,760 10 854 889 181 802

201 35 0 23 0 129 94 44 0 156 155 -28 -30

0.52 0.22 0.01 0.83 0.03 0.58 0.79 0.23 0.07 0.55 0.51 0.89 0.83

127.0% 66.6% 26.3% 22.5% 18.3% 17.6% 13.2% 11.5% 9.7% 6.1% 5.2% 2.7% 2.5%

(D) 3,479 (D) (D) (D) 20,477 36,848 78,652 (D) 37,804 39,215 8,876 31,104

(D) 36,621 (D) (D) (D) 75,283 44,182 44,689 (D) 44,267 44,111 49,039 38,783

(D) (D) (D) (D) (D) 27.32% 12.48% 9.93% (D) 6.24% 5.22% 1.68% 1.76%

4 7 3 5 1 43 11 48 1 37 44 6 19

2,658 327 750 1,879 181 218

833 -34 0 159 -194 -132

1.04 3.23 2.56 1.16 1.08 1.33

-0.2% -2.2% -2.2% -6.0% -44.3% -44.9%

171,207 12,394 (D) 141,030 5,589 6,996

64,412 37,902 (D) 75,056 30,878 32,092

-1.28% -2.65% (D) -7.81% (D) -51.50%

136 4 4 54 3 19

10 10 10 10 10 10 10 967 134 1,013 296 284 136 10 10 0

10 10 10 10 10 10 10 -19 -41 -20 -79 -91 -58 -32 -50 -10

0.14 0.10 0.08 0.04 0.03 0.03 0.01 0.63 0.63 0.70 0.11 0.80 0.44 0.03 0.11 0.00

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -8.2% -9.8% -10.9% -18.2% -26.2% -28.1% -74.5% -81.4% -100.0%

(D) (D) (D) (D) (D) (D) (D) 64,230 4,002 51,826 9,594 11,351 6,959 (D) (D) -

(D) (D) (D) (D) (D) (D) (D) 66,422 29,866 51,161 32,412 39,968 51,169 (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) -9.53% (D) -12.80% -18.24% (D) -28.11% (D) (D) (D)

1 3 1 1 2 1 1 61 5 41 13 21 12 2 1 -

44 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

TRANSPORTATION, DISTRIBUTION AND LOGISTICS CLUSTER, HAMILTON COUNTY FIRMS BY EMPLOYMENT SIZE AND ZIP CODE AREA , 2000

Analysis This cluster is vital to the success of many regional industries, as it connects their products to their clients in other parts of the US and globally. It is to be noted that the State of Indiana has targeted this cluster for future development as one of four clusters in a statewide development effort. Other industries in the cluster connect workers with jobs, and students with schools and training. A large messenger sector in Hamilton County speeds the delivery of business papers and small products. Star performers in the cluster include general, long-distance freight trucking, other warehousing and storage and nonscheduled air transportation. This air transportation sector is rapidly growing, and is composed largely of regional charter passenger air transportation, very likely based out of Lunken Airport in Cincinnati. Both specialized, local and long-distance freight trucking increased in specialization and importance during the study period. General warehousing and storage decreased in specialization, however, as some of these companies moved out to the suburban counties close to the I275 beltway.

Community COMPASS 45

Table 10 TRANSPORTATION, DISTRIBUTION AND LOGISTICS CLUSTER


NORTH AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM (NAICS) SECTOR AND SUB-SECTOR CODES AND NAMES Percent Change Annual Payroll Location Total Mid-March Change inTotal ($1,000), in Location Quotients for Employees, Employees, Hamilton Employment, by Quotients for Hamilton Hamilton County 2000 Employment, Sector, County 1998County 2000 Hamilton Hamilton 2000 County, 1998County, 2000 2000 (1) 556,563 16,017 (2) 25,435 1,147 (3) 1.00 0.87 (4) 0.0% -0.9% (5) 19,359,336 524,421 Annual Payroll per Capita, Hamilton County 2000 REGIONAL SHIFT Total Business and Industry Establishments, Hamilton Co., 2000

(6) 34,784 32,742

(7) -0.71% -1.75%

(8) 24,896 455

00 TOTAL HAMILTON COUNTY ALL INDUSTRIES SUMMARY CLUSTER DEFINITION 48-49 Transportation & warehousing CLUSTER INDUSTRY DETAILS Specialized, increasing specialization and positive regional shift 488490 Other road transportation support activities 4852 Interurban & rural bus transportation 4922 Local messengers & local delivery 4812 Nonscheduled air transportation 493190 Other warehousing & storage 484122 General freight trucking, long-distance, LTL Non-Specialized, increasing specialization and positive regional shift 4851 Urban transit systems 485991 Special needs transportation 488320 Marine cargo handling 488390 Other water transportation support activities 4831 Deep sea, coastal & Great Lakes water trans 484230 Specialized freight (exc used) trucking, LDist 488119 Other airport operations 4842 Specialized freight trucking 484220 Specialized freight (exc used) trucking, local 485310 Taxi service 484110 General freight trucking, local 4853 Taxi & limousine service 488410 Motor vehicle towing 488510 Freight transportation arrangement Specialized, decreasing specialization and negative regional shift 4832 Inland water transportation 488210 Rail transportation support activities 4879 Scenic & sightseeing transportation, other 4889 Other transportation support activities 485410 School & employee bus transportation Non-specialized, decreasing specialization and negative regional shift 4869 Other pipeline transportation 48-49 Transportation & warehousing 485320 Limousine service 4841 General freight trucking 4872 Scenic & sightseeing transportation, water 4884 Road transportation support activities 4859 Oth transit & ground passenger transportation 4811 Scheduled air transportation 4931 Warehousing & storage 484210 Used household & office goods moving 493110 General warehousing & storage 4881 Air transportation support activities 484121 General freight trucking, long-distance, TL 488190 Other air transportation support activities 485510 Charter bus industry 4883 Water transportation support activities 4861 Pipeline transportation of crude oil SECTORS WITH SUPPRESSED DATA 492110 Couriers 483211 Inland water freight transportation 492210 Local messengers & local delivery 481211 Nonscheduled chartered passenger air trans 485210 Interurban & rural bus transportation 488991 Packing & crating 483113 Coastal & Great Lakes freight transportation 488330 Navigational services to shipping 493120 Refrigerated warehousing & storage 481111 Scheduled passenger air transportation 481112 Scheduled freight air transportation 481219 Other nonscheduled air transportation 483111 Deep sea freight transportation 485113 Bus & other motor vehicle transit systems 485999 All other transit & ground passenger trans 486110 Pipeline transportation of crude oil 486910 Pipeline trans of refined petroleum products 487210 Scenic & sightseeing transportation, water 487990 Scenic & sightseeing transportation, other 493130 Farm product warehousing & storage 481212 Nonscheduled chartered freight air trans 483212 Inland water passenger transportation 485111 Mixed mode transit systems 485112 Commuter rail systems 485119 Other urban transit systems 486990 All other pipeline transportation 488111 Air traffic control 488310 Port & harbor operations 488999 All other transportation support activities

90 175 750 375 160 2,163

(D) 115 375 200 44 133

1.28 1.34 2.18 1.72 1.41 1.64

(D) 156.1% 101.7% 89.5% 58.0% 5.4%

2,894 (D) (D) (D) 4,066 96,787

32,156 (D) (D) (D) 25,413 44,747

(D) (D) (D) (D) 50.05% 4.82%

4 1 16 7 8 21

10 73 57 5 94 555 66 1,249 461 74 556 134 106 366

10 (D) (D) (D) 34 191 23 265 103 19 105 24 18 37

0.05 0.43 0.22 0.11 0.40 0.69 0.20 0.52 0.47 0.50 0.74 0.40 0.52 0.46

(D) (D) (D) (D) 80.3% 57.4% 37.1% 26.2% 26.1% 23.1% 10.1% 9.4% 8.2% 2.8%

(D) 1,358 2,535 363 3,690 22,591 1,553 43,821 14,184 1,971 17,205 2,858 1,764 16,892

(D) 18,603 44,474 72,600 39,255 40,705 23,530 35,085 30,768 26,635 30,944 21,328 16,642 46,153

(D) (D) (D) (D) (D) 54.97% 40.76% 25.67% 25.96% 24.48% 10.56% 9.67% 8.41% 2.30%

1 5 4 3 5 20 5 102 57 6 49 13 27 33

750 118 10 175 829

0 3 0 0 -897

7.79 1.13 1.03 1.45 1.04

-7.8% -9.8% -11.6% -15.6% -54.7%

(D) 3,217 (D) (D) 10,886

(D) 27,263 (D) (D) 13,131

(D) -11.95% (D) (D) -58.69%

3 8 1 6 7

10 16,017 60 3,338 10 196 60 10 357 233 174 122 619 56 71 60 10

0 1,147 5 149 0 21 0 0 5 -29 1 -17 -89 -40 -66 -54 -50

0.29 0.87 0.33 0.74 0.16 0.71 0.24 0.00 0.54 0.37 0.44 0.20 0.25 0.20 0.43 0.15 0.31

-0.1% -0.9% -3.6% -4.0% -4.5% -6.2% -6.5% -8.2% -10.2% -13.8% -17.3% -20.0% -22.7% -45.6% -50.5% -53.0% -81.7%

(D) 524,421 887 139,378 (D) 4,658 (D) (D) 9,356 7,046 4,611 3,323 25,386 1,770 1,154 (D) (D)

(D) 32,742 14,783 41,755 (D) 23,765 (D) (D) 26,207 30,240 26,500 27,238 41,011 31,607 16,254 (D) (D)

(D) -1.75% -4.80% -5.15% (D) (D) (D) (D) -12.31% -14.99% -21.92% -22.68% -26.42% -49.59% -53.53% (D) (D)

1 455 7 127 1 31 7 6 30 25 19 13 57 8 4 9 1

5,000-9,999 500-999 500-999 250-499 100-249 100-249 20-99 20-99 20-99 0-19 0-19 0-19 0-19 0-19 0-19 0-19 0-19 0-19 0-19 0-19 -

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) -

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

(D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D) (D)

22 3 16 6 1 6 2 2 2 5 1 1 3 1 2 1 1 1 1 1 -

46 HAMILTON COUNTY REGIONAL PLANNING COMMISSION / PLANNING

Appendix B: Current Issues in Industry Classification Systems

Community COMPASS 47

Up until 1997, industries in the United States were classified according to the Standard Industrial Classification (SIC) code. The major SIC classifications are:
SIC 7 10 15 20 40 SECTOR Agriculture, Forestry and Fishing (AFF) Mining Construction Manufacturing Transportation and public utilities (TPU) SIC 50 52 15 70 99 SECTOR Wholesale trade Retail trade Finance, Insurance and Real Estate (FIRE) Services Unclassified Establishments

The SIC code sorts industries into four tiers or classes, which are usually referred to by the number of digits they contain (e.g 2-digit, 3-digit classifications). The analyst can choose what level of detail to use, depending on his or her purpose. Often, problems are found at the 4-digit level of detail due to the need to suppress some of the data when there are very few firms in the detailed sector. Since 1998 however, government agencies that compile data on economic activity have switched to a new system of classification the North American Industrial Classification System (NAICS), in order to obtain data compatibility with other nations, particularly Canada and Mexico the USs trading partners in NAFTA (the North American Free Trade Agreement). The major NAICS classifications are:
NAICS 11 21 22 23 31-33 42 44-45 48-49 51 52 99 SECTOR Forestry, fishing, hunting, and agriculture support Mining Utilities Construction Manufacturing Wholesale trade Retail trade Transportation & warehousing Information Finance & insurance Unclassified establishments NAICS 53 54 55 56 61 62 71 72 81 95 SECTOR Real estate & rental & leasing Professional, scientific & technical services Management of companies & enterprises Admin, support, waste mgt, remediation services Educational services Health care and social assistance Arts, entertainment & recreation Accommodation & food services Other services (except public administration) Auxiliaries (exc corporate, subsidiary & regional mgt)

The NAICS classification system is not entirely compatible with the SIC system for classifying economic activity. As can be seen from the above two tables, the NAICS system has twice as many major sectors as the SIC system. In addition, NAICS has regrouped many industries within the major sectors, consequently an industry grouping that looks similar to the SIC grouping may in fact contain several extra industries, or conversely, several fewer. One of the biggest differences between NAICS and SIC is the removal of administrative and support jobs from within major sectors and the placement of such jobs in NAICS sector 56 (Administration, support, waste management and remediation services). This has the effect of making some sectors look much smaller than they used to be for example, Manufacturing. NAICS, however, goes a long way towards updating industry classifications to match new industry types that have emerged more recently as a result of the restructuring of the national economy and advances in technology. In addition, instead of a four-level system of classification, NAICS has six levels of detail. This will be a great advantage in carrying out more detailed analyses once a sufficient number of years of NAICS data has accumulated. Currently, however, there is a problem when attempting to measure growth rates in some industries for years that cross the SIC and NAICS boundary years. For these reasons, in this report, employment, business establishment and payroll information from the County Business Patterns database has been analyzed in two parts: 1987-1997 (SIC) and 1998-2000 (NAICS). These two parts are treated as largely noncomparable at this time. This report presents only data from the period 1998 (as the base year) to 2000 and 2001.

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Appendix C: Example of a Cluster Strategy


Source: http://www.clusters.com.au/what.html (Downloaded 8-13-03)

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South Australian Business Vision 2010 Inc. 2000


What are industry clusters?
Industry clusters are groups of competing, collaborating and interdependent businesses working in a common industry and concentrated in a geographic region. They draw on shared infrastructure and a pool of skilled workers. Successful clusters are outward looking and have a concentration (eg of employment) within a region which is greater than the national average - implying specialization, comparative advantage and critical mass within the region. They bring wealth into the region and can be considered the building blocks of the economy. Industry clusters have been developing internationally over the past century. High profile examples include Silicon Valley, Hollywood and Northern Italy. Examples in South Australia include wine in Adelaide and surrounds, defense in metropolitan Adelaide and aquaculture in Port Lincoln. A "cluster map" is used to understand and communicate the components of the cluster. It identifies the capabilities of the companies selling directly into major markets. It shows the components of the support industries on which the front-line suppliers rely, and also the supporting infrastructure.

Why are they Important?


Clusters are the building blocks of the economy. They represent the specialization and comparative advantage of the region. When successful companies, with a focus on a particular industry, cluster in a local region they offer synergies for collaboration and trading. Local innovation fosters innovation to drive growth. Suppliers to the cluster are attracted to that region to be close to their customers. Pools of talent and skills develop to meet the needs of cluster growth. Clusters offer a focus to attract new investment, encourage local expansion and stimulate startup of new companies. Industry cluster development has been the focus fro the rejuvenation of current benchmark communities such as Austin (Texas), Phoenix (Arizona) Jacksonville (Florida) and Silicon Valley.

Accelerating cluster growth


The "cluster development process" identifies existing or emerging clusters with some competitive advantage and potential for high growth. It then maps the clusters and explores the drivers, opportunities and barriers that need to be addressed to accelerate the growth of the cluster. The process engages business leaders to take responsibility to address the barriers though collaborative strategic projects. This is done through a series of workshops and industry-led project teams that develop implementation plans. The projects offer new opportunities for leadership and foster new collaborative relationships across the cluster for innovation and commercial success. New partnerships may develop between business, government and community to address infrastructure needs identified by the industry. Business attraction may be targeted to fill gaps identified through the mapping process. Objectives x x Tangible return on investment - wealth, jobs, exports Innovation and commercial opportunities through strong linkages

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x x x x x

International marketing and alliances Develop supporting infrastructure New culture of collaboration - lower transaction costs New generation of industry leaders develop ownership A new partnership with government based on interdependence rather than dependence

Potential outcomes x New market opportunities through teaming and joint marketing x New commercial networks x Technology partnering agreements x Collaborative forum for industry issues x New infrastructure to meet industry needs x Additional skilled staff in targeted disciplines x Demand-driven framework for government support

Clusters are different


'Networking' is a well-known concept that fosters understanding, idea sharing and relationship building between business leaders. A 'soft network' is a broad grouping of participants with a common interest, which meets regularly to share ideas and opportunities or to address common issues. Industry associations often foster such networks. The defence cluster in SA emerged from a soft network, which was seeking a methodology for action. A 'hard network' is a group of 3 or more companies who agree to work cooperatively, often through a contract, joint agreement or other formal relationship to enhance mutual competitiveness. It may focus on joint marketing, sales, joint product development, purchasing, training, quality improvement, and financing or other joint initiatives. While the cluster development process may lead to hard and soft networks, it differs from these as follows: x Cluster identification and selection is based on a formal process utilising economic criteria such as concentration and recognising the breadth and depth of the components of the clusters; it also assesses the extent of, or potential for, horizontal and vertical relationships across the cluster It is a structured process involving analysis and engagement of industry leaders to identify, plan and deliver strategic projects Resultant projects may seek to promote hard and soft networks as vehicle

x x

Understanding the Process: What are the steps? Who needs to be involved?
The cluster process involves the implementation of a methodology developed initially by Joint Venture Silicon Valley (USA) and Collaborative Economics Inc (http://www.coecon.com/). Naturally the cluster process has been adapted by the various industry champions, government leaders and cluster facilitators in South Australia to reflect the regional community and economic environment. What are the steps? The cluster process is a step-by-step process that takes between six to nine months to complete and involves a number of steps: 1. engagement of the Leadership Group, industry champions and key stakeholders 2. background work is undertaken by the facilitators
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3. 4. 5.

a series of three carefully planned meetings are held leading to... action and business plans for undertaking strategic projects that are reviewed and supported by the Leadership Group

Who needs to be involved? A number of key stakeholders and support people are required if an industry cluster is to be successful. The requisite roles and functions include, the: x Leadership Group - a group of people who are prepared to contribute their personal skills, knowledge and business networks to help facilitate cluster activity in a region x Facilitators - independent facilitators trained in the cluster process who helpd direct and drive the five steps above x Co - Chairs - highly respected and collaborative industry leaders whose very involvement confers integrity on the cluster process x Project Champions - industry players who accept the challenge of leading separate industry initiatives that evolve from the process x Stakeholders within the Industry x Stakeholders from government and academia Understanding the process The cluster process is not "rocket-science" but when applied properly it is compelling, rejuvenating and of enormous benefit to an industry. It is not easily explained in a few words so please contact the SA Business Vision 2010 (http://www.sabv2010.com.au/) Cluster Manager for more details: Mr Hugh Forde Ph. +61 8 8403 0300 Fax +61 8 8231 0010 Email information@sabv2010.com.au

Commitment - Capital - Facilitators


Industry Clusters don't just happen. They need to be planned, nurtured, fostered and then nourished. This requires commitment, capital and people trained in the process - the facilitators. Commitment The cluster process involves a fairly intensive six to nine month window of activity in which industry stakeholders give of their time and expertise to their own benefit and that of the industry as a whole - this is what Doug Henton of Collaborative Economics calls, "enlightened selfinterest". Nevertheless, being involved in a cluster does exact time and energy. However, our experience tells us that the degree of commitment people put into the cluster matches the benefits their organisation reaps from the engagement. Capital Given that each cluster will be different and that it is a process taking anything from six to nine months, estimating the cost of bottom-line items such as management overheads and facilitation is extremely difficult. However, in the interests of providing an indicative range by which interested parties might be able to assess the broad costs of initiating a cluster, the costs for management and the facilitators could be expected to range between AUS $60,000 and AUS $100,000. Not included in this range is the cost of the hours that many of the industry players' will put into the process. Facilitators There are a number of cluster facilitators all of whom have attended training sessions conducted by Collaborative Economics Inc (http://www.coecon.com/). All facilitators listed below have also facilitated at least one industry cluster.
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x Mark Douglas, Ethos Australia Pty Ltd (mdouglas@ethos.com.au) x Dr. Tony O'Malley, Outlook Management (Tony.OMalley@adelaide.on.net) x Steven Smith, United Focus Pty Ltd (ssmith@unitedfocus.com.au) x David Zundel, Dramac Resources Pty Ltd (dmz@atlantek.com.au) For more information, contact the SA Business Vision 2010 Cluster Manager, Mr Hugh Forde .(hugh.forde@sabv2010.com.au)

Pilot Project Extending the Model Clusters Taking Off


Pilot project In 1995 MFP Development Corporation established linkages with an organisation known as Joint Venture Silicon Valley, which is a best practice model for a new collaborative regional alliance and cluster-based economic development. A close working relationship developed with Mr Doug Henton from Collaborative Economics, the intellectual and implementation drivers of JVSV, to adapt and apply this model for South Australia. Collaborative Economics have developed a cluster development process as described earlier. In conjunction with the SA Government (http://www.sacentral.sa.gov.au/) and Business SA (SA Employers' Chamber of Commerce & Industry), MFP DC introduced the new model for economic development into South Australia. A pilot project was launched in September 1995 to trial and demonstrate the model, and to adapt it for the local environment. Clusters selected were: x x defence and advanced electronics, and multimedia

Cluster initiatives were launched in August 1996. Following the success of this pilot other agencies adopted the model utilising facilitator/project managers trained during the pilot project. Extending the model Department of Administration and Information Services have sponsored the application of the model to the Spatial Information Cluster. This initiative complements the government-led Spatial Information Industry Project and the engagement of Fujitsu as Spatial Industry Alliance Partner. Fujitsu are enthusiastic participants in the cluster. Industry-led projects have been launched. United Water, SA Water and Department of Industry and Trade are collaborating to sponsor development of a Water Industry Cluster with excellent progress to date. Clusters taking off Defence x x x x x x x x x Multimedia x x learning electronic commerce
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New collaborative relationships - 50 companies and government (local, national, international) $400k investment for Defence Teaming Centre $10m export order - MNC & SME $1.5m local order to small company Collaborative marketing & teaming - target projects Influenced defence acquisition strategies to favour local industry Workforce initiatives 2 day seminar on legal issues for teaming Links to Silicon Valley

x x x x Spatial x x x x x x Water x x x x x x x x

medicine meets multimedia Networks '96 - $150k investment Ngapartji Interactive Narrative Research project - arts/technology Links to MSC and Silicon Valley effective partnership with SA Government (http://www.sacentral.sa.gov.au/) and Fujitsu collaborative marketing plan, web site, capability database new entity for commercial collaboration and branding standards development - use of spatial data sets skills development and resources currently 80 participants commitment to industry leadership and responsibility a new industry partnership with SA Water, United Water and Riverland Water market intelligence clearing-house new commercial entity - facilitator/broker communicating cluster capability education, training, R&D "early win" project strategic marketing plan

What is SABV2010?
The SA Business Vision 2010 project is about rejuvenating the South Australian economy. It aims to have business in South Australia prospering and growing and creating job opportunities and wealth for the community by the year 2010. South Australian Business Vision 2010 (SABV2010) had its genesis in 1996 within what was then the South Australian Employers' Chamber of Commerce and Industry Inc. It is business-driven and Government-supported: its philosophy has always been that it is industry and the community, not Government, which must take responsibility for building a better State and that Government cannot and should not be called upon to be all things to all people. SABV2010's role is therefore to make a difference in shaping and creating the future of the State of South Australia. The ideas behind SABV2010 grew during 1996, the first projects came into being the following year and in 1998 the structure was formalised with a constitution and its first Annual General Meeting. Over that time, and since, there has been a groundswell of community support for SABV2010 and its ideals, spearheaded by the former Governor of South Australia, Sir Eric Neal AC CVO but permeating the State as a whole. By early 2000 there were 11 projects in operation, endorsed by the SABV2010 Board, with other projects and initiatives under development. This website details those projects; flags things to come; reports on the successes of SABV2010; acknowledges our sponsors; and indicates ways in which you can be involved in building a better South Australia.

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Appendix D: Benchmarking Guide for Clusters

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Factor
Institutes of public or private research in areas related to clusters products or processes; Expert individual researchers that are available or accessible Number of enrollments in relevant programs; Graduates hired by cluster Number of credit and noncredit programs for cluster; Internships/apprentices employed

Description

Typical Measures/Proxies
R&D expenditures from government and private sources that involve cluster members, products, or processes

R&D capacity

Workforce skills and availability

Education and training

Degree to which labor force skills are tailored to the clusters needs (i.e., technical skills, general knowledge of the industry, and entrepreneurial skills) Education and training for the clusters major occupations, instruction embedded in context of cluster; Instructors with relevant experience; Training for technological and organizational changes Nearby sources of primary and secondary supplies, materials, and services that minimize transaction costs and maximize interaction

Proximity to suppliers

Input/output analysis of supply chains; Number of potential first-, second-, and third-tier suppliers; Survey of actual suppliers

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Local banks that understand the cluster and know the clusters key players; Dollar value of venture capital, loans made in cluster; Availability of working and startup capital; Access to seed and venture capital to Participation of bankers in cluster activities exploit new opportunities Public-sector services, such as technology extension services,technology centers, Number of consultants who specialize in cluster; export assistance, or small business centers Services that employ specialists from cluster; and private-sector services provided by designers, engineering consultants, Specialized services Dollar value of local outsourced services accountants and lawyers that have special knowledge of the cluster Access to companies that design and build the machines, tools, Number of companies that produce and sell capital Machine builders and software and software used by clusters; Working relationships between designers equipment to the cluster the tool builders and companies to foster collaborative innovations Frequency of formal cooperation among cluster members in, Number of joint ventures, skills alliances, marketing Networks and alliances for example, joint ventures, production, marketing, training, consortia, etc. or problemsolving Number of professional, business, and trade associations; Scale and degree of activity among local business and civic Membership in each, level of activity; Social capital associations in the region; Frequency of interaction; Survey of connections Informal networks of personal business related contacts Continual formation of new business ventures by workers and Number of new startups generated by cluster; Entrepreneurial climate managers within the cluster based on new, complementary, or Number attracted to cluster competitive products or on core competencies New and enhanced technologies and products that are conceived, Patents and copyrights; Innovation and imitation developed, and adopted or brought to market; Dispersion of Dollar investments in new technologies; innovations to other local firms New product lines started Number of acknowledged market leaders and magnet firms; Number of headquarter operations; Presence of market leaders and Marketing and sales of products or services outside the Dollar value of exports of cluster products innovators boundaries of the cluster Dollar value of U.S. sales outside of state Joint ventures, contracts, alliances with firms, contacts/ Study or benchmarking tours, travel to trade shows; External connections communications with experts in other regions; Alliances that include external members Knowledge of international benchmark practices Firms that think of themselves as a system (i.e., plan for and Collective strategic plan or vision statement; Shared vision and leadership share goals, have vision for future); Leaders who take Acceptance of cluster name or brand responsibility for collective competitiveness Source: A Governor's Guide to Cluster-Based Economic Development, NGA, 2002, pp. 45-46. http://www.rtsinc.org/publications.html

Capital availibility

Appendix E: Further Reading and Resources

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Barnes, William and Ledebur, Larry C. - The New Regional Economies: The US Common Market and the Global Economy, Thousand Oaks, CA, Sage, 1998 Battelle Memorial Institute - Innovation: The Future of Ohios Economy: An Ohio Technology-Based Economic Strategy, Technology Partnership Practice, Cleveland, OH, May 2002. Blandy, Richard South Australian Business Vision 2010 Industry Clusters Program: A Review, http://www.sabv2010.com.au/sabv/site/indicators/docs/profblandy.PDF Carnegie Mellon Center for Economic Development - Cluster-Based Community Development Strategies: A Guide for Connecting Communities with Industry Cluster Strategies, Carnegie Mellon University, Pittsburgh, PA, November 2002 www.heinz.cmu.edu/ced/ Coe, N. M. and Townsend, A R. 1998. Debunking the myth of localized agglomerations: the development of a regionalized service economy in South-East England. Transactions of the Institute of British Geographers, 23 (3), 385404. Cortright, Joseph; Dukehart, Laurel - Metropolitan Economic Task Force: Review of Economic Strategy, Impresa Inc., December 2, 2002. www.impresaconsulting.com Cortright, Joseph; Reamer, Andrew - Socioeconomic Data for Understanding Your Regional Economy, The Economic Development Administration: US Department of Commerce, 1998. www.econdata.net Cortright, Joseph; Mayer, Heike- High Tech Specialization: A Comparison of High Technology Centers, - Portland Metropolitan Studies, School of Urban Studies and Planning Portland State University. Portland, OR Brookings Institution on Urban and Metropolitan Policy. Washington, DC www.impresaconsulting.com, www.brookings.edu/urban Cortright, Joseph; Mayer, Heike - Signs of Life: The Growth of Biotechnology Centers in the U.S., the Brookings Institution Center on Urban and Metropolitan Policy, Washington, DC, 2002 www.brookings.edu/urban County Business Patterns http://www.census.gov/econ/www/mu0800.html Cypress Research Group - Regional Economic Development Strategy Initiative: Northeast Ohio Information Technology Workforce Assessment, May 2002. Doeringer, P. B. and Terkla, D. G. 1995. Business strategy and cross-industry clusters. Economic Development Quarterly, 9 (3), 225-237. E-COM- Ohio - Assuring Ohios Readiness for Global Electronic Commerce, Technology Policy Group, Columbus, OH, 2002. www.ecom-ohio.org Economics Research Group - Greater Cincinnati Labor Market Study: Characteristics of the Labor Supply in Greater Cincinnati, Center for Economic Education, University of Cincinnati, Cincinnati OH, January, 1999 Economic Censuses http://www.census.gov/econ/www/econ_cen.html Foster, K.A. Regional Capital, in Greenstein, R. & Wiewel, W. (eds.) UrbanSuburban Interdependencies, Cambridge, MA, Lincoln Institute of Land Policy, 2000.
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Gallis, Michael et al. - Greater Cincinnati Metro Region Resourcebook, Report Prepared for the Metropolitan Growth Alliance / Greater Cincinnati Chamber of Commerce, Cincinnati, Ohio, 1999. Gottlieb, Paul D. and the Cuyahoga County Regional Planning Commission Older Central Counties in the New Economy, Report Prepared for the Economic Development Administration, US Department of Commerce, Washington DC, 2001. Greenstein, R. & Wiewel, W. (eds.) - Urban-Suburban Interdependencies, Cambridge, MA, Lincoln Institute of Land Policy, 2000. Held, J. R. 1996. Clusters as an economic development tool. Economic Development Quarterly, 10 (3), 249-261. Institute of Portland Metropolitan Studies, School of Urban Studies and Planning New Economy Observatory 2001 Cluster Studies: Report No. 2001-2, Portland State University. Portland, OR, October 2001. www.upa.pdx.edu/IMS/ Kotler Philip, Haider, Donald H., and Rein, Irving - Marketing Places: Attracting Investment, Industry, and Tourism to Cities, States, and Nations 1993 Laulajainen, R. and Stafford, H. A. 1995. Corporate geography: business location principles and cases. Dordrecht: Kluwer Academic Publishers. Ledebur, Larry C. and Barnes, William R. Working Together: Cities and Suburbs, in Kemp, Roger L. (ed.), Main Street Renewal: A Handbook, McFarland, Jefferson, NC, 2000, pp. 390-398. Lee, B., Liu, L. and Stafford, H. A. Industrial Districts: Measuring Local Linkages. 2000. In M. B. Green and R. B. McNaughton (eds.), Industrial Networks and Proximity. Aldershot, UK: Ashgate Publishing. Louisiana Department of Economic Development Industry Clusters Overview, http://www.led.state.la.us/industry/, downloaded on 10-20-2003. Maki, J. and Maki, W. 1994. Economic role of university-industry collaboration in a regional medical devices industry cluster. Paper prepared for the North American Meeting of the Regional Science Association. Malecki, E. J., Tootle, D. M. and Young, E. M. 1995. Formal and informal networking among small firms in the USA. Paper prepared for the Annual Meeting of the Association of American Geographers, Chicago. McLean, B. M. 1996. Studying regional development: The regional context of development. Economic Development Quarterly, 10 (2), 188-198. Markusen, Ann R., 1994. Studying regions by studying firms. The Professional Geographer, 46 (4), 477-490 National Governors Association A Governors Guide to Cluster-Based Economic Development, Washington DC, 2002. http://www.nga.org Pastor, Manuel Jr., Drier, Peter, Grigsby, J. Eugene III and Lopez-Garcia, Marta Regions That Work: How Cities and Suburbs Grow Together, Minneapolis, University of Minnesota Press, 2000 Porter, Michael - The Competitive Advantage of Nations, New York, Free Press, 1990 The Competitive Advantage of the Inner City, Cambridge, MA, Harvard Business School, 1994.
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On Competition, Cambridge, MA, Harvard Business School, 1998. Locations, Clusters and Company Strategy, in Clark, Gordon L., Feldman, Maryann P., Gertler, Meric S. (eds.) The Oxford Handbook of Economic Geography, Oxford, Oxford University Press, 2000, pp. 253-274 Indiana: Profile of the State Economy - Institute for Strategy and Competitiveness Harvard Business School, February 24, 2002. Kentucky: Profile of the State Economy - Institute for Strategy and Competitiveness Harvard Business School, February 24, 2002. Ohio: Profile of the State Economy - Institute for Strategy and Competitiveness Harvard Business School, Cambridge, MA ,February 24, 2002

Rees, J. and Stafford, H. A. 1986. Theories of regional growth and industrial location: their relevance for understanding high-technology complexes. In Rees, J. (ed), Technology, regions, and policy. Totowa, NJ: Rowman & Littlefield. Regional Economic Information System (REIS) http://infoserver.ciesin.org/datasets/reis/reis-home.html Rosenfeld, Stuart A. Just Clusters: Economic Development Strategies that reach more People and Places, Regional Technology Strategies, Inc., Carrboro, NC, 2002 San Diego Association of Governments (SANDAG) - Major Activity Centers in the San Diego Region, - San Diego, CA, May 2002 www.SANDAG.org - San Diego Regional Employment Clusters: Engines of the Modern Economy, August 2001. - What Are Industrial Clusters? Understanding Cluster Analysis; Industrial Clusters in the San Diego Region, 1999. - San Diego Regional Economic Prosperity Strategy: Creating Prosperity for the San Diego Region, January 7, 1999. - San Diego Regional Economic Prosperity Strategy: Towards a Shared Economic Vision for the San Diego, July 1998. Santa Fe Economic Development, Inc. (SFEDI) The Santa Fe Plan: The Cluster Approach to Economic Gardening, a Strategic Plan for Economic Diversification and Regional Competitiveness, Santa Fe, NM, 2000 Saxenian, A. 1994. Regional advantage: culture and competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press. Schon, Donald; Bish, Sanyal Mitchell, William J. (Eds.)- High Technology and Low-Income Communities: Prospects for the Positive Use of Advanced Information Technology, MIT,1999. Sommers, Paul; Carlson, Daniel - What the IT Revolution Means for Regional Economic Development - University of Washington Evans School of Public Affairs, The Brookings Institution on Urban and Metropolitan Policy. Washington, DC, February 2003. www.brookings.edu/urban Standard and Poor US Metro Economies: the Engines of Americas Growth, Report prepared for the United States Conference of Mayors and the National Association of Counties, Standard and Poor DRI Division, McGraw-Hill, May, 2000
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Sweeney, S. H. and Feser, E. J. 1998. Plant size and clustering of manufacturing activity. Geographical Analysis, 30 (1), 45-64. University of Minnesota Extension Service - Industry Clusters: An Economic Development Strategy for Minnesota, The Humphrey Institute of Public Affairs, Minneapolis, MN, September 1999. University of Minnesota/Metropolitan Council - Twin Cities Industry Cluster Study, Metropolitan Council, St. Paul, MN, July 1995. US Department of Commerce, Economic Development Administration Cluster Based Economic Development: A Key to Regional Competitiveness, 1997 Voytek, Kenneth and Ledebur, Larry Is Industry Targeting a Viable Economic Development Strategy? in Bingham, Richard D. and Mier, Robert, Dilemmas of Urban Economic Development: Issues in Theory and Practice, Sage, Thousand Oaks, CA, 1997, pp.171-194 Waits, Mary Jo The Added Value of the Industry Cluster Approach to Economic Analysis, Strategy Development and Service Delivery, in Economic Development Quarterly, 14:1:February 2000, 35-50.

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Hamilton County Regional Planning Commission


138 E. Court Street, Rm 807 Cincinnati, OH 45202 (513) 946-4500 www.communitycompass.org