Exploring Opportunities for a Stronger Regional Economy

Module Six

Reflecting on the Previous Session

• What did you find most useful or valuable?• What progress have you made since then?• Any questions or clarification needed?

COMMUTING PATTERNSTable 1. Where Workers in a County Reside

Carson City Churchill Douglas Humboldt Lyon Mineral Pershing Storey WashoeCarson City 43.42% 2.22% 10.68% 1.03% 8.40% 2.81% 1.86% 5.99% 2.80%

Churchill 1.64% 71.72% 0.67% 1.34% 5.74% 3.89% 3.79% 1.65% 0.84%Douglas 12.83% 1.66% 49.78% 0.75% 3.28% 3.83% 1.80% 0.90% 1.70%Humboldt 0.52% 0.80% 0.23% 67.03% 0.28% 1.08% 8.26% 0.07% 0.33%

Lyon 12.76% 5.82% 3.95% 0.59% 60.00% 5.68% 4.79% 16.67% 3.17%Mineral 0.21% 0.57% 0.19% 0.11% 0.44% 67.58% 0.13% 0.14% 0.10%

Pershing 0.41% 0.43% 0.08% 4.20% 0.22% 0.36% 61.05% 0.07% 0.13%Storey 0.82% 0.19% 0.29% 0.05% 0.73% 0.18% 0.27% 19.63% 0.54%

Washoe 18.79% 9.26% 9.62% 5.39% 15.63% 5.80% 8.46% 50.41% 80.98%Rest of Nevada 4.33% 4.44% 3.77% 15.16% 1.71% 2.81% 6.19% 0.07% 4.99%RUS or ROW 4.25% 2.89% 20.73% 4.34% 3.56% 5.98% 3.40% 4.41% 4.42%

TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

COMMUTING PATTERNSTable 2. Where Workers from a Given County Work.

Carson City Churchill Douglas Humboldt Lyon Mineral Pershing Storey WashoeCarson City 54.17% 4.73% 18.84% 1.96% 19.34% 3.21% 5.89% 12.75% 2.90%Churchill 0.78% 58.11% 0.69% 0.84% 2.48% 2.43% 1.70% 0.84% 0.40%Douglas 8.96% 1.30% 49.15% 0.59% 4.03% 1.99% 0.72% 3.03% 1.00%Humboldt 0.34% 1.02% 0.29% 66.67% 0.24% 0.44% 15.86% 0.22% 0.22%Lyon 3.89% 6.14% 1.79% 0.39% 33.78% 2.49% 1.19% 4.21% 0.90%Mineral 0.21% 0.68% 0.34% 0.25% 0.52% 62.47% 0.31% 0.17% 0.05%Pershing 0.13% 0.60% 0.14% 1.69% 0.40% 0.11% 47.37% 0.22% 0.07%Storey 0.39% 0.25% 0.07% 0.01% 1.33% 0.11% 0.05% 16.01% 0.41%Washoe 24.03% 16.59% 17.13% 8.52% 33.03% 9.95% 12.76% 57.36% 85.91%Rest of Nevada 3.11% 5.94% 2.77% 16.22% 2.46% 4.42% 9.50% 2.64% 4.53%RUS or ROW 3.98% 4.65% 8.78% 2.86% 2.39% 12.38% 4.65% 2.53% 3.61%

TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Overview of Module Six• Explore basic concepts of competitive

advantage• Provide an overview of tools and data

available to detect regional competitive advantage

• Examine strategies for building stronger regional economies

BASIC CONCEPTS OF COMPETITIVE ADVANTAGE

Competitive Advantage: Four Factors

What determines competitive advantage?• Firm Strategy, Structure and Rivalry • Factor Conditions• Related and Supporting Industries • Demand Conditions

Business shapes the economic value of a region, but places can help shape, nourish and

sustain local enterprises and industry.

Health Care

Industry

Firm Strategy:3 hospitals

7 full-time doctorsIndustry determined by

university-owned hospital, located 100 miles away

Demand Conditions: Unemployed and

underemployed seeking low-cost health care

Higher income leaving the region for large urban

hospital

Factor Conditions: Low rent

Inexpensive unskilled laborDifficult to retain medical

professionals

Related and Supporting Industry:

25% of durable supplies can be purchased locally

0% of non-durable supplies can be purchased locally

What value chains or

clusters exist in our region?

How many competitors?

What is the threat of new entry? Local customer

base? What do people want?

How does place influence the

quantity, quality and cost of input

factors?

DETECTING REGIONAL COMPETITIVE ADVANTAGE

What Are the Keys toEconomic Growth?

• People• Place• Businesses• Innovation• Clusters or branding

First Key to EconomicGrowth: People

• Who are our workers? Skill level, education, occupation Work ethic

• Who are our residents? History and culture Long time residents, newcomers

People: The Residents• Who are the people that live in this region?

How long have they lived here? How many generations have lived here? Where did they originate? Why did they come?

• Why do they like living here? Social conditions Cultural factors Economic prospects

• Who are our workers? Basic demographics Experience Work ethic

• Is our workforce adapting to change? Technology Recognizing needs

People: The Workforce

Second Key to Economic Growth: Place

• What amenities does our region offer?

• Why would people want to live here?

• Why would businesses relocate here?

Place: Industrial Indicators• Current leading employers • New and expanding companies and industries • Research facilities, R & D• Available land and buildings• Existing infrastructure• Access to transportation networks• Tax structure

Place: People & Quality of Life Indicators

• Population and labor force• Education• Health care• Recreational opportunities• Shopping• Crime, weather, etc.

• What is the portfolio of businesses (small, medium, large)?

• What does entrepreneurship look like?• What’s the mix of industrial sectors?

Third Key to Economic Growth: Business

Industries & Occupations: Looking at Your Region’s Data

• What types of industries/ businesses currently exist?

• What are key occupations?• How have these businesses

fared, particularly during the recent economic downturn?

Business Assistance in the Region

What type of programs, assistance or incentives are offered to:• Support expanding businesses?• Recruit new businesses?• Foster the growth of

entrepreneurs or small, locally-owned businesses?

Identifying Entrepreneurs

Small businesses

Self- Employed

People with underutilized talent

Social Entrepreneurs

Unemployed

Innovators

High growth businessesEntrepreneurship

Youth

Who Is an Innovator/Entrepreneur?

Identifying Innovators & Entrepreneurs

Problem/Opportunity

New Old

SolutionNew YES YES

Old YES NO

Entrepreneur: one whose goal is to create or capitalize on new economic

opportunities through innovation.

Assessing Entrepreneurship Capacity

• Community surveys Existing programs Community readiness Leadership Networks

• One-on-one interviews with local entrepreneurs

Assess ambitions and needs Identify local/regional constraints

Assessing Entrepreneurship CapacityInventory of Entrepreneurship:• BEA-REIS data• Census (non-employer statistics)• County Business Patterns• Panel Study on Entrepreneurial

Dynamics• Business owners survey

Capacity for New Entrepreneurs:• Educational attainment• Immigration and diversity• Financial resources• Business resources

Fourth Key to Economic Growth: Innovation

"Innovation . . . the successful introduction of a new thing or method . . . Innovation is the embodiment, combination orsynthesis of knowledge in original, relevant,valued new products, processes or services.”

Luecke and Katz, 2003

How Nurturing is Your Region?

Conception Implementation Marketing

• Idea Generation• Project Planning

• Development• Prototype Dev• Testing

• Production• Launch

BusinessProcess

RegionalCapacity

• R&D centers• Universities• Industrial Parks

• Capital Availability• Community Support

• Education• Technical Assistance

Three Phases of Innovation

Source: Tawari, Buse and Herstatt, 2007

Your Region’s Capacity for Innovation

• Research & Development (R&D) assets

• Regional universities or community colleges

• Other resources that foster innovation

Fifth Key to Economic Growth:Clusters or Branding

• Cluster – making the whole greater than the sum of the parts

• Branding – consolidating the essential characteristics of the individual identity into a brand core

Industry Cluster Analysis

• Views firms and industries, as interdependent, not isolated

• Identifies value chains• Discovers collections of businesses

producing similar outputs

What Can Regional Cluster Analysis Tell Us?

Where we have . . . • Gaps • Growing industries/clusters• Declining industries/clusters

Data Needs

• Industry sector data: number of establishments (over time), number of employees, payroll, earnings

• Potential linkages to determine value chains

You Think There Is a Regional Cluster, So Now What?

• Map the cluster• Determine if growing or declining• Evaluate regional capacity• Identify potential leakages

& opportunities • Determine potential strengthening

strategies

MAPPING THE CLUSTER

Value Chain Cluster Example

Grape stock

Fertilizers, Pesticides, Herbicides

Grape harvesting equipment

Irrigation technology

Specialized publications

Public Relations & Advertising

Labels

Caps & Corks

Bottles

Barrels

Winemaking equipment

Educational, Research & Trade organizations

Growers/Vineyards

Wineries/Processing

facilities

State government agencies

California Agricultural Cluster

Tourism Cluster

Food Cluster

Wine

Source: California Department of Food and Agriculture

Cluster Illustration: Bubble Chart

Source: EMSI.com

Identify Potential Leakages and Business Opportunities

For the cluster, determine the:• Current regional capacity• Industry potential• Future growth of industry • Types of skills needed

Identify Potential Leakages and Opportunities for New Businesses

Wine

Zero inputs available regionally Small % of inputs available regionallyLarge % of inputs available regionally100% of inputs available regionally

Labels

Grapes

Research

IIrrigation

System

Fertilizer

Advertising

Let’s look at the data for the Region

• Yesterday we looked at data that describes the people and the place.

• Today we are going to look at the data that describe the workers and the businesses– Workforce Data– Industry Data

The Workforce• Who are the workers in this region? • Are they blue collar or white collar? • What types of occupations have done

well lately?• Do you attract the creative class? • What are the skills or education needs

for targeted occupations?• What industries hire particular

occupations?

Occupation 2011 Jobs Growth (2002-2011)Real Estate Brokers and Sales Agents

6,751 82%

Securities, Commodities, and Financial Services

4,437 73%

Financial Analysts and Advisors

6,788 67%

Fast Food and Counter Workers

6,305 27%

Miscellaneous Managers

4,055 45%

Nursing, Psychiatric and Home Health Aides

3,420 36%

Accountants and Auditors

3,286 32%

The Creative Class

• Should be attracted and retained

• Develop, design or create new applications, ideas, relationships, systems or products

• Considered “footloose” • Attracted to amenities

Florida, 2002

Where is the Creative Class in the US?How "creatively-driven" is your economy compared to the national average?

Dark-blue is the least creative and dark-red the most creative areas.

INDUSTRY OVERVIEW

Examining Clusters in Your Region

Cluster Choices• Advanced Materials• Agribusiness, Food Processing &

Technology• Apparel & Textiles• Arts, Entertainment, Recreation & Visitor

Industries• Biomedical/Biotechnical (Life Sciences)• Business & Financial Services• Chemicals & Chemical Based Products• Communications• Computer & Electronic Product

Manufacturing• Computers & Software• Construction Materials• Defense & Security• Education & Knowledge Creation• Electrical Equipment, Appliance &

Component Manufacturing

• Energy• Energy (Fossil & Renewable)• Fabricated Metal Product Manufacturing• Food Products & Services• Forest & Wood Products• Glass & Ceramics• Health• Information• Information Technology & Telecommunications• Machinery Manufacturing• Manufacturing Super Cluster (6 sub-clusters)• Metals & Machining• Mining• Primary Metal Manufacturing• Printing & Publishing• Transportation & Logistics• Transportation Equipment Manufacturing

GOVERNOR’S CLUSTERS• Tourism, Gaming, and Entertainment• Clean Energy• Health and Medical Services• Aerospace and Defense• Mining, Materials, and Manufacturing• Business IT Ecosystems• Logistics• Agriculture• Intangibles and Financial Enterprises• Water Technology

Example: NV Manufacturing Cluster

NV Manufacturing ClusterNAICS Code

Description 2002 Jobs 2011 Jobs2011

Average Earnings

2011 Establishments

311 Food Manufacturing 1,328 1,739 $57,382 62312 Beverage and Tobacco Product Manufacturing 154 126 $65,605 3313 Textile Mills 212 22 $30,691 3314 Textile Product Mills 349 179 $47,027 18315 Apparel Manufacturing 94 91 $15,349 2316 Leather and Allied Product Manufacturing 50 22 $32,253 4321 Wood Product Manufacturing 675 524 $56,857 28322 Paper Manufacturing 204 345 $63,081 13323 Printing and Related Support Activities 1,762 1,149 $63,866 65

324 Petroleum and Coal Products Manufacturing 106 157 $157,491 7

325 Chemical Manufacturing 404 613 $97,538 30326 Plastics and Rubber Products Manufacturing 2,070 1,192 $66,129 45327 Nonmetallic Mineral Product Manufacturing 1,203 822 $82,232 43

331 Primary Metal Manufacturing 548 653 $102,122 13

332 Fabricated Metal Product Manufacturing 3,366 2,802 $66,184 157333 Machinery Manufacturing 1,072 943 $86,365 54334 Computer and Electronic Product Manufacturing 2,930 2,328 $86,993 68

335Electrical Equipment, Appliance, and Component Manufacturing 374 201 $77,622 13

336 Transportation Equipment Manufacturing 1,399 1,176 $74,086 42337 Furniture and Related Product Manufacturing 856 490 $60,973 54

339 Miscellaneous Manufacturing 3,833 3,444 $104,242 95

  

Total 22,991 19,017 $79,021 817

NV Manufacturing ClusterNAICS Code Description 2002 Jobs 2002 LQ 2011 LQ

339 Miscellaneous Manufacturing 3,833 2.34 2.34

326 Plastics and Rubber Products Manufacturing 2,070 1.10 0.88

323 Printing and Related Support Activities 1,762 1.08 1.03

327 Nonmetallic Mineral Product Manufacturing 1,203 1.04 1.01

332 Fabricated Metal Product Manufacturing 3,366 0.99 0.95

334 Computer and Electronic Product Manufacturing 2,930 0.90 0.96

314 Textile Product Mills 349 0.75 0.68

337 Furniture and Related Product Manufacturing 856 0.62 0.60

321 Wood Product Manufacturing 675 0.52 0.65

331 Primary Metal Manufacturing 548 0.50 0.78

333 Machinery Manufacturing 1,072 0.40 0.41

311 Food Manufacturing 1,328 0.39 0.55

336 Transportation Equipment Manufacturing 1,399 0.35 0.40

335 Electrical Equipment, Appliance, and Component Manufacturing 374 0.34 0.25

325 Chemical Manufacturing 404 0.20 0.35

  

Total 22,170 0.68 0.73

Looking Deeper into Misc Manufacturing Cluster

Distribution of Jobs Across Region

Strengthening the Miscellaneous Manufacturing Sector

Regional Occupations Related to Production

EXPLORING POSSIBLE ECONOMIC

DEVELOPMENT STRATEGIES

Strategies to Strengthen a Cluster or Brand

• Targeted attraction of industry• Business retention and expansion• New firm creation/entrepreneurship• Attraction of the creative class• Network development and

meta-business creation

Targeted Attraction of Industry• Past: Blindly attracting industry

• Now: Targeting businesses likely to be successful in the region

• Strategies: Cluster mapping Location models Community Business Matching

model

Location Models

Employs place specific data to:• Analyze the probability of an

industry moving to the region• Evaluate the region’s ability to

respond to industry needs• Select industries with the

highest likelihood of success

Community Business Matching Model

Compatibility Desirability

Community

Business

Assets

Needs Profile

Goals

The Ideal

Source: Cox et al., 2009

Business Retention & Expansion• Lets businesses know they are valued• Helps solve local business issues• Improves community awareness• Connects businesses to community

resources• Creates connections between community

organizations• Fosters job retention & growth

How BR&E Works

• Planning Phase• Action Phase

Recruit volunteer visitors Visit local businesses

• Follow-up Respond to concerns Plan for future

Regional Strategies to Increase Entrepreneurism

• Community-based training options Weekend boot camps FASTRAC or other 13-week programs Short-term targeted business training

• Access to business coaching• Youth entrepreneurship: 4H,

Scouts, in-school programs

Entrepreneurial Communities or Regions

Community Support

Conception

Birth

Openness to new ideas

and intellectual stimulation

Capital: Equity and Debt

Education: K-22

Information

Connections + Networking

Infrastructure

Services and Amenities

Source: Based on Reynolds, et. al., Small Business Economics 23: 263–284, 2004.

Attracting the Creative ClassThe creative class is ‘footloose’ and tends to congregate in places with a high quality of life.

• Networking • Retain/attract youth • Recreational activities• Cultural diversity, tolerance and

inclusiveness• Infrastructure• Population density • Proximity to metropolitan areas• Natural amenities (esp. mountains, forest)

Pote

ntia

l to

Affe

ct

Business Network Development

A formal or informal collaboration or cooperation among either competing firms or

firms that are part of a value chain for the purpose of

creating a net benefit for all involved

Network ExamplesWorkforce Development Example• Milwaukee Seven Water Council:

Transform the workforce system and create high performance talent pipelines within the region

Entrepreneurship Network Example• The Entrepreneurs Network:

Promote job growth and business creation

Meta-Business Formation

Strategies for generating revenue that support all local business

Examples:• Local coupons• Local credit/debit cards• Local currency • Business directories• Local stock exchange• Businesses that support other businesses

What’s Next?• Consider other potential strategies that

could be successful in the region

• Further examine the regional data

Final Reflections What topics did you

find most helpful? What did you find

confusing? What other data do

you need? Other items you want

to mention?

Looking Ahead: Module Seven

We will: Examine regional assets Explore the region’s seven

capitals Take an honest look at potential

barriers Take steps to link assets to

your potential regional goals