USING CLUSTERS TO DEVELOP A NEW TECHNOLOGY DRIVEN ECONOMY

Mark Copsey

31 May 2005

BACKGROUND

• British – worked in Economic Development for last 20 years

• Worked in English Local Government and up to 2002 for Yorkshire Forward – the Regional Development Agency for the Yorkshire region

• Worked in South Yorkshire Objective 1 area on cluster development

CONTENT

•Using technology to create and drive competitive regions

•Using cluster initiatives to achieve change

•Experience working in the UK and New Zealand

YORKSHIRE

SOUTH YORKSHIRE – OBJECTIVE 1 REGION

• In 2000 South Yorkshire was designated as an Objective 1 region

• Total programme developed over 7 years of around £3B

• Strategy built around 6 programme priorities

PROGRAMME OBJECTIVES

•Reshape the economy by increasing the scale and presence of new and high technology growth sector companies

•Modernise business base, maintain and develop a technologically advanced manufacturing sector

•Help communities to re-engage

•Capture new opportunities for communities in the process of economic transition

•Remove barriers constraining economic growth

SOUTH YORKSHIRE – THE CHALLENGE

• An industrial heartland based upon Steel, Coal Mining, Engineering (eg Railway).

• Up to 1980 GDP at UK average and just below EU average

• Went into severe decline through the 1980’s

• Hit employment and GDP hard – by early 1990’s below 75% of EU average and became an Objective 1 region in 2000

South Yorkshire GDP decline (EU=100)

65

70

75

80

85

90

95

100

1979 1981 1984 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Source:Eurostat Regio

STRATEGY TO ADDRESS PROBLEM• South Yorkshire’s economy is

too dependent on industries in decline

• Too few jobs, too few companies

• Focused on those sectors with the best prospects for growth

• Will require significant investment from external sources

• Used a cluster lens

Investment Strategy

Hi Tech Clusters

Economic Infrastructure

Skills

Community

Capability

CLUSTERS – HEART OF THE STRATEGY

Key parameters for activity from a total budget in excess of £1B:

• Total investment 633m euro

• Net jobs created 17,000

• New firms created 500

Cluster strategies:

• Advanced Manufacturing and Metals

• Environmental and Energy Technologies

• Banking and Finance

• Bioscience

• Creative and Digital Industries

THE APPROACH TO CLUSTER INITIATIVES

• Time limited

• Need for speed

• Need a driver

• Based on knowledge drivers

• Source knowledge internally and externally

• Core approach

• What have we got?

- Research and company capability

• Where is it going?

- Markets and their future shape

• Are we competitive?

• What needs to happen?

FINDING THE DRIVER

Each cluster had to identify the opportunity around which a new employment platform could be developed

• Metals ➜ Aerospace and Medical Devices

• Environment ➜ Remediation

• Bioscience ➜ Drug design and support services eg infomatics

• Creative and Digital ➜ e-learning and multimedia content

• Banking ➜ Outsourcing

METAL CORE – CAN IT BE RE-INVENTED?

• Centre of the world in terms of stainless steel – world reputation but uncompetitive

• Huge decline in employment

• Had the classical cluster support infrastructure – research, companies large and small, specialised training, community

• But pointing in the wrong direction?

• Value still being generated

• Had to find a new driver

• Specialist alloys an increasing focus of attention

• Opportunity in Titanium cutting

• Becoming a driver linked to aerospace

• Had around 50 companies already >40% of activity in aerospace supply chain

DEVELOPING THE DRIVER

Casting Technology International

Specialist supply companies eg Thornton Precision Components

INVESTING IN THE DRIVER

CO-ORDINATING INVESTMENT IN THE FUTURE

• Has significant access to resources

• Developed a focal point – Advanced Manufacturing Park

• Integrated set of stakeholders:

Project Team

Les Pynn – Business Development DirectorLaura Watkinson-Teo – Project Co-ordinator

Cluster DevelopmentBob Heywood - Advanced Engineering Cluster Manager

Inward Investment

Martin Tyler - AMP Inward InvestmentSimon Spode - RSY Inward Investment Jim Warden - AMP Marketing, US/Canada

Funding Support

Tony Newson - Objective 1 Tariq Javid - Regional Selective Assistance

Land and Property Eddie Peat - UK Coal Dave Custance - Yorkshire Forward 

PR and Events

Theresa Lindsay

ADVANCED MANUFACTURING PARK

ASSOCIATED INVESTMENTS

• Not just about a site:

• Supply chain development

• Labour market assessment and training

• Inward investment and investor support

• Investing in the knowledge base

• Investing in growing companies

• Investing in incubation

➜ Critical was the COMMITMENT to investment

NEW ZEALAND

NZ – DIFFERENT PLACE - SAME ISSUE

• 2003 - Trade New Zealand and Industry New Zealand merged to form New Zealand’s national economic development agency

• Key objective to move New Zealand’s per capita income to the top half of OECD rankings

• A global network of nearly 40 offices around the world

• Incorporating Investment NZ

• Challenge in NZ not greatly different to South Yorkshire – would be an Objective 1 country – on a par with Spain

60

70

80

90

100

110

120

130

140

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

GD

P p

er c

apit

a, O

EC

D =

100

New Zealand Australia Ireland Spain

For NZ per capita income to be in the top half of

OECD by 2020, need to grow economy by

50% or $50bn

NZ GDP PER PERSON CF OECD 1970-2003

NZTE’S STRATEGY

• Government’s goal is very ambitious

• For NZ business it means:

• International engagement is crucial to achieve required growth

• Strong connections between NZ businesses and key players in global value chains are critical

• Collaboration between businesses is crucial to achieve scale for engagement

• Market led rather than production push

GIF Goal: “Return NZ’s per capita income to the top half of the OECD rankings and maintain that standing”

3 Strategic Goals• Build business capability

• Improve the environment for enterprise & growth

• Increase international connections …help to return

NZ’s per capita income to the top half of the OECD rankings

Improve theinternational competitiven

ess and sustained

profitability of NZ

business

Growth &

Innovation

Framework

STRATEGIC DIRECTION

Facilitate strategicprojects

Facilitate strategic

relationships

Build international

business capability

Clustering Initiatives fit all of these goals

BUILDING A CLUSTER AROUND HTS

• Example of new technology – High Temperature Superconductors –where NZ has global ability and recognition

• Objective to develop a technology capability into an industrial sector

• Report commissioned - Aim should be to create HTS activity worth $300M pa by identifying and proactively engaging with industry in areas of early commercial opportunity

From this to this…..

HTS – WHAT IS IT ALL ABOUT?

• The ability to conduct electricity with minimal resistance

• Potential use in a number of areas within the power industry:

• Motors

• Generators

• Transformers

• Fault Current limiters

• Cables

• Wider applications in scientific and medical fields where strong or high magnetic fields are required

HTS IN NZ

• Surprised many that NZ has leading capability in this industry

• Based on the quality of science in IRL, Victoria University and Canterbury University

• Spun out 3 companies – HTS 110 from IRL, Canterbury TX from University of Canterbury and Magritek from Victoria University

• But critical is the ability to receive and use the science

HTS MRI

HTS Motor

INDUSTRY DEVELOPMENT WITH CLUSTER LENS

• Did not fit any one cluster capability

• Needed the capability of a number – too risky and too hard for one go it alone

• Built around of 4 areas that had necessary competency

• Had international links and partnerships

28HTS APPLICATIONS

HTS Opportunities

OPPORTUNITIES

• Design and supply magnet systems

• Supply current leads

• Development of HTS magnet system products eg Power supply

• Cryocooling

• Development of prototype projects for use in NZ and beyond

• Transformers

• Fault Current Limiter

• Fast Generators - aircraft

• MRI and NMR

DETERMINING THE DIRECTION

• Report proposed 2 10-year goals for developing an HTS cluster:

• A company that is a major player in HTS devices

• A base for the design and development of an international company in HTS power and rotating machinery

• Continuation of on-going research in core HTS technology to feed future product development and maintain global links

• Restructure R+D work around markets

• Magnetic fields

• Power systems

• Energy conversion

ACTIONS TAKEN BY NZTE

• Working group set up involving regional clusters: Wellington, Christchurch, Dunedin and Southland

• Formalising the group into an HTS Consortium

• Focus on engaging the private sector to drive forward the emerging commercial opportunities

• Learn by doing

• Our vision is to set up a structure within which:

• Private sector led groups develop products

• Utilise research capabilities at IRL & Canterbury &Victoria Universities

HTS Commercialisation Consortium

Facilitate the development of expertise and capability within EDAsCo-ordinate potential HTS partners and projectsFacilitate Industry partnership groupsProvide a focal point for international collaborationDevelop forward plan for HTS in NZ Provide forum for HTS awareness

Business groups based upon technology opportunities

HTS Pilot projects

Current leads

Cryostats

Cryocoolers

Research focused development opportunities

Power systems

Medical opportunity

HTS Wave power

HTS Transformer

Develop centres of academic excellence on HTS

Talent

Applied Research

DELIVERY MODEL FOR HTS WORK

Inner ring separately funded body

Outer ring activities initiated with own commercial funding arrangements

SEEKING TO REPLICATE

AG BIO – CORE OF NZ CAPABILITY

SUNSET - MARLBOROUGH SOUNDS