Cluster Development

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Cluster Development

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  • A Global Perspective on Cluster & Value Chain

    Development

    Presented by

    Richard A. Ramsawak

    Team Leader Cluster Development Initiatives

    Arthur Lok Jack Graduate School of Business, UWI

    Presented to IMBA Students at ALJGSB

  • Some Common Problems in Business

    Access to Markets meeting international Quality Standards

    Limited economies of Scale

  • Some Common Problems in Business

    Low Levels of Innovation and Competitiveness

  • Some Common Problems in Business

    Disease

    Labor Shortages

    Infrastructure and facilities

  • What are Clusters?

    Networks are groups of firms that cooperate on a joint development project complementing each other and specializing in order to overcome common problems, achieve collective efficiency and penetrate new markets

    Clusters are geographic concentrations of interconnected companies, specialized, service providers, and associated institutions in a particular field that are present in a nation or region Professor Michael Porter, Harvard Business School

    Value Chains -Refers to the fact that value is added to products in each element of the productions process (raw material production or supply, R&D, manufacturing, marketing and distribution), with other resources

  • Private Sector

    Institutions for Collaboration

    Financial Institutions

    Research Institutions

    Academia

    What are Clusters?

    Government

  • What is a Value Chain?

  • What are Clusters?

  • Example of an Industrial Cluster

    Port Facilities

    Methanol

    Ammonia

    Steel

    UTT

  • Government

    Ministry of Energy and Energy Industries

    National Energy Corporation

    National Gas Company

    Environmental Management Agency

    Private Sector

    Yara Trinidad Ltd.

    Phoenix Park Gas Processors Ltd.

    PCS Nitrogen Limited

    Nu-Iron Unlimited

    Methanol Holdings (Trinidad) Limited

    Methanex Trinidad Limited

    Caribbean Nitrogen Company

    Academia

    University of Trinidad and Tobago

    Metal Industries Company Limited

    Arthur Lok Jack Graduate School of Business

    UWI

    Financial Institutions

    First Citizens

    Scotiabank

    Republic Bank

    Royal Bank of Canada

    Institutions for Collaboration

    Energy Chamber of Trinidad and Tobago

    Point Lisas Chamber of Industry and Commerce

    Trinidad and Tobago Chamber of Industry and Commerce

    Research Institutions

    The Point Lisas Natural Gas Cluster

  • The Point Lisas Natural Gas Cluster

    Down-Stream Gas Processing

    Process Plant Services

    Logistics Services

    Financial Services

    Training Services

  • Pop Quizz

    1. Who was the first theorist to link Geographic co-location with growth

    Karl Marx

    Max Weber

    Schumpeter

    Johann Heinrich von Thnen

    Michael Porter

  • Understanding the Theory of Clusters

  • The Understanding Cluster Development Methodology

    Preliminary Analysis

    Developing a stakeholder Map (who are the key stakeholders and their interest)

    Recent economic trends local, regional and international

    What are the market opportunities

    Undertaking industry best practices

    Key lessons learned

    Cluster Level Analysis

    Mapping the Cluster

    Identifying Demand and Supply Side Issues

    Value Chain Analysis

    Mapping the Value Chain

    Costing the Value chain/Benchmarking

  • The Understanding Cluster Development Methodology Strategy Development

    Developing a Vision and objectives for the Sector

    Developing Strategies for implementation

    Developing a Holistic Action plan with Associated Budget

    Identifying lead and support firms

    Ensuring stakeholder buyin

    Creating Governance and Implementation Mechanisms

    Monitoring and Evaluation

    Amending the plan

  • The Local Maritime Industry

  • Definition of the Industry

    A DEFINITION OF THE MARITIME TRANSPORT INDUSTRY - The maritime transport industry constitutes economic activities that have some direct and indirect relationship with the sea. This will include activities that are concerned with the exploitation of resources of the ocean, and seabed

  • The Team

    Captain Rawle Baddaloo (Team Leader)

    President (Ag)

    Plipdeco

    Mr. Robert Miller

    CEO Miller Marine

    (South Trinidad Chamber of Industry

    Representative)

    Richard Ramsawak

    Ministry of Trade and Industry

    Ms. Jennifer Gonzales

    General Manager

    Shipping Association

    Mr. Mark Forgenie

    CEO Thin Red Line

    Mr. Cornell Buckradee

    Manager, Investments

    Tourism Development Company

    Ms. Beverly Philips

    Director

    Maritime Services Division

    Mr. Leonard Chan Chow

    Petrotrin

    Mr. Haydn Jones

    NEC

    Mrs. Michelle Hosang Scipio

    NEC

    Mr. Selwyn Brooks

    UTT

    Mr. Kurt Duncan

    Pilots Association

    Mr. Ronald Tsoi-a-Fatt

    Private Consultant

  • Maritime Industry Cluster Map

  • Global and Local Developments

    Growth in maritime trade

    Changes in the structure, size and depth of the international fleet

    Increases in world container traffic

    Development among Ports

    New security measures Increasing freight rates and insurance costs

    Developments in International Trade

    Erosion of Traditional Preferences.

    There is increased use of non-tariff measures such as SPS, TBT, the U.S. Bio-Terrorism Act of 2002, and more recently new security requirements for the international shipping industry.

    More liberalized movement of goods, services and people.

  • Examination of Best Practices

    Singapore and Malta

    Key elements of Best Practice

    Offering a range of maritime service

    Quality Training

    Institutional structure

    Technology & Innovation

    Quality Service

    Developing alternative sectors in the Maritime cluster

  • Global and Local Developments

  • Demand and Supply Issues

    Space constraints at Major Ports

    Deficiencies of equipment at the port

    Human Resource challenges

    There are also challenges with the labor at the port in terms of industrial unrest and more importantly productivity. There have been reports of work stoppages at critical times during the operations at the port

    Infrastructure Congestions on the roadways causing delays in the transportation of cars

    Institutional - There are several complaints about the institutional arrangements, which are faced by the maritime sector

    Bureaucracy and poor inter-ministerial coordination. There are several Ministries, which are responsible in one way or another for different aspects of the maritime sector

  • Demand and Supply Issues

    The regulatory agencies involved in the sector have not developed in line with the level of sea trade, realized in Trinidad and Tobago in recent years.

    Outdated Legislation

    Customs and Excise Division The number of customs officers is steadily declining. By the end of 2004, approximately 80 officers will be eligible for retirement

    The compulsory rotation of the customs officers also creates problems, as a certain level of experience and skill is required to efficiently clear the cargo

    Working hours Customs officials continue to work on an 8 a.m. to 4 p.m. basis. Again for an industry, which is required to operate on a 24/7 basis, this means significant overtime for customs officials.

    Finally and perhaps most importantly antiquated information systems Customs currently utilizes a paper-based system for clearance of goods. There have been steps to update this system with the new ASYCUDA ++ system, as well as, with the purchase of scanners for the two major ports.

    Maritime Services Division Presently there exists an outdated structure within the Division that makes no provision for the employment of legal, research and sufficient professional and technical personnel to carry out its national and international

  • Vision and Objectives

    To be a maritime hub and a global leader in the maritime industry;

    Objectives

    Preparing governance structure formalized and resourced for implementation.

    Making the legislative, policy, and regulatory changes for the development of the industry. (Harmonizing policy and incentives for the sector)

    Institutions reform of key institutions

    Creation of a Maritime Authority

    Human Resource Development

    Provision of training and development for key careers in the maritime sector

    Building awareness and developing policies for key social issues in the maritime sector.

    Developing Clusters within the Maritime Sector

    Developing local content and participation

  • Creating a Governance Structure

  • What were the Results?

    Establishment of Maritime Industry Development Committee

    Update of Legislation

    Shipping Act

    Shipping Regulations

    Development of Mentorship programme for the Maritime Sector

    Establishment and expansion of Maritime programme at UTT and ALJGSB

    Development of Key Clusters in the Maritime Sector

  • What were the Results?

  • History of Chiles Economy: Chile made a transition from a Natural Resources based economy (forestry, petroleum refining, steel and sugar production) to non-traditional exports and a significant growth in services.

    While the cluster itself evolved considerably over three decades, conditions were ideal for the establishment of the globally competitive cluster.

    Climatic and geographical conditions were ideal for salmon farming and the establishment of new salmon farms at key geographic locations in Chile.

  • The Salmon Industry Cluster Chile

    Overtime the availability of key human resources personnel in sciences, technical and vocational studies, which were necessary for the development of the sector.

    Pioneering Spirit coupled with openness to collaborate, establish associations, and team work.

    Government Support - Complementary Government investment in infrastructure, research funding, and training for the development of the cluster.

  • The Salmon Industry Cluster Chile

  • The Salmon Industry Cluster Chile

    Some of the Association Initiatives

    The Chilean Farming Association (SalmonChile)

    The development of a pioneer quality seal to face stringent quality market requirements.

    The launching of a phytoplankton vigilance programme.

    The establishment of geographic and good management practices tools.

    The development of a labor-competency certification system

    The implementation of a Clean Production Agreement for the salmon industry (APL) and a Vigilance and Management Model.

    The initiatives of the Government

    Catalyst for the Industry

    Promoting research and development through the Associations

    Building trust among stakeholders

    Enforce regulations related to coastal zones and environmental standards

  • The Salmon Industry Cluster Chile

  • Findings of Global Cluster Initiatives Survey

    85% of the stakeholders surveyed believed that the Cluster Initiative (CI) improved the Competitive Performance of the Cluster.

    89% believed that CI helped the Cluster to Grow

    Every CI is unique, and objectives of CI can vary greatly

    32% of CI s were initiated by Government, 27% by Industry, and 32% by both

    54% were financed primarily by Government, 18% by Industry, and 25% both

    CIs with Budgets and Offices sufficient to manage key projects were generally more successful

  • Key elements of Dynamic clusters

    Intense local rivalry involving on going competition displayed by continuous upgrading, innovation and change

    Dynamic competition from the new entry of firms or spin-offs from larger firms

    Intense cooperation organized through various institutions for collaboration such as professional organizations, associations

  • Proximity to sophisticated and demanding buyers

    Clusters with an explicit framework built on the strengths of the cluster and one which is accepted by the stakeholder community

    Access to increasingly , specialized and advanced factors of production (human, capital, financial, infrastructure)

    Key elements of Dynamic clusters

  • The Economist 13th August 2011

  • Regional Economic Outlook, IMF April 2011

  • Draft Agenda

    Theme 1 - The Current State: The Imperative for Development & Growth in the Caribbean

    Theme 2 - Fundamentals of Cluster Development

    Theme 3 The Role of Government and Private Sector

    Theme 4 Best Practices in Cluster Development Research

    Theme 5 The Way Forward

  • Profile of Key Speakers

    Ambassador Luis Andrade

    Secretary General

    Association of Caribbean States

    Emiliano Duch

    Emiliano Duch is the founder and CEO of

    The Cluster Competitiveness Group

    Gerardo Patacconi

    Chief, Cluster and Business Linkages, Business,

    United Nations Industrial Development Organisation

  • Profile of Key Speakers

    Dr. Ronald Ramkissoon

    Senior Economist

    Republic Bank Group

    The Honorable Bhorendratt Tewarie

    Minister of Planning and the Economy

    Christian Felzensztein

    PhD, Director of Cluster Innovation and STEIN Business Center.

    Professor of International Marketing, School of Business,

    Universidad Adolfo Ibaez, Chile

  • Dr. Beverly Morgan - Vice-President of the Jamaica Exporters Association, Member of the Board of Governor, Central Bank of Jamaica, Value Chain Development Expert.

    Dr. Tamal Sankar Cluster and Value Chain Development, Expert, MSME Foundations India

    Professor Miguel Carrillo Professor of Strategy & Innovation, Executive Director, Arthur Lok Jack Graduate School of Business, UWI

  • Where do we go from here?

  • Thank you!

    Questions

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