Cluster Development

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Cluster Development


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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