1 Cluster evolution: from “in itself” to “for itself” Observations from Sudbury’s Mining Supply and Service Cluster Prepared for the Annual Conference.
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Cluster evolution: from “in itself” to “for itself”Observations from Sudbury’s Mining Supply and Service Cluster
Prepared for the Annual Conference of the
Innovations Systems Research NetworkVancouver, May 11-13, 2004
David Robinson,Laurentian University
May, 2004
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The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood."
John Maynard Keynes
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Canada’s leading mining community
• GDP much larger than the GDP of Prince Edward Island, (5.6 vs. 3.4 billion)
• Population greater than the combined populations of the Yukon, the Northwest Territories and Nunavut,.
• 270 specialized mining supply and service firms, • Demanding anchor firms• A concentration of administrative services • The only city in the world with 15 producing mines
within the city limits. • The only mining community in Canada with a research
university.
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51-60 46-50 41-45 36-40 31-35 26-30 21-25 18--2015--1712--149--11 6--8 3--5 0-2
2 Royal Tire
4 Waters Environmental Geoscience Ltd.
5 Center for Environmental Monitoring
5 CT Hydraulics
5 REM Environmantal Services
6 Hardrock Mining Products Ltd.
6 Ionic Engineering
6 Testmark Laboratories Ltd.
7 Four Leaf Solutions Inc.
7 Medd Inc.
7 NAR Environmental Consultants Inc.
8 D. F. Wood Consulting
8 HLS Hard Line Solutions
8 Varis Mine Technology Ltd.
9 Bestech Engineering
9 Fenicem Minerals Inc.
9 Houston Lake Mining
12 Baker Hughes Mining Tools
12 Spectrum 2000 Group
13 Canun International
13 Electrowindings
14 Dallys Industrial Services Ltd.
14 Del Bosco Surveying
14 Dunrite Rubber and Plastic
14 ECMS Electronic Controls Monitoring Systems
15 Norguard Industries
15 Northern Survey Supply
17 Langford Industries Ltd.
17 Mine Limited
17 Moran Mining and Tunneling
17 Sudbury Mining Products Ltd.
17 Zacon Ltd.
18 Chess Control Systems
18 Ethier Sand and Gravel
18 Hunt & Sons Industrial Equipment Ltd.
18 Mine Site Technologies
18 Northern Heat Treat
18 South Bay Design and Construction
19 Metex Inc.
20 Elastovalve Rubber Products
22 AMEC
22 Rezplast
23 Electric Vehicle Controllers Ltd.
23 Novenco
23 Sudbury Prospectors and Developers Association
24 B&D Manufacturing
24 Consbec Inc.
24 Rocvent
24 Tracks and Wheels
25 B&R Rubber Services Ltd.
25 Marcotte Mining Machinery Services Inc.
26 Comairco
26 Ground Control
27 Bull Industrial Supply Ltd.
27 CTF Supply
28 Lopes Mechanical
29 DST Consulting
29 Herold Supply
30 O.C.P. Construction Supplies Inc.
34 Sling Choker Manufacturing Ltd.
34 TROW Associates Inc.
36 FAG Bearings
38 Bristol Machine Works Ltd.
38 Carriere Industrial Supply
39 Herby Enterprises Ltd.
48 Copper Cliff Mechanical
48 Groom Callaghan Supplies
48 Guillevin International
48 Keith R Thompson Ltd.
49 Baycar Steel Fabricating Ltd.
50 Clarke Philips Supply Co. Ltd.
53 Sudbury Regional Credit Union
54 Bearing Distribution Inc.
x 100 Sandvik Mining and Construction
131 Atlas Copco
Adamic
Catastrophe
x4.5
13+
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Inco, Falconbridge
5. Building materials
1. Underground vehicles
10. General industrial supplies
11. Lubricants, engines,
9. Material handling material
2. Instrumentation
3. Air and liquid flow
4. Metal Fabricating
12. Environmenta
l
7. Packaging and handling
6. Ground control
8. Drilling and blasting
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NRCan’s three
largest centres for MS&S by
advertising
Growth rate
Concentration Ratio
151413121110
987654321
0 1 2 3 4 5 6 7 8 9 10
TORONTO VANCOUVER
SUDBURY
SASKATOON
for Dale
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suits
F I N A N C E
Sudbury Cluster
Extraction
Supply and
servicesEducationResearch
GOVERNMENT
Exploratio
A cluster without suits
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Deepening
• 75% employ specialized service providers. Accounting, law firms, payroll, insurance and business consultants. – Firms native to Sudbury AND firms with
branches locally said that the specialized service providers were local.
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• The firms studied did not report difficulties in raising capital. (As Holbrook notes for west)
– 28/73 internally generated funds – 56 /73 banks– Only two went to non-local bank offices
Capital
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Networked
• 84% participate in local or regional associations
• 39 of 75 regularly attend networking events
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Innovation
• 76% offered new or significantly improved products or manufacturing/production processes over last 3 years. – 16 were world firsts.– 16 were Canadian firsts.– 25 were firm firsts.
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Sources of innovations
0 20 40 60 80
CustomersManagementCompetitors
In-house R&D UnitEngineering Staff
SuppliersMarketing Dept.
ConsultantsUniversity Researchers
Federal or ProvincialVenture Capitalists
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Factors contributing to growth of firms:External benefits of labour force
financing
Other firms
infrastructure
customers
policies
training
workforce
research
0 10 20 30 40 50 60 70
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First invisible, then disputed
• By officials of the Ministry of Northern Development and Mines (MNDM),
• By the Director of the Canadian Association of Mining Equipment and Service Exporters (CAMESE).
• By The Institute for Competitiveness and Prosperity (ICAP)
• By University: Sudbury now a service economy
• By owners of the first 12 firms interviewed
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“official” profiles of the top five clusters of traded industries: 2002
1. Education and Knowledge Creation
2. Hospitality and Tourism
3. Heavy Construction Services
4. Financial Services
5. Business Services
A View of Ontario: Ontario’s Clusters of Innovation. The Institute for Competitiveness & Prosperity.
Working Paper No. 1, April 2002, http://www.competeprosper.ca/public/wp01.pdf
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Questions
1. Why was an evident cluster not observed
2. How does it come into sight?
3. Why resisted?
4. What does it tell us?
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Why not seen 2002?
• Methodology misses– Look for exporting sector– Location quotients
• Theory – Emphasis on connections,
organization, self-representation
• Entrenched interests
• No champions
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If image is a criterion, these questions must be asked to measure whether an area is a tech cluster: http://
www.technologycanada.com/views.cfm
1. Would an outsider say the city, town or region in question is a tech cluster, without prompting?
2. Do the people involved in the tech cluster understand what it is and define themselves in one?
3. Is there a mouthpiece, a news organization or organizations that are very supportive of the industry.
4. Is there a professional organization that supports technology exists in every tech cluster
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2004: 3 out of 4
• City declares MS&S the leading growth engine
• 2003, December: SAMSSA incorporated
• 2004 First issue, Sudbury Mining Solutions, a Sudbury MS&S trade journal
• Now most firms interviewed (April) say there is a network of firms and they are part of it.
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An unchampioned cluster
• Weak city state• Weak entrepreneurial culture• Weak, new, sectoral leaders,• Senior governments under pressure to spread goodies
around• Old ideas:
– City promoting self as centre of healthcare, tourism, alternate energy
– Mining-related means mining-run
• University not committed to economic development, technology
• Political competition from other segments of industry
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Policy implications?
• Key policy choices:– Location of public assets– Voice: Public role in branding, signalling
• Outcomes likely to be suboptimal because of because governments respond to pressure to include everyone.
• Don Di Salle: locals have to get organized
• Role of social, political
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Theoretical implications?
1. Invisible clusters?2. Power of customers and traditional
aggregation forces-Role of moderately thick labour market-tacit knowledge
3. Importance of recycling talent 4. Importance of culture – Negative example5. Role of university in moving up-technology –
late joiner 6. Importance of public sector decisons
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Notes from talks
• We lived here and we didn’t want to leave
• This is THE centre for mining
• Weak entrepreneurial culture– Blue collar, branch plant town,
• Loss of jobs: Schumpeter?
• Community response is important
• spatial agglomeration or functional network?
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