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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Stylized facts: 1960

World

Suppliers

Local

In houseproduction

Regional supply

Canada

6

1980

World

Suppliers

Local

Regional supply

7

1990

World

Local

Regional supply

branches

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2002

World

branches

Specializedsuppliers

Researchcenters MNDM

OGS,

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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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• Numbers, size verified

• Network structure described)

• Organization is emerging

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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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That’s all Folks

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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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