Industry clusters may hold the key to differentiating a region by defining its uniqueness of offerings, with the potential of leveraging these attributes for a comprehensive economic development strategy. The process of developing this comprehensive strategic plan around industry clusters is complex and involves a lot of moving parts with collaborations across several sectors. This effort has proven worthwhile for areas across the country, with the promise of impactful economic developmental growth.

First of all. the definition of an industry cluster is “a geographic concentration of inter-related industries that drive wealth creation in a region, primarily through export of goods and services.” Let’s take the automotive industry, for example. When an automotive factory opens in an area, it magnetically attracts secondary and tertiary suppliers to open up down the road, providing more convenient and immediate supply chain options. A concentration of related-supply chain businesses, such as this example revolving around the automotive industry, make up a cluster.

Understanding industry clusters, and their possible impact on a region, is a critical component of regional economic development. An assessment of an area, which is what I do for my clients, helps to identify available resources, find any gaps, and offer solutions towards a long-term, sustainable comprehensive strategy.

Like with automotive, taking a look at an industry’s supply chain could identify opportunity. Why not attract suppliers to your region? Most of the supply chain manufacturers are privately held and family-owned, which are desirable businesses to have in a community.

It’s critical to understand what you have in your own backyard. What if you already have businesses with the potential to service other manufacturers in your area? Many businesses, like plastics companies for example, are capable of producing an abundance of components for a variety of industry verticals under one roof. The capabilities and possibilities of businesses in an area comprise the assets of a community and its ability to attract complimentary businesses.

Many local economic development organizations have limited resources, so implementing a creative approach towards a regional strategy becomes all the more important. It’s important to understand a regional cluster of industry in order to provide optimal targets for business attraction efforts for local economic development organizations. Industry analysis helps to connect these dots.

A comprehensive industry cluster analysis can help inform policy and help economic development organizations offer programs and services to meet the needs of the existing business base.

Another critical component in assessing industry clusters is understanding the workforce needs of an industry. The workforce conversations should be cognizant of inclusivity with regards to training and workforce pipeline design. There needs to be more intentionality around an inclusive strategy than has been historically considered. Creating opportunities for a diverse workforce is a really good business strategy and leads to more innovation. Diversity directly impacts how much more effective a business will be and therefore the table needs to be bigger so that everyone has a seat. Collaborative efforts with working with schools, colleges, training centers, and with other programs at the local, state, and regional level will help to create a flourishing talent funnel to fill workforce needs.

Understanding which industry clusters you have in your region will drive your economic development strategy and may strengthen an industry, if implemented well. We help communities draft competitive, actionable economic development strategies to facilitate results that benefit all.


About the Author 

Brett Wiler

Director of Economic Development