Author's note: This is the first of a series of blogs profiling the successful wood products manufacturing “cluster” of companies located in southwestern Ontario, Canada: the Bluewater Wood Alliance (BWA). To our knowledge there are no other wood product manufacturing clusters of this kind operating in Canada, but we are aware of an Amish Cluster in the northeastern U.S. However, this type of clustering is very common in Europe.
First of all, it is important to understand what the term “cluster” really means. “Clustering” is a word often misused by governments, economic development organizations, manufacturing associations and consortiums. Recently, it has become a “sexy” term implying innovation in the attraction and retention of industry in North America. However, there are very few real clusters functioning in the true sense of the definition on our side of the globe.
According to Harvard Business School Professor Michael Porter, “A cluster is a geographically proximate group of companies and associated institutions in a particular field, linked by commonalities and complementarities.“
A true cluster boils down to a few key elements:
• Companies in the same sector or industry: In manufacturing, this means that they use a common raw material and common elements in their processes, and serve common and multiple sectors. For example, in a major clustering centre in Linz, Austria, there are clusters for plastics, metal fabrication and wood products. The plastics and metal clusters may serve automotive, aerospace and other industries.
• Geographic proximity to each other: The rule of thumb for a cluster's size is a one to two hour driving radius. This allows for ease of companies to meet with each other and participate in activities of the cluster.
• Infrastructure commonalities: This refers to things like skills training, purchasing, supply-chain, service provision, logistics, etc. When you think about it, this is an area that makes a lot of sense.
While these three elements are key, there is a fourth element we have discovered to be the most important of all. It is a vital ingredient that Prof. Porter does not point out, and assumes should come naturally, but does not in North America:
• Collaboration among (competing) companies: In order for a cluster to succeed, it requires the commitment of companies in the sector and the region to collaborate on projects, share those best practices they wish to share and see the importance of the “big picture” for the growth of their industry. It requires people to step out of their typical comfort zones of the competitive environment and realize the opportunities that exist by working together in the areas that make sense. This includes engaging the supply chain in strategic ways, work-force development, adoption of technologies and export development to name a few.
Buying into this last concept is likely the reason why true clustering is not yet as common here in North America. Culturally, we are not yet ready for clustering en masse like they are in Europe.
However, if the right people are at the table with the right attitudes, and circumstances exist that provide the right motivation, a seed can sprout into a cluster, such as it has done with the Bluewater Wood Alliance (BWA).
The Bluewater Wood Alliance Inc. has now grown to 55 member companies over the first two and a half years of its existence.
We look forward to sharing details of this evolution, the companies, our projects, activities, and our successes and challenges in the coming blogs.
Meanwhile, all the best to you and yours for 2014!
Mike Baker is the Manager of the Bluewater Wood Alliance (BWA). His role involves bringing diverse wood sector companies together for collaboration on projects, facilitating value-added networking events, and developing and executing the business plan. This includes growing the Alliance with new member development and retention through member driven programming. Recently, Mike led the BWA on an export development exercise to Dubai, UAE, and also continues to liaise and work with government and industry partners to support the ongoing development of the BWA and its activities. Learn more at BluewaterWoodAlliance.com.