The Opportunity

An industry cluster is a geographic concentration of firms and supporting institutions with common or complementary business interests.[1]  For example, a cluster of businesses associated with boat manufacturing has formed along the North Carolina coast. By locating in a single region, this cluster of firms may lead to growth or establishment of additional related businesses, accelerating the entry of new ideas and technology within the cluster and increasing access to labor, financing, and support services.[2]  Businesses join the cluster because they obtain a competitive advantage over other firms that are not located in the cluster. Clusters rarely develop as the result of a planned design or intervention; more frequently, they develop as a natural evolution of industrial development in a particular area.[3] Once formed, the aim is to identify and nurture the cluster. When a regional industry cluster forms in a rural area, it presents an opportunity for strengthening the regional economic base, sustaining a skilled workforce, and benefiting households on the economic margin.[4]

How the Tactic Is Applied

• Nurture emerging industry clusters
•  Support existing industry clusters undergoing transition

Nurture Emerging Industry Clusters

Marine Trades Cluster (North Carolina)
Wine Cluster (North Carolina)

Some rural industry clusters arise because of natural and built assets in a particular region.  This occurred in eastern North Carolina, where a Marine Trades Cluster formed because of the region’s access to warm coastal waters, major ports in Wilmington and Morehead City, and interstate highways.  Businesses in the cluster include boat builders, suppliers, haulers and distributors, as well as end-users of the boats such as boat rental companies and dealers.  Local business and community leaders recognized the region’s competitive advantage in hosting this particular industry as well as the cluster’s importance to the region’s economy, so they have worked to enhance the cluster. Their efforts have centered on workforce development and industry-targeted technical assistance. 

Several regional community colleges participate in the workforce development initiatives. For example, Pamlico Community College and Cape Fear Community College offer boatbuilding degree programs. Other regional colleges offer programs to teach skills closely related to the marine trades, such as welding and electronics.  Carteret Community College hosts the N. C. Marine Training and Education Center, a comprehensive training center that offers courses and degrees in boat manufacturing, marine propulsion, and marine systems.  These workforce training programs ensure that the region remains attractive to the businesses associated with this particular cluster.

Industry-targeted technical assistance is provided by a regional Small Business and Technology Development Center (SBTDC), a state-sponsored business and technology extension service. The SBTDC hosts the N.C. Boating Industry Service, an initiative that serves the needs of marine trades small businesses by providing technical assistance and by matching businesses with potential suppliers and customers.  Additionally, the regional economic development commissions, North Carolina’s Eastern Region and North Carolina’s Southeast, actively market and recruit businesses that enhance and compliment this industry cluster.

Providing an example on the other end of the state, in the Yadkin River Valley, the resurgence of wine-making in North Carolina has led to the development of a Wine Cluster which relies on the region’s fertile soil, mild climate, and water supply.  State and local leaders nurtured the cluster by enacting favorable state tax policy, offering incentives to farmers for growing crops other than tobacco, and by marketing vineyard tourism. Additionally, Surry Community College established diploma and certificate programs in viticulture enology, and the Yadkin Valley Chamber of Commerce began hosting an annual wine festival featuring local wines, food, crafts, and entertainment.

Support Existing Industry Clusters Undergoing Transition

Hosiery Cluster (North Carolina)

Industry clusters naturally evolve over time. When global shifts in the economy force an industry to overhaul its business model—as has occurred frequently in manufacturing sectors across rural America—the survival of related industry clusters may depend on how the evolution is handled. The stakes are high for communities and households on the economic margin, because jobs and tax base hang in the balance.  For this reason, some community leaders have taken an active role in assisting regional industry clusters with managing economic transitions.       One example is the Hosiery Cluster in the vicinity of Hickory, North Carolina.  In the late 1980s, when global competition threatened the survival of the industry, the regional trade association established the Hosiery Technology Center with the support of the state legislature and the community college system.[5]  Housed at Catawba Valley Community College (CVCC), the center provides training, business development assistance, and product testing services for small business clients.[6]  As the hosiery industry faced increased global competition in the new millennium, the cluster and the center worked with industry participants on developing and testing niche products, such as organic cotton socks.[7]  The center also collaborated with CVCC to incorporate industry terms into “English as a Second Language” classes to take advantage of a growing population of immigrant workers.[8]  In 2009, the center changed its name to the Manufacturing Solution Center to reflect its expanded mission to support a wide range of manufacturing industries in the region.[9]   

Learn More

Dan St. Louis
Director
Manufacturing Solutions Center/Hosiery Technology Center
Hickory, NC
828-327-7000 x4292
dstlouis@manufacturingsolutionscenter.org
http://www.manufacturingsolutionscenter.org/

On the Internet

Generating Local Wealth, Opportunity, and Sustainability through Rural Clusters
http://rtsinc.org/publications/documents/RuralClusters09.pdf

A Compendium of Clusters in Less Populated Places: Circumstances, Interventions, and Outcomes
http://rtsinc.org/publications/documents/compendium_final_forWeb_new.pdf

Clusters and Competitive Advantage: Finding a Niche in the New Economy
https://www.sog.unc.edu/publications/articles/clusters-and-competitive-advantage-finding-niche-new-economy