By ANDREW WAREING
A community trying to be something it is not can become an economic development equation that can equal disaster, says an official with the City of Thunder Bay.
Thunder Bay city council recently approved an approach that tourism and economic development manager Derik Brandt says is more likely to spell success for Thunder Bay’s economic future. That approach is called “clustering.”
“Rather than a government trying to make something happen, it facilitates the natural growth by clustering groups of businesses,” Brandt says, adding that clustering builds on the strengths of the community. “It recognizes that government can’t create jobs nor force the economy to create jobs.
This recognizes how economies grow on their own rather than (someone) saying ‘Go out and create jobs in an Internet technology.’ Clustering by definition is building on your strengths.”
Clustering in action, he says, includes Ottawa’s technology sector frequently referred to as the Silicon Valley of the North. Several technology firms locate around each other and, although many are competitors, their very presence encourages innovation among them and also encourages people with particular skills to move to that community. Attempts by communities to attract business by offering things like tax incentives have proven time and again not to work because the community does not offer other important things like a skilled workforce to the companies they are trying to attract, he explains.
“Part of the whole concept of clustering is that you have to have firms competing,” Brandt says. “That’s what drives innovation and drives job growth. If you have stiffer competition in a community, it creates a culture of innovation.
“Stiffer competition raises the level of a firm’s competitive advantage to a global level. Rather than servicing a local area, firms are risen to a level of competition on the global stage.”
The concept of clustering started as an analytical tool for looking at how economies grow and has developed into an overall approach toward economic development, says Brandt.
Strength areas for Thunder Bay are tourism, forestry, transportation and education/knowledge creation. Within those areas, particular areas of focus include the development of the value-added wood sector involving pre-manufacturing of some wood products. In the area of educational and knowledge transfer, he says the focus is turning toward biotechnology. Transportation will have a particular focus on finding opportunities in the aviation field, while tourism seeks to develop Thunder Bay as a destination attraction including tourism packages. Each cluster has its own economic development officer in charge of assisting companies in each sector to find new opportunities. The effort is further assisted by community champions, such as private individuals with experience and expertise within that cluster who assist in the efforts to find venture capital and support the efforts within the clusters. Efforts are also underway to find “angel investors,” venture capitalists who are willing to invest in growing clusters.
“We’re fortunate to have people in the community who are taking the lead in important areas where necessary,” says Brandt. Although many communities throughout Ontario have natural clusters in operation, this method of economic development is considered innovative, says Brandt.
The advantages of taking this approach include higher wages and spillover of benefit to other businesses within the community.
“Research has shown that clustering create growing jobs with higher wages. “
