Leaders Find Economic Optimisim in Maine Trade Clusters

Story posted August 10, 2006

Leaders in business, education, and public policy convened at Bowdoin College this week to discuss the promise of economic development clusters in Maine. Among them, were noted Harvard Business School (HBS) Professor Michael Porter, former Maine Governor Angus King, SOLERA Capital Managing Director Karen Mills, and Professor John Quelch, leader of the HBS's Global Initiative.

Maine By the Numbers

Harvard Business School Professor Michael Porter is graciously making available to the Bowdoin community data slides from his Aug. 7, 2006, talk at Bowdoin College. They include never-before-published statistics about comparative wage performance, local and national trade clusters, Maine jobs created by traded cluster, wages by industry, and comparative performance indexes.

View his Competitive Assessment of Maine here.


The Aug. 7, 2006 forum, which was sponsored by the Maine Chapter of the Harvard Business School Alumni Club, showcased new data compiled by Professor Porter about areas of economic growth in some surprising quadrants in Maine - including aerospace engines, communications equipment, process foods, financial services, and medical equipment manufacturing. (See sidebar for a link to his slideshow presentation.)

His findings were part of a decade-long study of "cluster development"- geographic concentrations of interconnected companies, specialized suppliers and service providers in a particular field.

Porter has identified over 40 clusters of what he terms "traded businesses" nationwide - those that produce goods and services that are traded outside the local area, but which bring money into the local community. Traded clusters tend to be more efficient economic stimulators than traditional government-driven policies, said Porter, and they tend to produce higher-wage jobs than do local markets.

According to his data on Maine, only about 26 percent of businesses currently are in traded clusters, fewer than the national average of 30 percent. Several of them, however, rank surprisingly high among national standings: Maine's traditionally strong footwear sector still ranks eighth in the nation and its growing aerospace engine manufacturing trade cluster is ranked at thirteenth place.

"We tend to think of Maine's many small businesses as small scale, but when you group them together in trade clusters, they have a lot more traction and momentum to power our economy." -- Karen Mills

"Maine has quite a lot of vitality," noted Karen Mills. "We have more assets than we have thought in the past with which to build strong economic development. We tend to think of Maine's many small businesses as small scale, but when you group them together in trade clusters, they have a lot more traction and momentum to power our economy."

Mills presented a case study of one such cluster development taking hold in Maine, North Star Alliance, a three-year, $15 million federally funded project. The program targets boatbuilding, with over 80 public and private entities committed to developing a trade cluster in composites and plastics for the marine-trade sector.

The Alliance is expected to generate as many as 2,000 new jobs in the composites and marine industries- many of them in the greater Brunswick area. Mills, who was active in the formation of the Alliance, described it as "a virtuous circle."

"The University of Maine Composite Center is developing innovations in composites and plastics that are driving some of this opportunity," she explained. "In turn, the Department of Labor and Maine Community Colleges are focusing on training to connect our workforce to these industries. The federal grant gives us startup capital and funds to develop marketing for these innovative products under the branding of 'Maine Built Boats.' If you put all of those pieces together, with Maine's 400-year boatbuilding heritage, we have a strong competitive advantage."

For more information on cluster development and national competitiveness, visit Harvard Business School's Institute for Strategy and Competitiveness, which is led by Porter.

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