To date there is no such thing as SimCluster. If there were, it would work much like SimCity, the popular software game. SimCity lets you play urban developer, trying “what if” scenarios. Depending on the ground rules you define, and how well you marshal your resources, you can create a thriving metropolis … or a stagnant backwater.
The idea behind SimCity is that primary resources are necessary but insufficient. The same idea applies to industrial clusters. Yes, a particular region may have low labor costs, reliable utilities, and an extensive transportation infrastructure. But do these primary resources coalesce, forming an environment that stimulates both production and development? This question is especially pertinent to polymer clusters or zones. By no means is the polymer industry predominantly high-tech. However, innovation is becoming more of a priority. It is seen as a way to outflank foreign competition that often relies on low labor costs and lax environmental standards.
Defining Clusters
According to the Mississippi Development Authority, clusters are complex arrays of suppliers, support services and companies making intermediate products. In the case of polymer clusters, these arrays include companies throughout the value chain: resin manufacturers, materials designers, processors, and many more. Each kind of company has unique requirements. For example, resin manufacturers value proximity to raw materials, and they often need copious supplies of water. And processors value proximity to their customers. Yet companies of all kinds stand to benefit from being part of a cluster.
Some benefits are obvious. A concentration of companies within a region can justify ambitious educational programs and aggressive public relations and lobbying efforts. And regional financial institutions and government agencies grow beyond “one off” inefficiencies when accomplishing tasks such as financing, permitting, and environmental compliance. Finally, it is possible to create sourcing consortiums to reduce the cost of purchasing materials, supplies and equipment.
Less obvious, but perhaps even more important, are the benefits of networking. Sometimes, networking seems to take care of itself. A large company can effectively form its own cluster by developing relationships with its own suppliers and customers. Sometimes smaller companies spontaneously form a cluster when they form ad hoc partnerships. And sometimes links form between the academic and commercial worlds. For example, professors may be able to take advantage of technology transfer initiatives. They may become entrepreneurs and launch start-up companies.
Networking is the ultimate justification for a cluster. Networking enables a cluster to accelerate technology commercialization. Networking benefits everyone along the value chain, from suppliers of raw materials to end user — and everyone in between.
Evaluating Primary Resources and Networking Opportunities
The prospect of joining a cluster complicates the job of site selection. As always, a site selection project must evaluate primary resources. But it must also evaluate the quality of a region’s networking opportunities. To accomplish these evaluations, a company will usually consult a range of information sources. To learn about primary resources, a company will need to talk to local organizations. Municipalities, for example, tend to focus on such details as tax codes, utility rates, workforce relations and so on.
To learn about networking opportunities, a company will want to talk to organizations at the state or regional level. In comparison with local organizations, which reflect a tactical point of view, state or regional organizations reflect a strategic point of view.
This division of labor is the rule, but there are exceptions. In any case, local groups, state organizations and regional educational institutions may coordinate their activities. In fact, it can seem that development groups themselves may cluster. For example, the Area Development Partnership (ADP), a not-for-profit organization in the Hattiesburg area of Mississippi, coordinates its activities with several other groups. The ADP’s communications director, Katie Townsend, said, “We work with the Mississippi Polymer Institute and the University of Southern Mississippi’s School of Polymers and High Performance Materials to ensure our polymer industry members get the assistance they need whether it requires technical solutions such as analytical testing, rapid prototyping, new product development or training.”
Through its ties to these groups, as well ties to the Mississippi Polymer Cluster Organization and the University of Southern Mississippi’s Innovation and Commercialization Park, the ADP promotes industry-wide interests such as technology transfer. In addition to these broad concerns, the ADP focuses on specifics such as tax rates, the status of tort reform efforts, workforce quality and the condition of particular industrial sites. These include greenfield sites, existing facilities suitable for polymer companies, and even “polymer-centric” industrial parks. The ADP indicates that there are about 300 polymer companies in the Hattiesburg area, and that they represent a range of activities, from nanoscale applications to injection molding to end-user applications.
At the same time, an organization at the state level, the Mississippi Development Authority, provides a document called the Mississippi Polymer Cluster Study. In addition to emphasizing the importance of developing links between industry and educational institutions, it reveals an abiding interest in improving the rates of polymer patent activity and entrepreneurial development.
Municipal Perspectives
Whatever the region, the availability of tactical or strategic input will depend on the information source. For example, when asked to characterize the polymer cluster in southern Illinois, Kevin Baity, the City of Carbondale’s assistant city manager for Economic Development, focused on a region within a 25-mile radius. He cited advantages in many of the primary categories:
Labor: Relatively low cost and availability of a trained labor force.
Water: Extensive surface water impoundment (lakes, rivers and side channels). The current daily usage does not impact these supplies even in the driest of years.
Electricity: Numerous electric cooperatives as well as Ameren CIPS. Three power plants are located within 50 miles. Supply far exceeds demand.
Transportation: Proximity to interstates (13 miles from I-57, 20 miles fromI-24 and 40 miles from I-64). Illinois Route 13, which connects Carbondale to I-57, is currently a 4-lane highway with plans to improve portions to 6 lanes. Carbondale is served by the Canadian National / Illinois Central Railroad with dual tracks throughout town. Approximately 30 trains per day operate on the line.
Incentives: Availability of Enterprise Zone, Tax Increment Financing, Special Service Area and Low-Interest Revolving Loans. Together with the Carbondale Business Development Corporation (501c-3), the city offers more than 200 acres of infrastructure-ready green space.
According to Baity, these advantages have already attracted a variety of manufacturers utilizing polymers. Specialties include zip-lock food and medical bags, automotive interiors, recreational boats, digital media such as DVDs and CDs, and adhesive tapes.
Another contact at the municipal level, this time for a polymer cluster in Nevada, is Bob Cooper, the economic development manager for the City of Henderson. Cooper indicates that the City of Henderson is home to a number of leading plastics companies that collectively employ more than 1,000 people in the community. Cooper also emphasizes primary advantages. He cites low taxes, favorable electricity rates and proximity to nearly 60 million people in neighboring states. Plus he indicates a unique shipping advantage: “Many trucks come in to serve the hospitality market in Las Vegas and leave empty to return to their destination. Thus, shipping out of the market is affordable.”
A State-Wide Perspective
The brief examples in the previous section should give some sense of the local or municipal perspective. For an example of a state-wide perspective, we can look at Pennsylvania, and some of the organizations enhancing and promoting polymer clusters there. The Pennsylvania College of Technology in Williamsport is home to The Plastics Manufacturing Center (PMC). It offers confidential client services, which include product and process development, testing and analysis, training, literature and patent searching, and consulting. The PMC also partners with The Penn College Technology Transfer Center to support the plastics processing industries throughout Pennsylvania.
Documentation available from Focus Central Pennsylvania, a regional marketing alliance, not only cites primary resources, it also describes regional training resources, including workshops offered by the Industrial Modernization Center. These are held at Penn College. Other research institutions include The Center for Plasticulture, The Composites Manufacturing Technology Center and The Polymer Processing and Characterization Laboratory.
A wealth of information on business financing is available online at www.newPA.com. Programs cover real estate, machinery and equipment, working capital, workforce development, research and technology development, tax credits, infrastructure development, and export financing.
Of course, state-wide statistics tend to sound more impressive, especially for large, populous states such as Pennsylvania. Home to over 1,000plastics companies, the state boasts more than 82,000 jobs in the plastics industry. Plastics shipments total more than $16 billion.
Strategic Applications
With a little digging, it is easy to find out if regional institutions are interested in targeting specific applications. These applications may reflect considerable ambition. They may rely on emerging technologies that have yet to be commercialized. If this is the case, look for evidence that regional institutions are interested in doing more than furthering the necessary research. Consider whether or not these institutions are helping to prepare the necessary marketing channels. Coordination efforts may encompass regional educational institutions, state and federal research facilities, and varied sources of financing.
In West Virginia, a regional institution called the Polymer Alliance Zone coordinates the activities of varied constituents. Within the Polymer Alliance Zone are five major manufacturers of high-technology, specialty and engineered polymers. Executive Vice President of the Polymer Alliance Zone, Karen L. Facemyer, reports, “This zone contains one of the highest concentrations of polymer companies in the world. Also, located within the Polymer Alliance Zone are 23 service and support companies directly related to the polymer industry.”
The Polymer Alliance Zone is also targeting specific applications. It is working with West Virginia University’s Polymer Research Center and private sector companies on the internationally recognized MARCEE Project. The MARCEE Project is developing an economically feasible world-class plastics recycling program in the Polymer Technology Park located in Wood County, West Virginia. The partners include SDR Technologies, Amandi Services, Innovative Management & Technology Services (IMTS) and the National Center for Electronics Recycling.
Besides recycling, institutions in West Virginia have recognized the growing importance of composite fabrication and flexible manufacturing. Advanced training and technical assistance in these disciplines is available from four Robert C. Byrd Institute for Advanced Flexible Manufacturing training centers distributed across the state.
In Ohio, the Ohio Polymer Strategy Council, as its name suggests, emphasizes the strategic dimension of regional development. It draws on expertise from business, academic and government leaders to define state-wide program and funding priorities. To give an idea of the scope of its activities, the Council notes that Ohio contains over 2,800 companies in the polymer industry, and that these companies provide more than 140,000 jobs. In fact, polymers represent Ohio’s largest industry, responsible for shipments valued at $49 billion per year.
According to Sharell Mikesell, executive director for the Ohio Polymer Strategy Council, Ohio and Ohio polymer companies are investing more than $100 million to commercialize new technology. “The state’s Third Frontier program,” states Mikesell, “has awarded more than $40 million in grants to the Ohio polymer industry. Sixty collaborating companies have pledged an additional $70 million to Ohio polymer projects.”
Ohio’s Center for Multifunctional Polymer Nanomaterials and Devices has identified a range of growth opportunities related to the polymer industry. These include nanomaterials, nanocomposites, polymer photonics and biomedical materials. Most of these opportunities represent demand-driven, near-term applications. Established markets such as building construction, aerospace and car manufacturing are demanding lighter, more capable and more environmentally friendly materials. Other opportunities represent technology-driven, emerging applications. These include flexible displays, biosensors and other applications demanding advanced photonics.
Critical Mass
Citing Ohio’s concentration of polymer resources, Mikesell asserts that the state’s clusters had the “critical mass” to drive emerging technology commercialization and new product development. “For sure,” notes Mikesell, “the speed to market and higher probabilities of success are achieved when developments are taking place within strong and growing clusters.”
When asked whether clusters still needed to be location dependent in this, the age of advanced communications, (relatively) cheap transport and globe-spanning supply chains, Mikesell notes that “virtual clusters” are still much the exception: “These are being explored in a few special projects. Most typically these projects are carried out by large companies that have facilities in different nations.” At present, 24-hour engineering remains a specialty. Location still trumps the virtual in cluster formation and growth.
When assessing locations for expansion or “green field” development, companies must weigh each location’s relevant tactical and strategic attributes. To be fully briefed on the full range of attributes, companies will likely draw information from a range of institutions, including city, state and regional institutions.
Raw Materials
The availability of raw materials and supplies is a primary consideration in locating plastic manufacturers. The amount of raw materials used may very from company to company. An industry average is 60 percent of total production costs. Of these materials, the most important are polymer building block chemicals (monomers), catalysts and additives. The costs of these materials vary by region.
Product Design and Development Services
Technical consultants to the polymer industry offer services at every stage of development. These services include:
Material selection
Choice of manufacturing process
Computer-aided modeling and analysis
Rapid prototyping and tooling techniques
Source selection and procurement
Existing tooling reviews and new tooling development
Standard and customized training.
Bulk Applications
Although there are many specialty and emerging applications, the polymer industry is currently dominated by a core group of bulk applications. These applications are carried out by various subclusters:
Plastic resin and petroleum refining
Suppliers and support services for resin production
Plastics products (molding, extruding, compounding)
Synthetic rubber production
Rubber products production (foam and molding)
Organic fiber production
Coatings and adhesives.
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