Industrial Clusters Development Policies

1. 1 Industrial Clusters Development Policies Dott. Luciano Consolati Section I

2. 1 Industrial Clusters Description Dott. Luciano Consolati – 09.2005 - Mexico

3. Why are clusters of interest? Perché occuparsi dei distretti? • Clusters are an example of development from the basis in the presence of limited material resources • Clusters are one method of local development that involves most local subjects • Clusters are cognitive labs with extended and dynamic learning processes • Clusters - for developing countries - can contribute to the surfacing from poverty of entire local communities extending the level of social belonging • Clusters represent a form of economic democracy that contrasts with the model of big multinational companies Dott. Luciano Consolati – 09.2005 - Mexico

4. Industrial Clusters Introduction “Small unknown factories whatever their numbers, are at a great disadvantage compared to large ones, unless there are many condensed in one same industrial district (…) The location of productive units promotes and educates ability and taste and spreads technical knowledge. Where there are large numbers of people dedicated to one same kind of activity they educate each other” A.Marshall “Industrial clusters are a local concentration of inter-industrial relations which present reasonably stable characteristics over time (…) A socio-territorial entity characterised by the active joint presence in a limited naturalistic and historically determined area of a community of people and a population of industrial enterprises (…) The community and its enterprises tend – so to speak – to mutually interact.” Becattini Arnaldo Bagnasco, “Three Italies. Territorial Problems related to Italian Development” Sebastiano Brusco, “Small firms and industrial districts: the experience of Italy” Gioacchino Garofoli, “Local Development Problems : Small Enterprises Systems” Dott. Luciano Consolati – 09.2005 - Mexico

5. How is a cluster born MKT Dott. Luciano Consolati – 09.2005 - Mexico

6. Method of Production 1 • System of enterprises with a vertically integrated cycle on a territorial level. Important work division between single enterprises that minimises costs (specialisation economy) and promotes new business opportunities. • Economies of scale: each enterprise is both producer of inputs and consumer of outputs in the cluster. • Continuing process of technological innovation • High level of specialisation by phases and components (learning by doing) Dott. Luciano Consolati – 09.2005 - Mexico

7. Method of Production 2 • High horizontal competition between enterprises • Cooperation between enterprises and public bodies on external economies • Weak entry barriers • Strong exit barriers: small entrepreneur knows how to do his work and cannot easily change Dott. Luciano Consolati – 09.2005 - Mexico

8. Method of Production 3 A local productive system can be interpreted as an area with a centre that creates A vertically integrated productive cycle LEADER COMPANIES Dott. Luciano Consolati – 09.2005 - Mexico Companies that operate in the final phases of production Companies that operate in the first phases of production sub-contractor of semi-finished products sub-contractor of precision equipment sub-contractor of workmanship Assembly sub-contractor

9. Method of Production 4 “Decisive factors: work sharing Outsourcing of surplus Market Growth • Outsourcing of diseconomies and of phases not established in an optimal manner Lack of balancing in productive processes • Production with decreasing unit costs • External purchasing of products at lower prices Dott. Luciano Consolati – 09.2005 - Mexico • Geographic proximity between enterprises and well-established existing relations • Reduction of transaction costs and greater reliability

10. Method of Production 5 Advantages resulting from work division • More professionally prepared workers (“Learning by doing” A. Smith) • Saving and optimisation of production phases • Greater flexibility in the management of production processes • Development of special machinery for production by other companies, linked to the cluster, that increases results (learning by interacting) Dott. Luciano Consolati – 09.2005 - Mexico Higher Productivity Level

11. The Productive Cycle of “Sistema Lumezzane” MKT Raw Materials Orders Final Product Leading Company Stamp Construction Mechanical Manufacturing Dott. Luciano Consolati – 09.2005 - Mexico Fusion Thermic Treatments Cleaning of Metals

12. Productive line of non-ferrous metals Raw Materials:chipboard, scraps Foundry Refinery Taps/Fittings Valves Door Handles Fastenings Mechanical Manufacturing Assembly Dott. Luciano Consolati – 09.2005 - Mexico Shearing of burrs, Piercing, Boring, etc Fusion (electric ovens) Threads, section bars e aluminium and brass drafts Fusion pressing Finished Product Cleaning Polishing, Shining, Burnishing, etc Burrs, Cylindrical Billetts Other internal workmanship (cutting to cold, etc) Pressed piece Degreasing

13. Productive line in Steel Transformation From Outside the Area Stamping to cold Semifinished: plates, billetts, steel sections Preliminary detersion Funneling Pickling Rinsing Drying Dott. Luciano Consolati – 09.2005 - Mexico Cleaning With milling machines, emery , etc Finished Product Superficial finishing

14. The Main Distinctive Charateristic The first product of a cluster is its capacity to transfer the entrepreneurial spirit to its people. These become the players in their own economic growth process and in their social achievement. Dott. Luciano Consolati – 09.2005 - Mexico

15. The Industrial Cluster Model Four groups of key factors: • Location and space • Social and cultural • Economics and organisation • Institutional Dott. Luciano Consolati – 09.2005 - Mexico

16. Location and Space Factors • Geographic proximity and sectorial specialisation • Small urban dimension • Reduction in transportation and transaction costs • Circulation of information and responsibilities • Lower work and land costs and stronger social cohesion Dott. Luciano Consolati – 09.2005 - Mexico

17. Social and Cultural Factors Stable Human Capital • Family’s central role and work division between family members as a legacy of a rural society • Mutual and shared social values • High level of social mobility and aptitude to entrepreneurship • Faith as a key issue in the system of economic relations Dott. Luciano Consolati – 09.2005 - Mexico

18. Economic and Organisational Factors • Possibiliy of reaching high levels of specialisation • Balance between cooperation and competition • Labour specialisation as a “public asset” (safekeeper of common knowledge) • Combine economies of scale and of purpose • Collective learning (learning by localizing, learning by specializing, learning by interacting • Possible co-operation (stability, long term, know-howexchange) Dott. Luciano Consolati – 09.2005 - Mexico

19. Political and Institutional Factors • Support role in the construction of clusters, key role in supporting development and innovation • Participation especially at a local and/or regional level (both with public and private or mixed bodies) • Regional agencies, service centres, entrepreneurial associations, consortia Dott. Luciano Consolati – 09.2005 - Mexico

20. Species of Capital Creation and valorization processes and transformation of forms of capital are the base of a competitive advantage ECONOMIC CAPITAL SOCIAL CAPITAL SYMBOLIC CAPITAL Dott. Luciano Consolati – 09.2005 - Mexico INTELLECTUAL CAPITAL HUMAN CAPITAL

21. MATERIAL CAPITAL Anatomy of a cluster SOCIAL CAPITAL Accessibility Labour market Trasport Value Building area Aptitude Water purification Faith/Confidence TYPICAL ACTIVITIES SUPPLIERS CLIENTS Subcontracting Research Raw materials Subcontracting Production Markets Semi finished Subcontracting Marketing Machinery Dott. Luciano Consolati – 09.2005 - Mexico COLLECTIVE SERVICES PRIVATE SERVICES Schools Banks Category associations Trasports Service centres Agents Consortia Designers