C OMPETITIVENESS WITH V ALUE -C HAIN A NALYSIS Marty Romitti, PhD, - - PowerPoint PPT Presentation
R EACHING N EW H EIGHTS IN R EGIONAL C OMPETITIVENESS WITH V ALUE -C HAIN A NALYSIS Marty Romitti, PhD, Senior Vice President CREC 1 The 2014 EMSI Leadership Conference Coeur d'Alene, ID . October 21, 2014 W HAT DO N APOLEON AND R AISIN B RAN
REACHING NEW HEIGHTS IN REGIONAL COMPETITIVENESS WITH VALUE-CHAIN ANALYSIS
Marty Romitti, PhD, Senior Vice President CREC
The 2014 EMSI Leadership Conference
Coeur d'Alene, ID . October 21, 2014
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REACHING NEW HEIGHTS IN REGIONAL COMPETITIVENESS WITH VALUE-CHAIN ANALYSIS
Why Clusters? Identifying Clusters from the Top Down Identifying Clusters from the Bottom Up
with Value Chains
Applying Value Chain Analysis in
Regional Planning – NW PA
Topic
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Emphasis is on Interdependence
within and between businesses and other organizations
trade, information, innovation and labor
A geographic concentration of inter-related firms and institutions that…
Combined, these factors reinforce the regional cluster’s market advantage.
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THE BASIC LOGIC
Competitive Analysis
Cluster Identification
Cluster Strategy Cluster Expansion Regional Economic Outcome
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Enterprise
What your region makes
created by existing and prospective industries
and global economies
industries through new business formation .
Innovation
How your region renews
innovations
them from concept to market,
business models, companies, or product lines
Talent
What your region does
existing and future workforce supply
education, experience and training reflecting industry demand
LOCATION ASSETS
The basic conditions facing firms and innovators in the region.
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Which industries are largest
sources of jobs and income?
Are some industries local
specializations?
Which industries are growing?
Which are declining?
Are new businesses being
formed, leading to new industries?
Is the mix of key industries
unique?
Are related and mutually dependent industries present?
Is there evidence of multi- industry specializations?
Absolute size Relative size Local vs. state/national growth New business start-ups Application of cluster definitions
Key Questions Measures/Techniques
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6 CONTRIBUTING FACTORS TO MAKING DATA RELEVANT
Availability Relevance Timeliness Accuracy Ease of Extraction Findability
Making Sense of It All
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Go to www.economicmodeling.com Key advantages Detailed Comprehensive Regional Current Pulling together an overview Creating a region Demographic trends Economic structure
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REACHING NEW HEIGHTS IN REGIONAL COMPETITIVENESS WITH VALUE-CHAIN ANALYSIS
Why Clusters? Identifying Clusters from the Top Down Identifying Clusters from the Bottom Up
with Value Chains
Applying Value Chain Analysis in
Regional Planning – NW PA
Topic
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CHOOSING YOUR CLUSTER DEFINITIONS
There is no single best
way to define clusters
Off the shelf or self-
defined?
Depends on your needs EMSI Analyst provides
pre-defined clusters that can be used
17 clusters defined by
Purdue University researchers
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Employment size of cluster Relative concentration
(“Location quotient”) Employment growth trends of cluster Number of establishments in clusters Average annual wage level of cluster Traded or Local – (multiplier impact)
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employment size
trends
Stable
cluster industries
Emerging
faster than the nation
At-Risk
the region or nation
wages
Growing
ONE APPROACH TO CATEGORIZING CLUSTERS FOR TARGETING
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KEY DATA POINTS ONTARIO’S CLUSTERS
Cluster Employment 2011 LQ Average Wage Cluster Type Advanced Materials 65,151 1.31 $48,391 At-risk Agribusiness, Food Proc & Tech 187,315 0.91 $38,353 Stable Apparel & Textiles 25,270 0.93 $37,895 At-risk Arts, Entmnt, Recreation & Visitor Ind. 191,238 0.92 $31,669 Stable Biomedical/Biotech (Life Sciences) 476,257 0.95 $44,540 Growing Business & Financial Srvcs 451,539 1.13 $58,775 Stable Chmls & Chml Based Pdcts 50,820 1.26 $65,535 Stable Comp & Elec Pdct MFG 23,299 1.41 $59,623 At-risk Defense & Security 79,849 1.08 $41,030 Emerging Education & Knowledge Creation 436,806 0.99 $52,791 Growing Elec Eqpt, App & Compont MFG 49,802 1.15 $44,428 Stable Energy (Fossil & Renewable) 169,214 0.82 $71,381 Growing Fabricated Metal Pdct MFG 72,078 1.17 $51,146 Stable Forest & Wood Pdct 164,624 0.79 $50,771 Stable Machinery MFG 54,922 1.12 $55,973 Stable IT & Telecomm 194,044 1.28 $69,680 Stable Printing & Publishing 36,192 1.07 $62,698 Stable Transportation & Logistics 196,464 0.93 $47,139 Growing Transp Eqpmt MFG 106,341 1.69 $56,672 Stable Ontario average $46,100 15
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REACHING NEW HEIGHTS IN REGIONAL COMPETITIVENESS WITH VALUE-CHAIN ANALYSIS
Why Clusters? Identifying Clusters from the Top Down Identifying Clusters from the Bottom Up
with Value Chains
Applying Value Chain Analysis in
Regional Planning – NW PA
Topic
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Source: Center on Globalization, Governance & Competitiveness, Duke University.
Value Chain Example
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FRAMEWORK FOR CONDUCTING VALUE CHAIN ANALYSIS
Core Industry Backward Linkages
(supplier opportunities)
Forward Linkages
(market opportunities)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5
Core Industry
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Automotive assembly Wheels Tires Rubber molding Engines
Vehicle rental services
Legal services Advertising Rubber Steel Consumers Government Exports
Automotive assembly’s backward linkages Automotive assembly’s forward linkages
Direction of sales
Value Chain Example
Source: Edward Feser, University of Illinois.
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Which linked industries’ value chains are in the region? Are the linked industries significant/competitive in the region? Where are the gaps? Which linked industries could be in the region? Which industries are not appropriate for your region?
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REACHING NEW HEIGHTS IN REGIONAL COMPETITIVENESS WITH VALUE-CHAIN ANALYSIS
Why Clusters? Identifying Clusters from the Top Down Identifying Clusters from the Bottom Up
with Value Chains
Applying Value Chain Analysis in
Regional Planning – NW PA
Topic
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NW Pennsylvania has seen an erosion in jobs over the past decade, especially when compared to broader state and national trends
Source: Economic Modeling Specialists Int’l., Analysis by CREC 88.00 90.00 92.00 94.00 96.00 98.00 100.00 102.00 104.00 106.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 NW PA PA US
Employment Index for NW Pennsylvania, Pennsylvania, and US. Base Year 2001 = 100
Source: FracFocus chemical disclosure registry, a partnership between federal and state governments and private companies, lists more than 50,000 gas and oil wells nationwide where companies have voluntarily reported using fracking.
Mapping the Shale Gas Boom
27 Gas wells (red) and oil wells (blue)
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Employment trends in Oil and Gas-related activities
0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Employment Index (2001=100)
Index of Employment in Oil and Gas Related Activities*
(2001=100)
Northwest Pennsylvania Pennsylvania USA
*Include NAICS industries: Crude Petroleum and Natural Gas Extraction (211111), Drilling Oil and Gas Wells (213111), Support Activities for Oil and Gas Operations (213112), and Natural Gas Distribution (221210) Source: Economic Modeling Specialists, Int'l
Define Inter- Industry Linkages using NAICS Codes Identify Regional Strengths/Trends with Data Analysis Supplement Data with Interviews and Focus Groups
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KEY LINKAGES FOR OIL AND GAS EXTRACTION
Backward linkages
Support activities for oil & gas
Construction Industrial gas MFG Metal valve MFG Mining & oil & gas field
machinery MFG
Lessors of nonfinancial
intangible assets
Forward linkages
Electric power generation,
transmission, & distribution
Natural gas distribution Petroleum refineries Petroleum & coal products
MFG
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Stable (2008-2013) Growing faster than US (2008-2013) Declining faster than US (2008-2013)
Exploration & Leasing
Scientific R&D Services Architectural, Engineering, and related services Supp. Activities for
Lessors
Site Construction
Architectural, Engineering, and related services Construction
rental & leasing Truck transp. Environ. Remediation services
Drilling
Drilling oil & gas wells Construction Mining &
Metalworking
Steel prod. Mfg.
Hydraulic Fracturing
Pump & pumping
Metal valve & pipe mfg. Petroleum lubricating oil & grease mfg. Industrial sand mining
Extraction & Production
Supp. Activities for
mfg Metal valve & pipe mfg. Pump & pumping
Metalworkin g mach. Mfg. Steel prod. Mfg. Truck transp.
Processing
Pipeline transp. Truck transp. Rail transp. Sensor &
detection
Petroleum refineries Metal valve & pipe mfg.
Storage
Oil & Gas Pipeline & Related Structures Const. Pipeline transp. Metal valve & pipe mfg.
Distribution
Natural gas distribution Electric power generation, trans., & distr. Supp. Activities for
Truck transp.
Site Preparation Drilling & Extraction Midstream
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Key companies by segment of the Marcellus Shale Supply Chain
Quality is paramount consideration and far more important than cost. Many suppliers invest in industry certification programs like ISO 9001 or the American Petroleum Institute as a way to demonstrate their product quality. Firms involved in the oil and gas industry must also demonstrate impeccable safety records, given that few industries are as scrutinized about health, environmental and safety standards. Vendors must be available 24/7 to meet client needs. Beyond short-term responsiveness, firms must be able to deliver on actual deadlines as well as their forecast planning. Financial solvency is an important consideration because payments to vendors do not turn around as quickly as in other industries.
Supply Chain Issues
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