Concentrated industry: Modern manufacturing clusters

Paul Boughton

Jonathan Wilkins discusses the benefits of modern manufacturing clusters

First noted in the United Kingdom in the early 1900s, highly concentrated, localised industries, otherwise known as industry clusters, gave some of England’s towns the iconic nicknames they go by today. Stoke-on-Trent is widely referred to as ‘The Potteries’ due to its historic pottery industry and ‘The Black Country’, an area of the West Midlands, gained its title due to the excessive smoke and pollution caused by steel works during the industrial revolution.

Today, technology enables organisations from all over the globe to collaborate. Despite this, industry clusters are still massively prevalent.

The term ‘industry cluster’ or ‘business cluster’ simply describes a large number of organisations congregating to one geographic region. These clusters are not limited to manufacturing. Think Silicon Valley for tech, Hollywood for film or Wall Street for stock broking - clusters exist in any industry. Typically, they will be formed in a relatively small geographical region where natural resources, nearby universities and the local economy work hand in hand to create the perfect environment for success for the organisations involved.

For the automotive component industry, for example, look no further than The Basque Country. This region of Northern Spain is home to around 300 automotive companies. Set up with the support of the Basque Government in 1993, ACICAE is thought to be one of the first official clusters in Europe. This cluster focuses on improving the competitiveness of the automotive industry and as a result, the 300 companies located there bill more than 10 million euro and employ around 60,000 people.

On the other side of the globe, Jurong Island has earned Singapore its reputation as a global petrochemical leader, particularly in the oil and gas and speciality chemicals subsectors. Jurong Island is an extensive development built on an artificial island off the southwest cost of Singapore. This integrated complex is home to many of the world’s leading energy and chemical companies including Shell and BP.

The island is custom-built for petrochemical manufacturing and therefore benefits from extensive security. In addition, Jurong Island is home to the Chemical Process Technology Centre (CPTC) a dedicated space to prepare STEM graduates for work, giving businesses fresh engineering talent, right on their doorstep.

More often recognised for its idyllic scenery rather than its industry, California is home to a huge number of manufacturing clusters. 17 unique clusters have been identified in the state with computers and electronics manufacturing in Silicon Valley being one of its largest. Although computer manufacturing has long been one of the biggest employers in California, the state is now witnessing a decrease in the sector. Instead, research from the Centre of Excellence (COE) and the Centre for Applied Competitive Technologies (CACT) suggests a sharp rise in biotechnology, pharmaceutical and medical devices manufacturing is expected. Luckily for Silicon Valley, many biotech firms are also based in the area.

Industry clusters are certainly not a new phenomenon, but today, their benefits go far beyond the obvious logistical advantages of the past. I mean, what better way for an organisation to thrive than to be immersed in an environment that helps and supports it to do so? Industry and business clusters encourage innovation, competition, investment and partnerships, ultimately helping to build industrial powerhouses across the planet.

Jonathan Wilkins is  marketing director of industrial components supplier European Automation.