Alberto Pezzi on the role of clusters in the new industrial revolution - some thoughts on business transformation and job re-generation, presented at the 15th TCI Global Conference, Basque Country 2012

2. THE ROLE OF CLUSTERS IN THE NEW
INDUSTRIAL REVOLUTION
SOME THOUGHTS ON BUSINESS TRANSFORMATION AND JOB RE-
GENERATION
Alberto Pezzi
Head of Competitive Strategy
ACC10 / Directorate General for Industry
Government of Catalonia
Past President and member of the Board of Directors TCI Network
San Sebastian, 19th
October 2012

3. Index
• Another industrial revolution: why now and what
does it mean?
• How clusters matter in the new industrial revolution
• New agendas for companies, clusters and policy
makers
• Conclusions and open questions

4. ANOTHER INDUSTRIAL REVOLUTION: WHY NOW AND WHAT
DOES IT MEAN?
4
The Economist, February 2009
The Economist, August 2010The Economist, August 2006
The Economist, September 2011
The Economist, April 2012
The Economist, October 2003

5. ANOTHER INDUSTRIAL REVOLUTION: WHY NOW AND WHAT
DOES IT MEAN?
5

6. ANOTHER INDUSTRIAL REVOLUTION: WHY NOW AND WHAT
DOES IT MEAN?
Firsts and second industrial revolutions
6
Source: The Economist, Dec. 23rd, 1999 from A. Maddison, IMF.

7. ANOTHER INDUSTRIAL REVOLUTION: WHY NOW AND WHAT
DOES IT MEANS?
Clusters in the first industrial revolution
7
Sheffield
cutlery
Lancashire
cotton textiles
North Staffordshire
pottery
Yorkshire
woollen textiles

8. 8
Source: Joint Venture Silicon Valley Network, Internet Cluster Analysis 2000
ANOTHER INDUSTRIAL REVOLUTION: WHY NOW AND WHAT
DOES IT MEAN?
Clusters in the internet revolution

9. HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL
REVOLUTION
The new industrial revolution: main features
• Green revolution
• End of the oil era -> electromobility
• Mobile technology
• Use of new technologies and materials -> manufacturing in going digital
• Fragmentation and globalization of value chains -> the “new industry”
• Factory re-shape and localization
9

10. 10
HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL REVOLUTION
Source: BSG, 2011
AT A GLANCE
•China wages increase at 15-20% per year
•China labor cost advantage Vs USA to pass from
55% in 2011 to 39% in 2015
•Progressive reduction of manufacturing
expenditures on overall product costs
Reassess offshoring strategy

11. HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL
REVOLUTION
The new industrial revolution: main features
• Green revolution
• End of the oil era -> electromobility
• Mobile technology
• Use of new technologies and materials -> manufacturing in going digital
• Fragmentation and globalization of value chains -> the “new industry”
• Factory re-shape and localization
• Dramatic changes in skills and jobs -> jobless growth
• Growing importance of tacit knowledge and immaterial assets
(creativity, entrepreneurship, design, etc.)
• …
• Clusters will still play a key role in the economy
11

12. 12
HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL REVOLUTION
Source: The Economist, April, 21st, 2012
Source: Peterson, 2010
Source: BSG, 2011

13. 13
Clusters generate endogenous
competitiveness advantages by
- improving companies’ operational
efficiency
- fostering innovation and tacit
knowledge diffusion
- stimulating creation of new companies
especially through spin-offs
- accelerating social capital formation
Source: adapted from M.E: Porter, 1998
HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL
REVOLUTION
Clusters key features

14. Implications for companies and
clusters
•Re-think products and way of
producing -> from mass production to
mass-customization
•Changes in the geography of supply
chain and in manufacturing location
•Identify Key Competitive Advantages
and cluster core specialization
•Put strategy at the center of the
company and the cluster
NEW AGENDAS FOR COMPANIES, CLUSTERS AND POLICY
MAKERS
14

15. NEW AGENDAS FOR COMPANIES, CLUSTERS AND POLICY
MAKERS
Implications for companies and
clusters
•Re-think products and way of
producing -> from mass production to
mass-customization
•Changes in the geography of supply
chain and in manufacturing location
•Identify Key Competitive Advantages
and cluster core specialization
•Put strategy at the center of the
company and the cluster
Some new items on policy makers’
agendas
•Focus on growing and sustainable
industries
•Focus on clusters’ strategic and
endogenous assets (tacit knowledge,
specific skills, etc.) -> place-based
competition
•Re-think the “perimeter” of cluster
development initiatives
•Use clusters to understand and
adapt to business model changes
•Articulate regional smart
specialization strategy around smart
defined clusters 15

16. 16
HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL REVOLUTION
Source: The Economist, April, 14th, 2012
“Yet Germany’s cutting edge has an
ancient blade.
The country’s Mittelstand clusters of
firms, which often specialise in niche
areas of manufacturing, developed in
the late 19th century”.

17. 17
The Economist, April, 21st, 2012
Where China scores
Li & Fung, a Hong Kong firm that helps companies
find suppliers in Asia, says in a recent research
report that clusters like Shenzhen are “an integral
Part of China’s international competence in
manufacturing”. It counts more than 100 industrial
clusters in China—including one, in Zhuji in
Zhejiang province, that just makes socks. It consists
of more than 3,000 small and medium-sized
enterprises in the production chain for socks.
As long as China’s clusters maintain their edge,
these jobs, whether producing iPads or socks,
will not go back to America or Europe.
HOW CLUSTERS MATTER IN THE NEW INDUSTRIAL
REVOLUTION
Source: Update on Industrial Clusters in cina (2010)
Li & Fung research centre

18. CONCLUSIONS AND OPEN QUESTIONS
A couple of simple conclusions:
•Cluster will still play a key role in the new industrial transformation
•Strategy is more and more the key ingredient for global competition in the
XXI century
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19. 19
CONCLUSIONS AND OPEN QUESTIONS

20. CONCLUSIONS AND OPEN QUESTIONS

21. CONCLUSIONS AND OPEN QUESTIONS
A couple of simple conclusions:
•Cluster will still play a key role in the new industrial transformation
•Strategy is more and more the key ingredient for global competition in the
XXI century
.. and a lot of open questions:
•What role should Government and policy makers play in this scenario?
•How does the clusters of the future look likes?
•How to conciliate the paradox of localization?
•How to solve the question for job?
•….
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22. For more information and request for slides:
Apezzi@gencat.cat
Apezzi@tci-network.org
22