Philadelphia Competitiveness Profile
Innovation Leadership Speaker Series
Fox School of Business, Temple University
Michael E. Porter, Harvard Business School
Mercedes Delgado, Fox School of Business
Rich Bryden, Harvard Business School
March 11, 2014
For further material on regional competitiveness and clusters: www.isc.hbs.edu/econ-clusters.htm
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
What is Competitiveness?
A nation or region is competitive to the extent that firms operating there are able to
compete successfully in the regional and global economy while maintaining or
improving wages and living standards for the average citizen
• Competitiveness depends on the long-run productivity and efficiency of a
location as a place to do business
- The productivity of existing firms and workers
- The ability to achieve high participation of citizens in the workforce
• Competitiveness is not:
- Low wages
- A weak currency
- Jobs per se
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Geographic Influences on Competitiveness
Nation
States
Regions
Metropolitan Areas
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Regions and Competitiveness
• Economic performance varies significantly across sub-national regions
(e.g., provinces, states, metropolitan areas)
• Many essential levers of competitiveness reside at the regional level
• Regions specialize in different sets of clusters
• Regions are a crucial unit in competitiveness
• Each region needs its own distinctive strategy and action agenda
•
Business environment improvement
•
Cluster upgrading
•
Improving institutional effectiveness
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Philadelphia Performance Scorecard
Prosperity
GDP per Capita, 2001-2012
Wages
Average Private Wage, 2001-2011
Labor Mobilization
Proportion of Working Age Population
in the Workforce, 2008-2012
Job Creation
Private Employment Growth,
1999-2001and 2009-2011
Labor Productivity
GDP per Labor Force Participant, 2001-2011
New Business Formation
Traded Cluster Establishment Growth,
1999-2001 and 2009-2011
Innovation
Patents per Employee, 2001-2011
Cluster Strength
Employment in Strong Clusters, 2001-2011
Leading Clusters
by employment size, 2011
(national rank versus all metro areas)
Start Position
Trend
Current Position
20
13
16
+4
15
31
13
+2
33
25
36
-3
30
21
24
+6
16
10
15
+1
20
42
43
-23
15
40
17
-2
21
19
11
+10
Distribution and Electronic Commerce (133,049, rank 6)
Education and Knowledge Creation (118,814, rank 6)
Financial Services (78,239, rank 6)
Insurance Services (42,971, rank 5)
Marketing, Design, and Publishing (28,093, rank 10)
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Rank vs. Top 50
Metro Areas
21-30
1-10
31-40
11-20
41-50
Copyright 2014 © Professor Michael E. Porter
Comparative Metro Prosperity Performance
2001 - 2012
$85,000
$80,000
High but declining
versus U.S.
San Jose
(2.8%, $90,528)
U.S. Metro GDP per Capita
Real Growth Rate: +0.57%
Bridgeport, CT
High and rising
prosperity versus U.S.
$75,000
San Francisco
$70,000
Gross Domestic Product per Capita, 2012
Washington
$65,000
Houston
New York
$60,000
Boston
Seattle
Portland
(3.8%, $62,028)
New Orleans
Hartford
Denver
$55,000
Columbus
Atlanta
$45,000
Raleigh
Memphis
Detroit
Las Vegas
Orlando
Phoenix
$40,000
Jacksonville
Milwaukee
Indianapolis
Kansas City
Richmond
Philadelphia Salt Lake City
Chicago
Charlotte
$50,000
Dallas
Minneapolis
Cleveland
Birmingham
Cincinnati
St. Louis
Pittsburgh
Louisville
Miami
Tampa
Sacramento
Los Angeles
San Diego
Baltimore
Nashville
Oklahoma City
Virginia Beach
Austin
U.S. Metro GDP per
Capita: $45,604
Providence
$35,000
San Antonio
$30,000
$25,000
Low and declining
versus U.S.
Low but rising versus
U.S.
Riverside
(-1.1%, $22,411)
$20,000
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Real Growth in Gross Domestic Product per Capita, 2001 to 2012
Notes: Source BEA. Data in 2005 constant dollars; compound annual growth rate on real values. 50 largest MSAs displayed.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Comparative Metro Labor Mobilization Performance
2008-2012
75%
Proportion of Working Age Population in the Workforce, 2012
High but declining labor force
participation versus U.S.
High and rising labor force
participation versus U.S.
Washington
Minneapolis
Salt Lake City
Denver
70%
Dallas
Nashville
Atlanta
Columbus
St. Louis
65%
Las Vegas
Seattle
Charlotte
Virginia Beach
Phoenix
Portland
Indianapolis
Boston
Baltimore
Hartford
Milwaukee
Chicago
San Jose
Providence
San Francisco
Cincinnati
Richmond
Orlando
Austin
Kansas City, MO
Bridgeport
Philadelphia
Sacramento Los Angeles Cleveland
Jacksonville
Oklahoma City
San Diego
San Antonio
Miami
Louisville
Pittsburgh Houston
Memphis, TN
U.S. Labor Force
Participation Rate: 63.7%
New York
New Orleans
60%
Tampa
Birmingham
Detroit
Riverside
U.S. Change in Labor
Force Participation
Rate: -2.3%
Low and declining labor force
participation versus U.S.
55%
-7%
-6%
-5%
-4%
-3%
Low but rising labor force
participation versus U.S.
-2%
-1%
0%
1%
2%
3%
Change in Proportion of Working Age Population in the Workforce, 2008-2012
Source: BLS. 50 largest MSAs displayed.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Comparative Metro Wage Performance
2001 - 2011
$70,000
U.S. Average Wage Growth Rate: +2.8%
$65,000
San Jose
(+3.3%, $89,857)
Bridgeport, CT
(+3.0%, $77,922)
San Francisco
High but declining
versus U.S.
New York
High and rising wages
versus U.S.
Boston
Washington
$60,000
Average Wage, 2011
Seattle
Houston
$55,000
$50,000
Philadelphia
Chicago
Hartford
Detroit
(+1.95%, $48,621)
Los Angeles
Denver
Dallas
Portland Charlotte
Milwaukee
Atlanta
Austin
$45,000
U.S. Average Wage,
2011: $45,535
Kansas
City, MO
Indianapolis
St. Louis, MO
Phoenix
Miami
Louisville
Low and declining
versus U.S.
$35,000
2.0%
Las Vegas
Memphis
Tampa
Orlando
Columbus
San Diego
Cleveland
Raleigh
Pittsburgh
Birmingham
Cincinnati
Sacramento
$40,000
Minneapolis
Salt Lake City
Providence
Baltimore
Richmond
Nashville
New Orleans
(+4.2%, $44,485)
Jacksonville
Oklahoma City
(+3.8%, $40,113)
San Antonio
Virginia Beach
Riverside
2.5%
3.0%
Low but rising
versus U.S.
3.5%
Growth in Average Wage, 2001 to 2011
Notes: Average wage for private, non-agricultural employment. Growth calculated as compound annual growth rate. 50 largest MSAs displayed. Source Census CBP.
2014 Metro Competitiveness – Rich Bryden
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Copyright 2014 © Professor Michael E. Porter
Comparative Metro Labor Productivity Performance
2001 - 2011
$140,000
Gross Domestic Product per Labor Force Participant, 2011
Bridgeport, CT
(-.071%, $155,918)
San Jose
(+4.7%, $191,781)
San Francisco
$130,000
Houston
New York
$120,000
New Orleans
Portland
(+4.7%, $118, 578)
Washington
Boston
Charlotte
Seattle
$110,000
High but
declining
versus U.S.
Dallas
Denver
Atlanta
Richmond
$80,000
$70,000
Los Angeles
San Diego
Milwaukee
Austin
Nashville
Baltimore
Oklahoma City
U.S. GDP per Labor Force
Participant: $85,331
Tampa
Low but rising versus U.S.
Providence
Riverside
(-.74%, $53,858)
-0.5%
Minneapolis
Kansas City
Detroit
Cleveland
Raleigh
Birmingham
Virginia Beach
Columbus
Phoenix
Pittsburgh
Louisville
Las Vegas
Sacramento
Cincinnati
St. Louis
Orlando
Jacksonville
San Antonio
Miami
Low and declining versus U.S.
$60,000
-1.0%
Memphis
Salt Lake City
Philadelphia
Indianapolis
Chicago
$100,000
$90,000
Highly productive and
productivity rising
versus U.S.
Hartford
0.0%
0.5%
U.S. GDP per Labor Force
Participant Real Growth: +0.77%
1.0%
1.5%
2.0%
2.5%
Real Growth in Gross Domestic Product per Labor Force Participant, 2001-2011
Sources: BEA, BLS. Notes: GDP in real 2005 dollars. Growth rate is calculated as compound annual growth rate. 50 largest MSAs displayed.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Philadelphia Performance Scorecard
Prosperity
GDP per Capita, 2001-2012
Wages
Average Private Wage, 2001-2011
Labor Mobilization
Proportion of Working Age Population
in the Workforce, 2008-2012
Job Creation
Private Employment Growth,
1999-2001and 2009-2011
Labor Productivity
GDP per Labor Force Participant, 2001-2011
New Business Formation
Traded Cluster Establishment Growth,
1999-2001 and 2009-2011
Innovation
Patents per Employee, 2001-2011
Cluster Strength
Employment in Strong Clusters, 2001-2011
Leading Clusters
by employment size, 2011
(national rank versus all metro areas)
Start Position
Trend
Current Position
20
13
16
+4
15
31
13
+2
33
25
36
-3
30
21
24
+6
16
10
15
+1
20
42
43
-23
15
40
17
-2
21
19
11
+10
Distribution and Electronic Commerce (133,049, rank 6)
Education and Knowledge Creation (118,814, rank 6)
Financial Services (78,239, rank 6)
Insurance Services (42,971, rank 5)
Marketing, Design, and Publishing (28,093, rank 10)
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Rank vs. Top 50
Metro Areas
21-30
1-10
31-40
11-20
41-50
Copyright 2014 © Professor Michael E. Porter
Comparative Metro Business Formation
2001 - 2011
600
Raleigh
Los Angeles
Miami
(+7.0%, 876)
Denver
Traded Establishments per 10,000 Employees, 2011
Tampa
550
Sacramento
New York
Oklahoma City
San Diego
San Francisco
Austin
Portland
500
High but
declining
versus U.S.
Charlotte
350
U.S. Traded Establishments
per 10,000 Employees: 456
Atlanta
Bridgeport, CT
Chicago
Richmond
Baltimore
Orlando
Houston
Phoenix
Philadelphia
Minneapolis Indianapolis
Salt Lake City
Cleveland
Dallas
Seattle
St. Louis
Detroit
Kansas City
Nashville Virginia Beach
Boston
Louisville
Low and declining
San Antonio
versus U.S.
Hartford
Cincinnati
Birmingham
Providence
400
High and rising versus U.S.
Jacksonville
New Orleans
450
Riverside
Columbus
Memphis
Milwaukee
300
-2%
-1%
Low but rising versus U.S.
Las Vegas
Pittsburgh
San Jose
Washington
U.S. Traded Establishments Growth: +0.41%
0%
1%
2%
3%
4%
Growth in Traded Establishments, 2001-2011
Sources: Growth rate is calculated as compound annual growth rate. 50 largest MSAs displayed.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Comparative Metro Innovation Performance
2001 - 2011
50
San Jose
(+44.9, 104)
U.S. Change in Patents
per 10,000 Workers: +2.0
45
High and declining
innovation
Patents per 10,000 Workers, 2011
40
High and improving innovation
rate versus U.S.
San Francisco
Austin
35
Seattle
30
Raleigh
San Diego
25
Boston
Minneapolis
20
Portland
Bridgeport
Philadelphia
(-.49, 8.1)
Rank: 17
15
Detroit
Cincinnati
10
U.S. Patents per 10,000 Employees: 9.6
Los Angeles
Atlanta
Milwaukee
5
Kansas City, MO
Oklahoma City
0
-5
0
5
10
Change in Patents per 10,000 Workers, 2001 to 2011
Notes: Median number of patents per 10,000 workers among top 50 Metro Areas in 2011 is 6.99.
Source: USPTO utility patents granted, Bureau of Labor Statistics.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Low and improving
innovation
Low and declining
innovation
Tampa Memphis, TN
12
15
20
= 700 patents in 2011
Copyright 2014 © Professor Michael E. Porter
Comparative Metro Innovation Performance
2001 - 2011
18
Minneapolis
U.S. Change in Patents per
10,000 Workers: +2.0
16
Bridgeport
High and declining
innovation
Patents per 10,000 Workers, 2011
14
High and improving
innovation rate versus U.S.
Detroit
12
10
Los Angeles
Hartford
Philadelphia
(-.49, 8.1)
Rank: 17
U.S. Patents per 10,000
Employees: 9.6
New York
Phoenix
Houston
Cincinnati
8
Salt Lake City
Pittsburgh
Providence
Dallas
Atlanta
Chicago
6
Washington
Milwaukee
Indianapolis
Miami
St. Louis, MO
4
Riverside
Low and declining
innovation
Baltimore
New Orleans
Tampa
Charlotte
Nashville
San Antonio
Louisville
Virginia Beach
Kansas City, MO
Denver
Columbus
Orlando
Oklahoma City
2
Cleveland
Sacramento
Memphis, TN
Richmond
Birmingham
Jacksonville
Low and improving
innovation
Las Vegas
0
-3
-2
-1
0
1
Change in Patents per 10,000 Workers, 2001 to 2011
Notes: Median number of patents per 10,000 workers among top 50 Metro Areas in 2011 is 6.99.
Source: USPTO utility patents granted, Bureau of Labor Statistics.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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2
3
4
= 700 patents in 2011
Copyright 2014 © Professor Michael E. Porter
Comparative Innovation Performance
2001 - 2011
12
11
Patents per 10,000 Workers
10
9
8
7
6
U.S.
Philadelphia Metro
5
Top 50 Metro Areas
4
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
.Source: USPTO utility patents granted, Bureau of Labor Statistics.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Patents by Organization
Philadelphia Metro
Organization
1
E. I. Du Pont De Nemours And Company
2
Metrologic Instruments Inc.
3
4
5
6
7
University Of Pennsylvania
Merck + Co., Inc.
Rohm And Haas Company
Wyeth LLC
Lutron Electronics Company, Inc.
8
Interdigital Technology Corporation
9
10
11
12
13
14
14
16
17
18
19
20
21
21
23
24
25
Siemens Medical Solutions USA, Inc.
Bristol-Myers Squibb Company
Lockheed Martin Corporation
Janssen Pharmaceuticals, Inc.
General Instrument Corporation
JP Morgan Chase Bank, N.A.
Smithkline Beecham Corporation
Lyondell Chemical Technology, L.P.
Rohm And Haas Electronic Materials Cmp Holdings
Synthes (U.S.A.)
Unisys Corporation
Gore Enterprise Holdings, Inc.
Alcatel-Lucent USA Inc.
Zenith Products Corporation
Medical Components, Inc.
Lucent Technologies Inc.
AT&T Corporation
Cluster
Chemical Products
Information Technology and Analytical
Instruments
Education and Knowledge Creation
Biopharmaceuticals
Chemical Products
Biopharmaceuticals
Lighting and Electrical Equipment
Information Technology and Analytical
Instruments
Medical Devices
Biopharmaceuticals
Aerospace Vehicles and Defense
Biopharmaceuticals
Communications Equipment and Services
Financial Services
Biopharmaceuticals
Chemical Products
Chemical Products
Medical Devices
Business Services
Communications Equipment and Services
Furniture
Medical Devices
Communications Equipment and Services
Communications Equipment and Services
* Patents with inventors addresses in Philadelphia Metro Area.
Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.
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20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Patents Issued*
2007 - 2011
985
151
149
147
137
125
116
107
94
91
84
80
66
65
65
62
59
55
54
53
51
51
45
43
42
Copyright 2014 © Professor Michael E. Porter
Top Patenting Universities and Research Institutes
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
77
126
143
Organization
University of California, The Regents of
Massachusetts Institute of Technology
Harvard College, President And Fellows
Stanford University
Wisconsin Alumni Research Foundation
California Institute of Technology
University of Texas
University of Illinois
Johns Hopkins University
University of Michigan
Columbia University
Cornell Research Foundation Inc.
Georgia Tech Research Corp.
University of South Florida
Battelle Memorial Institute
University of Central Florida
University of Pennsylvania
University of Washington
University of Florida Research Foundation, Incorporated
Research Foundation of State University of New York
Drexel University
Temple University
The Children's Hospital of Philadelphia
Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.
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20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Patents Issued
2007 - 2011
1,469
735
659
590
571
539
503
329
323
318
307
281
268
267
257
256
255
250
244
233
58
24
21
Copyright 2014 © Professor Michael E. Porter
What is a Cluster?
A geographically concentrated group of interconnected
companies and associated institutions in a particular field
Traded Clusters
Local Clusters
• Compete to serve national
and international markets
• Serve almost exclusively the
local market
• 36% of employment
• 64% of employment
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Strong Clusters Drive Regional Performance
Research Findings
• Presence of strong clusters
(based on employment and
innvation)
• Job growth
• Breadth of industries within each
cluster
• Higher patenting rates
• Higher wages
• Greater new business
formation, growth and survival
• Strength in related clusters
• New regional industries
• Presence of a region’s clusters in
neighboring regions
• The initial employment and patenting strength of a cluster each has a positive
effect on the employment and patenting growth of the constituent industries
• Multiple types of externalities arise among firms participating in clusters
(knowledge, skills, input-output linkages, and others)
• Economic diversification usually occurs within clusters and across related clusters
Source: Delgado/Porter/Stern (2010, 2012), Porter (2003)
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Philadelphia Performance Scorecard
Prosperity
GDP per Capita, 2001-2012
Wages
Average Private Wage, 2001-2011
Labor Mobilization
Proportion of Working Age Population
in the Workforce, 2008-2012
Job Creation
Private Employment Growth,
1999-2001and 2009-2011
Labor Productivity
GDP per Labor Force Participant, 2001-2011
New Business Formation
Traded Cluster Establishment Growth,
1999-2001 and 2009-2011
Innovation
Patents per Employee, 2001-2011
Cluster Strength
Employment in Strong Clusters, 2001-2011
Leading Clusters
by employment size, 2011
(national rank versus all metro areas)
Start Position
Trend
Current Position
20
13
16
+4
15
31
13
+2
33
25
36
-3
30
21
24
+6
16
10
15
+1
20
42
43
-23
15
40
17
-2
21
19
11
+10
Distribution and Electronic Commerce (133,049, rank 6)
Education and Knowledge Creation (118,814, rank 6)
Financial Services (78,239, rank 6)
Insurance Services (42,971, rank 5)
Marketing, Design, and Publishing (28,093, rank 10)
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Rank vs. Top 50
Metro Areas
21-30
1-10
31-40
11-20
41-50
Copyright 2014 © Professor Michael E. Porter
Philadelphia Metro Wages in Traded Clusters
vs. National Benchmarks
Electric Power Generation and Transmission
Financial Services
Information Technology and Analytical Instruments
Business Services
Oil and Gas Production and Transportation
Communications Equipment and Services
Insurance Services
Upstream Metal Manufacturing
Aerospace Vehicles and Defense
Upstream Chemical Products
Lighting and Electrical Equipment
Biopharmaceuticals
Distribution and Electronic Commerce
Marketing, Design, and Publishing
Downstream Chemical Products
Construction Products and Services
Production Technology and Heavy Machinery
Video Production and Distribution
Paper and Packaging
Transportation and Logistics
Jewelry and Precious Metals
Metalworking Technology
Vulcanized and Fired Materials
Education and Knowledge Creation
Plastics
Downstream Metal Products
Printing Services
Automotive
Nonmetal Mining
Hospitality and Tourism
Medical Devices
Recreational and Small Electric Goods
Performing Arts
Environmental Services
Livestock Processing
Furniture
Leather and Related Products
Wood Products
Textile Manufacturing
Agricultural Inputs and Services
Water Transportation
Apparel
Food Processing and Manufacturing
l
Indicates average
national wage in
the traded cluster
Philadelphia average
traded wage: $73,350
U.S. average
traded wage: $64,096
0
10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000
Wages, 2011
Note: Wages are not available in all clusters due to data suppression to protect confidentiality.
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
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Copyright 2014 © Professor Michael E. Porter
Productivity Depends on How a Metro Competes,
Not What Industries It Competes In
Metro Area
Bridgeport
San Jose
New York
San Francisco
Boston
Houston
Washington
Hartford
Austin
Denver
Chicago
Minneapolis
Seattle
Philadelphia
San Diego
Atlanta
Dallas
Los Angeles
Detroit
Baltimore
Charlotte
Raleigh
Richmond
New Orleans
Memphis
Metro
Traded Wage
versus National
Average
Cluster Mix
Effect
Relative
Cluster
Wage Effect
+68,598
+66,434
+38,651
+36,126
+26,924
+24,602
+24,449
+14,949
+11,678
+10,917
+10,636
+10,490
+8,377
+7,671
+5,500
+5,350
+4,702
+3,847
+3,005
+2,332
+1,404
+1,308
+626
-262
-351
10,066
5,693
5,079
3,870
5,327
4,548
4,475
3,292
5,412
3,548
942
2,024
4,350
3,991
150
1,471
4,517
112
-406
2,321
228
3,340
4,132
-1,410
-2,437
58,532
60,741
33,572
32,256
21,597
20,054
19,974
11,658
6,266
7,369
9,694
8,466
4,026
3,681
5,350
3,879
185
3,735
3,411
11
1,176
-2,032
-3,507
1,148
2,086
Metro Area
Milwaukee
Pittsburgh
Kansas City
Indianapolis
Nashville
Portland
St. Louis
Cincinnati
Birmingham
Oklahoma City
Cleveland
Columbus
Miami
Sacramento
Jacksonville
Salt Lake City
Phoenix
San Antonio
Providence
Tampa
Louisville
Virginia Beach
Orlando
Riverside
Las Vegas
Metro
Traded Wage
versus National
Average
-626
-810
-961
-1,664
-1,981
-1,988
-2,880
-3,999
-4,731
-6,527
-6,710
-6,808
-7,253
-8,101
-8,604
-10,298
-10,388
-10,789
-11,578
-12,226
-12,286
-13,307
-18,052
-20,720
-21,758
Cluster Mix
Effect
Relative
Cluster
Wage Effect
303
1,436
917
-463
-694
984
128
-372
208
3,011
503
1,275
-1,031
-555
5,193
749
1,187
2,978
-2,945
3,491
-3,607
-2,700
-6,178
-5,679
-16,500
-929
-2,246
-1,879
-1,201
-1,287
-2,972
-3,007
-3,627
-4,939
-9,538
-7,213
-8,083
-6,223
-7,546
-13,797
-11,046
-11,575
-13,766
-8,633
-15,718
-8,679
-10,607
-11,874
-15,041
-5,258
On average, cluster strength is much more important (77.8%) than cluster mix
(22.2%) in driving performance in the 50 largest metro areas
Note: All data are Census CBP 2011; author’s analysis.
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
Copyright 2014 © Professor Michael E. Porter
21
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Philadelphia Metro Employment by Traded Cluster, 2011
Rank in U.S.
Business Services
Distribution and Electronic Commerce
Education and Know ledge Creation
Financial Services
Insurance Services
Hospitality and Tourism
Marketing, Design, and Publishing
IT and Analytical Instruments
Transportation and Logistics
Aerospace Vehicles and Defense
Construction Products and Services
Printing Services
Food Processing and Manufacturing
Biopharmaceuticals
Production Technology and Heavy Machinery
Plastics
Metalw orking Technology
Dow nstream Chemical Products
Paper and Packaging
Performing Arts
Automotive
Livestock Processing
Lighting and Electrical Equipment
Medical Devices
Electric Pow er Generation and Transmission
Communications Equipment and Services
Dow nstream Metal Products
Furniture
Water Transportation
Upstream Metal Manufacturing
Oil and Gas Production and Transportation
Recreational and Small Electric Goods
Upstream Chemical Products
Video Production and Distribution
Vulcanized and Fired Materials
Wood Products
Textile Manufacturing
Apparel
Agricultural Inputs and Services
Environmental Services
Nonmetal Mining
Tobacco
Music and Sound Recording
Jew elry and Precious Metals
Leather and Related Products
Trailers, Motor Homes, and Appliances
Footw ear
Forestry
Fishing and Fishing Products
Metal Mining
Coal Mining
8
6
6
6
5
15
10
10
13
8
9
5
6
5
11
8
9
4
4
9
13
3
8
8
1
19
12
7
11
14
10
9
5
7
10
12
8
7
2
6
13
3
9
13
18
29
12
20
22
36
26
42,971
37,039
28,093
23,455
23,187
14,497
14,410
13,352
13,104
12,637
11,873
11,757
7,834
7,775
7,418
6,997
6,820
6,352
5,688
5,514
5,492
5,348
4,791
4,773
4,545
4,191
4,088
3,544
2,872
2,582
2,475
2,339
2,268
2,173
1,917
1,830
793
780
380
290
283
190
120
80
40
10
10
0
50,000
78,239
219,120
133,049
118,814
Philadelphia overall employment rank = 5
100,000
150,000
Employment, 2011
200,000
250,000
Note: Ranks are across top 50 Metro Areas.
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
Copyright 2014 © Professor Michael E. Porter
22
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Traded Cluster Composition of the Philadelphia Metro, 2001-2011
5.0%
Philadelphia National Employment Share, 2011
Overall change in the Philadelphia Share of
US Traded Employment: -.104%
Electric Power Generation
and Transmission
4.0%
Financial Services
Education and
Knowledge Creation
Downstream
Chemical Products
Distribution and
Electronic Commerce
Insurance Services
Employment
2001-2011
3.0%
Biopharmaceuticals
(+.65%, 5.5%)
Printing Services
Aerospace Vehicles
and Defense
Added Jobs
Marketing, Design,
and Publishing
Lost Jobs
Performing Arts
Information Technology
and Analytical
Instruments
Business Services
Philadelphia Overall Share of
2.0% US Traded Employment: 2.25%
Agricultural Inputs
and Services
Water Transportation
Furniture
Transportation and Logistics
Upstream Chemical Products
Communications Equipment
and Services
Upstream Metal Manufacturing
1.0%
Leather and Related Products
Oil and Gas Production
and Transportation
Textile Manufacturing
Jewelry and Precious Metals
Vulcanized and Fired Materials
Footwear
Automotive
Wood Products
Nonmetal Mining
Trailers, Motor Homes,
and Appliances
Fishing and Fishing Products
Forestry
0.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
Change in Philadelphia Share of National Employment, 2001 to 2011
1.0%
Employees 7,000 =
1.5%
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
20140311 – Fox School of Business, Temple University Competitiveness Presentation (Porter, Delgado, Bryden)
Copyright 2014 © Professor Michael E. Porter
23
Traded Cluster Composition of the Philadelphia Metro, 2001-2011
3.0%
Overall change in the Philadelphia Share of
US Traded Employment: -.104%
Philadelphia National Employment Share, 2011
Printing Services
2.5%
Distribution and Electronic
Commerce
Marketing, Design,
and Publishing
Performing Arts
Environmental Services
Philadelphia Overall
Share of US Traded
Employment: 2.25%
Business Services
Construction Products
and Services
Paper and Packaging
Lighting and
Electrical Equipment
Medical Devices
2.0%
Recreational and
Small Electric Goods
Plastics
Music and Sound Recording
Apparel
Video Production
and Distribution
1.5%
Furniture
Metalworking Technology
Food Processing and
Manufacturing
Production Technology
and Heavy Machinery
Transportation
and Logistics
Employment
2001-2011
Downstream Metal Products
Textile Manufacturing
Livestock Processing
Hospitality and Tourism
1.0%
-0.5%
-0.4%
-0.3%
-0.2%
-0.1%
0.0%
Jewelry and
Precious Metals
Vulcanized and
Fired Materials
0.1%
0.2%
Change in Philadelphia Share of National Employment, 2001 to 2011
0.3%
Added Jobs
Lost Jobs
0.4%
Employees 7,000 =
0.5%
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
20140311 – Fox School of Business, Temple University Competitiveness Presentation (Porter, Delgado, Bryden)
Copyright 2014 © Professor Michael E. Porter
24
Traded Cluster Composition of Philadelphia Metro, 2006-2011
5.0%
Overall change in the Philadelphia Share of
US Traded Employment: .0021%
Biopharmaceuticals
(-4.4%,5.5%)
Tobacco
(+1.4%, 5.2%)
Financial Services
Philadelphia National Employment Share, 2011
Education and
Knowledge Creation
4.0%
Electric Power Generation
and Transmission (-1.5%)
Downstream Chemical Products
Insurance Services
3.0%
Lighting and Electrical Equipment
Printing Services
Marketing, Design, and Publishing
Distribution and
Electronic
Commerce
Environmental Services
Philadelphia Overall
2.0% Share of US Traded
Employment: 2.25%
1.0%
Performing Arts
Business
Services
Medical Devices
Construction Products
and Services
Aerospace Vehicles and Defense
Plastics
Paper and
Packaging
Information Technology and
Analytical Instruments
Recreational and
Small Electric Goods
Metalworking Technology
Agricultural Inputs
Upstream Chemical Products
and Services
Transportation and Logistics
Livestock
Music and Sound Recording
Furniture
Processing
Food Processing
Apparel Water Transportation
and Manufacturing
Video Production and Distribution
Vulcanized
&
Upstream
Metal
Communications
Production Technology
Hospitality and Tourism
Fired Materials
Manufacturing
Equipment and Services
and Heavy Machinery
Downstream Metal Products
Nonmetal Mining
Jewelry and Precious Metals
Leather and Related Products
Textile Manufacturing
Employment
Footwear
Automotive
Oil and Gas Production
and Transportation
2006-2011
Wood Products
Added Jobs
Trailers, Motor Homes, and
Appliances
Forestry
0.0%
-1.0%
-0.5%
Lost Jobs
Fishing and Fishing Products
0.0%
0.5%
Change in Philadelphia Share of National Employment, 2006 to 2011
1.0%
Employees 13,000 =
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
Copyright 2014 © Professor Michael E. Porter
25
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
20,000
15,000
10,000
5,000
-15,000
-20,000
-30,000
Business Services
Education and Knowledge Creation
Aerospace Vehicles and Defense
Information Technology and Analytical
Performing Arts
Agricultural Inputs and Services
Transportation and Logistics
Hospitality and Tourism
Livestock Processing
Video Production and Distribution
Fishing and Fishing Products
Footwear
Tobacco
Music and Sound Recording
Trailers, Motor Homes, and Appliances
Coal Mining
Forestry
Jewelry and Precious Metals
Production Technology and Heavy Machinery
Leather and Related Products
Environmental Services
Metalworking Technology
Recreational and Small Electric Goods
Upstream Chemical Products
Medical Devices
Nonmetal Mining
Lighting and Electrical Equipment
Downstream Metal Products
Electric Power Generation and Transmission
Wood Products
Food Processing and Manufacturing
Vulcanized and Fired Materials
Textile Manufacturing
Oil and Gas Production and Transportation
Upstream Metal Manufacturing
Furniture
Paper and Packaging
Communications Equipment and Services
Downstream Chemical Products
Plastics
Construction Products and Services
Water Transportation
Apparel
Marketing, Design, and Publishing
Automotive
Printing Services
Insurance Services
Distribution and Electronic Commerce
Biopharmaceuticals
Financial Services
Job Creation, 2006-2011
Philadelphia Metro Job Creation in Traded Clusters
2006 - 2011
25,000
Net traded job creation,
2006-2011:
-66,764
0
-5,000
-10,000
Indicates expected job creation
given growth in subclusters nationally.*
-25,000
* Percent change in national benchmark times starting regional employment. Overall traded job creation in this region, if it matched national benchmarks, would be -51,158.
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
Copyright 2014 © Professor Michael E. Porter
26
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
0.0
Biopharmaceuticals
Apparel
Forestry
Leather and Related Products
Automotive
Nonmetal Mining
Textile Manufacturing
Water Transportation
Vulcanized and Fired Materials
Oil and Gas Production and Transportation
Wood Products
Upstream Metal Manufacturing
Jewelry and Precious Metals
Recovered to 2006 level
Furniture
Communications Equipment and Services
Printing Services
Downstream Chemical Products
Paper and Packaging
Financial Services
Plastics
Environmental Services
Trailers, Motor Homes, and Appliances
Construction Products and Services
Electric Power Generation and Transmission
Downstream Metal Products
Upstream Chemical Products
Insurance Services
Marketing, Design, and Publishing
Recreational and Small Electric Goods
Lighting and Electrical Equipment
Food Processing and Manufacturing
Medical Devices
Footwear
Music and Sound Recording
Distribution and Electronic Commerce
Metalworking Technology
Tobacco
Production Technology and Heavy Machinery
Video Production and Distribution
Hospitality and Tourism
Livestock Processing
Transportation and Logistics
Education and Knowledge Creation
>1
Business Services
Information Technology and Analytical Instruments
Performing Arts
1.5
Agricultural Inputs and Services
Aerospace Vehicles and Defense
Ratio of Post- to Pre- Recession Employment
(2011/2006)
Philadelphia Recovery in Traded Cluster Employment
Post-Recession vs. Pre-Recession (2011 vs. 2006)
2.0
Indicates national recovery level
US traded employment: 0.93 recovery
PHL traded employment: 0.93 recovery
1.0
0.5
Note: Includes clusters with more than 100 employees
Source: Prof. Michael E. Porter, Harvard Business School; U.S. Cluster Mapping 2014 Benchmark Definitions (Delgado-Porter-Stern 2013), Richard Bryden, Project Director.
Copyright 2014 © Professor Michael E. Porter
27
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
Cluster Specialization by Economic Area, 2011
Education and Knowledge Creation
Philadelphia-Camden-Vineland
Employment:121,836; Share: 4%
High Employment Specialization and Share
High Employment Specialization
High Employment Share
Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75th percentile; High Employment
Share must have a Share of National Cluster Employment greater than the 90th percentile; High Employment Specialization and Share meet both criteria
Source: “Defining Clusters of Related Industries,” Delgado, Porter, Stern, 2013
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
28
Copyright 2014 © Professor Michael E. Porter
Potential Inter-Regional Spillovers:
Education and Knowledge Creation
Increased Employment 2006-2011
Decreased Employment 2006-2011
Scranton, PA
Harrisburg-Carlisle-Lebanon, PA
New York-Newark-Bridgeport
Philadelphia-Camden-Vineland
Dover, DE
Washington-BaltimoreNorthern Virginia
High Employment Specialization and Share
High Employment Specialization
High Employment Share
Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75th percentile; High Employment
Share must have a Share of National Cluster Employment greater than the 90th percentile; High Employment Specialization and Share meet both criteria
Source: “Defining Clusters of Related Industries,” Delgado, Porter, Stern, 2013
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
29
Copyright 2014 © Professor Michael E. Porter
Cluster Specialization by Economic Area, 2011
Biopharmaceuticals
Philadelphia-Camden-Vineland
Employment:12,747; Share: 5.6%
High Employment Specialization and Share
High Employment Specialization
High Employment Share
Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75th percentile; High Employment
Share must have a Share of National Cluster Employment greater than the 90th percentile; High Employment Specialization and Share meet both criteria
Source: “Defining Clusters of Related Industries,” Delgado, Porter, Stern, 2013
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
30
Copyright 2014 © Professor Michael E. Porter
Potential Inter-Regional Spillovers
Biopharmaceuticals
Increased Employment 2006-2011
Decreased Employment 2006-2011
Scranton, PA
Harrisburg-Carlisle-Lebanon, PA
New York-Newark-Bridgeport
Philadelphia-Camden-Vineland
Dover, DE
Washington-BaltimoreNorthern Virginia
High Employment Specialization and Share
High Employment Specialization
High Employment Share
Note: Economic Areas with High Employment Specialization must have a Location Quotient of Cluster Employment greater than the 75th percentile; High Employment
Share must have a Share of National Cluster Employment greater than the 90th percentile; High Employment Specialization and Share meet both criteria
Source: “Defining Clusters of Related Industries,” Delgado, Porter, Stern, 2013
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
31
Copyright 2014 © Professor Michael E. Porter
Summary: Philadelphia Cluster Employment Performance
• Following a pattern seen in many regions of the U.S., Philadelphia’s
traded employment in 2011 has declined to 93% of the level in 2006
• Strong clusters that have lost jobs and underperformed the U.S. over
the period 2006-2011:
– Biopharmaceuticals, Financial Services, Insurance Services, and
Distribution and Electronic Commerce
• Clusters that have created many jobs over the period 2006-2011:
– Business Services, Education and Knowledge Creation, Aerospace Vehicles
and Defense, and IT and Analytical Instruments
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
32
Copyright 2014 © Professor Michael E. Porter
U.S. Cluster Mapping Project
Data and Tools
• The U.S. Cluster Mapping Project is a joint initiative between the U.S.
Department of Commerce, Economic Development Administration and Harvard’s
Institute for Strategy and Competitiveness
• The goal of the project is to improve U.S. competitiveness based on a bottom-up,
regional perspective on economic development, and to support evidence-based
decision making and thought leadership on cluster-driven economic policies
• US Cluster Mapping Project website will launch in late May/early June 2014. This
highly optimized, modern website will provide access to:
– Actionable cluster and regional data reflecting the state of today’s economy
– User contributed repository of cluster initiatives, studies, and news
– Community platform and registry for organizations
• The research is driven primarily by Harvard, MIT and Temple. Key research
updates include improved cluster definitions:
– Cluster categories are groups of related industries based on co-location patterns
across regions, input-output links and skill links
– Clustering methodology: Delgado, Porter and Stern (2013), Porter (2003)
20140311 – Fox School of Business, Philadelphia Competitiveness (Porter, Delgado, Bryden)
33
Copyright 2014 © Professor Michael E. Porter