Rural Knowledge Clusters:
Strategic Planning & Practical Application
Lee Munnich
Senior Fellow and Director
State and Local Policy Program
Humphrey Institute of Public Affairs
University of Minnesota
Phone: (612) 625-7357
E-mail: lmunnich@hhh.umn.edu
State and Local Policy Program
Overview
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Defining rural knowledge clusters and keys to
cluster success
Minnesota successes and other cluster
examples in Southern states
Steps to developing a rural knowledge cluster
initiative
Rural Knowledge Clusters
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Specialized networks of innovative, interrelated
firms
Centered outside major metropolitan areas
Deriving competitive advantages primarily
through accumulated, embedded, and
imported knowledge among local actors
Keys to Cluster Success
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Understand your local knowledge base.
Foster linkages between firms and the local
institutions that support them.
Develop strategies for promoting innovation
around rural knowledge clusters.
Don’t try to go it alone – promote a regional
vision to guide strategies.
Minnesota Success Stories
illustrating
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Competitive advantage
History
Institutions
Case Example 1:
Competitive advantage
Factors that give local firms a market
advantage:
 Supply or demand in the marketplace
 Related industries
 Local rivalry
Northwest Minnesota:
Key Facts
Population (2000): 88,472*
Major Cities:
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Crookston: 8,192
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East Grand Forks: 7,501
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Roseau: 2,756
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Thief River Falls: 8,410
Population Density (pop/sq mi): 11
(Twin Cities: 601; MN state: 62)
Population Growth (1990-2000): -2%
(MN non-metro: 4%; US non-metro: 9%)
Job Growth (1990-2000): 16%
(MN non-metro: 25%; US non-metro: 18%)
*Kittson, Marshall, Norman, Pennington, Polk, Red Lake,
Roseau counties (Region 1)
Source: Census Bureau; Bureau of Economic Analysis
Northwest Minnesota:
Recreational Transportation
Equipment
Key Industries
Other transportation equipment
manufacturing (NAICS:
3369/SIC: 3799)
 2000 Employment: 2,197,
20.5 times more
concentrated than U.S.
overall
Source: County Business Patterns
Competitive Advantage:
Recreational Transportation
Equipment
Key Employers
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Arctic Cat (Thief River Falls)
1,500 employees
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Machinewell (Grygla)
110 employees
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Polaris Industries (Roseau)
2,100 employees
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TEAM Industries (Bagley)
250 employees
Source: MN Dept of Trade and Economic
Development
Case Example Two:
History
An historical base of knowledge about an
industry or technology that is used to
create new products or services
Alexandria: Key Facts
Population (2000): 210,059*
Major Cities:
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Alexandria: 8,820
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Fergus Falls: 13,471
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Moorhead: 32,177
Population Density (pop/sq mi): 26
(Twin Cities: 601; MN state: 62)
Population Growth (1990-2000): 6%
(MN non-metro: 4%; US non-metro: 9%)
Job Growth (1990-2000): 25%
(MN non-metro: 25%; US non-metro: 18%)
*Becker, Clay, Douglas, Grant, Otter Tail, Pope, Stevens,
Traverse, and Wilkin counties (Region 4).
Source: Census Bureau; Bureau of Economic Analysis
Alexandria: Automation and
Motion Control Technologies
Key Industries
Packaging Machinery
(NAICS: 3339/SIC: 3565)
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2000 Employment: 1,209, 4.5 times more
concentrated than U.S. overall
Machine Shops and Related
(NAICS: 3327/SIC: 3599, 3451, 3452)
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2000 Employment: 844, 2.1 times more
concentrated than U.S. overall
Source: County Business Patterns
Alexandria: Automation and
Motion Control Technologies
Key Employers
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3M (Alexandria) 317 employees
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Alexandria Extrusion (Alexandria) 274
employees
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Brenton Engineering (Alexandria) 127
employees
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Douglas Machine (Alexandria) 492
employees
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Minnesota Automation (Crosby) 120
employees
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Massman Automation (Villard) 100
employees
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Schott Automation (Garfield) 35 employees
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Thiele Engineering (Fergus Falls) 81
employees
Source: MN Dept of Trade and Econ Development
Case Example Three:
Institutions
formal and informal; foster the creation,
diffusion, and renewal of the local
knowledge base
Winona: Key Facts
Population (2000): 112,517*
Major Cities:
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Winona: 27,069
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Lake City: 5,054
Population Density (pop/sq mi): 44
(Twin Cities: 601; MN state: 62)
Population Growth (1990-2000): 5%
(MN non-metro: 4%; US non-metro: 9%)
Job Growth (1990-2000): 21%
(MN non-metro: 25%; US non-metro: 17%)
Winona
*Blue Earth, Nicollet and Waseca counties
Source: Census Bureau; Bureau of Economic Analysis
Winona: Advanced Composite
Materials
Key Industries
Custom compounding of purchased resin
(NAICS: 325991/SIC: 3087)
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2000 Employment: 517, 5.37 times more
concentrated than U.S. overall
All other plastics products manufacturing
(NAICS: 326199/SIC: 3089)
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2000 Employment: 241, 3 times more
concentrated than U.S. overall
Source: County Business Patterns
Winona
Winona: Advanced Composite
Materials
Key Employers
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RTP Company (Winona) 407 employees
Cytec Engineering (Winona) 175 employees
Ticona Celstran (Goodview) 69 employees
We-no-nah Canoe (Winona) 75 employees
Watlow Polymer Technologies (Winona) 24
employees
AFC Strongwell (Chatfield) 200 employees
Composite Products Inc. (Winona) 50
employees
CodaBow Composites (Winona) 15
employees
Miken Composites (Caledonia) 15 employees
Geotek (Stewartville) 35 employees
Source: MN Dept of Trade and Economic Development
Winona
Winona: Rural Knowledge
Cluster Profile
Competitive Advantages
Diverse local industry base
Skilled worker base around
composite engineering
Cooperative relationships
Firms and Industries
History
•Miller Brothers – formed
Fiberite after WWII
•Initial growth in aerospace,
military applications
•Spin-off/startup activity
to new firms
•Composite materials producers
Advanced Composite
Materials Mfg
Institutions
•SAMPE – professional society
•Winona St – composite eng
•COMTEC – applied R&D/testing
•Winona Composites Consortium
•Technical college: custom training,
technical education
•Existing products improved
through use of composite
materials (i.e. canoes, heated
plastics, automotive products,
violin bows)
A Cluster in Turmoil:
Precision Agricultural Equipment in
Southwestern Minnesota
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Agricultural sprayer technology
Highlights potential pitfalls of having a cluster of
companies doing essentially the same thing, rather
than diverse activities around the same technology
Vulnerability that comes from non-local ownership
Suffered from corporate consolidations, layoffs, and
plant closings
Minimal start-up activity
Current and Emerging Industry Clusters
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Overview of past research
Data on potential emerging clusters
State and Local Policy Program
Regional Cluster Studies
Twin Cities
Southeast
Minnesota
Southwest
Minnesota
Northwest
Minnesota
Northeast
Minnesota
Printing and
Publishing
Composites
Computer and
Electrical
Components
Manufacturing
Recreation and
Transportation
Equipment
Manufacturing
Forest Products
Value-Added
Agricultural
Cooperatives
Value-Added
Agricultural
Processing
Health Services
Agricultural
Equipment
Manufacturing
Wood Products
Food Processing
Computers and
Software
Medical Devices
Machinery and
Metalworking
Financial Services
Printing,
Publishing, and
Software
Industrial
Machinery and
Computer
Manufacturing
Dairy Processing
Tourism
Information
Technology
Tourism
RTS Snapshots of Rural
Innovation: Rural Cluster Vignettes
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Auto Industry Supply Chain
Automotive
Carpet Manufacturing
Crafts
Furniture (Household)
Gaming
Hosiery
Hosiery
Houseboat Manufacturing
Oil and Gas
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Pottery
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Central Tennessee
Northwestern South Carolina
Dalton, Georgia
Western North Carolina
Northeastern, Mississippi
Tunica County, Mississippi
Catawba Valley, North Carolina
Fort Payne, Alabama
Somerset, Kentucky
Southern Louisiana
Seagrove, North Carolina
Source: Stu Rosenfeld, RTS http://www.rtsinc.org/rc/rc_home.html
Identifying Clusters:
Location Quotient
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Measures employment concentration in a particular
industry in a particular region
Measure of specialization
LQ is calculated as a ratio of the industry’s share of
employment in the region to the industry’s share of
employment in the nation
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LQ > 1 means that concentration of employment in the
industry in the region is higher than concentration of
employment in same industry in the nation; i.e. the
region specializes in that industry
Developing a Cluster Initiative:
6 Key Steps
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Identify Cluster Candidates
Select Key Industries
Perform Stakeholder Analysis
Hold Industry Stakeholder Roundtable
Perform One-on-One Interviews
Develop Action Plan
Knowledge Cluster Strategies
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Research and Innovation
Cluster Branding and Awareness
Strategic Partnerships
Global Marketplace
Knowledge Cluster Expansion
Cluster Initiative Sustainability
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Project Team should be assembled prior to
the cluster initiative development process
Concurrent to the development of the cluster
initiative, Project Team requires training in:
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overall cluster approach and criteria for cluster
identification
qualitative assessment process
design and coordination of cluster roundtables and
interviews
Conclusions
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The cluster study approach:
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ensures that pertinent issues are brought to the
forefront,
gives a voice to the region’s businesses, leading to
future economic development
And thus…
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secures the industries’ future
secures jobs for the region’s residents
motivates and engages industry leaders and policy
makers.
For further information:
Go to
http://www.ruralvitality.org
http://www.hhh.umn.edu/centers/slp/