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"Clusters" to identify economic strengths, opportunities

SITKA, ALASKA
Visit the Juneau Economic Development Council website.

 “A cluster is a straightforward concept: It’s a set of firms in a related field that collaborates together to address common problems.”

Brian Holst is the director of the Juneau Economic Development Council. He took an hour recently to explain to the Sitka Chamber of Commerce how identifying and focusing on a region’s strengths was critical to boosting economic growth.

 “Cluster development work hasn’t happened in Alaska. It’s occurred in the US, but it really isn’t a part of how we operate in the region. This project allows us to introduce that concept. It puts the private sector really at the center of the discussion of economic development. So much of economic development tends to focus on people like Garry and I talking about we should do something, or other well-meaning groups or government. Your local government, your political leaders – all of whom have to have an important say. But if we really want to see jobs created, whose creating those jobs? Yeah, businesses create those jobs.”

Holst was referring to Garry White, director of the Sitka Economic Development Association, who was in the audience for the presentation.

The Southeast Cluster Initiative is intended to identify the best opportunities for growth in the region, based on the resources available – or, as Holst put it, “What we’re good at” – and larger economic trends. He said the greatest mistake in economic development was looking only within a community, rather than at the world.

Clusters are based on specific industries and services.

“For example, boatbuilding. If we were to identify that as a cluster we would want to support in Southeast Alaska, you would bring together those companies that are involved in boatbuilding. Plus you’d also bring together some of the key organizations that support boatbuilding. What the cluster working group would come up with are strategies that would allow boatbuilding to be more successful. It may mean an interest or desire to do things proactively in your procurement at the local level to purchase boats built locally.”

Other clusters Holst discussed included seafood – the region’s top private employer by all measures – transportation, tourism, mining, social assistance, non-profits, administrative support, financial activities, and information technology.

Based on an industry’s national rate of growth, the number of employees in the region, and whether the concentration of employment exceeded national averages, Holst said the Cluster Intiative could help identify opportunity.

Continuing on the example of boat building, Holst had some concerns.

“What you need to think about in terms of economic development is, Hey we got something good, markets are growing, let’s make sure we do well here. Over here are industries that are more mature, industries that we’re good at, but they’re not growing as fast (nationally). Is there some reason to think that in a declining market we can capture more? Like boat building: the markets are diminishing. Are our players in Southeast Alaska really better, so in a declining market we can thrive? Or – oh my gosh – this is the time to get out? Because we’re over-extended in this industry and this industry is in decline. These are the questions that this kind of analysis poses.”

The Southeast Cluster initiative is funded by the Forest Service and the USDA’s Rural Development. Holst said an important initial component of the project was an “asset map” that will overlay a traditional geographic map with populations, resources, and industry clusters. Planners will then target between four and six strategic industries for the next phase of the project this coming spring: creating working groups to develop a roadmap for strengthening those industries.
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