Transportation drives growth of industry clusters

One industry cluster important to northwestern Minnesota is recreational vehicle production.

One industry cluster important to northwestern Minnesota is recreational vehicle production.

From recreational vehicles in the northwest to Mayo Clinic in the southeast, Minnesota has a diverse and changing set of industry clusters. What do such clusters need to grow and prosper? Recent U of M studies take a look at the vital role of transportation.

Industry clusters are geographically concentrated groups of interconnected companies, universities, and related institutions. Clusters promote efficiencies that individual businesses or industries cannot, and they tend to have a large economic impact on a region.

One recently completed study of competitive industry clusters in the greater Minneapolis–St. Paul (MSP) region revealed that some important new clusters—water technology, robotics, 3D printing, and biorenewables—are emerging in the region. “These are industries to watch, and they may be areas where we need to spend more time in the future,” advised Lee Munnich, director of the State and Local Policy Program (SLPP) at the Humphrey School of Public Affairs.

A second cluster study, for the Minnesota Department of Transportation (MnDOT), explored the issues that are most important to companies in clusters throughout Minnesota. Major transportation issues identified were weather-related delays, rail capacity and equipment issues, truck driver workforce and regulatory issues, regional air access, congestion delays in the MSP metro area, and carrier availability.

Researchers also used what are called location quotients to quantify how concentrated a particular industry is in an area relative to the nation as a whole. For example, the medical devices industry in the MSP region has a location quotient of 3.96—that is, a concentration almost four times the national average in that same industry.

One industry particularly important to northwestern Minnesota is recreational vehicle production, which has a location quotient of 17.22, or more than 17 times the national average for that industry. Recreational vehicle manufacturing has two main players: Arctic Cat and Polaris. These are two very competitive firms in one of the most sparsely populated areas of the state, and both face major transportation issues related to inclement weather and difficulty in finding skilled workers.

SLPP researchers also completed a cluster-related project in southwestern Minnesota for MnDOT’s District 8. “We interviewed manufacturing firms in the clusters most important to this area, as well as area freight carriers, about their specific transportation needs in efforts to come up with some low-cost improvement strategies that could be implemented in the short term,” Munnich says. A similar project for MnDOT District 4 in west central Minnesota is under way.

“Findings from cluster-based studies like these can be used to shape transportation policy, planning, and implementation to better direct Minnesota’s economic successes,” Munnich says.

Read the full article in the December 2014 issue of Catalyst.

Posted in Freight, Infrastructure, Planning, Transportation research

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