EDCO Conference, Toronto, ON February 8,
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1 EDCO Conference, Toronto, ON February 8,
2 Agenda Cluster Context: Secondary Wood Manufacturing in Numbers Introduce the Bluewater Wood Alliance What are cluster organizations? How do they differ from other industry associations? Opportunities for Economic Developers For later discussion: Innovation, Activities and Accomplishments 2
3 Secondary Wood Industry Kitchen and Bath Cabinetry Office Furniture Store Fixtures and Architectural Millwork Household Furniture (Bedroom, Dinning room, Entertainment, Upholstered ) Institutional Furniture (Hospitals, Schools ) Value- Added Products and Other Windows, Doors, Components Prefabricated Houses and Building components Flooring, Staircases
4 Secondary Wood Industry in Numbers Sales Volume Ontario: $6.6 Billion (38%), Canada: $17 Billion Sales Volume SWO: $5.2 Billion (85%), Ontario 6.6 Billion Employment: Ontario: 28,400 (32%), Canada: 88,000 Employment: SWO: 22,500 (79%) Ontario: 28,400 Companies: Ontario: 1,800 (34%), Canada: 5,300 Companies: SWO: 1,400 (78 %), Ontario: 1800 (Source: Conference Board of Canada, Wood Manufacturing Council, 2016) Quebec and Ontario make up about 67% of total sector establishments. Furniture manufacturing is the largest subsector with about 39% of the sector manufacturing wood and upholstered furniture Kitchen cabinets manufacturers 25% Other millwork 15% Prefabricated buildings 14% Wood windows and doors 7% 4
5 Bluewater Wood Alliance (BWA) Is a not- for- profit, member- driven wood products manufacturing cluster organization Membership area spans Southwestern Ontario Members are manufacturers of wood products (furniture, kitchen cabinets, flooring, store fixtures, millwork, etc.) Associate members are supply chain companies (machinery, wood, abrasives, coatings, etc.) 5
6 What is a cluster? A.k.a. business cluster, industry cluster, competitive cluster or Porterian cluster A cluster organization is of a group of companies and associated institutions, in a common industry and geographical area, linked by the same interests and challenges. Includes competing companies and supply chain. Clusters have often developed naturally, without an overall plan, throughout history (Silicon Valley, Detroit, etc.) Bluewater Wood Alliance: initial seeds of a wood cluster have been in existence for decades with the past strength of Ontario s furniture industry. 6
7 What is the cluster advantage? Strength in Numbers Critical mass of companies in a geographical area Competing companies Complementing companies Vertical supply chain (suppliers) Engage Colleges, Universities and Research facilities Michael Porter: clusters affect competition by Increasing the productivity of the companies in the cluster Driving innovation in the field Stimulating new businesses in the field: B2B, Export Workforce development 7
8 Upper Austria Clusterland Guiding Principles Organized, facilitated clusters take at least years or more to mature Must start with significant government funding for operations and infrastructure to support member activity - 100% at beginning, but charge members for services Over time, the percentage of funding decreases as the cluster develops membership and other revenue streams Gov. funding never fully goes away, as gov. always a stakeholder, on at least project level At beginning: 100%, over time transitions to 80/20, 60/40, 40/60, to 20/80 at maturity (Austria wood cluster example) 8
9 Cluster vs. Association 9
10 How did the BWA Start? 7 Original Members With An Idea
11 Clusters: BWA How? Clusters need to start organically in order to stick. Must be bottom- up: industry driven Mindset of Trust and Collaboration Offshore competition was pressuring companies Nov 2010: Grey- Bruce Regional Economic Development Partnership initiated study In 2010, BWA started with 7 original (competing) companies who collaborated on mutually- beneficial government funded projects for Lean Training (RED/OMAFRA) 11
12 Bluewater Wood Alliance - History In Jan, 2011: Sent two representatives to Clusterland in Linz, Austria for Cluster Training on how to start and run an industry cluster March 2011: Start- up funding by MNRF/FP Innovations and five collaborating towns/municipalities March, 2011: Incorporated as not- for- profit with board governance by seven board members and established by- laws- Co- Managed by Consultants August 2011: One year funding agreement with MNDMF signed 12
13 Clusters: BWA How? Began with quarterly networking events as learning opportunities and established collaborative projects and roundtables: i.e. IRAP, Purchasing, etc. Fall 2012: Hired part- time manager, increasing frequency and variety of events, training, and projects with 25 members at the time April 2013: MNRF supporting BWA with basic operational funding under multi- year agreements (current agreement ending March 31, 2018) Expanded Cluster Region to all SWO: Fall
14 Initial Intended Cluster Region It wasn t enough! The demand grew from farther afield.
15 New BWA Cluster Region Fall 2015 Clusterland Model: 2-4 hrs distance Demand came from all Southwestern Ontario! 15
16 BWA Members Today there are 103 members, including 73 manufacturing and 30 supply chain associate member companies Manager now Executive Director (four days per week) with responsibility for day- to- day running of the cluster and facilitating board governance Expansion of cluster region to include all of SWO with members in communities from Orillia to Chatham to Niagara, including the GTA and beyond 16
17 BWA Mission Increase our members competitiveness by improving their know- how, strengthening their powers of innovation and facilitating internationalization through export market development 17
18 BWA Vision Lead in the management of a cluster organization in support of its members increased competitiveness in wood products manufacturing in Ontario. 18
19 Bluewater Wood Alliance- Objectives 1. Cluster Development: Increase member services: focus groups, co- op projects, roundtable exchanges Recruitment: membership growth Identify and create strategic links: stakeholder relationship development Stable operational budget Develop Organizational Infrastructure 19
20 Bluewater Wood Alliance Objectives 2. Provide Services to increase member competitiveness Cooperative projects: export development and process improvement projects (NRCan, MNRF, OMAFRA RED) Plant tour focus groups: Innovation, Continuous Improvement Methodology, Technology Transfer Networking and B2B Training and skills development 20
21 Bluewater Wood Alliance Objectives 3. Operate as a member- driven organization Advisory board executive round table: 11 members representing 9 wood manufacturing and 2 supplier member companies Non profit board governance model utus.aspx
22 Bluewater Wood Alliance as a Benchmark Cluster Organization Governments are recognizing the value of regional clusters Clusters are spreading (building on the experience of others in North America, especially Europe) BWA is setting the standard for clustering: only of its kind in Canadian value- added wood industry BWA is setting the bar for an umbrella cluster organization nationally Model for clustering for all industries 22
23 Opportunities for EDOs Look for the collaborative mindset in all your industries Spot your industry leaders: open minded forward thinkers: Lean on them, Leverage them Identify opportunities for mutual collaboration between similar companies in the same industry Create venues/circumstances for industry members to meet, and get value: gain trust Establish common ground: quick win 23
24 Opportunities for EDOs Relationship development is the grunt work Find ways to get in front of them Win trust through helping to diminish red tape Leverage existing cluster models. i.e., Bluewater Wood Alliance is YOUR wood manufacturing cluster in SWO. You should have BWA in your economic development strategy, and encourage your wood companies to engage the cluster activity! 24
25 Questions? Bluewater Wood Alliance th Street Hanover, ON N4N 2A1 Mike Baker Executive Director:
26 High Tech Manufacturing 26
27 Member Examples of Innovation 27
28 Member Examples of Innovation 28
29 Member Examples of Innovation 29
30 Innovation in Secondary Wood Manufacturing Adoption of new technologies into diverse business models is the main definition of Innovation in the secondary wood sector Woodworking is an old traditional craft, slow to adopt. BWA focus is to promote and facilitate the transfer of best practices in the adoption of new technologies between members and leveraging supply chain (i.e. CNC routers, Optimization Saws, etc) 30
31 BWA Accomplishments and Activities: Collaborative Projects and Events Export development projects introducing members to new markets, such as the Index show in Dubai, UAE and the High Point Furniture Market in High Point, North Carolina Recent OMAFRA RED project funding to help companies adopt new technologies and initiate process improvement projects. $500,000 in funding leveraged over $3 million in member project investment over the past 2 years Monthly plant tour focus groups, where members learn from each other's challenges, find solutions, share best practices and adopt lean principles Learning events where members have access to subject matter experts through a shared cost model, making expertise affordable and accessible 31
32 BWA Accomplishments and Activities Quarterly Networking Events leveraging the supply chain members for expertise and technology transfer Participate on Program Advisory Committees for Community Colleges (Chair Georgian and member Conestoga) to connect industry needs with workforce development stakeholders Sponsorship of 20 high schools in southwestern Ontario to adopt the WoodLINKS curriculum Facilitate a bottom- up member- driven organization where industry dictates the agenda 32
33 BWA Accomplishments
34 2016 Upper Austria Clusterland Consultation BWA Board recognized need to re- visit Upper Austrian model to update strategy to take the BWA cluster to next level. Issues: Increased membership but NO infrastructure Limited administrative support for Executive Director Expanded region demands more time Increased demand for services and programming Need for other funding sources and revenue streams Opportunities to facilitate improvement project funding Opportunities for Federal and other Provincial Gov. stakeholders BWA President Dennis McGlynn, V.P. Mike Vokes and BWA ED Mike Baker attended three days of training in Austria from May 17-19,
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