Cluster concept pays off – Momentum builds as firms collect in an area and new ones start and grow in rural Indiana

This Orange County community is an isolating half-hour drive from I-64 and bleeding manufacturing jobs to foreign competitors.

By:
Norm Heikens
Indianapolis Star

Yet renewal of Indiana’s worn economy may rest partly on grass-roots projects like one here that hopes to parlay enthusiasm for rural music into good jobs.

While Paoli tries to transform itself into a mini-Nashville, Tenn., a metal-stamping hotbed is firing up in Logansport and a concentration of businesses with biosensor technology is growing in Indianapolis.

The proliferation of these microclusters could help stabilize the ups and downs of Indiana’s manufacturing economy, said Elaine Fisher, who directs Ball State University’s Center for Economic and Community Development. "It means an overall, more sustainable economy," Fisher said. "It’s more consistent employment for people."

Communities across the state are grasping for ways to create jobs. Indiana lost 159,000 positions from July 2000 to July 2003, according to the Bureau of Labor Statistics. That’s one of every 20 jobs.

More than half — 94,800 — were in bedrock manufacturing, and many experts fear international competition has squeezed them out for good.

The Indiana Department of Commerce, Indiana Chamber of Commerce and Central Indiana Corporate Partnership, a nonprofit group of CEOs, in varying degrees have endorsed advanced manufacturing, life sciences, logistics (advanced distribution) and information technology as holding the most promise for revitalizing the state economy.

While microclusters like the Logansport metal-benders fit those niches, others, such as the rural music of Orange County, don’t.

But that doesn’t leave Orange County without hope. Not if interest in a concert on a recent Saturday evening was any indication.

Parking spaces on Paoli’s "courtyard" — the town square, where vehicles traveling Ind. 37 and 56 whiz through a roundabout surrounding the courthouse — were packed. With about 100 people seated in lawn chairs on the courthouse lawn, the local group Heaven Bound Bluegrass played old-time acoustic tunes on fiddle, dobro, stand-up bass and guitar.

Live music can be found in the county just about any weekend, said booster Mabel Fultz.
She is vice president of an event that convinced Ball State’s Fisher that music has economic development potential.

The Lotus Dickey Hometown Music & Arts Reunion, held the second weekend of June, has grown largely through word of mouth in its eight years and now attracts several thousand enthusiasts.

Named after a late local music legend who gained a national following, the festival this year was attended by fans from 30 Indiana counties and 17 states, Fultz said.

Judging by the number of motel bookings and sales of fuel, food and trinkets, Fultz believes Paoli could turn itself into a tourist destination on the order of Nashville, Ind., if it wished.

The music culture is deeply entrenched. Local men make guitars and dulcimers, the Paoli grade school trains students on the instruments, and area residents occasionally gather to play for enjoyment much like they did before the advent of television.

"We have such talent, such talent hidden in the corners of this county," said Paoli singer and songwriter Melinda
Sketo. "This is one of the biggest potentials this county has."

Fisher thinks the budding industry simply needs focused attention.

"Every community or every region has the opportunity to do that," she said. "We just can’t keep looking at the way things were.

"We have to be more creative and look at local assets."

Clusters should not be mistaken for mere concentrations of a particular industry, said Graham Toft, a Hudson Institute senior fellow and economist who formerly ran the Indiana Economic Development Council think tank.
Clusters involve building an industry through joint development of skills, marketing and other needs.

Many Indiana microclusters are larger and have more potential than rural music, say Toft and other experts.

In Logansport, several companies with accumulated smarts in precision metal stamping and forming, especially coil springs, are backing the fledgling Century Career Center.

Owned by Logansport High School, the center trains high school students in techniques companies hope will enable them to remain globally competitive.

The center goes beyond training in traditional trades like welding to tracks that include human resources, transportation and metallurgy, each of which gives students a broader grasp of how manufacturers operate.

More than 900 are enrolled in the $10 million facility, though it’s too new for any to have completed a program, said Director Steve Hagen.

Jim Weaver, president of the Logansport-Cass County Economic Development Foundation, said sharpening the companies’ edge is critical.

"It’s clear that manufacturing jobs will shrink over time," Weaver said. "Those that are left are going to be higher-skill and higher-tech. We want to be a survivor in that niche."

Winemakers are probably the best example of aggressively building a microcluster, Toft said.

They persuaded the General Assembly in the 1970s to allow selling directly to consumers, then in 1989 returned to lawmakers to ask for a tax that created the Indiana Wine Grape Council, which funds market development.

Since creation of the council, the number of wineries has mushroomed from nine to 27, mostly in southern Indiana. Direct employment tripled to an estimated 150.

Toft sees microclusters with great potential:

• Energy technology. Savvy for fuel cells, which turn hydrogen into electricity, exists in West Lafayette and at the Crane Surface Naval Warfare Center; advanced battery know-how is concentrated in Kokomo; and expertise in distributed power — tiny power plants for businesses and homes — exists at Delco Remy in Anderson.

• Environmental technology. Indiana has developed strengths in handling environmental problems because of the industrial revolution’s existence in the Midwest for over a century.

Heritage Environmental Services in Indianapolis, for instance, claims to be the largest such privately owned company in the nation. Developing countries will need environmental expertise to avoid problems or clean up messes as they build their economies, Toft said.

Elsewhere, communities are beginning to figure out what sectors of the life sciences industry could become successful microclusters, said Tom Miller, a Greenfield economic development consultant.

Companies in Indianapolis — particularly Dow Agrosciences and Roche Diagnostics — are developing expertise in biosensor technology, which can be used to detect biological activity in everything from industrial waste to biological weapons.

Momentum for the technology also is building at smaller companies in the city and at the Indiana University School of Medicine.

"It’s a horse you want to put your money on," Miller said.

Clusters will be considered in economic development plans being formed by each of the dozen regional offices of the Indiana Department of Commerce, said Executive Director Tim Monger.

Microclusters can be built by companies inviting customers and suppliers to move close. Momentum builds as companies collect in an area and additional firms start and grow.

"If you have a business base that’s a strength, that’s an opportunity," Monger said.

Predicting the direction of any particular cluster is difficult, Toft said. But he pointed out that the auto industry once existed in tiny pockets before developing into a Midwestern powerhouse. One of these new clusters could do the same, he said.