'Ideas in the air' make for good economy

January 18, 2009
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It happens to almost everyone. You look at an old photo and think, “What was I thinking with that hairstyle? Was I serious about stonewashed jeans?”

Keeping up with the latest fashion trends can be risky when viewed in retrospect. With industries, the same phenomenon occurs: A region that tries to attract the latest hot industry to bolster its economy may end up questioning its decision. The difference, however, is that there’s a lot more at stake.

George Erickcek, senior regional analyst with the Upjohn Institute for Employment Research, argues that it is better for a region to invest in the industries it already has. Erickcek says promoting regional industrial clusters is a healthier alternative to trying to predict what the next big thing might be.

“There’s three advantages that industrial clusters are supposed to bring to a region, and I think we see several of these in the Grand Rapids area,” said Erickcek. “The first is that it brings a unique work force to the area. The Grand Rapids community is rich in office design and manufacturing designers that were brought into the area because of its cluster of office furniture manufacturers.

“One of the opportunities Grand Rapids has is to make use and apply these skills to companies outside of office furniture.”

For Erickcek, exploring the possibilities of “spill-over effects” from the talent brought in by the office furniture cluster is of particular interest.

“The No. 2 thing about clusters is that it creates an environment where, either through cooperation or competition, ideas are shared among the players,” he said, pointing to Detroit and the auto industry. “Even though the car industry is hurting … Detroit has been able to become the center for research and development activities, not only for the Detroit 3, but also for Toyota and others.”

“The third is that you develop a supplier base that meets the unique needs of the different clusters.”

Predicting the next big industry is a difficult task for anyone, said Erickcek, and an industry that looks good for tomorrow might not even be around when tomorrow comes.

“My bias is that, although I’m a forecaster, I don’t think very many people are good at predicting what the next best thing is,” he said. “To me, a more beneficial road is one of looking at what we’re doing today and how we can change it to meet the markets for tomorrow. That, to me, is hard, but it’s better than entering the gamble of saying, ‘Oh, it’s going to be ethanol.’ Not! I just fear that no one’s that good. No one can predict that.”

Erickcek said he would rather see a Grand Rapids metal fabrication plant, for example, get together with designers and engineers to see how it can move into the growing wind turbine market or other industries.

“They’re working from their base of knowledge and exploring ways for them to use that knowledge to go after new markets. At least that’s coming from a position of strength, more than trying to catch the latest fad train that’s leaving the station,” he said.

Collaboration is the main theme with industry clusters. He mentioned that Europe, especially Italy and the U.K., are exploring the concept. The goal is to share tactile knowledge among firms so they can be more innovative.

Erickcek mentioned the theories of Alfred Marshall, an economist of the 1890s, who maintained that regions that were open to sharing their ideas became stronger than those that did not.

“He looked at regions and cities and came up with this wonderful phrase: ‘ideas in the air,’” said Erickcek. “Areas which had ideas in the air had a lot of innovation, a lot of entrepreneurialship, a lot of sharing of knowledge; these areas did better than those where there were not ideas in the air.”

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