Industry Cluster Initiative FAQ

“The cluster initiative is important because for the first time in the history of this state we will be able to develop a coordinated, market-driven economic development plan for the state of Texas.”
Gov. Rick Perry

Q: What is an industry cluster?

A: Industry cluster means a concentration of businesses and industries in a geographic region that are interconnected by the markets they serve, the products they produce, their suppliers, trade associations and the educational institutions from which their employees or prospective employees receive training. While located in close proximity, these industry clusters are economic in nature and not geographically bounded.

“Clusters rely on an abundance of ideas and talent. In a cluster, an employer has access to professional colleagues, suppliers, customers, skilled labor, research and development institutions, and industry leaders all in close geographic proximity.”
Gov. Rick Perry

Q: What industry clusters do we want to develop?

Advanced Technologies and Manufacturing:

• Nanotechnology and Materials
• Micro-electromechanical Systems
• Semiconductor Manufacturing
• Automotive Manufacturing

Aerospace and Defense

Biotechnology and Life Sciences (not including medical services)

Information and Computer Technology:

• Communications Equipment
• Computing Equipment and Semiconductors
• Information Technology

Petroleum Refining and Chemical Products

Energy

• Oil and Gas Production
• Power Generation and Transmission
• Manufactured Energy Systems

“It is critical that we marshal all of our resources, such as innovations and worker training programs at our two-year and four-year colleges, and local, state and federal incentive dollars toward supporting the technology-based economic activity that can create new wealth and new opportunities.”
Gov. Rick Perry

Q: Why should we develop clusters?

A: Gov. Perry’s objective with the cluster initiative is to stimulate sustained growth and direct the allocation of limited state resources in a manner that optimizes prospects for success.

Our economy is becoming more technology and knowledge-based and Texas must be positioned to efficiently meet the needs of business and effectively communicate our competitive advantages. Clusters thrive on the transfer of knowledge or know-how and increase competitiveness and innovation. Working in close coordination with this concentrated network of industry leaders from across the state will result in efficient use of resources and continued diversification of our industry portfolio, simultaneously increasing our capacity for innovation and growth in emerging technologies.

Furthermore, SB275 (78th Legislature) mandated the establishment of statewide strategies to address economic growth and quality of life issues, a component of which is based on the identification and development of industry clusters. It also called for coordination of state efforts to attract, develop or retain technology industries in this state in certain sectors, which are now included among the target clusters.

“This effort is about much more than competing with neighboring states for jobs, it is about putting Texas at the forefront of the global marketplace.,”
Gov. Rick Perry

Q: Why weren’t all industries in Texas included in the clusters plan?

A: The clusters identified are primarily technology-based as we look to meet the projected demands of the future. These clusters indicate the spheres in which we anticipate having the greatest advantage and ultimately maximum return on investment.

“I realize there are critics who believe investments in job creation come at the expense of investments in government programs. I disagree. To fund priorities like healthcare and education, you need the revenue generated by keeping and attracting jobs.”
Gov. Rick Perry

Q: How were the industry clusters selected?

A: The target competitive clusters are based on the 2001 Cluster Mapping project, a multiyear effort to statistically define clusters and analyze regional economies in the United States by Dr. Michael Porter of the Institute for Strategy and Competitiveness at Harvard Business School, and on the work of Dr. Ray Perryman in Texas Our Texas, a 2002 report on the Texas’ economy. The continuing work over the past two years by the Council on Competitiveness and the Institute for Strategy and Competitiveness in the Clusters of Innovation project has clearly articulated the key strategic role that strong regional economies play in growing prosperity for a state and its citizens.

Q: How will the advisory or cluster teams work?

A: Governor Perry will appoint a chair in each industry area. Teams represent a broad cross-section of public and private sector stakeholders statewide and are comprised of those individuals who best represent the core function, product and technology within the cluster. These industry representatives intimately understand the resources required to increase the capacity for innovation thereby accelerating the growth of the cluster.

Q: What are the objectives of the teams?

A: As we quickly approach the next Legislative session, teams will be meeting this month to discuss deliverables including the status of competitive assessments, responses to immediate opportunities (i.e. federal grants, prospects, etc.), mapping the clusters and recommendations for the Legislature.

Beyond that, the first task of each industry cluster team will be to conduct a comprehensive competitive assessment of the cluster. At a minimum, elements of this evaluation will include the following:

• Current and prospective supply, cost and skill level of workforce,
• Education and training resources and their capacity to support the workforce,
• Identification of existing companies that comprise the cluster,
• Infrastructure strengths and limitations affecting the cluster,
• Regulatory strengths and weaknesses at the federal, state and local levels,
• Tax, tort or other business climate issues that adversely affect the cluster, and
• Identification of primary domestic and foreign competitive threats.

Using results from that assessment, cluster teams will make recommendations towards the allocation of state resources based upon existing and predicted market forces and conditions and suggest a legislative plan to address any regulatory, taxation or other business climate issues. These recommendations will also contribute to long-range planning for the retention, expansion and recruitment efforts of each target cluster.

Resource allocation will include but not be limited to the following:

• Allocation of state and federal workforce dollars to occupations within clusters for workforce training or education development.
• Directing infrastructure funding to the regions and locations where weaknesses exist.
• Targeting secondary and higher education funding into subjects and curriculums with the most relevance to clusters.
• Targeting research and development funding to areas and institutions that foster the growth of the cluster.
• Allocating adequate marketing resources to recruit new employers domestically and internationally.

Additionally, cluster teams will continually monitor the competitiveness of the industry cluster and closely coordinate team activities with the state to efficiently react to opportunities and threats affecting the cluster. They will also contribute to long-range planning for the retention, expansion and recruitment efforts of each target cluster.