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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/25/2006 - INDUSTRY CLUSTER ANALYSIS AND TARGETING STUDY DATE: July 25, 2006 WORK SESSION ITEM STAFF: Timothy Wilder FORT COLLINS CITY COUNCIL SUBJECT FOR DISCUSSION Industry Cluster Analysis and Targeting Study. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does Council have any questions about the initial findings? 2. Is Council comfortable with the next steps? BACKGROUND The Industry Cluster Analysis and Targeting Study was fimded in 2006 through the BFO process. The City has contracted with a team of economic development companies, including Development Research Partners and R&M Resource Development, to prepare an Industry Cluster Study and Strategy for the City. The consultants have completed the first two tasks of the Study. Task 1 was to identify industry clusters using Colorado employment data (Quarterly Census of Employment and Wages). Eight industry clusters were identified as currently operating in Fort Collins (as measured by employment concentration) or represented emerging clusters for the region. Task 2 involved the ranking of these clusters and the selection of four for further analysis. Criteria representing the City's economic goals were chosen to provide the ranking. The criteria included such goals as "Grow and retain existing businesses"; "High Employment Multiplier Effects"; "Environmentally Friendly'; High Average Annual Salary" and others. The following groups participated in weighting the criteria: • Economic Vitality and Sustainability Group • Fort Collins Area Chamber of Commerce • Fort Collins Sustainability Group • Northern Colorado Economic Development Corporation • Fort Collins Economic Lead Team The industry clusters were then ranked according to the weighted criteria and the clusters that best met the community's goals were identified. The six clusters that were identified are: 1. Uniquely Fort Collins (Selected for current cluster analysis) 2. Computer& Electronics Manufacturing (Selected for current cluster analysis) 3. Information Technology/Software(Selected for current cluster analysis) 4. Agricultural Technology(Agri-Tech- selected for current cluster analysis) July 25, 2006 Page 2 5. Bioscience(Selected- other study or industry effort underway) 6. Clean Energy(Selected - other study or industry effort underway) Given earlier initiatives and existing momentum to support the Bioscience and Clean Energy Clusters, this Industry Cluster Analysis and Targeting Study is focusing on the other four important clusters— Uniquely Fort Collins, Computer & Electronics Manufacturing, Information Technology/Software, and Agricultural Technology. The latest task of the Study has involved meetings with representatives of those four clusters in order to identify advantages and disadvantages of doing business from Fort Collins. The consultants posed a series of questions having to do with the strengths and weaknesses of the Fort Collins business climate. When representatives were asked why their companies located to Fort Collins, the most common response was that Fort Collins' quality of life was the biggest factor. Staff is continuing its outreach to companies and is expecting additional comments from companies that could not attend the initial meetings. A paper summarizing the key themes from the focus group meetings is attached. Next Steps In-depth industry profile reports will be prepared containing a detailed description of each industry cluster, why the cluster is important to Fort Collins, and information about the growth potential of the cluster. Some of this information is included in the staff presentation. In addition, the consultants will prepare action items to support the industry clusters. The action items will incorporate information gained at the business meetings and will be cognizant of the current actions the City, the Northern Colorado Economic Development Corporation, the Chamber of Commerce and Colorado State University are undertaking to support economic development within the community. This Study's action items will also be supportive of the City's Economic Vision and Values adopted by Council in 2005. ATTACHMENTS 1. June 12, 2006 Memo to City Council on Industry Cluster Analysis. 2. Key Themes from Focus Group Meetings. 3. Powerpoint Slides. Community Planning and Environmental Services ATTACHMENT Advance Planning Department • City of Fort Collins June 12, 2006 TO: Mayor Hutchinson and City Council Members THROUGH: Darin Atteberry, City Managekec Mike Freeman,Economic Ad Greg Byrne, CPES Director Joe Frank,Advance Planning 1111 ' FROM: Timothy Wilder, City Planner RE: Update on the Industry Cluster Analysis and Targeting Study The Industry Cluster Analysis and Targeting Study was funded in 2006 through the BFO process. The City has contracted with a team of economic development companies, including • Development Research Partners and R&M Resource Development,to prepare an industry cluster study and strategy for the City. Industry clusters are geographic concentrations of interconnected companies and institutions in a particular field. This study is focusing on four key industry clusters in which the City of Fort Collins has a competitive advantage and which offer opportunities for economic growth. The attached memo outlines the results of the first two tasks of the study and identifies industry clusters that will be selected for further, in-depth analysis. The clusters are: 1. Uniquely Fort Collins(Selected for current cluster analysis) 2. Computer&Electronics Manufacturing(Selected for current cluster analysis) 3. Bioscience(Selected-other study or industry effort underway) 4. Information Tecbnology/Software (Selected for current cluster analysis) 5. Agricultural Technology(Agri-Tech- selected for current cluster analysis) 6. Clean Energy(Selected-other study or industry effort underway) Next steps include meetings with business representatives, in-depth industry profile reports,and preparation of recommended action items(see attachment for more details). A draft Study is scheduled for review by the Council at a worksession on July 25. • 281 North College Avenue • P.O.Box 580 • Fort Collins,CO 80522-0580 • (970)221-6376 FAX(970)224-6111 • TDD(970)224-6002 • E-mail:aplanning@fcgov.com Development Research Partners R&M Raoum Development FORT COLLINS INDUSTRY CLUSTER ANALYSIS AND TARGETING STUDY May 31,2006 A major step in developing a region's economic development strategy focuses on what types of industries to target for growth and retention.Industry targets may be chosen to meet varying community goals ranging from diversifying the economic base to increasing the average wage to utilizing natural and labor resources more fully.A community's economic development efforts should focus on those industries in which the community has some clear competitive advantages.Further,industries selected need to be acceptable economically,environmentally,and socially to the community.The identification and description of industry clusters operating in Fort Collins will be accomplished through the completion of the following tasks. Task 1: Identify Industry Clusters:This study uses a cluster methodology similar to that developed by Michael E.Porter,Professor of Business Administration at the Harvard Business School,to identify industry clusters currently operating in Fort Collins.Industry clusters are geographic concentrations of interconnected companies and institutions in a particular field.Employment concentration(industry employment as a share of total employment)will be used to determine industry cluster strength. We will be looking for a diverse mix of industries, including both technology-based and"traditional"industries. Task 2:Industry Cluster Rankine: Using a combination of qualitative and quantitative data,the industry clusters are ranked according to how well each cluster best meets the community's economic - development goals.The selected clusters offer strong growth potential and/or a high degree of employment concentration.While some industry clusters may exhibit strong employment concentrations but slow or no employment growth in recent years,there is value in recognizing large employment sectors for retention efforts. See the following Industry Cluster Ranking Results table for the summary of the four industry clusters chosen for further analysis in this study. Task 3:Industry Cluster Profile Report: Clusters continually evolve as new companies and industries emerge or decline.Because industries ebb and flow in strength, it is important to examine industry clusters historically to understand how to support and promote the cluster.The industry cluster profile report will include a detailed description of the industry cluster,including why this is an important cluster to the future economic health of Fort Collins and a discussion of the growth potential of the industry at the national,state and regional level. Task 4:Locational Advantaees&Disadvantaees:Discussions with community leaders and business professionals will be held in order to understand the factors that tend to drive the location decisions of companies within the industry cluster.Based on these factors that drive the growth of the industry cluster, how well does Fort Collins compete?A discussion of other locations in the U.S.that have strong concentrations of this cluster and the identification of where Fort Collins currently ranks relative to these other areas will be included. Task 5:Recommended Action Items:Targeting industries based on the idea of industry clusters provides focus to an economic development program in four key areas.First,an understanding of existing industry strengths helps to create an identifiable regional image and message,improving marketing programs. Second,retention campaigns can be focused on protecting existing industries and resources. Third,recruitment strategies can be focused on cluster companies and their suppliers or service providers. Finally,cluster analysis may identify industries that the community does not currently have a strong concentration in but also present unique,new opportunities for developing the regional economy.This study will deliver to the City of Fort Collins recommendations for cost-effective,actionable strategies that will propel the City toward its goal of creating a sustainable economic environment for current and future generations. ~ Development Research Partners R&M Resource Development _ • FORT COLLINS INDUSTRY CLUSTER RANIUNG RESULTS Rank Industry Cluster Selection Notes #1 Uniquely Fort Collins Selected for current cluster analysis.Fort Collins is home to a variety of unique businesses that create the personality of the region.A focus on this industry cluster may help to enhance the quality of life for existing residents and help to attract additional visitors to the region. 92 Computer&Electronics Selected for current cluster analysis. Fort Collins has recently been Manufacturing successful in attracting and growing companies related to this industry.Given the significant existing concentration,it is important to develop strategies for future growth and retention of this cluster. #3 Bioscience Selected-other study or industry effort underway. This emerging cluster presents significant growth opportunities for Fort Collins. However,there is an on-going initiative called the Latimer County Bioscience Initiative that has already developed a detailed strategic plan for growing Bioscience in Northern Colorado.We recommend that Fort Collins continue to play an active role in this Bioscience initiative. #4 Beverages Not selected-cluster elements incorporated into Uniquely Fort — Collins cluster. While this cluster represents a strong existing concentration of employment,the employment base exists due to the presence of three companies.Instead,DRP recommends that the • breweries be incorporated into the Uniquely Fort Collins cluster. #5 Information Selected for current cluster analysis. The cluster represents one of Technology/Software the strongest future growth industries throughout the United States. This cluster tends to be very entrepreneurial and dominated by small businesses.It is important to develop strategies for future growth and retention of this cluster. #6 Agri-Tech Selected for current cluster analysis. This cluster represents strong collaborative opportunities between the City, local businesses and higher education.There exists a strong base of nationally acclaimed companies and research upon which to build. #7 Clean Energy Selected-other study or industry effort underway. This emerging cluster presents significant growth opportunities for Fort Collins. However,there is an on-going collaborative initiative by Colorado State University,NCEDC,Fort Collins Area Chamber of Commerce,Poudre School District,Larimer County and private enterprise that is already developing a strategic plan for developing the Clean Energy Cluster.We recommend that Fort Collins continue to play an active role in this Clean Energy initiative. #8 Specialty Construction Not selected—subject for potential future research. While this is a strong existing cluster in Fort Collins,the growth and contraction of this industry tends to be directly related to the general business cycle.While the importance of this industry needs to be recognized, the development of specific industry growth strategies is lower priority. • • Attachment 2 Key Themes from Focus Group Meetings July 10—11,2006 The following companies attended one of the four focus groups(Agricultural Technology,Computer and Electronics Manufacturing, Information Technology/Software,and Uniquely Fort Collins)held on July 10 and July 11,2006 in support of the Fort Collins Industry Cluster Analysis and Targeting Study. • TechniGraphic Systems, Inc. • Sigma Instruments • Process Innovations Inc. • Land Images • MouCo Cheese Company • Cedar Creek Associates • Marriott Hotels • Kaufman&Robinson Inc. • Mountain Whitewater Descents • XY Inc. • Bas Bleu Theatre Company • ImuTek Laboratories Inc. The Mountain Shop/Poudre River Kayak& • Fort Collins Wholesale Nursery Canoe • MWH Americas,Inc. • The Armstrong Hotel • Miller Ecological Consultants Inc. • Canyon Concert Ballet • Jim Sell Design Inc. • CooperSmith's Pub&Brewing • Bath Nursery • New Belgium Brewing • Ranchway Feeds The following comments or themes were raised in two or more of the focus groups regarding the current opportunities and • challenges of a Fort Collins business location. The industry-specific comments raised in the focus groups are not included in this summary memo,but will be discussed in the final industry cluster report. • Kudos for"New"Pro-Business Attitude: The business community recognizes that the City leaders and City staff are more approachable than prior years and are tending to make more pro-business decisions. • Desire for City to Articulate a Clear Vision and to "Brand"Itself: The high quality of life in Fort Collins makes it an attractive destination for employees and employers,but the city cannot rely on this attribute to carry their identity; efforts need to be made to establish a marketable town identity. • Quality of Life Amenities: The nature of many industries located in Fort Collins potentially allows these businesses to conduct their operations from any location.Many businesses owners locate to and/or choose to stay in Fort Collins due to the quality of life. Specifically,the business community is interested in enhanced transportation options,downtown health/vitality,affordable housing and a solid retail/entertainment base. • Importance of Colorado State University: CSU is vital to the success of the majority of the businesses located in the City and is a primary reason why many firms remain in the area. Specifically,businesses recognize the importance of CSU to the City's"brand,"as a key quality of life factor and as an attractor/retainer of talent. • Cost Competitiveness of Fort Collins: While higher costs of doing business reflect the economic success of the region,higher costs create a deterrent to local business expansion and makes Fort Collins less attractive to potential employers from a cost and investment perspective. • Streamlined,Predictable Development Review Process: While it is recognized that the City has taken steps to streamline the development process,continuing efforts to improve the process are encouraged. • 'k , Fort Collins Industry Cluster Analysis and Targeting Study f g k � City Council Wo,ek" Sessiona k July 25, 2006 � 3L bt9 Rp.Mm c [In ela) wnV q3 wan Project Introduction City Staff — Mike Freeman — Economic Advisor — Greg Byrne — Director of CPES W — Joe Frank — Advance Planning Director — Timothy Wilder — Project Manager, City A. Planner Consulting Team - Patty Silverstein , Development Research Partners Susan Blansett, R&M Resource Development 7" Al s aw - r "�xs GuC Project Scope Of Work F Identity Industry Clusters Industry Cluster Ranking Industry Cluster Profile Report 5 Locational Advantages & 4 Disadvantages Recommended Action Items =i { � s Identify Industry Clusters Agricultural Technology Beverages ;. Bioscience a Clean Energy Computer & Electronics Manufacturing g Information Technology/Software 'Specialty Construction Uniquely Fort Collins Industry Cluster Ranking Qualitative Input - Community Goals F, - Fort Collins Economic Lead Team - Economic Vitality and Sustainabiiity 'r Action Group ( EVSAG ) - City of Fort Collins Management Staff - Northern Colorado EDC Board of Directors - Fort Collins Area Chamber of Commerce Legislative Committee -Fort Collins Sustainability Group A Industry Cluster Ranking Grow and retain existing businesses 15 . 10 Nigh employment multiplier effects 1 11 7 , ...._....._.._.__._........_.................. ............... ... Opportunities for collaboration between 11 . 3% 4 the City, local businesses and higher IN education _ Attract revenue from customers 11 .0°,0 residing outside of the area Strong projected tongw#arm (3 or more ; 10.7% years) job growth rates f' .x _ K ^ a Industry Custer Ranking Environmentally friendly l o .4% High average annual salary I 9 7% t Opportunities for diversifying the � -9 1 % economic base Existing strong community 6 8% leadership base Strong projected short-term 4 1 ( 1 -2 year) job growth rates �A «z� 'A - s Industry Clusters Selecte Quantitative Analysis - Final Selection — Uniquely Fort Collins — Computer & Electronics Manufacturing —Information Technology/Software — Agricultural Technology Other Efforts Underway ` Bioscience Clean Energy s Uniquely Fort Collins Artistic & cultural entertainment , recre. " ., & retail , hospitality 5 ,200 employees, 750 businesses :Stronger concentration than Colorado : _ 1 .4% average annual employment growth .; Crucial to the quality of life , branding of Fort Collins J ..rv4. � rm✓1: .��t� MD7`�i �h�� `kii< 6GJiER h -} Information Tech nology/Software z Software development and data processing 2, 300 employees , 200 businesses Strong current growth rates and strong projected growth rates Dominated by small businesses — very entrepreneurial industry ti _- t t3 tL ✓' z 'n ¢ n 4 Agricultural Technology Utilize technology to improve crop and < livestock production 1 , 000 employees , 100 businesses 'Strong current growth; significantly higher concentration than state r Important linkages with CSU Important linkages with Bioscience and Energy clusters JZ Computer & Electronics `b. Manufacturing 3 'I R&D and manufacture of computers and electronic components rs, . 5 ,400 employees , 60 businesses s One of strongest concentrations in country µ, although high job losses Off-shoring is major challenge to future growth Business retention is current key j a Cluster Business Themes Kudos for " New" Pro-Business Attitude J <a Desire for City to articulate a clear vision and to "brand" itself Quality of Life Amenities , , - Mass Transit — Downtown HealthNitality Affordable Housing — Solid RetaWEntertainment Base Cluster Business Themes. to Importance of CSU _ ' — To the City's "brand" ' 7, — As a key quality of life factor "S � — As an attractor/retainer of tali rt = Cost Competitiveness of Fort Collins Streamlined ; Predictable Development Review Process AAA Next Steps Supplement Focus Group Information", As Needed `" Finalize All Data , Industry Cluster Overviews ADevelop Recommended Action Items mg �x x a S Schedule August 31 Draft recommended actions prepared September 7 ECOLT Meeting September 12 .Council Worksession #2 (tentative ) September 28 EVSAG Meeting October 16 Final Industry Cluster Study I document prepared � ,�� ;^'r,� � ?c , �'� � � F • mow �r �� ; Questions for Council 10, 1 . Do you have any questions about our initial findings? 2 . Are you comfortable with the next steps? 4WR „ -,l Qr {