What are Industry Clusters?
Industry clusters have shaped corporate location strategies in the United States for many years, offering competitive advantages to companies in attracting talent, supply chain partners and workforce development. Clusters, as defined by the Harvard Business Review, are “geographic concentrations of interconnected companies and institutions in a particular field.” In other words, an industry cluster is a collection of companies, technologies, and resources that relate to a particular industry, and often work together to produce similar and interrelated products.
What is a Cluster?
The center of a cluster is often the manufacturer of the final product. The main manufacturer is then supplied by the complementary products and companies through skills, technologies, or common inputs. Rather than outsourcing the capital, goods, labor, and technology, companies within compact industry clusters look for more local solutions – to reduce the travel times and inspire continual innovation. To do so requires proximity. “The enduring competitive advantages in a global economy lie increasingly in local things – knowledge, relationships, motivation – that distant rivals cannot match” (Harvard Business Review 1998). By encouraging industry clusters on a variety of levels – nationally, regionally, in a state, or in a metropolitan area – the productivity within the immediate business environment can grow and prosper. An additional asset to the industry clusters is the proximity of governmental and other institutions, including universities, vocational training providers, trade associations, standards-setting agencies, and the like that provide specialized training, education, information, research, and technical support.
Let’s consider an example: a boat manufacturing company chooses a coastal city for its site location, because of its natural and built assets – coastal waters, major ports, access to interstate highways, and more. Businesses around the core boat manufacturer include boat builders, suppliers (sheet metal, fiberglass, engine manufacturers, design companies), distributers, and others that contribute to physically constructing the product. There are also companies that interact with the final product, such as boat rental companies and dealerships. To top it off, the community colleges in the region offer industry-targeted technical assistance and coursework, which often manifests through workforce development initiatives to teach the necessary skills in marine trades. The interaction between the final market producers, suppliers, and related enterprises is what creates an industry cluster, which then strengthens the economic area it operates in through increased productivity, partnership, and entrepreneurial activity. An example of this cluster is alive and well in North Carolina in places like New Bern and the Outer Banks.
What Has Been and What Can Be
North Carolina – and Burlington specifically – has a rich history within both agricultural and textile industries. The tobacco industry dates back to the 17th and 18th centuries, in colonial times, and gained popularity during the Civil War when smoking cigarettes replaced snuff and tobacco pipes. The first tobacco factories in North Carolina developed in Durham and Winston, hand-rolling cigarettes and cigars – by 1880, farms were yielding over 10 million pounds of tobacco, with factories producing 2 million hand-rolled cigarettes a year. Today , North Carolina is still the leading tobacco producer in the United States, with the tobacco industry contributing $1.025 billion in production value in 2021.
North Carolina’s plethora of cotton, lumber, and accessible waterpower helped textile manufacturing rise from producing coarse yarns and fabrics to uniform and apparel manufacturing in the late 1800’s . North Carolina supplied all textile goods for the South during the Civil War, mainly from Randolph, Forsyth, and Alamance counties; by 1921, North Carolina mills were producing $191 million worth of textiles annually. Even in 2019, long after many textile companies have gone offshore, U.S. textile exports brought in $2 billion.
Though agricultural and textile industries are still a significant portion of the state’s economy, in recent years North Carolina has seen more investment and expansion of knowledge-based industries and high-skilled industries like biotechnology, energy, finance, information technology, and advanced manufacturing. The state’s large metropolitan centers in Charlotte, Research Triangle Park, and the Piedmont Triad have grown clusters in finance, life sciences, and automotive industries, just to name a few.
Burlington’s Industry Clusters
Born out of the railroad and textile industries, Burlington has grown, adapted, and prospered both economically and culturally. It is surrounded by dozens of public and private universities and colleges, with innovative programs designed to build the skills needed to collaborate with industry executives and educators – anything from customized training programs to apprenticeships. With access to two major interstates, seeing over 124,000 travelers a day, two international airports within an hour, its own general aviation airport, and an Amtrak station running right next to downtown, Burlington is truly at the heart of North Carolina.
The top five industry clusters in the City are listed below, with some of the major manufacturers and producers in Burlington’s economic development:
Advanced Manufacturing: With such a rich pool of research and educational facilities available, not to mention its leadership in manufacturing, North Carolina has the largest manufacturing workforce in the southeast. By using innovative technologies to further advance manufacturing systems in automation, computation, and software, the state has connections to automotive, aerospace & defense, biotechnology, advanced materials, plastics & chemicals, and food manufacturing.
Aerospace: Industry roots can be traced to the Wright Brothers at Kitty Hawk, giving the state its “First in Flight” slogan. Within North Carolina there are over 200 aerospace companies, with more than 450 aerospace suppliers in-state alone.
-- In Burlington, Aero Accessories Inc. and Honda Aero Inc., who both manufacture aircraft equipment parts, produce more than $20 million in annual sales.
Biotechnology & Pharmaceuticals: North Carolina is #1 in biomanufacturing and #3 in pharma-manufacturing by total employment in the nation. Innovation, research, and higher education within the industry are all centralized in the area, with 790 companies and over 2,500 additional support businesses in the state.
-- Labcorp is headquartered in Burlington, North Carolina, and is a global life science company focused on research and clinical development, reporting $15.7 billion in total revenue in its 2022 fiscal year. Medical sterilization company Steri-Tek announced a $71 million investment and the creation of 50 jobs to establish its East Coast facility in Burlington. The company plans to purchase 85 acres to create a future life science industry park.
Food Manufacturing: More than 1,200 food and beverage manufacturing establishments are located in-state, making North Carolina the 2nd largest food and beverage industry cluster in the U.S.
Textiles (Performance Fabrics) Manufacturing: North Carolina is home to the only college devoted entirely to textiles at North Carolina State University, which serves to demonstrate how textiles is essential to the state. With over 600 textile manufacturers in the state, and a strong presence in nonwovens, the industry sources 83% of its raw materials within its borders.
Isabella DeLaGarza, EYOS Fellow