Daniels seeks to copy key-clusters strategy: Industry initiatives would mimic BioCrossroads plan

May 15, 2006

If imitation is the sincerest form of flattery, BioCrossroads has been vindicated.

Gov. Mitch Daniels hopes to see a series of similar industry initiatives sprout around key clusters in Indiana's economy. He envisions parallel initiatives for manufacturing, transportation and logistics and a series of other crucial business sectors.

"We'd love some company," said BioCrossroads CEO David Johnson.

As outlined in Daniels' "Accelerating Growth" economic development plan released last month, the initiatives would be based on proven Indiana strengths and identifiable assets. They would aim to leverage each industry's untapped capacity to spin out new companies and create jobs.

But Daniels expects the initiatives to emerge naturally. State government would have only peripheral involvement.

"Some states are pursuing strategies that explicitly target certain 'desirable' industry clusters. This plan does not propose such a strategy for Indiana as it is not appropriate for government to try to pick 'winners' in the game of economic competition," Accelerating Growth reads.

"Rather, free markets should determine the fate of both individual enterprises and even whole industry sectors. Moreover, clusters cannot be created from the top down. Instead, they emerge from mature networks of innovation and collaboration."

In their early stages, the efforts would pull together brainpower within the targeted industries, but actual financial costs would be small. The Indiana Economic Development Corp. says it will offer matching grants to help cover studies and other organizational efforts.

For such initiatives to become as successful as BioCrossroads, they'll need to be based on unified support from industry leaders. Indianapolis-based Celadon Trucking Services CEO Steve Russell sounded eager to take up the flag for the transportation and logistics sector.

"I'd be delighted to head up such an effort," he said. "Anything that would create more jobs and economic growth for the state, we're absolutely for. We'll do whatever's necessary to make that happen."

William Mays, president of Indianapolis-based Mays Chemical Co., was equally supportive of an initiative for the Indiana chemicals sector.

"We've already got the foundation here," Mays said. "We just need to better develop it."

Central Indiana Corporate Partnership Vice President Lee Lewellen said his organization is studying how to best organize such regional initiatives, either for major economic sectors like manufacturing and transportation; or for smaller ones like motorsports, chemicals and advanced materials.

"The next logical step is to do some of the asset mapping," Lewellen said. "There's a general interest for forward momentum, but we're at a point of testing how we develop that leadership and through what mechanism."

That's exactly how BioCrossroads began, remembered Johnson. Before it was formally unveiled in 2002, the seeds of the life sciences initiative were sewn in a CICP-sponsored study by Columbus, Ohio-based Battelle Memorial Institute. Its research catalogued Indiana's wealth of life sciences assets, such as its major biotech corporations and research universities.

BioCrossroads' initial goal was to increase communication among those organizations. Since then, it has raised tens of millions of dollars from investors to plow into new life sciences firms and built a growing brand awareness of Indiana as a biotech hub. Johnson said leaders in other Indiana industries could follow a similar strategy.

"The motive behind it is the same. You're looking for what is real, where the areas of opportunity and growth might be," Johnson said. "You don't know until you start something like this what you'll find. But I think the approach and the process is valid."

Some attempts to form industry-specific business initiatives have already begun on a smaller scale. Allen Novick, vice president of marketing intelligence and support for Indianapolis-based Rolls-Royce Corp., has been working with Purdue University to form the Indiana Advanced Aerospace Manufacturing Alliance. Its purpose is to unify manufacturers in the aviation and defense sectors. IAAMA now has 40 members.

Helping the smaller members of the aerospace supply chain grow is directly beneficial to Rolls-Royce, Novick said, because they often become the certified minority- or women-owned businesses required for many government contracts.

And, he said, a more robust manufacturing sector is good for every business in it, large or small. It creates a larger pool of available talent, as well as more suppliers and sales prospects.

"What we've done is try to put together the manufacturers within the state that have aerospace manufacturing capability," Novick said. "The bottom line is to get more business here. And the reception has been quite good."

Manufacturing may be the ripest sector to mimic the BioCrossroads model. With 9,131 businesses and 571,000 employees, according to the Indiana Manufacturers Association, it's exactly the kind of economic cluster Daniels would like to leverage.

"It's a matter of bringing the right people together," said Mark Cahoon, IMA's vice president for government, finance

and economic development. "What is

encouraging about [the IEDC effort] is they understand that concept. They're looking to include people with actual manufacturing plant experience in the dialogue."

Robert Laikin, CEO of Plainfield-based cell phone distributor Brightpoint Inc., said he would be happy to join the push for the transportation and logistics sector.

But he said expectations would have to be adjusted. Logistics is not an industry well suited for startups because successful companies need scale to justify the steep costs of information technology. Laikin said leaders in the transportation

and logistics sector are already well

aware of Indiana's geographic attraction as a central point for distribution. Encouraging further investment from major corporations may not be difficult.

"We were one of the first companies to develop a logistics center here in 2000," Laikin said.

"At that time, there was a bunch of dusty farmland. Today, when I look out my window, I see facility after facility, logistics and distribution centers that have popped up as far as the eye can see. Clearly, industry has recognized the potential."
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