Experiences from Wood Product Cluster Development from Estonia
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Experiences from Wood Product Cluster Development from Estonia Rene Tõnnisson Tartu Science Park Estonia in short Population 1.35 million Area 45,000 km2 Language Estonian GDP 9 800Euro GDP growth 11.8 % (2006) . Export 63 % of GDP Tartu Estonian Policy Context and Framework Conditions • Succesful transition economy with dominating neo-liberal policy approach • Long time “no policy” policy in innovation, industrial and technology policy areas • Increased understanding that policy measures are needed for upgrading existing industries and strengthening their competitiveness • Cluster support initiatives gaining popularity index of economic freedom rankings 2006 1. Hong Kong 21. Czech Republic 2. Singapore 23. Lithuania 3. Ireland 29. Japan 5. UK 32. Norway 7. ESTONIA 34. Slovak Republic 8. Denmark 39. Latvia 9. USA 40. Hungary 13. Finland 41. Poland 19. Sweden 44. France 20. Germany 111. China Source: Wall Street Journal; The Heritage Foundation 122. Russia GDP growth and inflation 1995-2006 15 30.0 gdp growth inflation 11.8 25.0 11.1 9.8 10 20.0 7.9 7.8 7.2 6.5 6.7 15.0 5 4.5 4.4 4.4 10.0 5.0 0.3 0 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -5.0 -5 -10.0 Source: Statistical Office of Estonia Main Challenges of Estonian Economy • Low share of high tech employment in industry • Lower productivity compared to EU average • Low investment into innovation and new product development • Exports based on sub-contracting • Weak position in international markets • Low knowledge of technical norms and regulations applicable to various products and markets in Europe Tartu and South-Estonia Region • Population of 350 000 inhabitants and territory of 15 000 sq. km • Dominated by traditonal economic sectors, such as wood-forestry-furniture, metalworks-machinery, agriculture-food • From another hand the leading research, education and medical centre of Estonia with up to 2/3 of total national research effort Tartu Science Park • Operating since 1992 • Founded by Tartu City, Tartu County, Tartu University and Estonian University of Life Sciences, as a regional technology development and innovation agency • Main activities: • Infrastructure Development and Provision • Business Consultancy and Incubation Services – Start-up companies – University Spin-off companies • Technology Transfer and Internationalisation • Networking and Clusters Wood Product Cluster Development in South-Estonia • One of the strongest traditional clusters with more than 200 companies and workforce of more than10 000 persons focused on furniture and wooden construction • Main challenges maintaining its competitiveness and gaining better access to international markets Setting-up Wood Product Cluster Initiative • As a response to the needs expressed by various wood product companies Tartu Science Park decided to set up a cluster initiative in 2004 within Tartu Regional Innovation Strategy • The cluster initiative has been supported by Interreg IIIC project “Gaining Added Value from Timber in Europe” GATE and “Cluster Linked over Europe” CLOE with total investment into the region of about 400 000 Euros Main Activities of Wood Cluster Initiative • Strengthening cooperation betweem cluster companies and other regional players • Promotion of integrated production and value chain management • Joint marketing and export activities • Awareness raising about wood products • Protecting environment • Industrial logistics • Information systems of production Examples from Cluster Activity - Best Wooden Building in Estonia 2006 (flat house) Examples from Cluster Activity - Best Wooden Building in Estonia 2006 (school building) Examples from Cluster Activity - Best Wooden Building in Estonia 2006 (wooden bridge) Main results and lessons learned • Most of the wood product companies are too small to penetrate foreign markets alone, unless there is a specific niche market, therefore joint marketing and clustering around lead company can help to create critical mass required • It is important to develop own products and brands and avoid the “sub-contracting trap” (IKEA example) While Developing regional cluster policies we could and should learn from each other However to make clusters work you need more than money and technology Understanding of your situation, competitors and your own competitive advantage is needed! Rene Tõnnisson Tartu Science Park Tel: +372 5037829 E-mail: [email protected] Tartu Science Park www.sciencepark.ee Thank you!.