0 AEROSPACE CLUSTERS World’s Best Practice and Future Perspectives An Opportunity for South Australia Matteo Paone Intern – Universita’ Commerciale Luigi Bocconi Supervisor: Nicola Sasanelli AM Director – Space Industry and R&D Collaboration Defence SA Government of South Australia September 2016 Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 1 “Quod Invenias Explorans Spatium Progressus Est Humanitatis” - Human Progress is in Space Exploration Hon Jay Weatherill - Premier of South Australia Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 2 Disclaimer While every effort has been made to ensure the accuracy of the information contained in this report, the conclusions and the recommendations included in it constitute the opinions of the authors and should not be taken as representative of the views of Defence SA and the South Australian Government. 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Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 3 Acknowledgements This report constitutes the conclusion of a three-month research activity carried out in Defence SA, and it has widely benefitted from the direct and indirect contribution of many people to whom I am beyond grateful. First and foremost, I would like to thank Mrs. Sherri Dawson for the extraordinary patience demostrated during the revision of my drafts. Thanks to the whole Defence SA team for the wonderful working environment created, and to Mrs. Sarah Strathearn for all the assistance and the precious suggestions provided during the four weeks we have been working together. A special mention goes to Mr. Michael Davis, President of the Space Industry Association of Australia, for the assistance provided and for his kind words of appreciation towards this report. My sincerest gratitude to my supervisor, Mr. Nicola Sasanelli, for the support provided and for being an inexhaustible source of priceless advice. I extend my gratitude to his family for the overwhelming hospitality and in particular to his wife Maria Lucia, whose exquisite cuisine helped me relieve homesickness every time it arose. An obligation goes to my friend and colleague Gabriele Lania. This report would not have been possible without him. Lastly, my most heartfelt thanks to my parents Roberta and Carlo. Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 4 Table of Contents Table of Contents .................................................................................................................................... 4 Executive Summary ................................................................................................................................. 6 Introduction ............................................................................................................................................ 8 Methodology ........................................................................................................................................... 9 1. Aerospace Clusters: Theoretical Framework ................................................................................ 11 1.1 A Unique Form of High-Tech Cluster .......................................................................................... 16 1.2 Dynamics of knowledge flows and innovation ........................................................................... 21 2. World’s Best Practice .................................................................................................................... 23 2.1 France .......................................................................................................................................... 25 2.1.1 The Aerospace Valley ........................................................................................................... 27 2.2 Germany ...................................................................................................................................... 36 2.2.1 The BavAIRia Aerospace Cluster .......................................................................................... 37 2.2.2 The Luft- und Raumfahrt Baden-Württemberg (LR-BW) cluster ......................................... 41 2.3 India ............................................................................................................................................ 47 2.3.1 The Bangalore Aerospace Cluster ........................................................................................ 49 2.4 Italy.............................................................................................................................................. 55 2.4.1 The Lombardia Aerospace Cluster ....................................................................................... 56 2.5 United Kingdom .......................................................................................................................... 62 2.5.1 The “UK Space Gateway” of the Harwell Science & Innovation Campus ............................ 64 2.6 United States ............................................................................................................................... 70 2.6.1 The Colorado Aerospace Cluster .......................................................................................... 71 2.6.2 The New Mexico Aerospace Cluster .................................................................................... 77 2.7 Emerging Clusters ....................................................................................................................... 82 2.7.1 Costa Rica ............................................................................................................................. 83 2.7.2 The IEF AERO Aerospace Cluster in Brittany ........................................................................ 91 3. Conclusions – Implementing an Aerospace Cluster in South Australia ........................................ 97 Opportunities for South Australia ................................................................................................... 100 Annexes ............................................................................................................................................... 106 List of Abbreviations ........................................................................................................................... 107 Bibliography ........................................................................................................................................ 112 Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 5 Matteo Paone, Nicola Sasanelli AEROSPACE CLUSTERS - World’s Best Practice and Future Perspectives 6 Executive Summary The following report provides an in-depth analysis of the phenomenon of clusters in the aerospace sector, with particular attention to those that have greater emphasis on the space segment. Aerospace clusters differ consistently from other high-tech clusters, particularly with respect to the geographical dimension of their economic impact and the related knowledge spillovers. As a result of the sector’s unique features – namely the global dimension of the value chain, the average size of the investment, the length of the development process of a new product/service, the strategic importance of the aerospace industry for the national economy, and the very nature of the products and services delivered – aerospace clusters exhibit higher levels of internationalisation. The common practice of collaboration among clusters in international aerospace programs creates wide and deep networks for commercial relations and knowledge transfer that cross the traditional regional dimension, acquiring stronger international connotations. The analysis carried out on an heterogeneous sample of clusters - in terms of location, geomorphological features, governance, date of establishment, government support, extension of the value chain – clearly points out the presence of common elements that are vital in determining the success of the world’s best practice. The clusters considered are: the Aerospace Valley of Tolouse, the BavAIRia Aerospace Cluster, the Luft- und Raumfahrt Baden-Württemberg cluster, the Bangalore Aerospace Cluster, the Lombardia Aerospace Cluster, the Harwell Science and Innovation Campus, and the US aerospace clusters of Colorado and New Mexico. The results of the comparison of the best practice analysed