Mature Cluster: Industry

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Mature Cluster Industry Supply Chain Dynamics

• ONRIS Seminar Nov 4, 2005
• Peter Warrian
• University of Toronto

2
ONRIS Mature Clusters

• Role of Lead/Anchor Firm
• Shift from Analytic to Synthetic Knowledge
• Supply Chain Dynamics
• External Linkages and Internal Dynamics of
  Clusters
• Conclusions

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Cluster Typology Mature Industries
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Cluster Typology Mature Industries
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Cluster Typology Mature Industries ON Steel
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Role of Lead Firm

• Exit Windsor TDM (International Tool)
• Labour Shedding Mining (Inco)
• Implosion Steel (Stelco)

7
International Tool Exit of Leader
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Inco/Falconbridge Shedding Labour
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Stelco Implosion of a Leader

• Withdrawal from Analytic Knowledge
• Decline and elimination of Stelco Engineering
• Applied Product Development
• Dofasco as franchiser/value added reseller of
  Arcelor NKK technology
• Solutions in Steel Application Development -
  Know How

10
Shift from Analytic to Synthetic Knowledge

• Patent Data
• Dates of Application
• Dates of Publication
• Steel Industry Patents 1970-2005
• Decline of Stelco Engineering/Steltech 90s

11
Steel Patent Data by Application Date
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ON Steel Knowledge Networks

• Withdrawal from Analytic Knowledge
• Decline and elimination of Stelco Engineering
• Applied Product Development
• Dofasco as franchiser/value added reseller of
  Arcelor NKK technology
• Solutions in Steel Application Development -
  Know How

13
Supply Chains

• Asymmetric Knowledge Flows in Supply Chains
  Aerospace
• Dynamics and Dysfunction in Auto-Steel Supply
  Chain

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Advanced Technology Cluster Aerospace

• Niosi Dynamics within Supply Chain
• OEM aerospace assemblers
• Tier 1 Tier 2 suppliers
• Knowledge flows International circuits of
  design, procurement
• Asymmetry between knowledge flows between firms
  and local labour pool

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Aerospace Asymmetry of Knowledge Flows
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Changing Supply Chain Models Drive Innovation

• Toyota Model
• Lean Production JIT
• Reduced inventory, cycle times, SPC
• Dell Model
• Mass Customization
• Build-to-Order

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Typical Order-to-Delivery Process
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Auto Industry Build to Order

• On average, it takes 40 days to get a car
• 30 days for an customer order to actually be
  inserted in the assembly plant schedule.
• 60 days total inventory in the supply chain
• Same number as Henry Ford in 1926.
• Closer integration of supply chain has increase
  volatility

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Auto Supply Chain Volatility
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Dofasco

• Benchmarking against Dell Vanilla Boxes
• Mass customization strategy Platforms
• Information content of the steel
• Diversity creates key bottleneck in Mills Slab
  Specifications Production
• Slabs Designs Dimensionality, Physical
  Chemical Properties
• From 10,000 Designs -gt 300 Vanilla Boxes

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External Linkages and Internal Dynamics of
Clusters

• Dynamics of Disaggregation in Cluster
• Mining Services
• ON Steel

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Disaggregation in Mining Services
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Algoma

• OEM, Tier 1and Specialized Tier 2 Suppliers
• Interface with Design Capacities Safety
• Metallurgy AHSS microstructures

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Disaggregation of Auto Steel Cluster

• Circuit 1 Global Supply Chain
• Auto OEM, Tiers 0.5-1.0, highly specialized Tier
  2 firms
• Integrated Mill Metallurgy DFS, STE, AGA
• Circuit 2 Local Value Chain
• Generalized Tier 2, Tier 3, Stampers
• Processing Technology Service Centres,
  Processors, Minimills

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Conclusions

• Cluster Life Cycles
• Multiple Policy Objects
• Disaggregation
• Policy targets are moving and changing

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Knowledge Dimensions and Flows in Mature Clusters

• Synthetic Knowledge Innovation
• Application of existing sources combination of
  knowledge
• Interaction between clients suppliers
• Reliance on applied product development
• Infrastructure
• Problem solving
• Sources of talent recruitment