As links in a chain provide support and stability, so can "business clusters" for the forest products industry, according to a new report by Mississippi State's Forest and Wildlife Research Center.
A cluster is a group of businesses and institutions in close proximity whose products or services are interconnected through value and supply chains, technologies and complementary products, among other factors.
Funded by the U.S. Endowment for Forestry and Communities Inc., the recent university study found that business clustering can provide competitive advantages and build business resilience among the entities. The investigation was conducted by MSU scientists and colleagues at the University of Missouri’s forestry department and Minnesota-based Dovetail Partners Inc.
"Close collaboration between members of a business cluster allows for better understanding of processes, cost structures and opportunities for efficiency improvements," said Robert Grala, an MSU assistant forestry professor. "This type of collaboration can provide the resiliency needed to address adverse market conditions and allow for the adoption of new technologies."
Grala, the project’s primary investigator and an Iowa State University doctoral graduate, said leadership by third-party organizations is essential to coordinate activities, help identify market niches and assist with workforce training and development, among other requirements.
The study collected information during the summer and fall of 2008. The information was used to develop a template for a national registry of forest business clusters.
"We conducted a nationwide online survey to get opinions from forestry stakeholders on advantages and disadvantages of these types of groups," Grala explained. "We also identified existing clusters in the forest sector."
Overall, the study found that companies gain ready access to trained workers, infrastructure and specialized suppliers by locating their production and services in business clusters. The "bottom-line" result is that "companies participating in a cluster can lower their costs compared to non-clustered ones," he emphasized.
To assist interested entities, the project concluded by opening an online registry of U.S. forest business clusters. The registry includes location, contact information, legal status, umbrella organizations, duration, size, and specific strategies of existing forest sector clusters.
"While the registry is not intended to represent all U.S. forest sector clusters, it represents the first step in a process to begin to categorize nationwide groups and create a structure for monitoring activities in the forest sector," Grala said.