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Germany’s Next Top Cluster! A Model Competition from Deutschland

Out of the recessionary rubble the “German model” stands tall in economic and policy circles for its resiliency and productivity. The Eurozone may be cracking but the German export machine keeps turning out world-beating manufactured goods with characteristic efficiency. Although fresh scrutiny is rightfully exposing weaknesses in corners of the German economy, experts concerned with the productive sector of the U.S. economy are turning to Germany for lessons.

We at the Metro Program count ourselves among the German industrial sector’s admirers. Just last week, a forum we hosted on why--and which--manufacturing matters lauded the country’s apprenticeship system, high-road shop floor practices, and best-in-class Fraunhofer research institutions, which provide applied R&D services to small- and medium-sized enterprises (SMEs).

Given our worldview, it should come as no surprise that another program has caught our attention: the “Leading-Edge Cluster Competition," or officially “Spitzencluster Wettbewerb.”

The competition should be lauded for its purposeful scale and design.

The cluster competition is a flagship initiative of the nation's High-Tech Strategy 2020, a long-term competitiveness agenda led by the Federal Ministry for Education and Research (BMBF) to bridge science and industry in order to jumpstart the industries of the future.

It was launched in 2007 and comprises three rounds of competition. In each round, five winning clusters are awarded €40 million each over a five-year period to implement their designed strategies. Clusters match the award one-for-one so that at its conclusion, the effort will have galvanized at least €1.2 billion in investment into Germany’s most advanced regional economic engines. The strategic goal: to seize the growth industries that will be key to the future of human development--climate/energy, health/nutrition, mobility, security, and communication--by grounding them in Germany’s top clusters.

The BMBF announced the third and final round of winning clusters in January 2012:

  • Carbon composites in and around Munich to create innovative lightweight materials for presently “heavy” industries
  • Electromobility in Stuttgart to bridge batteries, energy delivery, logistics, software, and transport in sustainable mobility solutions
  • Individualized immunotherapy in the Rhein-Main region to prepare the healthcare system to deal with prevention, diagnosis, and treatment in an aging population
  • The development, scale-up, and commercialization of materials from biomass around Leipzig and central Germany
  • Intelligent technical systems in Westphalia to incorporate ICT and “smart” features into everyday industrial and consumer goods

In each case, private firms (127 of them in the intelligent systems cluster!) partner with local universities, research institutions, vocational schools, industry and labor associations, and other cluster organizations to devise a discrete initiative to advance the industry in the region and the region globally.

In addition to showing significant private financial commitment, winning clusters must demonstrate that the planned projects build on strengths and promise to differentiate the region in the global marketplace with a comprehensive analysis of risk and upside and market positioning.

Awards call for clusters to experiment with new forms of cooperation and collaboration, to professionalize cluster management, and to design cluster-specific training initiatives for the next generation of workers.

All of this is very simpatico to both our metropolitan business planning methodology, which calls for a market positioning analysis and a strategic plan to execute discrete and fundable initiatives to boost the local economy, and the competitive cluster grant program we presented to states as a strategy for job creation on a budget. Both concepts are finding fertile ground in states like Nevada and Michigan and metro regions like Minneapolis-Saint Paul, the Puget Sound, and Northeast Ohio. Our still-nascent manufacturing agenda calls for cluster-specific training programs too. And well-established organizations like San Diego CONNECT epitomize best practice in cluster collaboration.

But would a cluster competition along the lines of the German program be possible at the federal level in the United States? Given the bottom-up embrace of similar ideas, is it even necessary?

Just last year Washington enjoyed its own “Cluster Moment” until deficit reduction politics sapped its momentum. The push nevertheless yielded a number of important policy innovations--the Economic Development Administration’s i6 Challenge Grant, the Jobs and Innovation Accelerator Challenge, and the Department of Energy’s Energy Innovation Hubs to name three of them.

Yet the federal government could play a bigger role in aligning--and inspiring--disparate state and local initiatives around national goals. Indeed that might be the most valuable lesson to draw from the German program: that the federal government should form a long-term competitiveness strategy and then get the incentives right so that regional industry clusters--the nation’s engines of innovation--can take it from there.