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A look at a legacy: The Upstate’s evolving automotive cluster |
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“Paradoxically, the enduring competitive advantages in a global economy lie increasingly in local things — knowledge, relationships and motivation that distant rivals cannot match.” —Michael Porter
It’s an old idea really, one that dates from 360 B.C., to be exact. Plato wrote in “The Republic,” “All things are produced more plentifully and easily and of a better quality when one man does one thing which is natural to him and leaves other things.”
Fast forward a couple thousand years to Michael Porter’s 1998 Harvard Business Review article, “Clusters and the New Economics of Competition.” Porter took Plato’s idea of specializing one step further by suggesting that clusters, which he defines as critical masses in one place of linked industries and institutions — from suppliers to universities to government agencies — display an unusual competitive success in a particular field.
He illustrated this theory as it played out all over the country on a detailed map. There were pin marks on California’s Silicon Valley, Oregon’s timber belt and others. South Carolina was left blank. But the rumblings of a new order were already being felt in the Upstate when Porter authored this piece.
As John Warner, president of Swamp Fox LLC, explained, “A significant part of the textile industry is automotive. We’ve got Milliken.” He pointed out that their textile and chemical technologies serve an array of markets, a significant part of which is automotive. He ticked off other companies such as Kemet, a manufacturer of solid tantalum, multi-layer ceramic and aluminum organic capacitors, who has also served the automotive industry from the Upstate for many years. There was Michelin, which expanded South Carolina manufacturing operations and constructed a new site for their North American headquarters in Greenville in 1988. They had been located in New York since 1950.
Jody Bryson, executive director of Donaldson Industrial Air Park, has observed the trend for years. He believes that BMW’s entrance was a wake-up call.
“They were the first automotive, original equipment manufacturer. The significance of that is, if you get them, all the rest will follow.” To date, he’s been proven right.
BMW spokeswoman Bunny Richardson said South Carolina was a clear choice for several reasons that included accessibility to transportation facilities, infrastructure, its previous public/private pro-business partnerships, a qualified work force trained through its technical education system, and of course the location within easy distribution range of a majority of BMW’s primary U.S. markets. Since 1994, BMW has expanded its facilities to the tune of more than $2 billion and is planning to grow even more.
Right now, there are more automotive manufacturing companies within a 500-mile radius of Greenville than there are in Detroit. “BMW has 52 suppliers in South Carolina, many of those in the Upstate and of those, 40 chose to place North American operations in South Carolina to partner with BMW,” Richardson said.
But it wasn’t until 10 years ago that efforts really ramped up to foster the knowledge portion of the cluster in the Upstate. With Michelin and BMW well established, and textile manufacturing departed for foreign shores, a group of academics, corporate leaders, politicians and concerned citizens put their heads together to chart a course for Plan B.
“Clemson (University) chose to make automotive and transportation technology one of our eight emphasis areas because of longstanding and existing faculty strength and expertise in automotive research,” Clemson President Jim Barker said.
Barker explained that even with the industry cluster and faculty expertise in place, one piece of the puzzle was missing. It came in the form of the Research Centers of Economic Excellence Act of 2002 (the “Endowed Chairs” Act).
“This was the first of five visionary pieces of legislation enacted by the S.C. General Assembly to spur research and innovation in support of specific economic clusters. We are very grateful to a group of outstanding state leaders in the public and private sector who supported these measures,” Barker said.
This groundbreaking legislation hastened the turning of the first actual shovelful of earth turned at the Clemson University International Center for Automotive Research (CU-ICAR) in 2003. The property’s availability was also serendipitous. Warner pointed out that it was around this time that millionaire John Hollingsworth died, leaving a huge chunk of undeveloped property a stone’s throw from Interstate 85, “right in the bull’s eye of the beltway.”
Even so, Bob Geolas, CU-ICAR’s executive director, admits it was difficult to persuade a region known for old-line manufacturing to refocus on the knowledge-based segment of the industry.
“This is always tough and takes time,” Geolas said. “Many people want to see results right away because they are worried about the loss of jobs and global competitiveness. And yet, competing today means developing long-term economic development strategies, with expected results to come not over years, but over decades."
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