Industry Cluster Analysis

Transcription

1 Industry Cluster Analysis Central NH Region Prepared For: Central NH Regional Planning Commission 28 Commercial Street Concord, NH Prepared By: PO Box 3367 Saratoga Springs, NY

2 Central NH Regional Planning Commission Industry Cluster Analysis Table of Contents EXECUTIVE SUMMARY... 2 INTRODUCTION... 3 OVERVIEW OF CENTRAL NH REGIONAL ECONOMY... 5 Overall Job Growth by Industry... 5 Location Quotients... 7 REGIONAL CLUSTERS Business & Financial Services Medical Services Arts & Entertainment Information Technology DIVERSIFIED MANUFACTURING BASE RESEARCH - SOURCES

3 Central NH Regional Planning Commission Industry Cluster Analysis EXECUTIVE SUMMARY The Central NH Regional Planning Commission (CNHRPC) retained Camoin Associates (CA) to conduct an industry cluster analysis for the Central New Hampshire Region. The purpose of the study is to build an understanding of the existing industry clusters within the 20 CNHRPC communities. However, CNHRPC also needed the data upon which this analysis is conducted to be collected in a way that will facilitate future analysis and use of the data. CNHRPC ultimately seeks to develop a Comprehensive Economic Development Strategy that encompasses the CNHRPC region as well as a number of communities in the Southern NH Planning Commission service area. Therefore, the study area (Region) is defined on a zip code basis for purposes of this analysis. See the map in Appendix A, which shows the zip codes included in the Region. The goals of this study are to identify strong and potential growth industries in the Region, based on changes in employment and the relative concentration of employment in industries over time. In addition, the study seeks to determine if identifiable industry clusters may have developed around major industries that could support future growth and maintain the region s concentration in those particular industries. A cluster develops when businesses in inter-related industries choose to locate in close proximity to take advantage of a region s inherent advantages. These businesses then become interdependent on each other, which enhances their operating environments and makes them more competitive in the global market. CA s analysis reflects a common understanding of the Region s strengths. Government, health care, and retail are the major employment sectors that make up the Region s economic base. In addition, a diversified manufacturing sector exists in the region. While declining overall, which is in line with national trends, the manufacturing sector does include a number of high-tech companies, which are increasingly drawn to the region because of the quality of life it offers. Based upon an examination of employment and industry data at the six-digit NAICS level (North American Industrial Classification System), CA found that the Region does not have strong clusters in the sense that strong interdependencies exist between firms, but four potential clusters were identified that, in addition to support for manufacturing industries, should be the central focus of future economic development efforts: Business & Financial Services Medical Services Arts & Entertainment Information Technology These clusters were selected based on their ability to provide good employment opportunities, build a stronger high-tech foundation in the Region, and, in the case of Arts & Entertainment, enhance the high quality of life found in the Region, which is one of the reasons that innovative entrepreneurs seem to locate there to begin with. In addition, this study points to the importance of regionalism in future economic development planning initiatives. While the Central NH Region may not currently contain true clusters of its own at the present time, it can build on emerging strengths and integrate its growth sectors and potential clusters with others outside the immediate region to create opportunities for cluster development going forward. 2

4 Central NH Regional Planning Commission Industry Cluster Analysis INTRODUCTION The Central NH Regional Planning Commission (CNHRPC) retained Camoin Associates (CA) to conduct an industry cluster analysis for the Central New Hampshire Region. The purpose of the study is to build an understanding of the existing industry clusters within the 20 CNHRPC communities. However, CNHRPC also needed the data upon which this analysis is conducted to be collected in a way that will facilitate future analysis and use of the data. CNHRPC ultimately seeks to develop a Comprehensive Economic Development Strategy that encompasses the CNHRPC region as well as a number of communities in the Southern NH Planning Commission service area. Therefore, the study area (Region) is defined on a zip code basis for purposes of this analysis. See the map in Appendix A, which shows the zip codes included in the Region. The goals of this study are to identify strong and potential growth industries in the Region, based on changes in employment and the relative concentration of employment in industries over time. In addition, the study seeks to determine if identifiable industry clusters may have developed around major industries that could support future growth and maintain the region s concentration in those particular industries. Conversely, this analysis intends to determine which of the Region s traditionally strong sectors may be in decline. According to Harvard University s Institute for Strategy and Competitiveness, Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which companies can compete. The terms industry cluster, business cluster, and competitive cluster are often used interchangeably. There are no official guidelines or standardized approaches to identify, define and describe industry clusters. Many economists and consultants develop their own methodologies, but most practitioners base their cluster analyses on employment data. CA utilizes EMSI (Economic Modeling Specialists, Inc., to acquire industry and employment data. EMSI combines employment and establishment data from the Quarterly Census of Employment and Wages (QCEW) produced by state labor departments with data from the Regional Economic Information System (REIS) published by the U.S. Bureau of Economic Analysis (BEA) and augmented with County Business Patterns (CBP) and Non-employer Statistics (NES) published by the U.S. Census Bureau. Current year estimates are based on the latest available EMSI industry data combined with past trends in each industry, industry growth rates in national projections (provided by the Bureau of Labor Statistics), and other projections and data from state labor departments. The data presented in this report are broken down into industry sectors, organized using the North American Industrial Classification System (NAICS). The first two digits in a NAICS code identify the general industry sector, such as government, manufacturing, or health care and social assistance. NAICS codes can be up to six digits long; the more digits, the greater level of detail reflected in the NAICS code. The most general NAICS codes (two digit level) are shown in the table below and provide a useful orientation to NAICS for the reader. As an example of how much more detailed they can be, NAICS code is the code for General and Surgical Hospitals. The 62 at the beginning of the code indicates that this industry falls under the general category of Health Care and Social Assistance shown in the table below. 3

5 Central NH Regional Planning Commission Industry Cluster Analysis NAICS Code Description 11 Agriculture, forestry, fishing and hunting 21 Mining 22 Utilities 23 Construction Manufacturing 42 Wholesale trade Retail trade Transportation and warehousing 51 Information 52 Finance and insurance 53 Real estate and rental and leasing 54 Professional and technical services 55 Management of companies and enterprises 56 Administrative and waste services 61 Educational services 62 Health care and social assistance 71 Arts, entertainment, and recreation 72 Accommodation and food services 81 Other Services, Except Public Administration 90 Government Source: EMSI Complete Employment - 1st Quarter 4

6 Central NH Regional Planning Commission Industry Cluster Analysis OVERVIEW OF CENTRAL NH REGIONAL ECONOMY This section provides a general overview of the regional economy to form the basis of our understanding of the Region, which later guides us in drilling down to a more detailed level of analysis to identify major sectors or clusters present in the Region. This analysis was performed primarily at the two-digit NAICS code level, which is the highest aggregated level available. Overall Job Growth by Industry The following table shows the change in total employment in the Region from 2002 to, by major industry sector. Given that the Region includes Concord, the state capital and largest population center within the Region, it is not surprising that Government, Health Care and Retail are the top three employment sectors. The Health Care sector experienced the most growth from 2002 to. Finance and Insurance and Professional, Scientific and Technical Services hold fourth and fifth place, followed by Manufacturing, which suffered significant losses between 2002 and. Employment by Industry in Central NH Region at 2 digit NAICS NAICS Code Description Government 11,999 12, Health Care and Social Assistance 8,430 10,913 2, Retail Trade 9,159 8,949 (210) 52 Finance and Insurance 4,353 4, Professional, Scientific, and Technical Services 4,280 4, Manufacturing 6,823 4,317 (2,506) 72 Accommodation and Food Services 3,696 3, Other Services (except Public Administration) 3,474 3, Construction 3,699 3,654 (45) 42 Wholesale Trade 3,214 3, Administrative and Support Services 1,849 2, Educational Services 1,586 2, Real Estate and Rental and Leasing 1,710 2, Arts, Entertainment, and Recreation 1,617 1,518 (99) Transportation and Warehousing 1,348 1,311 (37) 11 Agriculture, Forestry, Fishing and Hunting (137) 51 Information (81) 55 Management of Companies and Enterprises (25) 22 Utilities Mining, Quarrying, and Oil and Gas Extraction Total 69,936 72,710 2,774 5

7 Central NH Regional Planning Commission Industry Cluster Analysis The following bar graph illustrates the average earnings per worker in for the top 10 major industry sectors in the Region. Finance and Insurance; Professional, Scientific and Technical Services; Manufacturing; and Wholesale Trade offer the highest earnings per worker (EPW) in the region, with average earnings around $60,000. Retail Trade and Accommodation and Food Services provide the lowest EPW. $80,000 $60,000 $40,000 $20,000 $0 Average Earnings Per Worker The table on the next page shows the results of an analysis of NAICS at the four-digit level. The table includes the 20 largest employment sectors, which make up nearly half of all employment in the Region. The vast majority of these top 20 industries experienced growth from 2002 to. As expected, some of the largest employment sectors are in Government, Health Care and Social Assistance, and Professional Services. At this level, we can begin to see what industries the major employment categories are comprised of. For example, in the Health Care and Social Assistance category, we see that the following industries are driving growth: 6221 General Medical & Surgical Hospitals 6241 Individual & Family Services 6211 Offices of Physicians 6231 Nursing Care Facilities 6

8 Central NH Regional Planning Commission Industry Cluster Analysis NAICS Code Top 20 Employment Sectors in Central NH Region at 4 Digit NAICS Description 2002 % of Total 9200 State government 6,430 6, % 9300 Local government 4,803 5, % 6221 General Medical and Surgical Hospitals 1,940 2, % 6241 Individual and Family Services 1,008 2,235 1, % 5241 Insurance Carriers 1,966 1,902 (64) 2.6% 7221 Full-Service Restaurants 1,750 1, % 4451 Grocery Stores 1,784 1,607 (177) 2.2% 7222 Limited-Service Eating Places 1,196 1, % 6211 Offices of Physicians 1,130 1, % 5617 Services to Buildings and Dwellings 825 1, % 6231 Nursing Care Facilities 957 1, % 5411 Legal Services (6) 1.3% 5419 Other Prof, Scientific, and Tech Services % 4251 Wholesale Electronic Markets, Agents, Brokers % 5311 Lessors of Real Estate % 6111 Elementary and Secondary Schools % 4543 Direct Selling Establishments % 5239 Other Financial Investment Activities % 4411 Automobile Dealers 1, (265) 1.1% 8133 Social Advocacy Organizations % Total for Top 20 Sectors 30,630 34,309 3, % Total in Region 69,936 72,710 2, % Location Quotients A location quotient () is a quantitative tool that uses employment data to determine which industries have a larger or smaller presence in the local economy relative to the nation. analysis provides insight into understanding local economic strengths and competitive advantages. The location quotient method is often used to identify industry clusters and potential target industries. An is calculated as a ratio of an industry s local share of total employment to that industry s share of national employment. A value of 1.00 demonstrates that the employment concentration in a particular industry is roughly the same both locally and nationally. An greater than 1.00 indicates an industry with a high degree of concentration relative to the reference area. An less than 1.00 indicates that the industry s share of local employment is less than that industry s share of national employment. As a rule of thumb, location quotients between 0.80 and 1.20 are not considered significantly different from Although the location quotient method is a simple way to compare local and national employment, it does make some assumptions that can slightly skew the results. This includes the assumption that all conditions are equal, that worker productivity, consumption patterns, etc. are more or less the same everywhere. Of course, this may not be the case. A high location quotient can be interpreted as a relatively strong industry locally, but the may be high because the local 7

9 Central NH Regional Planning Commission Industry Cluster Analysis industry or workforce is inefficient, and thus greater numbers of employees are required to produce a comparable level of output. Another way to use location quotients is to examine how they have changed over time. By comparing the s, it is possible to determine whether an industry s presence is increasing or decreasing relative to the industry s national presence. The table on the following page shows the s and changes in s for the top 20 employment sectors at the four-digit level. A high that is increasing suggests an industry that is important to the local economy, with a growing concentration of employment relative to the national economy. Industries in this category may require additional analysis to understand what is driving their growth and how it can be sustained. Economic development strategies targeting these industries should focus on policies and programs conducive to their continued strong performance. In the Central NH Region, such industries in the top 20 at the four-digit level include: o 6241 Individual & Family Services o 5241 Insurance Carriers o 8133 Social Advocacy Organizations A high that is declining is indicative of an industry that is important to the local economy, but that may be at risk of layoffs, relocation, or other economic disruptions, requiring some level of intervention. Economic development strategies targeting these industries should focus on retention efforts and identifying types of financial and/or technical assistance necessary to strengthen their performance. Within the Top 20 industries at the four digit NAICS level, the following fall into this at risk category in the Region: o 4451 Grocery Stores o 5411 Legal Services o 4251 Wholesale Electronic Markets, Agents and Brokers (Industries in this subsector arrange for the sale of goods owned by others, generally on a fee or commission basis. They act on behalf of the buyers and sellers of goods. This subsector contains agents and brokers as well as business to business electronic markets that facilitate wholesale trade.) Finally, an industry that is small in size but with a high that is increasing over time indicates an industry that may not be a critical part of the Region s economic base, but could be a source of future growth. The table on page 9 shows the industries with the highest s in the Region. A handful of these are in the top 20 employment sectors (by size), but most are not. This analysis shows some interesting potential growth industries, meaning employment numbers that may not be really high, but are growing, and s that are high and increasing over time. These include: o 3333 Commercial and Service Industry Machinery Manufacturing o 3211 Sawmills and Wood Preservation o 6239 Other Residential Care Facilities o 3273 Cement and Concrete Product Manufacturing 8

10 Central NH Regional Planning Commission Industry Cluster Analysis of Top 20 Employment Sectors in Central NH Region at 4 Digit NAICS 2002 NAICS Description National National Earnings Code per Worker 9200 State government $57, Local government $49, General Medical and Surgical Hospitals $58, Individual and Family Services $22, Insurance Carriers $74, Full-Service Restaurants (0.08) $20, Grocery Stores (0.14) $23, Limited-Service Eating Places $17, Offices of Physicians $107, Services to Buildings and Dwellings $21, Nursing Care Facilities $42, Legal Services (0.04) $82, Other Prof, Scientific, and Tech Services (0.01) $40, Wholesale Electronic Markets, Agents, Brokers (0.58) $96, Lessors of Real Estate $36, Elementary and Secondary Schools (0.05) $42, Direct Selling Establishments $32, Other Financial Investment Activities (0.14) $36, Automobile Dealers (0.15) $65, Social Advocacy Organizations $29,083 9

11 Central NH Regional Planning Commission Industry Cluster Analysis Top 20 Industry Location Quotients in Central NH Region at 4 Digit NAICS NAICS Description National Code Electric Lighting Equipment Manufacturing 440 (339) (2.56) 4852 Interurban and Rural Bus Transportation Social Advocacy Organizations Leather and Hide Tanning and Finishing 17 (18) 6.62 (1.58) 3132 Fabric Mills 146 (211) Nonferrous Metal (ex Alum) Production & Processing 144 (11) Commercial and Service Industry Machinery Manufacturing 223 (65) Beer, Wine, and Distilled Alcoholic Bev. Merch. Wholesalers Sawmills and Wood Preservation Other Residential Care Facilities Nonmetallic Mineral Mining and Quarrying 179 (18) 3.67 (0.10) 6241 Individual and Family Services 2,235 1, Insurance Carriers 1,902 (64) Fiber, Yarn, and Thread Mills Dairy Product Manufacturing Other Leather and Allied Product Manufacturing 21 (17) 3.27 (0.53) 9200 State government 6, Other Nonmetallic Mineral Product Manufacturing Cement and Concrete Product Manufacturing Support Activities for Road Transportation Total 14,202 1,

12 Central NH Regional Planning Commission Industry Cluster Analysis REGIONAL CLUSTERS A cluster develops when businesses in inter-related industries choose to locate in close proximity to take advantage of a region s inherent advantages. These businesses then become interdependent on each other, which enhances their operating environments and makes them more competitive in the global market. EMSI groups industries into clusters based on national and regional business to business purchasing patterns. CA pulled the top 10 EMSI-defined clusters for the Central NH Region, which included those displayed in the table below. Upon review of the six-digit NAICS that comprise each of the ten EMSI-defined clusters below, CA determined that most of them are not clusters in the true sense of the word. Most had a handful of industries that were well-represented, but no clear sense of interdependence amongst them was demonstrated by the data analysis nor the interviews with major employers which were conducted by CA. See Appendix B for data tables showing all six-digit NAICS in each of the ten clusters listed below. Top 10 EMSI-Defined "Clusters" in Central NH Region* EMSI-Defined Cluster 2002 Earnings per Worker Business & Financial Services 7,419 7, $63, Biomedical/Bio-technical (Life Science) 5,351 6, $48, Arts, Entertainment, Recreation, & Visitor Industries 2,287 2,101 (186) $21, Information Technology & Tele-communications 1,558 1,350 (208) $68, Education & Knowledge Creation 1,077 1, $30, Agribusiness, Food Processing & Technology 1,125 1,052 (73) $32, Transportation & Logistics $43, Apparel & Textiles $38, Chemicals & Chemical Based Products (19) $77, Primary Metal Manufacturing (18) $71, Total 21,211 22,218 1, % of Total Employment in Region 30.3% 30.6% The lack of true clusters is common for relatively small, rural regions such as CNHRPC s service area, which may be too sparsely populated to exhibit true clusters in the data and which do not contain major colleges or universities engaged in significant research and development. In today s knowledge-based economy, higher education and R&D tend to drive cluster development. The nearby City of Manchester s Global Economic Development Strategy Community Assessment Report (2005) makes a similar finding, stating, Residing in Financial Services, Semiconductors, and Communications Equipment, Manchester s clusters are weak because they are not deep. Although Manchester has some strong businesses in these industries, this is not an accurate cluster assessment because there are not enough support businesses in these categories to truly claim a cluster There are a number of other types of businesses, but no strong clusters in Manchester (page 14). This also points to the importance of regionalism in economic development planning efforts while the Manchester area and the Central NH Region separately may not yet contain true clusters, together the two regions may be able to build on emerging strengths and integrate with sectors and clusters outside of the larger region

13 Central NH Regional Planning Commission Industry Cluster Analysis In the end, CA focused on the following four EMSI-defined clusters for further analysis and reporting for the Central NH Region. Based on the industry composition within each, CA offers alternative names (shown in parenthesis) for three of them: Business & Financial Services Biomedical/Bio-technical Life Science (aka, Medical Services ) Arts, Entertainment, Recreation & Visitor Industries (aka, Arts & Entertainment ) Information Technology & Telecommunications (aka, Information Technology ) These clusters were selected based on their ability to provide good employment opportunities, build a stronger high-tech foundation in the region, and, in the case of Arts & Entertainment, enhance the high quality of life found in the Region, which is one of the reasons that innovative entrepreneurs seem to locate there to begin with. The following provides an in-depth look at each of the four clusters, with anecdotal information culled from interviews to supplement the EMSI data. Business & Financial Services The table below shows the Top 20 industries (by number of jobs) at the six digit NAICS level in the Business & Financial Services cluster. See Appendix B for a list of all industries that this cluster is comprised of. 12

14 Central NH Regional Planning Commission Industry Cluster Analysis NAICS Top 20 Business & Financial Services in Central NH Region at 6 Digit NAICS Description 2002 Industry Industry Total for all Business & Financial Services Industries 7,682 *Estimated based on assumption that there were 9 jobs in Direct Life Insurance Carriers (55) Offices of Lawyers (29) Direct Health and Medical Insurance Carriers (61) Insurance Agencies and Brokerages (46) Direct Property and Casualty Insurance Carriers Investment Advice Engineering Services (236) Portfolio Management Custom Computer Programming Services Administrative Managmnt and Gen. Managmnt Consulting Servs Display Advertising < * Consumer Lending Computer Systems Design Services Residential Property Managers Offices of Certified Public Accountants (31) Securities Brokerage Trusts, Estates, and Agency Accounts < * Other Activities Related to Real Estate Other Accounting Services Environmental Consulting Services (1) Total for Top 20 Industries 6,060 Of the top 5 employment sectors shown above, four are involved in selling insurance, indicating the prevalence of the insurance industry in this cluster overall. The substantial loss of jobs in Engineering Services is worth looking into to determine if one large company closed or relocated or if there is something else going on that is affecting a number of smaller firms in this sector. The following table shows the changes in s in the top 20 industries in the business & financial services cluster. One industry of note is Custom Computer Programming Services. The previous table shows this industry is adding jobs, despite the recession, and the table below shows an that, while small, is increasing over time. Earnings per worker in this industry are high at over $80,000 annually. This could be an interesting sector to build support services for, in addition to other small professional and technical service businesses in the Region, which in general provide high earnings and appear to be experiencing modest growth, as shown by the small but increasing jobs numbers in a variety of industries shown in this cluster in Appendix B (display advertising, marketing, public relations, accounting, interior design, and computer related services). 13

15 Central NH Regional Planning Commission Industry Cluster Analysis NAICS for Top 20 Business & Financial Services Industries in Central NH Region Description Direct Life Insurance Carriers Offices of Lawyers (0.06) Direct Health and Medical Insurance Carriers (0.63) Insurance Agencies and Brokerages (0.15) Direct Property and Casualty Insurance Carriers Investment Advice (0.02) Engineering Services (0.66) Portfolio Management (0.33) Custom Computer Programming Services Administrative Managmnt and Gen. Managmnt Consulting Servs (0.05) Display Advertising Consumer Lending Computer Systems Design Services (0.18) Residential Property Managers (0.03) Offices of Certified Public Accountants (0.17) Securities Brokerage Trusts, Estates, and Agency Accounts Other Activities Related to Real Estate (0.02) Other Accounting Services (0.01) Environmental Consulting Services (0.66) 14

16 Central NH Regional Planning Commission Industry Cluster Analysis Medical Services The following table shows the top 20 largest industries in the Medical Services cluster. See Appendix B for a list of all industries in this cluster. The Region is home to Concord Hospital, which is the largest employer in this cluster. Despite a couple of challenging years due to the recession, the hospital added approximately 500 new jobs overall between 2002 and. Regional demographics point to continued growth in this field and the Region stands poised to host many of the facilities and jobs that will be required to provide needed services to the aging population in Central NH, the Lakes Region and beyond. Workforce development efforts should include focused attention on quality nursing and medical technician programs, as well as affordable housing initiatives to ensure that workers in the health care field can afford homes in the Region. Top 20 Medical Services Industries in Central NH Region at 6 Digit NAICS NAICS Description 2002 Industry Industry Job General Medical and Surgical Hospitals 1,940 2, Nursing Care Facilities 957 1, Home Health Care Services (71) Pharmacies and Drug Stores Other Residential Care Facilities Outpatient Mental Health and Substance Abuse Centers (47) Homes for the Elderly Specialty (except Psychiatric and Substance Abuse) Hospitals Residential Mental Retardation Facilities (4) Continuing Care Retirement Communities Medical Laboratories Ambulance Services (7) Analytical Laboratory Instrument Manufacturing Kidney Dialysis Centers Cosmetics, Beauty Supplies, and Perfume Stores All Other Miscellaneous Ambulatory Health Care Services Research and Development in the Social Sciences and Humanities All Other Health and Personal Care Stores Family Planning Centers Residential Mental Health and Substance Abuse Facilities Total for Top 20 Industries 5,930 Total for all Medical Services Industries in Region 6,076 15

17 Central NH Regional Planning Commission Industry Cluster Analysis The following table shows the changes in for the top 20 Medical Services industries in the Region. NAICS for Top 20 Medical Services Industries in Central NH Region Description General Medical and Surgical Hospitals Nursing Care Facilities Home Health Care Services (0.61) Pharmacies and Drug Stores Other Residential Care Facilities Outpatient Mental Health and Substance Abuse Centers (1.35) Homes for the Elderly Specialty (except Psychiatric and Substance Abuse) Hospitals Residential Mental Retardation Facilities (0.14) Continuing Care Retirement Communities (0.36) Medical Laboratories Ambulance Services (0.47) Analytical Laboratory Instrument Manufacturing Kidney Dialysis Centers Cosmetics, Beauty Supplies, and Perfume Stores All Other Miscellaneous Ambulatory Health Care Services Research and Development in the Social Sciences and Humanities All Other Health and Personal Care Stores Family Planning Centers Residential Mental Health and Substance Abuse Facilities (0.06) 16

18 Central NH Regional Planning Commission Industry Cluster Analysis Arts & Entertainment The following two tables show the change in number of jobs and the change in for the top 20 industries in the Arts & Entertainment cluster. See Appendix B for a list of all industries in this cluster. Perhaps the most interesting phenomenon shown in the first table is the strong growth in the number of Independent Artists, Writers, and Performers (NAICS ) in the Region between 2002 and. While the for this industry is not very high, as shown in the table on page 16, it has increased since 2002, indicating that the Region is becoming more of a creative hub than it was a decade ago. At the same time, a number of tourism industries appear to have suffered moderate to heavy job losses, mostly likely as a result of the recession. NAICS Top 20 Arts & Entertainment Industries in Central NH Region at 6 Digit NAICS Description 2002 Industry Industry Total for all Arts & Entertainment Industries in Region 2,101 *Estimated based on assumption that there were 9 jobs in Job Independent Artists, Writers, and Performers Hotels (except Casino Hotels) and Motels (53) Fitness and Recreational Sports Centers (56) Golf Courses and Country Clubs Racetracks (316) All Other Amusement and Recreation Industries Radio Stations (8) Motion Picture Theaters (except Drive-Ins) Skiing Facilities Museums (1) Recreational and Vacation Camps (except Campgrounds) (13) Historical Sites (47) Other Gambling Industries Promoters of Performing Arts, Sports, and Similar Events with Facilities (8) RV (Recreational Vehicle) Parks and Campgrounds Promoters of Performing Arts, Sports, and Similar Events w/o Facilities < * Tour Operators < * All Other Travel Arrangement and Reservation Services < * Musical Groups and Artists < * Total for Top 20 Industries 2,000 17

19 Central NH Regional Planning Commission Industry Cluster Analysis The following table shows the change in for the top 20 Arts & Entertainment industries in the Region. Again, the most notable trend is the growing concentration of Independent Artists, Writers, and Performers. Interviews reveal that the Region has launched an initiative in recent years to support the development of a creative economy in the Greater Concord Area, which includes efforts to develop affordable housing for artists in Downtown Concord and a plan to open an incubator for creative entrepreneurs. The incubator would provide workspace for musicians, writers, fine artists, photographers, architects, designers, and anyone else who generates wealth using artistic expression and creativity. These efforts should be supported to the maximum extent possible because high-tech entrepreneurs are attracted to regions with strong arts & cultural offerings. A number of such firms have already made the region their home because of the high quality of life and these creative economy initiatives will contribute to making the region attractive to even more of these individuals and companies. NAICS for Top 20 Arts & Entertainment Industries in Central NH Region Description Independent Artists, Writers, and Performers Hotels (except Casino Hotels) and Motels (0.08) Fitness and Recreational Sports Centers (0.36) Golf Courses and Country Clubs Racetracks (9.96) All Other Amusement and Recreation Industries Radio Stations Motion Picture Theaters (except Drive-Ins) Skiing Facilities Museums (0.09) Recreational and Vacation Camps (except Campgrounds) (0.99) Historical Sites (8.11) Other Gambling Industries (0.53) Promoters of Performing Arts, Sports, and Similar Events with Facilities (0.66) RV (Recreational Vehicle) Parks and Campgrounds Promoters of Performing Arts, Sports, and Similar Events w/o Facilities Tour Operators All Other Travel Arrangement and Reservation Services Musical Groups and Artists

20 Central NH Regional Planning Commission Industry Cluster Analysis Information Technology The following tables display information on the top 20 industries in the Information Technology cluster. While some of this activity may be a natural spillover from the high-tech corridors found in the Boston & Southern NH and NH Seacoast areas, more than one interviewee noted that it s primarily the quality of life in the Central NH Region that attracts high-tech firms to the Region. Eight of the top 20 industries exhibit a decline in employment since Many of these same industries also show a declining, which indicates they are losing strength. While this is the smallest of the four clusters identified, it is the one that likely requires the most attention given that the Region is not a hub of research & development and therefore must work harder and rely on other characteristics to attract these firms. Establishing entrepreneurship programs focused on technology sectors should be a priority in future economic development planning efforts. NAICS Top 20 Information Technology Industries in Central NH Region at 6 Digit NAICS Description 2002 Industry Industry Total for all Information Technology Industries in Region 1,350 *Estimated based on assumption that there were 9 jobs in Job Custom Computer Programming Services Computer Systems Design Services Instrument Mnfg - Measuring & Testing Electricity/Elect. Signals (91) Wired Telecommunications Carriers (44) Data Processing, Hosting, and Related Services Telephone Apparatus Manufacturing (30) All Other Miscellaneous Electrical Equipment and Component Manufacturing < * Analytical Laboratory Instrument Manufacturing Power, Distribution, and Specialty Transformer Manufacturing (64) Other Computer Related Services Carbon and Graphite Product Manufacturing Other Management Consulting Services Other Communications Equipment Manufacturing Other Electronic Component Manufacturing < * Research and Development in the Social Sciences and Humanities Software Publishers (17) Bare Printed Circuit Board Manufacturing < * Computer and Computer Equipment and Software Merchant Wholesalers (8) Computer Facilities Management Services (46) Mnftng Devices for Measuring/Displaying/Controlling Ind. Process Variables (24) Total for Top 20 Industries 1,328 19

21 Central NH Regional Planning Commission Industry Cluster Analysis for Top 20 Information Technology Industries in Central NH Region NAICS Description Custom Computer Programming Services Computer Systems Design Services (0.18) Instrument Mnfg - Measuring & Testing Electricity/Elect. Signals (1.30) Wired Telecommunications Carriers (0.04) Data Processing, Hosting, and Related Services Telephone Apparatus Manufacturing All Other Miscellaneous Electrical Equipment and Component Manufacturing Analytical Laboratory Instrument Manufacturing Power, Distribution, and Specialty Transformer Manufacturing (3.74) Other Computer Related Services Carbon and Graphite Product Manufacturing Other Management Consulting Services Other Communications Equipment Manufacturing Other Electronic Component Manufacturing Research and Development in the Social Sciences and Humanities Software Publishers (0.15) Bare Printed Circuit Board Manufacturing Computer and Computer Equipment and Software Merchant Wholesalers (0.02) Computer Facilities Management Services (1.37) Mnftng Devices for Measuring/Displaying/Controlling Ind. Process Variables (0.84) 20

22 Central NH Regional Planning Commission Industry Cluster Analysis DIVERSIFIED MANUFACTURING BASE Although the Region does not exhibit strong clusters at the present time, it does boast quite a diverse manufacturing sector in general. According to interviews, a growing number of high-tech manufacturers are becoming attracted to the region due to the quality of life it offers. The following table shows the Top 20 industries in the manufacturing sector. NAICS Code Top 20 Manufacturing Industries in Central NH Region at 4 Digit NAICS Description Electric Lighting Equipment Manufacturing (339) 3231 Printing and Related Support Activities (322) 3333 Commercial and Service Industry Machinery Manufacturing (65) 3345 Navigational, Measuring, Electromedical, and Control Instruments Mnfg (93) 3273 Cement and Concrete Product Manufacturing Other Fabricated Metal Product Manufacturing (95) 3115 Dairy Product Manufacturing Plastics Product Manufacturing (90) 3211 Sawmills and Wood Preservation Other Wood Product Manufacturing (470) 3132 Fabric Mills (211) 3152 Cut and Sew Apparel Manufacturing Nonferrous Metal (except Aluminum) Production and Processing (11) 3339 Other General Purpose Machinery Manufacturing (19) 3342 Communications Equipment Manufacturing (26) 3399 Other Miscellaneous Manufacturing (3) 3359 Other Electrical Equipment and Component Manufacturing < Architectural and Structural Metals Manufacturing (37) 3279 Other Nonmetallic Mineral Product Manufacturing Bakeries and Tortilla Manufacturing Total in Top 20 Manufacturing Industries 3,483 Total in Manufacturing in Region 4,247 Given the importance of retaining manufacturers, the following summarizes key challenges expressed by the manufacturers interviewed for this report, which are all related to workforce. Production managers, engineers and skilled technicians are non-existent within the Region and difficult to recruit from outside. In general, brain drain is a concern and most reported significant difficulty finding college educated professionals in technical and engineering fields in the Region. In addition, housing affordability and lack of amenities make it challenging to recruit managers and engineers from outside the Region. Technical training programs appear to be lacking in the region. Many of the vocational training that was routinely provided in high school a generation ago, such as welding, is not very common anymore and as a result, some manufacturers find it difficult to find skilled tradespeople. Those that do have training or experience often do not possess the level of skill and proficiency required and manufacturers typically have to re-train them or provide significant on-the-job training time for them to become productive. Younger workers lack soft skills, which makes them difficult to employ. A couple of the interviewees noted that in the past five years they have noticed a marked shift in the 21

23 Central NH Regional Planning Commission Industry Cluster Analysis quality of the production workforce in the Region. Many of the younger workers coming directly out of high school seem to lack the traditional New England work ethic that so many manufacturers boast is the reason they have stayed in the region to date, despite the transitions in their respective industries. One manager suggested a program to prepare non-college bound high schoolers to enter the production workforce. 22

24 Central NH Regional Planning Commission Industry Cluster Analysis RESEARCH - SOURCES Interviews Conducted Sheryl Blackwood, Plant Manager, Osram/Sylvania Matt Cookson, New Hampshire High Tech Council Chris Donally, Labsphere Ron Feronte, Vice President, Mastermatic/Heat and Control Laurie Harte & George Downing, Elektrisola Tim Sink, President, Concord Area Chamber of Commerce Don Welch, President, Globe Manufacturing Previous Reports Referenced Global Economic Development Strategy, December 2005, Prepared by Angelou Economics for the City of Manchester, NH NH Lakes Region Industry Cluster Analysis, May 2007, Prepared by Camoin Associates for the Lakes Region CEDS Strategy Committee and the Lakes Region Planning Commission Data Source All employment and industry data were purchased from Economic Modeling Specialists, Inc. 23

25 Appendix A Map of Central NH Region by Zip Code

26 Zip Codes in the Central Region ±

27 Town Zip Code Dunbarton Bradford Canterbury Hopkinton Chichester Epsom Henniker Deering Hillsborough Sutton Pittsfield Salisbury South Sutton Allenstown Pembroke Warner Concord Concord P.O Box Boscowen Concord Nowrthwest Webster Bow Loudon 03307

28 Appendix B Data Tables for all Ten EMSI-Defined Clusters

29 Business & Financial Services NAICS Description 2002 % Job 2002 EPW Direct Life Insurance Carriers (55) (5.77%) $86, Offices of Lawyers (29) (3.25%) (0.06) $83, Direct Health and Medical Insurance Carriers (61) (8.28%) (0.63) $55, Insurance Agencies and Brokerages (46) (8.57%) (0.15) $83, Direct Property and Casualty Insurance Carriers % $76, Investment Advice % (0.02) $31, Engineering Services (236) (47.58%) (0.66) $91, Portfolio Management % (0.33) $36, Custom Computer Programming Services % $80, Administrative Management and General Management Consulting Services % (0.05) $61, Display Advertising < Consumer Lending % $66, Computer Systems Design Services % (0.18) $66, Residential Property Managers % (0.03) $18, Offices of Certified Public Accountants (31) (15.66%) (0.17) $86, Securities Brokerage % $80, Trusts, Estates, and Agency Accounts < Other Activities Related to Real Estate % (0.02) $11, Other Accounting Services % (0.01) $19, Environmental Consulting Services (1) (0.89%) (0.66) $39, Third Party Administration of Insurance and Pension Funds % $57, Other Scientific and Technical Consulting Services % (0.44) $57, Nonresidential Property Managers % (0.17) $32, Trust, Fiduciary, and Custody Activities % $33, Data Processing, Hosting, and Related Services % $73, Graphic Design Services (1) (1.25%) (0.19) $24, Marketing Consulting Services % (0.02) $41, Title Abstract and Settlement Offices % $59, Public Relations Agencies % $87, Tax Preparation Services (3) (5.08%) (0.17) $26, Testing Laboratories % $42, Other Computer Related Services % $140, Claims Adjusting % (0.04) $42, Drafting Services % $30, Interior Design Services % $29,103 Business & Financial Services Page 1

30 Other Management Consulting Services % $75, Surveying and Mapping (except Geophysical) Services (19) (30.16%) (0.28) $37, Process, Physical Distribution, and Logistics Consulting Services (7) (13.73%) (0.46) $44, Architectural Services (17) (28.33%) (0.12) $52, Landscape Architectural Services (10) (20.41%) (0.22) $48, Advertising Agencies (9) (19.15%) (0.09) $43, Human Resources Consulting Services (3) (9.38%) $87, Other Activities Related to Credit Intermediation (42) (60.87%) (0.89) $38, All Other Insurance Related Activities (15) (37.50%) (0.57) $83, Computer Facilities Management Services (46) (65.71%) (1.37) $56, Commercial Photography < Investment Banking and Securities Dealing < Payroll Services % $126, Digital Printing < Mortgage and Nonmortgage Loan Brokers < Pension Funds < Direct Mail Advertising < Marketing Research and Public Opinion Polling (3) (20.00%) (0.03) $46, Reinsurance Carriers (2) (15.38%) $145, Real Estate Credit <10 < All Other Nondepository Credit Intermediation <10 < Financial Transactions Processing, Reserve, and Clearinghouse Activities 339 < (9.00) Commodity Contracts Dealing 0 < Commodity Contracts Brokerage <10 < Securities and Commodity Exchanges 13 < (0.57) Miscellaneous Financial Investment Activities 0 < Direct Title Insurance Carriers <10 < Health and Welfare Funds 0 < Other Insurance Funds <10 < All Other Legal Services <10 < Building Inspection Services 16 < (0.85) Geophysical Surveying and Mapping Services <10 < Industrial Design Services 11 < (1.06) Other Specialized Design Services <10 < Media Buying Agencies 0 < Media Representatives <10 < Advertising Material Distribution Services 0 < Total Business & Financial Services 7,419 7, % $63,096 Business & Financial Services Page 2