Israel

I am pleased to be a part of the SC Trade Mission to Israel. Headed by Chairman Jonathon Zucker and the American Israeli Chamber of Commerce, 27 South Carolinians made the 24 hour journey to Tel Aviv. (The actual flight time from New York to Tel Aviv was 10 hours, but increased security, getting from Charlotte to JFK and just international travel add to the time.)

As many of you know, Israel is the second most innovative economy on earth. Significant innovations that came from companies in Israel include: the jump drive, the cell phone, voice over internet protocol, cordless phones, call centers, the desktop pentium chip, the laptop centrino, the DVD, plasma TV, LCD TV, cable TV, data compression, satellite TV, Firewalls, instant messaging and much, much more. Some of these innovations were with Israelis working for American companies like Intel, but they came out of Israel. For a discussion of this incredible success, see the book Startup Nation by Dan Senor and Saul Singer.

Israel has only 7.5 million people, but there is a culture here that rivals Silicon Valley. Tel Aviv is an international city that has been called the capital of cool. It's the second largest city in Israel with a population of 610,000 in the City and 3 million in the County. (Ignore my previous post that said Tel Aviv was smaller than Greenville County. I relied on Wickipedia.) We are at the Carlton Hotel that overlooks the Mediterranean. It has the fastest wireless internet connection I have ever seen.

SC is interested in establish both research collaborations and new business relationships in six key cluster areas. Those areas are:

Sustainable Systems (Agriculture, Water, Energy)
Biomedical
Transportation (Automotive and Aerospace)
Insurance and Health Information Technology
Defense/Security
Advanced Materials

This week we will try to connect with the Israelis at different levels. We will try to better understand what made the country so innovative and how SC can benefit both the Israeli companies and ourselves. We will also try to develop opportunities for Israeli companies in SC.

I hope you will follow the daily blog posts.

Tire Cluster

ON October 6, the Governor and Secretary of Commerce Bobby Hitt announced that Continental Tire will build a $500 million tire plant in Sumter that will eventually employ 1700 people. Continental's North American headquarters is in Fort Mill, SC.

Last month, Bridgestone Corporation announced a $1.2 billion tire plant in Aiken that will employ 850 people. This will be the largest initial investment ever in South Carolina.

Michelin Tire is SC's largest private employer, with their North American headquarters in Greenville and seven plants in Greenville, Spartanburg, Anderson and Lexington Counties that employ 7,711 people. They also have a research center in Greenville and a test track in Laurens County. Michelin announced a $200 million expansion of their Lexington plant in May.

Michelin is headquartered in France, Continental in Germany and Bridgestone/Firestone in Japan. Combined these companies will make South Carolina the largest producer of tires in the United States.

In addition, TBC Corporation (Tire Kingdom and other brands) has a one million square foot tire distribution facility in Charleston. In June, Tire International announced a $25 million tire and rubber recycling facility in Charleston.

Dr. Porter says that companies co-locate in clusters. There may be many reasons: business environment, right to work laws, incentives, the presence of a trained workforce, the ports of Savannah and Charleston, etc. The tire industry is clearly emerging as one of South Carolina's major clusters.

South Carolina Israeli Trade Mission

By George Fletcher

For the past six months, I have had the privilege of working with a group called the South Carolina/Israeli collaboration. Chaired by Charleston’s Jonathon Zucker, the group is working with the American Israeli Chamber in Atlanta on partnerships between the SC research universities and Israeli universities, as well as establishing business relationships in six clusters. New Carolina was invited to join the collaboration because of our data base on clusters. The six target clusters are Biomedical, Advanced Materials, Sustainable Systems (water, energy, agriculture), Transportation (auto, aerospace), Defense/Security and Insurance and Health Information Technology. SC obviously has signficant strengths in these clusters.

Educational session were held at the Greenville Chamber and the Columbia Chamber on July 27th and at the CRDA offices in Charleston on July 28th. Background information on the collaboration was presented. Israel produces more high tech companies than anyplace other than Silicon Valley. Innovation that came from Israel included the DVD, the jump drive, the cellphone, voice over internet, voice mail, plasma and LCD TV’s, firewalls and many other innovations in medical devices, security and weapons. The culture for innovation was documented in the book Startup Nation which I highly recommend.

The collaboration would like to recruit a group of key SC people for a trade mission on the week before Thanksgiving. Details on the mission, itineraries and participant applications are on a recently created website http://sc-israel.org.

As many of you know, I am a recovering engineer who’s expertise was in water and wastewater. During the proposed week of the trade mission, Israel is hosting WATEC, an international water conference that will attract 20,000 people. Israel uses every drop of water 4 times. They have planted 450 million trees in the desert. They invented drip irrigation. The conference will showcase some of the Israeli innovations in water. Over the past two days, we have had 20 of the leaders in water meet with Booky Oren, the conference chairman and one of the great Israeli private sector innovators in water technologies. I believe that a separate partnership will develop in the area of water and wastewater reuse.

Thanks to Tom Glaser of the American Israeli Chamber of Commerce, and to Jonathon Zucker, CEO of Intertech, for driving this effort.

Harvard Business School Case Study

by George Fletcher

Michael Porter's think tank at the Harvard Business School is called the Institute for Strategy and Competitiveness (ISCC). That is the organization that is managing the EDA funded Cluster Mapping Project, of which New Carolina is a team member.

Dr. Porter teaches one course at Harvard on regional competitiveness. That course is licensed to almost 100 Universities around the world through an organization called the Microeconomics of Competitiveness (MOC). The Moore School at USC is a member of that consortium. Every year representative of the MOC go to Harvard in December to get an update on research and recent ISCC activities.

Last weeks, Dr. Jorge Ramirez from ISCC was in Columbia to collect information on a case study for the MOC. This study will review all activites of New Carolina since Dr. Porter was here in 2003. The idea of the case study is to provide the facts of the situation and the students will provide approaches to the problem. A separte document will be developed for the faculty saying what actually happened.

This is an incredible opportunity for New Carolina and the State of Scuth Carolina. Probably 10,000 students a year will review clustering activities in South Carolina and think through what should be done to advance these clusters. Ed Sellers and I have been invited to address the MOC reps in December.

Thanks to Ed Sellers, Amy Love, Chad Prosser, Scott Carlberg, Neil McLean, Steve Warner, Jim Reynolds and Don Herriott for taking the time to speak with Jorge Ramirez. We gave him detailed information on the other clusters and there may be follow-up.

The case will be available to groups around the world for purchase. The work of the hundreds of New Carolina volunteers will be memorialized.

Midlands Clusters

by George Fletcher

Congratulations to Amy Love, who has already been promoted from Senior Manager of Global Business Development to Marketing and Communications Director at the SC Department of Commerce. In that role, she will be in constant contact with the Governor, the Secretary of Commerce and his senior staff. I know she will do a great job.

I have not used this blog as I should have. In the post Amy world of New Carolina communications, I will try to improve.

On Tuesday, July 19, I attended a meeting of the Midlands Cluster Oversight Committee. This group is Chaired by Cathy Novinger and has approximately 20 members. Staffing is being provided by Neil McLean and Sagacious Partners. This is an excellent model for regional clusters, especially when Cathy and Neil provide the leadership.

The committee has identified four cluster areas: Clean Energy (specifically Fuel Cells and Nuclear), Insurance and Health Care Technology, Health Care/Health Sciences. With nuclear, they are taking our multi-state approach and finding niches that can be specifically applied to the Midlands.

Many people believe that the next big thing in Nuclear will be Small Modular Reactors (SMR’s). There was a conference in Columbia this spring on SMR’s and nearly 300 people from all over the country paid $2000 to attend a two day conference. These 250 MW units could potentially replace coal plants in the US or provide power to some of the planet’s remotest places. Alaska, for example, has a huge interest in SMR’s. Senior nuclear people at SCANA and the Savannah River Site think that research, testing and manufacturing of these units could and should take place in SC. Congress is considering appropriating $400 million or more to this purpose. One manufacture believes that exports could hit $100 billion by 2030. To put that number in perspective, BMW currently ships 700 cars per day though the Port of Charleston and that amounts to $4.2 billion.

The Midlands Nuclear Cluster group is called NuHub and it demonstrates exactly the kind of private sector driven economic development that is the hallmark of successful cluster strategies.

Entrepreneurship Conversation Leads to High Impact Recommendations

By Garry Powers

Director of Economic Development Initiatives
CTC Public Benefit Corporation

New Carolina’s High Impact Entrepreneurship conference was held on April 7.  About 125 participants from both urban and rural counties throughout the state met to have a conversation on how we can work together to build a stronger base of homegrown firms.

Our goals for the conference were to:

• Learn more about the types of homegrown firms that are creating most of the jobs and wealth in the state.
• Understand the factors that can help high impact firms expand in our state.
• Obtain information about the entrepreneurship strategies that work in other regions of the country.
• Discuss some specific steps that we can take in South Carolina to promote high impact entrepreneurship.

1. Who is Creating Jobs?
Research presented by USC professor Dr. Doug Woodward indicated that:

• Small businesses with fewer than 20 employees are creating a disproportionately large share of South Carolina’s jobs.
• In any four-year period during the last 10 years, 2.5 percent of all South Carolina-based “high impact” firms created almost all of the net new jobs in the state.
• “High impact” firms are spread across industry sectors. 
• High-impact firms are highly urban. 
• About half are in traded sectors of the economy. 
• South Carolina is not growing as many small firms into big firms as our neighboring states.

2. What are the Needs of High Impact Companies?
Based on interviews with South Carolina’s high growth firms and economic developers in the state, six of the most critical constraints to growth fall into the following categories:

•  Lack of Access to Affordable Financing
• Lack of High-level Management Talent 
• High Business-related Taxes in Some Areas 
• Need for more Collaboration Related to Innovation 
• A Less than Robust Entrepreneurial Culture 
• Difficulties in Attracting and Retaining High-level Professional and Technical Workers.

3. What Strategies Work in Other Regions?
Kurt Dassell with the Monitor Group, a global economic development consulting firm, indicated that many regions have difficulties implementing entrepreneurship strategies because: (1) they try and fail to become the next Silicon Valley, and (2) they do not understand their particular region’s strengths and weaknesses and - consequently - they do not pursue solutions that are tailored to their regions.  He recommended that South Carolina should focus on a small number of initiatives designed to increase the base of management talent and to improve access to financing.  

4. What are the Next Steps?
In collaboration with the economic development community and the organizations that provide services to entrepreneurs, New Carolina has pledged to identify three or four recommendations on strategies that can help to build a stronger base of homegrown firms.   Stay tuned.  We are still digesting the information from the conference.  
There was one clear message from conference participants, though.  They identified a strong need for a highly visible statewide “portal” that is recognized as the one place that entrepreneurs and service providers can go to find resources and information.  That is an idea that will be explored further.

5. One Other Success Story
During the conference, representatives from the organizations that currently operate or plan to open an incubator met to form the South Carolina Incubator Association.  Thanks to Joel Stevenson, the Executive Director of the USC/Columbia Technology Incubator, for taking the lead on this initiative. 

How do we gain more ground, faster

By C. Grant Jackson

Senior Vice President/Community Development
The Greater Columbia Chamber of Commerce and New Carolina Partner

Per Capita Income in South Carolina continues to head in the right direction. That was part of the story out of the data released late last month by the U.S. Bureau of Economic Analysis. Just not fast enough. That was the rest of the story hidden in the mass of BEA data.

South Carolina’s per capita income, a metric that has been tied to New Carolina since its beginning nearly 10 years ago as South Carolina’s Council on Competitiveness, is now $33,163. That compares to $26,132 in 2003 when Harvard professor Michael Porter came to South Carolina to present his economic analysis and recommended South Carolina form a public-private partnership to tackle a cluster strategy for moving the state’s economy forward. That led to New Carolina.

Since Porter’s study and the creation of New Carolina, per capita income has increased, just not enough and just not quickly enough. It has continued to hover around 81-82% of the national average – $33,163 is 81.7% of the current national average of $40,584. We also currently rank 45 in per capita income among the states. Those lower than us: Arkansas 46 at $33,150, West Virginia 47 at $32,641, Utah 48 at $32,595, Idaho 49 at $32,257, and (I won’t say it) Mississippi 50 at $31,186. By the way, we’ve actually ranked higher – in 2003 we were 42^nd at $33,041 and 83% of the national average of $31,632.

If you notice that 2003 national average is actually less than our state’s current per capita income. And that is the problem: as we gain ground, others are gaining a lot more. That is the real message: if we want South Carolina to break out of the 81-82% of the national average, we’ve got to find a way to grow quicker. 

We often quote Michael Porter as saying, “It’s a marathon, not a sprint.” But to win a marathon at some point you’ve got to run faster and overtake the other guy. So as New Carolina moves toward closing its first decade I’d like to start a race strategy conversation: how do we move up in the pack?