The £11 million Cluster Acceleration Programme (CAP) was launched last month. It’s generating an extraordinary level of interest. More than 170 attendees packed into the Dunadry for an information session this week. I haven’t seen that level of interest in a programme for quite some time.
And to be fair to Invest NI, they laid on a packed programme led by international experts. There’s no question that government really wants this to stick.
A Long-Term Strategy for Economic Growth
It’s called ‘Cluster Acceleration’, but that’s a relative term. But from what I gleaned, clusters take years to ripen into the bountiful economic harvest that we so badly need here. In economic terms, results arrive in something akin to geological time scales. Their true efficacy takes years, decades to take full effect.
But it’s not a new concept. Stormont has been doing this for years, using different nomenclature. Simon Hamilton launched a previous iteration called the Collaborative Growth Programme in 2016. When it closed, the £5.7 million programme had supported 70 projects and over 600 businesses. It spawned the GEMX network in the North West, and MEGA manufacturing network in Mid Ulster.
CAP's Unique Position in Northern Ireland's Policy Landscape
Why is a modestly funded, nebulously titled programme - of which we already have more than a few - creating so much buzz?
It ticks a lot of policy boxes. The concept is at the heart of the PfG, in there to help kill off one of the DfE Minister’s biggest bugbears - low productivity. “Transformational” clusters will assist development of high-productivity sectors. And this will also help the economy to tack through that other priority headwind, regional balance. In Denmark, cluster companies obtained productivity growth 3.6% higher than firms not involved in clusters. Also, only 5.6% of Danish SMEs are active internationally. By comparison, 14% of SMEs who participate in Danish clusters are active in international activities.
Completing the policy bingo card, clustering also opens the door to more all-island initiatives which DfE has been driving towards. One presenter at the Dunadry described Ireland as a “cluster-driven society.” Connecting mature clusters in the south with emerging clusters in the north may hit DfE’s objective of supporting more all-island trade development.
It’s within this context that the Invest NI Business Strategy 2024-2027 landed. It has some very ambitious double-digit growth goals on R&D, investment, recruiting new client companies, attracting new FDIs, and new sales in existing client companies. Creating up to five new super clusters via the CAP will start to move the needle on a number of these (while, not inconsequentially, answering some weighty critical recommendations contained in the Lyons Review of Invest NI last year).
What Do We Mean By Clustering?
So clustering is proven and immensely powerful. But what is it?
Clusters are, in effect, an interconnected grouping of enterprises, research centres and associated institutions in particular fields that compete, cooperate and face common challenges and opportunities.
These are based on a 30-year old economic theory that works. For example, in Europe there are now nearly 3,000 regional industrial clusters, accounting for nearly a quarter of all employment. UKRI attached £100 million to its own clustering programme last year. Just as Invest NI wants to move away from loading investment inside the Belfast Metropolitan Area, UKRI ploughed £33 million into each of three regions to stimulate economic growth outside of the affluent south.
Who Should Be Involved?
Our CAP is targeting the creation of five clusters, which should be drawn from eight priority sectors (agri-tech; life and health sciences; advanced manufacturing, materials and engineering; fintech/financial services; software; screen industries; and low carbon).
If you’re an established membership-led organisation, you may have a head start. A Grant Thornton report to the Irish Government on clustering said in order to ensure companies are active participants, “the introduction of membership fees is a useful tool to illustrate member dedication towards the cluster”. One of the speakers at Dunadry from SPRI Basque Business Development Agency said much the same thing. One possible model for this might be the Advanced Food and Drink Manufacturing Network set up by NIFDA a few years back. So if you’re a sector specific, professional network (better if you’re in the eight priority sectors), you and your members have the raw ingredients to create a cluster.
But the ultimate benefactor should be the SME. One of the speakers at Dunadry hailed from the Norwegian Offshore Wind Cluster (NOW). It started in 2009 and now claims over 400 members, many of whom are SMEs. An entity like the Northern Ireland Maritime & Offshore Network (NIMO) might be the seedbed for something similar here.
International Successes
This is a long term plan. As I suggested, think in geological time rather than financial quarterly cycles. But done well, this approach can transform economies and also transform the policy environment that created it. Singapore reorganised its economy around clustering. In 2018, the government there decided to increase the linkages between 23 sectors and collectivise them into six clusters. This involved reshuffling the constituent parts of 80% of their GDP. The clustering framework was viewed as that influential.
So what’s on the table?
The CAP caters for two funding phases: Phase 1 is feasibility studies involving 8-10 SMEs funded to the tune of £60,000; and Phase 2 is for those progressing to cluster projects involving up to 20 SMEs and funded up to £1 million over five years. Successful projects should be focused on tackling challenges in areas like skills, productivity, and sustainability, fostering growth through joint innovation and shared resources.
By involving themselves in the CAP, SMEs here can be part of a network that not only strengthens individual businesses but reshapes the wider economic landscape. For any SME ready to rise to this challenge, the CAP represents a launchpad for sustainable growth and a pathway to becoming a vital part of Northern Ireland’s next era of innovation and prosperity.
The application process is live now. Judging by the spectrum of attendees in the room, the CAP will not be lacking submissions when it concludes in December. To find out more, log on to https://www.investni.com/support-for-business/collaborative-working/cluster-acceleration-programme
