Challenges of Transformation: Innovation, Re-bundling and Traditional Manufacturing in Canada's Technology Triangle

Abstract

Bathelt H., Munro A. K. and Spigel B. Challenges of transformation: innovation, re-bundling and traditional manufacturing in Canada's Technology Triangle, Regional Studies. This paper develops a perspective of regional re-bundling in overcoming economic crises. It does this by focusing on the effects of the recent global financial crisis on traditional manufacturing. It analyses the structure of innovation processes and their development over time in Canada's Technology Triangle – a region known for university-related spin-off processes and successful modernization. What is less well known is that this region has been strongly influenced by traditional manufacturing industries. It is shown that these industries have been well prepared to deal with the effects of the crisis due to ongoing innovation and diversification stimulated by prior economic crises.

Bathelt H., Munro A. K. and Spigel B. 转型的挑战：创新、再绑定以及加拿大技术三角中的传统制造业， 区域研究。本文提出了区域绑定视角来应对经济危机。文章通过集中于目前传统制造业全球金融危机效应，对此问题进行了考察。文章分析了创新过程的结构以及加拿大技术三角的发展。人们普遍认为加拿大技术三角的成功源自与大学相关的脱离过程以及现代化。但是对于该区域受传统制造业影响较大这一点较少研究关注。文章认为，这些产业足以应对由于持续的创新及前经济危机导致的多样化所引发的危机。

加拿大的技术三角 制造业 全球金融危机 再绑定 创新实践/策略

Bathelt H., Munro A. K. et Spigel B. Le défi de la transformation: l'innovation, le refusionnement et l'industrie manufacturière traditionnelle dans le triangle canadien de la technologie, Regional Studies. Cet article cherche à développer une idée du rôle du refusionnement quant à la résolution des crises économiques. On met l'accent sur les retombées de la dernière crise financière mondiale sur l'industrie manufacturière traditionnelle. On analyse la structure des processus en matière d'innovation et leur développement au fil du temps dans le triangle canadien de la technologie – une région bien connue pour les retombées universitaires et la modernisaion réussie. Ce qui est moins bien connu c'est la forte influence sur cette région des industries manufacturières traditionnelles. On démontre que ces industries ont été bien équipées pour faire face aux retombées de la crise en vertu de l'innovation en cours et de la diversification stimulée par les crises antérieures.

Triangle canadien de la technologie Secteur manufacturier Crise financière mondiale Refusionnement Pratiques et Stratégies en matière d'innovation

Bathelt H., Munro A. K. und Spigel B. Herausforderungen der Transformation: Innovation, Neubündelung und traditionelle Industrien in Canada's Technology Triangle, Regional Studies. Der Beitrag entwickelt eine Perspektive regionaler Neubündelungs (Re-bundling-) Prozesse zur Überwindung ökonomischer Krisen. Der Fokus der Studie liegt bei den Auswirkungen der globalen Finanzkrise Ende der 2000er Jahre auf traditionelle Industrien. Untersucht werden die Struktur von Innovationsprozessen und ihr Wandel am Beispiel von Canada's Technology Triangle – einer Region, die durch universitätsbezogene Spin-offs und ökonomische Modernisierungsprozesse bekannt geworden ist. Weniger bekannt ist dagegen, dass die Region ebenso durch traditionelle Industriesektoren geprägt ist. Die Ergebnisse der durchgeführten Unternehmensbefragungen zeigen, dass die betreffenden Industrien überraschend gut auf die Wirtschaftskrise vorbereitet waren und darauf reagieren konnten. Dies hing mit andauernden Innovationsprozessen und Diversifizierungsbemühungen zusammen, die durch vorhergehende Krisen ausgelöst wurden.

Canada's Technology Triangle Traditionelle Industrien Globale Finanzkrise Neubündelung (Re-bundling) Innovationspraktiken/-strategien

Bathelt H., Munro A. K. y Spigel B. Retos de transformación: procesos de innovación, recombinación y manufactura tradicional en el Triángulo Tecnológico canadiense, Regional Studies. En este artículo desarrollamos una perspectiva de recombinación regional en la superación de las crisis económicas. Para ello nos centramos en los efectos de la reciente crisis financiera mundial en la manufactura tradicional. Analizamos la estructura de los procesos de innovación y su desarrollo con el paso del tiempo en el Triángulo Tecnológico canadiense, una región conocida por los procesos spin-off universitarios y sus avances en modernización. Lo que es menos conocido es que esta región ha estado muy influenciada por las industrias manufactureras tradicionales. Demostramos que estas industrias han estado bien preparadas para tratar los efectos de la crisis debido a la continua innovación y diversificación estimuladas por las crisis económicas anteriores.

Triángulo Tecnológico canadiense Sector manufacturero Crisis financiera mundial Reconstrucción Prácticas/estrategias de innovación

Keywords:

• Canada's Technology Triangle
• Manufacturing sector
• Global financial crisis
• Re-bundling
• Innovation practices/strategies

JEL classifications:

• L16
• L62
• O31
• R11

Acknowledgements

This paper, to which all authors contributed equally, was presented in 2010 at: the Annual Meeting of the Association of American Geographers in Washington, DC; the IGU Conference on ‘Industrial Transition – New Patterns of Production, Work, and Innovativeness in Global–Local Spaces’ in Cologne, Germany; and the European Urban and Regional Studies Conference on ‘Repositioning Europe in an Era of Global Transformations’ in Vienna, Austria. The authors would like to thank Ron Boschma, Susan Christopherson, Andy Cumbers, Peter Dörrenbächer, Martina Fromhold-Eisebith, Martina Fuchs, Arne Isaksen, Arnould Lagendijk, Rünno Lumiste, Andy Pike, Mike Taylor, Alain Thierstein, Franz Tödtling, Jici Wang and Stefan Wetzstein, as well as the anonymous reviewers, for valuable comments and feedback. Financial support by the Canadian Social Sciences and Humanities Research Council (File Number 410-2007-2167) and the Canada Research Chair Program is greatly appreciated.

Notes

CTT was jointly established in the late 1980s by the cities of Cambridge, Guelph, Kitchener and Waterloo to market the region's technological strengths and reduce inter-municipal competition (Cities of Cambridge, Waterloo, Kitchener and Guelph, 1988; Bathelt and Hecht, 1990). Although Guelph left this initiative later to market its strengths individually, the local economies are still linked to one another, draw from a shared labour market and depend on similar economic conditions, even in traditional manufacturing industries. Therefore, the entire region is referred to here as ‘CTT’.

An example is the interpretation of Leipzig's economic trajectory as one along a related-variety path (Neffke et al., 2011).

Within economic analysis, the term ‘resiliency’ is contested due to the implication that the goal of regions would be to return to economic or industrial equilibrium after an external shock (Christopherson et al., 2010; Hassink, 2010; Pike et al., 2010; Park, 2010). Re-bundling, in contrast, does not presuppose a return to previous spatial and industrial configurations, but rather it emphasizes and examines the ability of networks of firms and institutions to adjust to new economic realities after periods of rupture.

To conduct research during such an important event, of course, raises serious methodological considerations. In particular, the immediate stress of the crises no doubt had an impact on the respondents. However, this bias is likely to be no greater than that produced by investigating the effects of the crisis years after they have occurred. Studies conducted during a crisis are an important source of knowledge of how firms and regions react to the intense economic pressures brought about. As the most severe effects of the crisis were seemingly overcome when this research was completed, the authors are confident that the structures and processes identified are not just short-term reactions to the crisis. In fact, the positive evaluation of the ability of firms to minimize crisis effects through innovation, as discussed in the empirical section, is also supported by comments from industry observers. Wilding (2010), for instance, President of the Toronto Board of Trade, expresses concerns about the economic strength of Toronto in relation to CTT after the economic crisis. In a commentary about a future regional strategy of the Toronto region, Wilding wrote that ‘city-regions such as London [UK], Chicago and even Kitchener/Waterloo/Cambridge act as regional zones, snatching new investment and jobs away from Toronto ….’ CTT's economic revival also goes along with a recovery of the Southern Ontario automobile parts industry in 2010 (van Alphen, 2010). It is clear, however, that future studies will have to be conducted to measure and understand the full effects of the crisis.

This was not always obvious when attempting to book interviews with the firms as the telephone numbers were still in place. It sometimes took up to ten telephone calls to find out about the actual state of the firms and receive an answer regarding the interview requests. The process of making initial contact included a diverse set of, often unexpected, replies ranging from crying secretaries and an offer to buy a recently closed factory to a telephone call with a security guard who was the only person left in the warehouse to make sure the inventory was safe.

Changes to improve the manufacturability of a part were limited to modifications that reduced production costs but did not affect the function of the part in its final assembly.

Some firms suggested that this was an intentional strategy. They benefited from the consistency and efficiency of working with a few large customers, but used smaller projects to explore potential opportunities to diversify their customer base and the industries they serve.

Diversification was also an important strategy in the renewal of the Aberdeen oil complex since the 1990s (Chapman et al., 2004).

The trend to diversify into areas such as green machining, wind turbines and solar energy has been an important part of the innovation strategy of regional automobile suppliers, such as Linamar, Magna International and Meikle Automation (Hamilton, 2009).

Even in the middle of Chevrolet's bankruptcy, several smaller firms reported increased sales to Chevrolet because of high consumer demand for the 2010 Camaro.

The layoffs were strongest in the automobile production and supplier sector of the region (van Alphen, 2008, 2009), and particularly hit those operations that were largely or exclusively dependent on Chrysler and GM (Keenan, 2009; GuelphMercury .com, 2009).

The firm worked closely with local material suppliers and allied metal-finishing firms to help them grow large enough to support the firm's operations. This was part of the broader strategy to shift to consumer products and broaden product offerings.