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Clusters in the UK

Clusters are geographic concentrations of inter-connected companies, specialised suppliers, service providers, firms in related industries, and associated institutions.

What are they?

Professor Michael Porter, an acknowledged authority, defines clusters as “geographic concentrations of inter-connected companies, specialised suppliers, service providers, firms in related industries, and associated institutions (for example universities, standards agencies, and trade associations) in particular fields that compete but also co-operate.”

  • Thus, a cluster goes wider than the typical supply chain of a company, since it can involve businesses which are normally in direct competition coming together to work on issues of common interest.

Examples of cluster activity in the UK include:

  • The collaboration between motor sport companies in the south east, south west and the midlands. These companies have come together to develop and sponsor a motor sport engineering course at Oxford Brookes University. This produces a pool of qualified engineers which benefits all of them, while in no way reducing the direct competition between them. 
  • The advanced engineering and materials cluster in South Yorkshire, which focuses on high-volume, high-value metal and precision engineering activity. Local, regional and European funding has supported the development of an Advanced Manufacturing Park at Waverley, which has attracted Boeing and other businesses to the area. This is now the largest manufacturing cluster in Yorkshire & the Humber, generating £5 billion GDP per annum. 

Developments in Europe

  • Cluster development is identified as part of the Lisbon Strategy for Jobs and Growth, and Member States are able (but not obliged) to support cluster activity through the Framework Programme and Structural Funds. Directly-funded EU activity is mainly dedicated to the support of best practice networks between agencies supporting clusters, and the RDAs are involved in several of these. The UK supports a clusters policy that is focussed at national and regional level and we were able to influence the Commissions final conclusions to ensure that Commissions activity will continue to support member states efforts in this area.