New clustering programme to promote cooperation between businesses

The Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, this week launched a new €2million programme to encourage groups of businesses to collaborate to achieve specific business objectives, improve competitive advantage, create mutual financial gain – and ultimately create jobs.

The programme, which is based on international best practice, is being supported jointly by Enterprise Ireland, IDA Ireland, Údarás na Gaeltachta and the City and County Enterprise Boards. Advertisements are currently appearing in newspapers seeking participants in the programme. Today’s announcement marks the delivery of a key measure under the Action Plan for Jobs 2012, and represents a new departure in industrial policy by encouraging businesses to cooperate with each other to develop clusters of strength.

Some of Ireland’s major industrial success stories – e.g. pharmaceuticals, medical devices – are based on the establishment of clusters, and this initiative is aimed at attempting to replicate that success in other sectors.

Projects must involve a minimum of five companies, and will be eligible for funding of up to €100,000. The initiative is aimed at a broad range of businesses serviced by the enterprise development agencies. Clusters will also be encouraged to seek to find members from other jurisdictions including Northern Ireland, global corporations with presences in Ireland, companies not clients of enterprise development agencies, trade/business associations, academic institutions and suppliers.

Collaboration and clustering is a proven strategy providing potential for economies of scale and access to opportunities that would be outside the capability or scope of a business working alone. The benefits of clustering are many, and can include:

— Increased productivity and company income

— Increased market share

— Greater innovation and knowledge transfer

— Enhanced capability

Launching the initiative Minister Bruton said:

“If we are to see the jobs recovery we so badly need, we must be more innovative in the ways we seek to move the performance of our industries to the next level. Some of Ireland’s major success stories are based on clusters – for example, the medical devices cluster, which is recognised internationally as one of the best in the world. Part of the Government’s plan for jobs and growth is to seek to replicate this across the economy and ensure that Ireland can become a world leader in a range of sectors, whether it be digital games, cloud computing, or anything else

“Clusters like this cannot be created by Government – but must be led by businesses and people operating at the coalface. This initiative is about encouraging businesses to look past immediate concerns, and cooperate to lift the fortunes of the sector in which they operate, to the benefit of everyone. By encouraging businesses to cooperate on issues of mutual benefit, we can help to develop clusters of strength which can sustain strong companies and create the jobs we need.”

Welcoming the announcement, Frank Ryan, CEO of Enterprise Ireland said: ‘Clusters are proven catalysts of change. By engaging in collaborative activities, companies can ultimately improve their productivity and compete more effectively on the regional, national and international stages’.

Applications and full details of the programme, including funding levels, can be found at clusteringprogramme

Networks and clusters help firms in sectors to achieve critical mass and economies of scale and compete in larger, more diverse and more competitive markets than they could if they were to continue to act alone.

For example, in the area of sales and marketing – a cluster could encourage firms to form alliances or partnerships to enable them enter new markets. It gives them stronger leverage in order to respond to large scale tenders, to pool funding for market research and intelligence gathering, to create a common brand and to develop capability together.

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Examples of successful Irish clusters include:

• The medical devices sector in Galway (geographic cluster )

• Education in Ireland - the umbrella brand for the higher education sector in overseas markets (marketing cluster )

• Animation Ireland – 14 companies co-ordinating a single voice for promoting Irish animation companies globally (branding cluster )

For the purpose of this pilot, a clustering initiative must be proposed by a group of at least five companies that are clients of an enterprise development agency (e.g. Enterprise Ireland, IDA Ireland, Údarás na Gaeltachta and City/County Enterprise Boards ), which has agreed to collaborate to achieve specific business objectives that are likely to result in enhanced competitive advantage and/or mutual financial gain. In addition, applicants are encouraged to include “affiliate” enterprises (eg companies not clients of the DJEI enterprise development agencies, trade/business associations, academia, suppliers, global corporations with presences in Ireland, companies based in other jurisdictions including those based in Northern Ireland ) in their project proposals as participants/contributors to the project.

For already established networks/trade associations, projects must be additional to the activities currently being undertaken by them, and additional to activities currently funded by the State to them.

Funding support:

Under the pilot programme, funding support will be offered in two distinct non-competitive phases.

Phase 1: Feasibility/Scoping Study Phase

Provides funding for groups to undertake a feasibility study to scope out and define a clustering opportunity and develop a proposed project plan.

Project should typically be completed within a four to sixmonth time frame from date of approval.

Funding available up to a maximum of 70 per cent of the total eligible feasibility study costs or €20,000 (whichever is the lesser ).

Phase 2: Facilitation Phase

Provides funding for groups to undertake clustering projects which are industry-led and involve businesses collaborating for specific purposes, where the results of the activity will have some identifiable and measurable impact on their business.

Projects may be up to two years in duration from date of approval.

Funding available up to a maximum of 50 per cent of eligible costs or €100,000 (whichever is the lesser ).

Groups need not have applied for Phase 1 support to avail of Phase 2 support.


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