1. Introduction: Building A Greater Southwest

Mission

Leaders from across the region’s communities and industries have agreed that it is time for a new way of thinking and acting and that together we can shape our regions next steps in development. This initiative is intended to change how the people of the Southwest see their region and enable them to work together to ensure that this region secures a dynamic sustainable economy.

To achieve sustainable prosperity, new ways of thinking, and action are indeed called for. New investments and new ways of cooperating are required. Yet as the development of this initiative has clearly shown, the people of the Southwest care deeply about their region and are willing to move forward together. This report presents the outcome of a hugely collaborative effort encompassing the broadest range of stakeholders possible in crafting the steps to a sustainable prosperous future. This document has been designed to reflect agreements by stakeholders on crafting the next generation economy – but its fundamental goal is to launch a permanent change in how this region does business together now and in the future.

Power of Partnerships

Over 120 key stakeholders collaborated in this initiative. They were encouraged to think strategically about their industries and communities, their assets and liabilities, where they wanted to go and what steps they wanted to take to get there. The following are the main groups that have made this effort possible:

Action Southwest Business Networks Coalition: The ASBNC project originated at the request of the business community of the City of Swift Current through the Action Swift Current Business Retention and Expansion movement. The business community indicated that they wanted not just Swift Current to grow, but the entire southwest region including all rural communities to grow as well. To do this we all had to become better and more successful at regional economic development.

The business community of Swift Current believes that success of all in the southwest region would bring about further success for Swift Current. And the further success Swift Current experiences, the greater the growth potential for rural southwest communities. The Swift Current business community truly believes that “we are all in this together” and as a result the ASBNC was born.

The ASBNC was launched in August 2004 and is made up of 18 regional leaders involving key industry businesses, business organizations, sector associations, government and educational institutions. They have come together to support the partnering process. In other words the ASBNC is a strategic alliance in its own right. Within the coalition “strategic alliance”, there is a diverse representation of stakeholders that ensures breadth and depth of business experience as well as industry specific perspective.

The role of the ASBNC is simply to support the development of strategic alliances and to help businesses derive maximum benefit from this collective experience with partnering. The ASBNC is not the beginning or the end of the process of making strategic alliances a powerful tool for southwest region businesses. Rather, it is working towards making a lasting and profitable contribution to local business, communities and economic development stakeholders across the region to help cultivate a strong, permanent culture of alliances.

The ASBNC have diligently played the role of social entrepreneurs, bringing key participants together, managing the developmental process of this large-scale collaborative process – a movement if you will. The consultancies were the “legs” on which this initiative has run, ensuring that the vast array of participants came together at the right time and received the key messages needed to energize key commitments.

Lead Steering Committee: A leadership group of individuals committed to “ thinking regionally” were identified and recruited to help oversee and build this strategy. These individuals represent business and community organizations from across the region. These individuals have played and continue to play a crucial role in sustaining the momentum this initiative has generated. In particular, they will be the forces behind launching the flagship initiatives that reflect the needs shared regionally and are essential to achieving future regional prosperity.

“I think that in terms of southwest economic development it isn’t about what we can do in Frontier or what we can do at Honeybee, it’s about the region and that’s why when I heard what Action Southwest was proposing I knew I had to support it.” Brad Nelson, Honeybee Manufacturing (Member Lead Steering Committee)

Industry Leadership Teams: Leadership Teams were formulated in the regions four key industry sectors: manufacturing, energy, tourism and agribusiness. These individuals have been the heart of the ASBNC process. They were sought as people who were able to see beyond their own company interests into the needs they might share with other firms, suppliers or economic institutions and shape a competitiveness strategy for their industry. The development of the ASBNC strategy benefited profoundly from the high level of participation, continuity and commitment of these stakeholders. They came together not to make plans, but to agree to changes in their communities and economy that would enable innovation and competitiveness, and that is what they did.

Funding Partners: This initiative was supported by agencies committed to building and growing Southwest industries and communities and as a result numerous successes have been achieved and a stronger more vibrant economy is now in our grasp.

ASBNC Approach for a Successful Region

The ASBNC recognizes that a successful region is the sum of a strong urban and strong rural southwest and is committed to working with regional residents, organizations, and other levels of governments to ensure the long-term sustainability of our communities and region at large.

A successful region is one that leads by example, where innovation and new ideas are allowed to flourish. A successful region is one that involves our business leaders of today and tomorrow– helping them contribute now to build their world for the future. A successful region has the ability to develop the skills to embrace our knowledge–based economy in the new millennium. A successful region attracts, develops and retains people – essential in building the capacity of rural and urban communities.

The success of the ASBNC partnership is evident through ongoing grassroots rural dialogue meetings with business leaders and citizens across the region; who know that a strong and successful southwest can only exist when all of its components – both rural and urban – are strong.

“To date, the coalition has identified 30 projects in the areas of agribusiness, energy, manufacturing and tourism as key to growing the area. Creating a targeted strategy such as this is a critical step - and as the list of projects grows, the ability to create prosperity in the region also grows”. Clay Serby, Deputy Premier Minister of Rural Development

People are changing the landscape of the southwest region. By building and growing together, we help to create sustainable and successful, bottom-up solutions. The answers are in our own backyard – opportunities for business innovation and community based solutions to overcome challenges at the grassroots level. Our success will ensure new and existing businesses and our youth will see the southwest region as a place with opportunity for all, where they can have access to wealth and have a future for themselves and their families.

Our strategic approach is a series of actions intended to proactively connect with the key industry business community. It involves efforts to identify and respond to key industry sector business concerns, trends and opportunities. It includes a multi stakeholder process to develop and implement local strategic action plans. Activities involved in implementing the strategy are as follows:

1. Think Regionally – Becoming a United Economy

We no longer live entirely within the boundaries of a village. For this reason, each of us needs to realize that range of challenges that influence our lives takes shape not only in our backyard, but also down the road. Globalization of production, expanding trade, and increased mobility of capital have made it increasingly possible for industrial activity to be geographically dispersed. The new global market place and technological advances is providing an opportunity for business to market and compete from virtually any geographic location. However, as globalization has expanded, the importance of place has grown. Now, as the southwest region of Saskatchewan enters the 21st century, it’s economy faces intense competition in global markets, demand for productivity improvements and quality, and cost effectiveness. Regions that can provide critical inputs that industries need, such as skilled workers, technological innovation or financing have become the stronger players in the new economy and our ability to cooperate regionally will determine our ability to compete globally. Community and business leaders are increasingly recognizing that regional cooperation will have a significant influence on the quality of life in each rural and urban municipality.

The ASBNC is driven to create a collaborative regional culture in the Southwest. A culture where stakeholders are open to change and are willing to negotiate trade-offs and constructive agreements with one another to get things done; where communities, businesses, governments and institutions work together, to commit to new ways of doing business and to make investments that will have a mutually beneficial pay off. Thinking regionally and applying collaborative practice is the key to building regional advantages and achieving a sustainable and prosperous economy.

2. Develop Clusters Through Business Networks and Strategic Alliances

A business network is a group of small to medium sized enterprises (SME) working together on short-term and long-term projects while remaining independent. The purpose of the network is to gain access to resources and to develop projects normally available only to larger firms. Networks sometimes also known as partnerships, collaborations, or strategic alliances lets firms capitalize on what they do best, share risks and profits, while remaining independent. Networks can be created in a number of ways to help companies improve profitability and achieve efficiencies that aren’t possible when companies work alone. Using this kind of teamwork, companies can expand markets, lower costs and improve profits.

“Many of our service providers are independent and each are specialized in certain areas, so I do see a real benefit to having businesses partner with other businesses to give us as a company a better service”. Gord Olson Husky Oil Operations

Networks can be used to rationalize purchasing and training, to improve product development, to share the cost of an expensive piece of equipment, to share export development and marketing efforts, to increase access to equity and capital formation, and to access human and financial resources in order to develop and bid on larger scale projects.

Clusters are where not only businesses work together but support organizations are also included. By working together they are able to develop new forms of business and opportunities. Therefore, cluster development through business networks have moved to the forefront of economic development theory and practice. Instead of focusing on individual companies, clusters encourage practitioners and scholars to think about regional economies in terms of groupings of related firms and supporting infrastructure to increase productivity levels, innovation and economic growth.

Economists increasingly believe that endogenous technological change is the most important source of long-term economic growth. One important aspect of the economics of innovation is the clustering and networking of the agents of innovation—firms, end users, universities, colleges, government research facilities, etc. This emerging network economy leads towards more tightly coupled, more intense, more persistent and more intimate relations among firms and between firms and governmental organizations spurring inter-firm and inter-agency cooperation, joint ventures and strategic alliances.

The basic premise of clustering is that a loose, geographically bounded collection of similar and/or related firms work together to create competitive advantages for member firms and the regional economy. Competitive advantages are created through the agglomeration of key industries, supporting sectors and economic infrastructure working interdependently; sharing technology and skills, using similar inputs and suppliers, achieving economies of scale and efficiency, developing new products and markets. Thriving clusters span the entire chain of production from basic research to marketing of a finished product.

There are four key areas of advantages to cluster development:

Clustering Strengthens Local Economies: The concentration of an industry at a particular location / region may result in significant cost savings to firms of the cluster. These cost savings are referred to as localization economies. Sources of potential savings include a greater availability of specialized input suppliers and business services; a larger pool of trained, specialized workers; public infrastructure investments geared to the needs of a particular industry; financial markets familiar with the industry; and an enhanced likelihood of inter-firm technology and information transfers.

Clustering Facilitates Industrial Reorganization: The transition in industrial organization from large firms engaged in mass production to small firms focused on specialty production is well documented. The change in industrial structure is attributed to increased global competition and the emergence of new production technologies (e.g. computer aided manufacturing). Product specialization and the adoption of new production technologies are more prominent and easily attained among firms in industry clusters. Proximity between the more specialized firms and their input suppliers and product markets enhances the flow of goods through the production system and enables firms to more quickly adapt to market changes.

Clustering Encourages Networking Among Firms: Networking is cooperation among firms to take advantage of complementariness, exploit new markets, and integrate activities, or pool resources and knowledge. The cooperation occurs more naturally and frequently within industry clusters. And surveys of manufacturing networks find that firms in networks perceive significant advantages from cooperation with their counterparts. Networking firms are more likely than non-networking firms to engage in collaborating and information sharing in marketing, new product development and technological upgrading. The networking firms also report that their competitiveness and profitability are enhanced by inter-firm cooperation and collaboration.

Clustering Permits Greater Focusing of Public Resources: The targeting of industry development efforts permits regions to use their limited economic development resources more efficiently. First, a clusters approach enables regions to focus their recruitment, retention and expansion and small business development programs rather than attempting to provide assistance for many different business types. The tailoring of development initiatives permits clearer identification of specific industry needs. Secondly, because of linkages among firms in a cluster, programs supporting specific businesses will have relatively large multiplier effects for the area economy.

Therefore, regions that contain vibrant industry clusters / networks of economic activity are more attractive to highly productive and innovative companies than regions lacking in such industry clusters. Regions containing vibrant industry clusters serve as magnets attracting new businesses into the cluster because:

• They find better access to skilled employees and high quality suppliers. Both of these are essential ingredients of increasing productivity and innovation. Clusters are an important component of employee attraction strategies in today’s environment.
• They have access to specialized information. Extensive market, technical, and competitive information accumulates within the cluster, and members have preferred access to it.
• They are close to specialized infrastructure and public institutions. Public spending on infrastructure and programs important to business gives the region a location advantage with some industry clusters.
• They are motivated to compete with the best. Locating in the cluster often means that the company is competing with the best in its class. This ensures that it establishes strong competitive capabilities in its domestic market making it more likely to be successful in world markets.

To achieve successful industry cluster development, provincial and regional efforts and policies should not be aimed at helping individual firms, but rather at building relationships or networks among cluster firms. However, this coordination or networking among firms and the public sector does not occur naturally through market competition; it requires local leaders who promote collective action and institutions that transcend the interests of individual firms. Promoting and instilling a strategic alliance culture into a region, and actually facilitating functioning business networks will ensure that capital, resources and skills of the region are combined to promote innovation.

Creating networks requires a key entrepreneur or organization committed to getting the ball rolling. While public officials often initiate networks, industry associations and universities start many successful networks. While public officials can help initiate a network, these efforts ultimately require the leadership and participation of the private sector, specifically wellrespected CEOs or individuals, to succeed. Private sector leadership lends credibility to collaborative activities that may seem foreign to many firms and ensures the right issues are addressed in a way that government cannot.

Therefore, the ASBNC is focusing on ways to increase the connections and communication within our industries. We have identified opportunities to better align producers with suppliers and with support organizations and service providers. By strengthening southwest industries we are bolstering our regions competitiveness provincially, nationally and internationally.

3. Build Community Capacity – Key to Industry Innovation and Growth

The ability of a community and region to engage in “bottom up” planning to build industry depends on certain characteristics of people and business in communities that make them more or less able to adapt to change, to manage change, or even to create change that will have a desired outcome for their key industries in the region. The ability of a region to adapt to change is determined by its community capacity. A formal definition of community capacity is: the collective ability of a group to combine various forms of capital within an institutional and relationship context to produce desired results. This can be broken down into three elements. The first element is that the community must have access to a variety of capitals, assets or resources.

Assets and capital include: economic capital such as money and infrastructure for the communities roads, communications systems, buildings, schools, water and sewage; social capital which is defined as relationships between individuals and where people in communities can work together to achieve a positive outcome; natural capital which includes traditional natural assets such as minerals, agriculture land and water which humans have combined with other capitals to create primary, intermediary or finished products; and human capital which is the education, skills and health of people. Secondly, those capitals or resources must be mobilized through different kinds of relationships or networks that the community can develop. Lastly, those efforts must have some specific outcome that the community desires.

Capacity can be built, but it can also be eroded. Capacity can be built by creating additional capital stock, by improving access to financial capital, by increasing human capital through education or the development of leadership skills and facilitation of the creation of social capital. Capacity can also be strengthened by: enhancing economic, bureaucratic, associative and reciprocal relationships and networks. However the erosion of community capacity has happened in many communities through the loss of various forms of capital from the community such as: declining municipal and infrastructure grants, the removal of services, the closure of schools, hospitals and businesses and depopulation. It is also happening from the breakdown of associative and reciprocal relationships in communities in crisis that lead to community conflicts. You then end up with fewer volunteers, market relations are lost through the closure of business and bureaucratic relations are lost with a loss in the faith of government.

It is good to know that capacity is also cyclical, and positive capacity outcome may generate new forms of capital that lead to additional positive outcomes. Hence, success breeds success. If a community is successful in generating an industry development project that brings jobs into that community, then they will be more confident and skilled in looking at further opportunities and projects. Maximizing the ability of industry, community and the region at large to adapt requires strong community capacity. Strong community capacity will emerge from high level of economic, social, natural and human capital along with strong market, bureaucratic, associative and reciprocal relationships. This will ultimately empower communities and industry to recognize the assets and capitals they currently hold; determine ways to increase the stock of those assets and capitals; and recognize and enhance the relationships and networks present in the region that are able to mobilize assets and capitals.

ASBNC Strategy for Success

Stage 1. Cluster / Network Engagement

From the beginning the focus of the ASBNC has been to work on behalf of the region and to build a team that would shape the collaborative strategy. In September 2004 a Lead Steering Committee was formulated with a broad range of leaders representing urban and rural municipalities, private and public sector businesses, federal and provincial government departments, business development organizations and educational institutions from across the Southwest. The Committee was established to manage, oversee and support all activities in the effort.

In November 2004 the ASBNC began the mobilization of regional stakeholders in the key industry sectors of manufacturing, energy, tourism and agribusiness by hosting three regional information sessions in the communities of Maple Creek, Shaunavon and Swift Current. The purpose of the information sessions focused on education and awareness. Together with the network of businesses, community leaders and business organizations; the ASBNC worked hard to get the word out about the power of partnerships; help launch the process of forming alliances among small and medium sized businesses; and began the process of engaging dialogue with industry leaders for the purpose of collecting pertinent information to develop a strategy for industry growth.

The next step in the strategic process was to structure four industry leadership teams and further engage industry leaders “champions” from across the entire region in a series of round table discussions for the purpose of developing a blue print of initiatives (challenges and opportunities) that need to be worked on and implemented to help our economy, industry sectors and community’s move forward; and to implement a functioning strategic alliance.

Stage 2. SWOT and Data Analysis

It was now time to examine the performance of our region’s economy by: identifying how industry can maximize their strengths and opportunities while mitigating their weaknesses and threats; evaluating the capacity of our economic foundation; and assessing the competitive position of all industries within the region.

A clear picture of the overall economic performance and foundation of the Southwest region was key in developing a vision for the region in the next five to ten years. The analysis began with:

Industry SWOT Analysis: The consulting team identified industry concerns, trends and opportunities of our regional economy and used this information as a point of departure for participants to use in identifying the challenges they share and on which they are prepared to work together to find solutions.

Economic Foundation Capacity Assessment: The consulting team evaluated the performance of the region’s sources of economic inputs for the four key industries. The economic input foundations addressed were adaptable human resources, accessible innovation, available finance, available materials and suppliers, adequate physical infrastructure, acceptable governance.

Regional Profile: This is a compilation of demographic, social and economic information from the Statistics Canada census that is specific to the Southwest region. The intended purpose of this data is for future reference and benchmarking.

Competitive Advantage Analysis (CAA): This analysis examined past trends with a view to identifying industry sectors that have under-performed or over-performed relative to others in the region and in the province. It is a tool used to identify the economic strengths and weaknesses of the Southwest region and to determine which sectors require strategies for retention and growth.

Stage 3. Flagship Initiative Development

A crucial achievement of this initiative was defining the flagship issues on which the industry and region can and must work together to enhance the advantages of the overall economy of the Southwest.

Once the consulting team, in collaboration with the industry leadership teams, completed their analysis and identified where the strengths and weaknesses existed in each of the four key sectors, it was time to begin the formation of flagship initiatives.

Over 20 roundtable discussions represented by over 120 industry and community leaders and industry support organizations took place from November 2004 to April 2005. These discussions showed that the ASBNC strategy would only be as good as the commitments made and the actions taken by those who participated. In addition, sustainable economic changes would not be the result of a well drafted report but rather from the enablement of small and continuous changes in the behaviour of our economy that will, if taken together, become a “wave” of economic improvement.

This process resulted in the development of over 30 stakeholder crafted initiatives that will benefit the entire region and serve as a rallying point for regional collaboration. Participants defined the competitiveness challenges they shared in common, identified the actions to address those challenges on which they were willing to work together, and developed action plans specifying the next steps to be taken to begin the process of implementation. The following sequence of steps were carried out by the industry Leadership Team members:

Step #1: Identify shared industry challenges and opportunities.
Step #2: Develop and prioritize potential collaborative Flagship Initiatives.
Step #3: Develop and finalize flagship action plans and potential sources of leadership to take the initiatives to the next level.
Step #4: Formation and implementation of a business network.

Stage 4. Coordination and Implementation

The completion of the ASBNC initiative has involved four stages that conclude with the start of network / flagship implementation. The priority focus for this phase of work is laying the
groundwork for sustaining the momentum that has been already started through our initiative and is as follows:

Network Implementation: To further impress upon the region how networks can contribute to regional economic growth, selected members from each of the Leadership Teams committed to taking part in formalizing four actual business networks. This involved development of a network business plan, cooperation agreement and all involved parties endorsed their names on a letter of intent. These individuals have agreed to work together on a project that will benefit their individual businesses or industries and their continuing progress will serve as a role model where other regions, businesses and community leaders can emulate to identify and act on new opportunities for growth of the Southwest.

Coordination of Regional Leaders: To ensure the continued success of the ASBNC initiative the Lead Steering Committee is dedicated to sustaining and maintaining the ASBNC’s collaborative activities. However, no regional growth strategy can succeed that does not have regional leadership groups committed to moving actions forward and as a result a number of regional leaders have committed to continuing and building the ASBNC initiative as the vehicle for maintaining this strategy’s forward progress.

Preparation of Phase I Final Reports: Final reports for each of the four key industries have been drafted encompassing recommended strategies that can help strengthen each individual sector and the local economy as a whole. Each of these reports has been compiled in this document and will be a record of the collaborative commitments that have been articulated through the extensive strategy process. Our ability to sustain a commitment to these initiatives and this process will be a reflection of the improvement in our regional collaborative culture that this strategy process has achieved.

Selection of Flagship Initiatives: Upon review of the identified flagship initiatives priorities will be set and a select number of initiatives will be chosen for implementation.

Action Plan Implementation: Once again regional stakeholders will be engaged in the formation of industry network teams to implement the identified flagship initiatives in the four sectors. A project will not be acted on unless at least three leaders / stakeholders are willing to take responsibility to see that steps are taken to implement it. The people who agree to work on each project do not need to be experts on the topic and can recruit others to work on the project. The Lead Steering Committee will meet monthly to continue to pursue development of flagship initiatives, build and support networks, provide technical assistance to industry network teams and monitor regional progress.

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