Prince Edward Island may be Canada’s smallest province, with a population of just 140,000, but it is a giant when it comes to clustering industries together for collective benefits and economic growth. From biotechnology and aerospace to culinary sciences and IT, P.E.I. is earning a global reputation as a key player.
Clusters are geographical concentrations of companies from the same, or related, sectors that collaborate with one another and other local players, such as governments and research institutions, to create an ecosystem that nurtures the best ideas and delivers greater productivity gains than could be achieved in isolation. Silicon Valley is the most famous, but there are countless others across every continent — some more successful than others.
Since the early 1990s, PEI’s economy has undergone considerable growth in high knowledge sectors such as aerospace, bioscience and IT, as well as advanced manufacturing and processing, including value-added food development and production. Keen to capitalize on the wealth, exports, information and jobs that clusters create, the province has kept pace with the construction of world-class infrastructure and the creation of training programs to ensure local companies have access to a skilled workforce. It has also been the impetus for the introduction of customized incentive packages, including seed capital and tax rebates, providing innovative entrepreneurs with a competitive cost structure and the opportunity for increased profits.
Aerospace has led the way. With the closing of the military base near Summerside in the late ‘80s, the province needed a new tenant for the nearly-vacant Slemon Park. Today, P.E.I. houses the only aerospace park in Canada that offers an on-site, customized training centre and the country’s only aerospace-specific tax rebate. The sector has grown in sales from $5 million in 1992 to more than $360 million last year. The direct payroll averages $39 million per year, generating about $3.7 million in provincial income tax and more than 3,500 jobs.
Not to be outdone, the province’s bioscience sector has made significant gains in the last decade. Currently, 46 companies employ more than 1,400 people. Businesses are developing products from functional food ingredients to pharmaceuticals, animal and fish health products, and diagnostics. Collectively, export sales exceeded $200 million in 2015.
Rory Francis, executive director of the PEI BioAlliance, says this kind of industry success story doesn’t happen overnight.
“A consistent, long-term commitment from leaders in business, research and academia and governments at all levels is essential. This has been a 12-year team effort.”
The PEI BioAlliance was incorporated in 2005 to help connect entrepreneurs, government agencies, research institutions and funding partners.
“Our role is to create many opportunities for companies and researchers to meet, get to know each other and work together. And there are some great government programs that can then support these initiatives,” Francis says. “That’s how innovation works — organizations with different purposes in life, finding value in sharing their expertise.”
With its rural roots and ready access to fresh seafood, it is perhaps not surprising that P.E.I. has also punched well above its weight in the food industry as well. Ten per cent of the province’s GDP comes from food processing and primary agriculture. In 2014, the Island exported a billion dollars worth of products internationally and 40 per cent were food products.
In 2015, the formation of the Food Island Partnership (FIP) was announced with the goal of establishing P.E.I. as an internationally-recognized place of origin for premium food products as well as a culinary excellence destination. This collaboration between companies, industry partners, research, development and technology institutions focuses on three areas: company and product development, creating new value-added food products, and leveraging and building the reputation of the P.E.I. food brand. An integral part of the innovation framework is Canada’s Smartest Kitchen (CSK), a research and development arm of the Culinary Institute of Canada, located in Charlottetown.
“We are a central part of what we consider to be a strong food innovation ecosystem that exists on Prince Edward Island,” says CSK executive director, Peter Crooks. “With first-hand connections to primary producers, infrastructure and expertise, funding partners, suppliers, and our own network of top industry experts across the globe, we are able to offer clients a customizable suite of services right from our advanced R&D facility in downtown Charlottetown. These strategic partnerships are key to being able to deliver valuable and functional results to our clients.”
These types of partnerships, more than anything else, are proving central to the success of innovation clusters, and may offer some insight into why Canada’s smallest province has been able to make its mark on a global scale.
After Harvard Business School professor, Michael Porter used the success of Silicon Valley to discuss the advantages of “innovation clusters” in his 1990 book, Competitve Advantage, legions of consultants following his methodology prescribed ‘top-down’ clusters to governments all over the world. The formula was always the same: select a hot industry, build infrastructure near a research university, provide subsidies and incentives and create a pool of venture capital. Today, far too many of these efforts, from Tsukuba, Japan’s science city to Egypt’s ‘Silicon Pyramid,’ are either dead or on life support.
It has become clear that it takes more than industry, academia or even funding to create a thriving innovation cluster. It takes close connections and enthusiastic relationships that are eager to attract companies, cut through red tape and cultivate brilliance. It turns out P.E.I.’s small size may actually contribute to its innovative achievements.
“Our collaborative approach,” says Francis, “that’s something that differentiates us from larger centres. We are using our size to our advantage.”
The success of innovation clusters depends on mutually-beneficial partnerships much the way small businesses do, says John Griffin, Atlantic Business Magazine’s 2016 “Innovator of the Year” and president of W.P. Griffin Inc., a 3,000-acre potato and packaging operation in Elmsdale, PEI.
“Working with others is the only way we can achieve something bigger than we are too small to achieve on our own,” he says, adding collaboration has been instrumental in growing his company, at a time when many others in his industry are failing.
In 2012, he collaborated with CSK to determine the best usage of different types of potatoes for the Canadian market. The findings would allow him to package the spuds in a way that would make it easier for consumers to know which type to buy, depending what they wanted on their plate.
“(Researchers) tested different potato varieties to determine which ones were best for baking, mashing, roasting and boiling,” Griffin explains. The new color-coded plastic bags of potatoes made their debut into Sobey’s stores in Atlantic Canada in 2013.
In the 1990s, Griffin partnered with the PEI Food Trust to develop Canada’s first shrink-wrapped potato packs, ready-to-heat in the microwave and he has partnered repeatedly with government and industry on trade missions and credits these trips for some of his biggest successes. A 2000 trade event in Philadelphia resulted in W.P. Griffin becoming the initial branding partner for Dole for potatoes in Canada. Another in Boston in 2010 inspired Griffin’s foray into a new brand of potato called the Rooster — the top selling table potato in Ireland — and the resulting international partnership with UK potato grower, Albert Bartlett and Sons.
Broader connections like this are key if one wants to compete on a global scale, Crooks says.
“We have made an effort to extend our collaboration network outside of P.E.I. as well, in order to compliment and fill in any gaps in the service we can provide here on P.E.I. This includes linkages with other Atlantic Canadian R&D centres, like Perennia in Nova Scotia, or global partners like our packaging experts Food Atelier and DeDutch in The Netherlands.”
Crooks says one of their biggest challenges the CSK is facing right now is simply helping prospective clients to understand the value of getting help early in the development process, which can save their company valuable time and money.
“Clients are often reactive and we would like them to be more proactive in their R&D efforts by including it in their strategic planning to ensure that it has a prominent role in their business growth strategies,” he says.
On the bioscience front, Francis says the cluster needs to double and then redouble its scale in order to reach critical mass.
“We can see that goal from here — it’s not only possible, it’s probable, if we stick to our strategic priorities and build our innovation ecosystem,” he says. “As a priority right now, we need quality incubation and acceleration space for early stage companies. Our growth has used up what’s available. So we have a team finalizing that business plan and identifying funding sources. We put a lot of emphasis on human resources. This is a brainpower business. So to attract and grow companies, you need to build the talent pool locally, and attract specialized skills as required. That’s a team effort.”
And Francis remains undaunted by the task. Quoting one of his board members, he says, “Dream big and execute well. There is not much we cannot do collectively.”