What do we mean by “near”?
Miners look for new mines near old mines. They also look for new solutions from suppliers they know and trust.
Customers following up on success have driven the growth of the Sudbury mining supply and service cluster.
Suppliers following up on success also drive the cluster. Companies develop new offerings based on successful products they already supply. They apply expertise developed solving old problems to new but related challenges.
These are all examples of the power of “nearness.” Rastall Fasteners in Sudbury provides an extreme illustration of exploiting nearness. Rastall’s Nut and Bolt division is the largest industrial stocker and supplier of fasteners in Northern Ontario, with over 19,000 different products in stock. If you need great big nuts, for example, you go to Rastall. If you need an even larger nut, Rastall may not have it in stock, but the company will know how to get them or make them.
Other SAMSSA companies grow the same way, improving products, adding related products, and finding customers with similar needs. They succeed by identifying and capitalizing on opportunities close to their existing strengths.
“Near,” though, is a tricky idea. Products can be near each other in several ways. They might be close in an engineering sense. The new product might be so much like an existing product that it takes very little new engineering and design.
Products can be near in marketing space as well. When you sell a machine, you may be able to sell servicing with it.
Servicing a drill on-site is not at all like building one, but for the customer, service belongs in the same package.
Products that do similar jobs are near in function space. Shotcrete, rock bolts and mesh, for example, are often interchangeable. Conveyers can do pretty much the same job as scoop trams. Successful businesses like Rastall’s Nut and Bolt division have to have a lot of practical knowledge about their product neighbourhood. They have marketing departments and product development divisions as ways to explore nearby possibilities.
Statistical agencies have long tried to understand high-level relationships among industries as well as business operators understand the relationships among nearby firms and products. In 1937, the U.S. developed the Standard Industrial Classification (SIC). It gave firms with similar products and production, services, and delivery systems similar numbers. All the codes for metal mining, for example, were in the 1000s. Coal operations and related businesses got numbers in the 1200s. Oil and gas operators are in the 1300s.
The SIC system and the newer North American Industrial classification system (NAICS) became the standard way that economist used to think about industry “nearness.” The categories may not help businesses that want to diversify, but they have helped governments to shape national industrial strategies.
Unfortunately these classification systems don’t work at all for the mining supply sector. Mining supply and services companies in the same town, selling to the same customers in the same industry, often working together, can be miles apart in the standard industrial classification system. Rastall’s nuts and bolts are under code 3452, close to metal doors in 3442, a long way from explosives in 2892, and even farther from shotcrete in 1771. The essential services of mining engineers are in 8711, thousands of four-digit categories away from metal mining.
With the standard classification as their framework for industrial policy, federal and provincial governments have had trouble believing that firms in the Sudbury area had created an innovative export cluster. It didn’t mater. Firms in the region went on developing products and expanding into new areas without help or guidance.
The interesting question now may be what the cluster will add next. Sudbury and North Bay are centres for aviation servicing vast northern territories. Mineral exploration and mining operations rely heavily on the aviation industry and will soon rely on hybrid aircraft. Firms that do precision machining or rugged electronic systems may well find themselves making aircraft parts, coded 3728, on the side. A drill manufacturer may make a breakthrough in ground source heat pumps, and grab a huge new market as the world decarbonizes.
One thing is certain: there are opportunities nearby just waiting to be found.