Mapped: North America’s top advanced manufacturing clusters

This article is part of a series that looks at the highest-density clusters in North America. Stay tuned for entries on technology, business services, finance and insurance, food and beverage, creative industries and life sciences.

As with tech, talent availability is an important factor for most companies, as is overall cost. Research is also important for manufacturers looking to develop high-value products. One oft-overlooked – but incredibly important – consideration is whether the business ecosystem has formed a legitimate manufacturing “cluster.”

While the benefits aren’t as immediately apparent as having access to top trades talent or engineers or inexpensive real estate, locating in a cluster has long-term advantages. For example, the Harvard Business Review has argued that clusters help drive innovation, productivity, new business growth and helps businesses within the cluster scale.

How do you find a strong manufacturing cluster?

Site selectors use something called location quotient (LQ). In really simple terms, LQ compares an industry’s share of employment in an individual community with the national average. We’ve taken LQ measurements of North America’s top advanced manufacturing communities to figure out a) whether there are any surprises and b) which ecosystems have the strongest clusters.

Here are North America’s top large and mid-sized manufacturing clusters:

What are you seeing?

If the circle is green, it’s a “true” cluster. If it’s red, then a cluster effect isn’t evident. The circle size is representative of total cluster employment – the bigger the circle, the more employees. As you can see, a community can have high employment in a particular industry but NOT be a cluster.

Who sticks out for advanced manufacturing concentration?

Well, we didn’t expect San Jose to be big and green, while none of the smaller communities with a heritage of manufacturing – Pittsburgh, Indianapolis or Columbus – show up as a “true” cluster. This may have something to do with the differences between traditional manufacturing, which emphasizes larger labour forces working on lower-value products, and advanced manufacturing, which incorporates more technology to build higher-value products (consumer technology, automotive, etc.). Seattle and Portland showing up as big manufacturing clusters is surprising. Detroit continues to be a powerhouse of manufacturing. In Canada, communities across Ontario appear as true clusters, as do Montreal and Quebec City.

The big green dot in Ontario is the Toronto-Waterloo Corridor. This area is part of Canada’s largest manufacturing and automotive corridors, so its inclusion isn’t surprising. Here’s what we see when we zoom in:

That’s five communities that qualify as legitimate “true” clusters, all within an ~100km/65mi of each other. Waterloo and Guelph are particularly strong with LQs over 4. Generally speaking, an LQ score greater than 1 is good and less than 1 is bad.

Here are the top 5 large advanced manufacturing clusters in North America – defined as high LQ communities with total cluster employment over 50,000:

San Jose, US – LQ = 3.221 – Total Cluster Employment: 122,780

Detroit, US – LQ = 1.992 – Total Cluster Employment: 134,131

Montreal, CAN – LQ = 1.863 – Total Cluster Employment: 62,595

Toronto, CAN – LQ = 1.684 – Total Cluster Employment: 82,845

Seattle, US – LQ = 1.662 – Total Cluster Employment: 112,900

Here are the top 5 mid-size advanced manufacturing clusters in North America – defined as high LQ communities with total cluster employment under 50,000:

1. Guelph, CAN – LQ = 6.458 – Total Cluster Employment: 8,950
2. Waterloo, CAN – LQ = 4.428 – Total Cluster Employment: 20,405
3. Oshawa, CAN – LQ = 2.454 – Total Cluster Employment: 7,900
4. Hamilton, CAN – LQ = 2.439 – Total Cluster Employment: 15,105
5. Portland, US – LQ = 1.149 – Total Cluster Employment: 46,554

Why is Canada dominating that second list? As with our tech LQ data, the answer appears to be that Canada has a limited number of communities that provide the ideal environment for these types of clusters, so those communities end up with a very high concentration. However, it’s also possible that thanks to the prevalence of automation in Canadian manufacturing – Waterloo has the largest robotics and automation cluster in Canada – and the particular importance of automotive manufacturing within Ontario, the manufacturing we do just happens fit more comfortably in “advanced manufacturing.” Put another way: if this was LQ for more traditional manufacturing, the map may look very different.

Regardless, this data really highlights the strength of manufacturing in Canada – not just Waterloo, but throughout the Ontario manufacturing corridor. This is the type of ecosystem where manufacturers are routinely finding success, thanks in part to local automation know-how, a highly-skilled workforce and a very advantageous location for supplying consumers and manufacturers across North America.