Regional innovation in Värmland

At the industry peak there were no less than 52 paper-mills in Värmland. Today only seven remain. Värmland has thus had an industrial cluster in pulp and paper for over a hundred years. Due to this long tradition Värmland is today a global centre for the manufacture of pulp and paper machines and has an Information Communication Technology (ICT) sector with a specialisation in control systems for the forestry industry

The paper mills have resulted in Värmland being a world leader in the construction and manufacturing of paper machines. Most new paper machines in the world have parts made in Värmland. Photo from Stora Enso Skoghall. Machine by Metso Paper. Photo Jan-Olof Hesselstedt.

The paper mills have resulted in Värmland being a world leader in the construction and manufacturing of paper machines. Most new paper machines in the world have parts made in Värmland. Photo from Stora Enso Skoghall. Machine by Metso Paper. Photo Jan-Olof Hesselstedt.

The big industries and paper mills benefited the local economy in that they had many employees. There was however one significant drawback to this industrial structure, simply put, it did not foster entrepreneurship. Jobs were taken for granted. When the industries were forced to shut down or rationalise this led to a significant rise in unemployment.

Stimulating the innovations that lead to new jobs and businesses is now one of the greatest challenges for Region Värmland. This is done through several cluster organisations and via extensive collaboration with Karlstad University. Over the next five years Region Värmland will invest around 50 million SEK to expand this University cooperation while additional external funding will attract a similar amount.

Cluster initiatives

The innovation system in Värmland is formed around several regional cluster initiatives and innovation platforms. The cluster initiatives as they are today began to take shape in the late 1990s. The Paper Province (pulp, paper and machinery) and Compare (IT and service sector) were early initiatives.

The cluster initiatives are based on co-operation between companies, society and institutes of higher education and have been set up around already strong sectors such as pulp and paper, the packaging industry, steel and manufacturing, the information and communications sector and the food industry.
They are strongly company-driven – most were initiated by industry – and are based on the companies' need for mutual expansion efforts. The initiatives serve as a platform in which companies meet and co-operate across borders with public players and with the academic world. Co-operation between private sector companies and Karlstad University has strengthened the companies and increased the commercialisation of the research results.

A focal point here is the need to create places and fora where people can meet. This helps to develop trust between the various actors, which is a critical issue when forming an effective innovation system. When people trust each other they tend to do business together and new ideas tend to spring to life when people with different backgrounds meet.

Innovation platforms

Particularly important for the clusters is the creation of innovation platforms. They are set up around new business challenges demanding interaction between different branches of industry and different competences. The task is to find new constellations of people, industries, companies and researchers that can come up with innovative solutions to meet the new challenges.

Some of these platforms have developed research infrastructures, test labs etc., to correspond to a need that lies between university labs and R&D-facilities at a single company.

One such example is the Compare Test lab which is an independent ICT test facility where both university researchers and companies can test new applications and ICT-systems.

Another is Packaging Media lab where consumer reactions to new packaging solutions can be tracked. Actors such as researchers in consumer behaviour, cardboard and packaging producers, food producers and designers use the facility.

The research infrastructures have proven to be an important mechanism not only in the development of new knowledge and solutions but also in functioning as natural meeting points for people from different sectors. In this way these facilities contribute to the creation of trust enhancing knowledge transfer between the actors while also acting as an inspiration for new ideas.

Region Värmland has now been at the forefront in the development of this system, together with the County Administrative Board and the municipalities, for ten years. A strong sense of political leadership and a clear strategy have been important here in gaining the support of key actors such as business leaders and those in the university sector.

Work has also focused on attracting additional financial support. The process of developing the programme with European funding helped the region financially to oversee a structural change from an old industrial to a knowledge-based environment. The use of innovation platforms as a tool for economic structural development has played an important role here. The ERDF-programme (European Regional Development Fund) in North Mid Sweden strongly supports the development of the innovation platforms in the three counties Dalarna, Gävleborg and Värmland.

Cooperation between Region Värmland, the cluster managers and the various research departments at Karlstad University has increased significantly during this period. The participation of the private sector through these cluster organisations has also been an important factor in the success of these organisations.

The progress made in Värmland has been widely acknowledged. For example professor Steve Garlick, from the University of Newcastle in Australia, who played a part in both the 2005 OECD team and the Pascal Observatory PURE team, reviewing Värmland, stated that he had "not seen anywhere in the world a region building a regional innovation system in such a short time as has been done in Värmland. This is an extraordinary achievement outside a metropolitan area."

Cluster organisations

The cluster organisations represent some 300 companies with approximately 30 000 employees which is about 30% of the workforce in Värmland. This generates a critical mass and provides a good opportunity to design development projects that have a significant impact on the region's economic activity. The overall turnover in these companies is about 3 billion Euros a year.

Through the establishment of innovation platforms, joint strategies, meetings and several development projects a learning process has now been put in place in the region. This has led to a change in action where market-driven cluster managers coordinate the cluster companies and match activities with researchers and students.

Among the region's companies many are already established in the global marketplace and some are even world leaders in their own particular branches of industry. These big companies can help plug small enterprises into the global system and introduce them to new markets abroad.

The innovation platforms also function as 'sugar canes' encouraging new visitors to the test labs to establish development projects or to invest in further cooperative ventures.

In all some 40 persons work in the test labs and about 20 researchers work full time with various projects. The projects attract partners from all over the world and investments of about 30 million Euros have been made over the past six years.

Measuring the focus and the choice of product by tracking the customers eye movements. Photo The Packaging Arena.

Measuring the focus and the choice of product by tracking the customers eye movements. Photo The Packaging Arena.

The reportage about innovation in Värmland is part of the Nordregio REKENE-project. The articles were provided by:

Staffan Bjurulf, Regional Advisor, Region Värmlan and Anders Olsson, Enterprise and Innovation Manager