Joint competition – the world dominance of Danish fur production

Low-tech industries provide a substantial contribution to the Western economies and there is a growing literature that criticizes the over-emphasis both policies and economic analyses often put on high-tech industries. Clusters have been pointed to as instrumental for small firms in meeting the challenges of a globalised, knowledge-based economy because they are known to have deeper specialization, which in turn is seen as a prerequisite for constructing comparative advantages and industrial strongholds. The paper takes the point of departure in the Danish fur production and an agglomeration of production of mink/furs in North/North-Western Jutland, Denmark. This industry has been by far the major producer in the world with a large world market share. Two paradoxes needs to be explained: the world dominance of a low-tech, labour intensive sector by a small, high-income/high-wage, high-tech country, and secondly the strong geographical concentration within Denmark. It is shown that the industry is crucially dependent on both local, sticky production factors, and other local clusters. The clustering is, moreover, explained by historical reproduction of the succession process and access to input factors. Moreover, there is an extensive division of labour on an industry level concerning sorting furs, slaughtering, sales, etc. Several links in the value chain is thus covered in a vertical integration. Although innovation is limited on an organisational level the cooperative organisation and governance of the industry as such is an important factor in explaining the ability of Danish producers to remain competitive.