Were you unable to attend Transform 2022? Check out all of the summit sessions in our on-demand library now! Watch here.

The Midwestern and Southern U.S. are home to a number of cities and states with a strong manufacturing history that are trying to leverage their factories to become R&D leaders — think Wisconsin trying to recruit Foxconn to create its own version of Silicon Valley.

But cities need more than experience manufacturing a product to build research labs centered around that product — they also need research talent.

New research from the Brookings Institution looks at how one region with a strong automotive sector — upstate South Carolina — sought to do just that. The report was part of a larger research project from Brookings on the effectiveness of “cluster” initiatives: economic development initiatives that are based on the idea of trying to help a city become a leader in one specific industry.

The upstate South Carolina region, which includes Greenville and Spartanburg, is home to BMW’s U.S. manufacturing plant and the North American headquarters of tiremaker Michelin. In the early 2000s, discussions between nearby Clemson University and the area’s auto employers revealed that one group of employees was in short supply: high-end automotive engineers.

So in 2003, Clemson created the International Center for Automotive Research (CU-ICAR) to educate more engineers, and to serve as a center for industry-relevant research. CU-ICAR received investments from BMW, Michelin, and Timken, a bearings manufacturer with a presence in upstate South Carolina. In 2007, CU-ICAR began offering master’s and Ph.D. programs in automotive engineering, and last year it launched a one-year certificate program in auto engineering for undergraduate students or current employees of auto companies. Some of the fields that students and professors are conducting research in include vehicle-to-vehicle connectivity and vehicle infrastructure-integration — both important fields of study relating to the development of autonomous vehicles.

The result: Since 2007, more than 400 students have graduated from CU-ICAR’s master’s, Ph.D., and certification programs and about a quarter of them have stayed in South Carolina, according to Brookings, indicating that the employers investing in CU-ICAR are retaining some of its talent.

“For leaders in other regions and states, CU-ICAR offers an example of how a major research university, state government, and industry can co-invest in a shared asset that can differentiate a cluster from its competitors,” the lead author on the Brookings report, Joe Parilla, told VentureBeat in an email.

The report highlights a few lessons from CU-ICAR and its partners that other regions might want to learn from — for starters, that it took significant investment from a number of private and public partners to help CU-ICAR get off the ground. Since its inception, CU-ICAR has received close to $300 million in investments, including $95.5 million from the state and local governments and $55.8 million from the private sector. Private partners have also worked closely with CU-ICAR to develop relevant research projects that give students and professors the chance to work with multiple companies. One example, from the report:

Michelin is interested in developing a new type of tire design called TWEEL, and BMW wants to understand if this technology can improve driving dynamics. Together, Michelin and BMW contract CU-ICAR to test the ride and handling of a Mini Cooper utilizing TWEEL technology. The industry partners and/or Clemson would own the intellectual property developed as part of this contract.

Second, Clemson — a traditional four-year-university — is also working with other local educational institutions to address the multiple segments needed to build a true “talent pipeline.” CU-ICAR hosts a mentorship program with a local middle school, and has also worked with the local technical schools to create a center to train advanced manufacturing talent.

Parilla does caution that upstate South Carolina is a unique case in that it first recruited BMW to set up a plant — in order to create an auto manufacturing cluster — in 1992. BMW still employs close to 9,000 people at the plant, but not every instance of a city recruiting a company to set up an office or factory creates positive economic benefits. There are a number of cities, for example, that gave Amazon tax breaks to set up a fulfillment center in their backyard but have yet to see extensive job gains.

The CU-ICAR program is also still young and, with its focus on longer M.S. and Ph.D. programs, is still not at the scale where it can churn out the hundreds of engineering graduates necessary each year in order to create an R&D hub that can compete with other U.S. research centers.

“The next phase for Upstate South Carolina’s economy is to continue its evolution from a branch manufacturing economy — meaning it is primarily building and assembling cars/appliances, etc. — to an economy where firms are conducting research and development and inventing new technologies locally,” Parilla told VentureBeat. “For instance, right now most auto sector R&D is still done in Detroit or Munich or the Bay Area — can USC compete in that space?”

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.