Cluster of Plastic and Tool Producers of BiH has been established with an aim to strengthen and capacitate SMEs operating of plastics and tool sectors across BiH with aim to improve their competitiveness and to influence policy making in BiH.

The guiding principle of approach towards establishment of Cluster of Tool and Plastic Producers of BiH is that small-scale manufacturing enterprises can play a key role in triggering and sustaining economic growth and economic development in developing countries, and BiH is no exception. This potential role is often not fulfilled because of a particular set of problems characterizing SMEs which are related to their size.

Individually, SMEs are often unable to seize market opportunities which require large production quantities, homogenous standards, and regular supply. By the same account, they experience difficulties in achieving economies of scale in the purchase of inputs (such as equipment, raw materials, finance, consulting services, etc.).

Small production outputs also constitute a significant hindrance to the internalization of functions such as training, market intelligence, logistics and technology innovation all of which are at the very core of healthy SMEs. Furthermore, small scale can also prevent the achievement of specialized and effective internal division of labor aimed to achieve cumulative improvements in productive capabilities and innovation. Finally, because of the continuous and fierce struggle to preserve their thin profit margins, small scale entrepreneurs in BiH are often locked in their routines and unable to innovate their products and processes and look beyond the boundaries of their firms to benefit from arising market opportunities. Through Cluster networking, individual SMEs can address the problems related to their size and improve their competitive position chances of success.

On account of the common problems they all face, small enterprises are in the best position to help each other. Through horizontal co-operation by occupying the same position in the value chain, enterprises can collectively achieve scale economies beyond the reach of individual small firms and can obtain bulk-purchase inputs, achieve optimal scale in the use of machinery and pool together their production capacities to satisfy strict quality requirements of customers. Through vertical integration (with other SMEs as well as with large-scale enterprises along the value chain), SMEs can specialize on their core business and give way to an external division of labor. Inter-firm co-operation also gives rise to a collective learning space.With an aim to increase competitiveness, seven Cluster members are recipients of www.ei-bih.ba grant financed by USAID and Ministry of foreign affairs of NORWAY to create self-sustainable MTTC - Machine Tool and Technology Center, within 2 years. The key success factor for the center is to provide services based on advanced technologies and skills that are hard to replicate or to develop individually by single SME. Center is recognized by clients as location that offers access to newest skills and technologies. Competitive advantage of the firm is not going to be duplication of existing services in the market, but rather set of services that are non-existent or very hard to find in BiH market. To be exact, services those are costly to develop individually by a single SME, for its own production needs but would significantly increase competitiveness of local SMEs. MTTC product mix is based on two main groups: services and trainings concerning applied CAD/CAM/CAE technologies.