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Manufacturing industries are facing increasing competitive challenges in both maintaining their existing markets and improving their capability to respond efficiently to marketplace needs. New architectures are required for next generation of manufacturing systems which must be developed to meet these challenges. This paper introduces a novel approach for dynamically creating and managing agent communities or virtual clusters. These virtual clusters use Contract Net bidding for multi-agent negotiation and Mediator agents to co-ordinate their actions. The manufacturing system is thus populated by heterogeneous agents and structures of control which operate autonomously during the planning and execution periods of the manufacturing tasks.