Reforms and engineering excellence are behind Italy’s renewed appeal to investors
Interview with Sandro de Poli
The international press has made much of the resurgence of foreign investment in Italy. In the following interview, Sandro de Poli, CEO of GE Italy and Israel, explains that this turnaround is not simply down to the reforms that are changing the country’s image. The fact that Italy can offer great engineering expertise at very competitive costs is also playing its part.
How do international investors view Italy today?
There has definitely been a positive turnaround in perceptions linked to the progress of reforms embarked upon and pursued promptly and vigorously. The demonstration of such qualities is crucial for the credibility of a country. In addition, certain very important issues for businesses, such as taxation and labor, have been clarified. Steps forward have also been made with respect to encouraging inward investment flows and assisting Italian firms to internationalize. I’m thinking of the reorganization of the ICE (Italy’s Institute for Foreign Trade), the clearer division of roles between ICE and Invitalia (the national agency dedicated to attracting investment and business growth), as well as the supportive efforts of the SACE export credit agency.
What factors still discourage foreign investors?
Foreign investors do not look favorably on a country where civil proceedings can drag on for 10 years or where permit-granting procedures take a very long time and are fraught with uncertainty. In other parts of Europe, investors have access to a one-stop shop that issues a response and gives the go-ahead for work to proceed within a matter of a few weeks.
To say nothing of tax audits: as chairman of the tax committee of the American Chamber of Commerce in Italy, I have found myself having to explain to foreign managers and entrepreneurs how to deal with arbitrary checks. The risk in these cases is that a bad experience with the tax authorities will discourage potential investment. Today we live in a world where money flows to places where a combination of factors exists, namely: value for money, savoir faire, an attractive tax regime, and an efficient judicial system.
Why do multinationals like GE continue to invest in Italy?
Italy’s expertise and cost competitiveness are drawcards. Italians are perhaps not the cheapest workers in the world, but they certainly cost less than the Americans, Germans, and French, and even, in some cases, the Chinese. In fact, if we’re talking about advanced engineering, we see that a highly-skilled professional in China costs more than an Italian counterpart.
GE’s investment in Italy has met with success. After taking over Nuovo Pignone in the days of the first privatizations, the company once again took a gamble on Italian technology by acquiring Avio Aero in 2013, with an only-recently announced investment of 600 million euro to establish a center for the group in Tuscany.
This is no accident: a look at what the country can offer in terms of its engineering tradition is enough to explain it. The latest reforms, especially those relating to the labor market, enable this forte to be turned to best advantage. Today, if someone were to ask me where in Europe they could open a factory, I would recommend Italy to them.
More of a cultural treasure than technology-rich: that is how Italy is portrayed in the international media. Is this an image that penalizes the country’s engineering excellence?
Absolutely not. The level of Italian engineering expertise is quite evident, especially in hi-tech sectors like those we operate in. Let’s think about the business results achieved by GE in a cultural capital like Florence: when we took over, Nuovo Pignone had a turnover of one billion euro. Last year, discounting the effect of mergers and acquisitions, this had reached 7 billion. The company’s allied industries have multiplied, creating wealth in the region. Not only has the shareholder GE grown wealthier, but so have all our people and the allied industries that work with us – both financially and in terms of technological expertise.
