Participants at this roundtable session were of a consensus that Italy still has an effective industrial system, and may continue to do so as long as a major restructure is undertaken so as to provide a boost for a great swathe of firms that are currently wavering between the boon of opportunities offered by global growth and the risk of being marginalized.
It was noted that Italy’s manufacturing industry has withstood the de-industrialization process taking place better than many of its European counterparts, confirming its second ranking in Europe behind Germany for value-added creation. Nevertheless, it was felt that in order to maximize and extend the incidence of existing strengths, a fully-fledged restructure is required, not only of the financial sector but also of industry. Indeed, investment must be systemic and create the kind of conditions that in other countries – the most virtuous example being Germany – have led to the emergence of national champions and institutions that support long-term industrial development, such as KfW, the German equivalent of Italy’s Cassa Depositi e Prestiti (a specialized lender to the Italian public sector). In addition, it was stressed that in the absence of national resources, any efforts to kick-start Italian industry must be accompanied by a push to attract a larger capital influx from abroad.
Of great assistance in this process, it was suggested, will be fact that there is no shortage of strengths on which to draw as starting points. The relative resilience of the Italian system to the crisis and the capacity to adapt to coexist and cooperate with German industry could provide a useful model for the forging of an increasingly more economically integrated Europe, in which no allowance is made for inefficiencies and unnecessary duplication so as to be able to compete with emerging countries. Moreover, like Germany, Italy too has succeeded in creating a system no longer characterized solely by basic production, but one that is bolstered by different specializations. Indeed, the country maintains good rankings for global competitiveness in its key sectors, and over the last fifteen years has put in place structural reforms that have led to a Made in Italy renaissance, in which technological and innovative sectors such as mechanical engineering sit alongside traditional industries like fashion, furnishings and food. This transformation has also resulted in the Italian system being ranked second globally, after China, for the number of product classes (excluding food) in respect of which the balance of trade is better than that of Germany.
Yet the strong growth in exports and significant manufacturing trade surplus (which in 2012 reached a record for Italy of 94 billion euro) are a symptom of a rather problematic phenomenon for Italian industry, namely, a sharp contraction in domestic demand. The participants pointed to this factor as the chief culprit behind a crisis that has resulted in the closure of many firms and the loss of 600,000 jobs out of a total of 4 million people employed in manufacturing. In a model that is becoming increasingly “local for local” (whereby clients require suppliers to maintain a strong local industrial presence) and in which firms are integrated into value chains, domestic market support is imperative for a manufacturing system that wishes to ensure solid foundations for the future.
While it was acknowledged that for globalized Made in Italy companies the domestic market is increasingly a European one, the question remains whether Italy can continue to be an attractive production base to serve clients across the Old Continent. As it is, the country’s structural and infrastructural problems still weigh heavily on the competitiveness of the economy as a whole, as do the “cultural“ limitations that characterize Italy’s small and medium enterprises. Indeed, a business continues to be viewed as inalienable, and the persistence of family-run firms throws the issues of proper corporate governance and growth in size into sharp relief.
In conclusion, it was recalled that Italy is a recently industrialized country, and that its successes in developing a manufacturing base after the Second World War are no guarantee of its future prosperity. The industrial boom was a time of many new SMEs, of great captains of industry, but also of fewer rules. The consensus among the participants was that Italy is now called upon to regain that momentum. Just like a large complex company trapped in a business model that no longer works, it must renew itself – and it can do this through a profound reinvigoration of its manufacturing industry, including by means of policies that improve the interaction between science, technology and businesses, providing industry with the highly-skilled human capital needed to compete in global markets.