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Focus on Industry: resilience and recovery

  • Venice
  • 30 September 2022
  • 2 October 2022

        The era of hyper-globalization that started back in the 1980s brought global production lines to geographic areas that offered lower production costs. However, over the past decade, that offshoring phase has slowed and has even, in part, been inverted. The priority of multinational corporations has shifted from the initial objective of lowering costs to that of minimizing the risk of supply-chain disruption, with a view to increasing resilience and ensuring continued and uninterrupted access to target markets.

        From that standpoint, the Italian manufacturing firms that grew considerably during that hyper-globalization are in dire need of an overhaul; indeed, the processes of reshoring that have begun are part of a logic of resilience in which production is brought closer to its target market (local-for-local). For Italy, these process must necessarily take place within the framework of a European manufacturing platform that places particular attention on the following: (1) research into alternative energies and the adoption of the technological neutrality associated with decarbonization; (2) completion of the single European market within a cohesive infrastructure and territorial structure plan; (3) a human resources policy that encourages the integration of the work force into the country’s economic and productive fabric.

        The new “short” local-for-local production line, in addition to being a manufacturing system, must also be considered a social one. The insularity that has long characterized many firms in Italy must give way to examples of collaboration between large and medium-scale companies as well as with research centers, schools and universities. That is going to require a two-pronged approach: (1) the design of a European production line based on the green economy, infrastructure, digitalization and big data; and (2) reinforcement of the system of services associated with value chains. Unfortunately, and notably, Italian small and medium-sized enterprises have not yet developed the managerial skills required, and necessitate a network of services – especially financial ones – capable of underpinning the energy and digital transitions with the sustainability ensured by “servitization” models.

        The concept of acceptability plays an extremely important role in the dynamics of this new manufacturing model, in as much as consumer opinion increasingly demands companies conform to the criteria of quality and sustainability. Two features that must become an integral part of a company’s competitive assets – i.e., either they produce sustainable products or those products will not make it to market. This is a tough challenge but also an opportunity for Italian industry to retool and redesign products and processes for a less intense use of resources, with a predilection for the use of locally-sourced materials and increasing products’ local circularity.

        Sustainability as an asset changes ways of manufacturing and participating in markets, and is also an incentive to localized applied research. Virtuous examples exist in Italy but are concentrated in the regions of the North; the reasons they are so scarce in the South are complex and need to be better understood.

        The human capital situation reflects a series of negative trends in Italy: limited numbers of college graduates, a high rate of functional illiteracy, the NEET phenomenon (not in education, employment, or training) especially in Southern Italy, and new graduates’ difficulty accessing the job market as a result of the mismatch between their educational training with industry’s demand for skills. Implicit therefore is the need to stress the quality and quantity of graduates (including women) qualified for STEM fields while also promoting a polytechnical culture that combines technical with humanistic knowledge.

        It is also clear that long-term learning is fundamental to accomplishing the digital and environmental transitions competitively. The quality of Italian elementary education is high, but begins to decline at middle school level which needs an influx of younger teachers and the increased participation of private enterprise. Upper secondary schools must continue this virtuous process aimed at forming the intermediate level professional figures of ITSs through a “territorial” curriculum in which the school exercises flexibility in the creation and management of relations with businesses.

        Finally, the smart-working phenomenon has a potentially negative impact on productivity. Dialogue and interface within firms, offices and professional facilities is fundamental to productivity and helps skill-sharing at the service of innovation. There is a risk that smart-working understood as a “right” could lead to a gradual slump in innovation and impact negatively on the corporate work mentality.

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