The Italian Sportsystem Cluster: A Model of Economic Development in North and Central Italy

1. Treviso Tecnologia Information Days Montebelluna Sportsystem Cluster - Italy ECOLEAD project Roberto Santolamazza - director Nova Gorica, 2005 Oct 06th

2. The Italian Sportsystem Cluster The Cluster is the development model strongly characterizing the economy over the last forty years mostly in North and Center Italy.

3. The Italian Sportsystem Cluster Key characteristics of this model of Local Productive System can be summarized as follows: • the governance of economic relationships based on social rules and traditions as well as on the strength of social ties among individuals within and across organizations; • the strong mix of competition and cooperation among firms, where generally relationships have a long length; • trust mechanisms as business enabler and empowerment • a quite equal distribution of the power among district firms, with an important role played by third parties; • the aggregation and spatial proximity as well as shared languages as elements able to support rapid information diffusion, facilitating knowledge sharing and innovation process

4. The Italian Sportsystem Cluster Veneto Region: a clustered economy • Presence of several industrial areas aggregating companies on relevant industrial sectors such as textile and clothing, leather and shoes industry, sportsytem products, wood and furniture, electrical appliances, conditioning and industrial refrigeration, eyewear… • 40 industrial clusters are supported by the Regional Government since 2003 (Regional Law n.8): • Bottom-up model: companies, local development and technical institutions co-operate on a voluntary basis • Long term agreement among them for new competitiveness • Yearly, call for new clusters and projects proposal • Population: 4.527.694 • 7,9% of total Italian population • n. of employees: 2.004.000 • about 9% of Italian employed population • Veneto unemployment rate 3,4% • Italian unemployment rate: 8,7%

5. The Italian Sportsystem Cluster Veneto Region: a clustered economy • Veneto is one of the strongest economic regions in Europe, with a gross domestic product (GDP) estimated at 94.9 billion Euros : 9.1% of the national GDP • Second Region for number of companies (9% of Italy) • Second Region for export (36.4 billion Euros, 14.1 % of Italy) • Excellently established entrepreneurial capability • Plenty of SMEs (over 440.000) • Relevant economic diversification • Export – led regional development 40 clusters • Footwear Cluster (2) • Marble & Stone Cluster • Classical Furniture Cluster • Artistical Furniture Cluster • Prosecco Cluster • Eye-Wear Cluster • Ceramics & Terracotta Cluster • Mechatronics Cluster • Sportsystem Cluster • Mechanics & Subcontracting Cluster • Logistic Cluster (2) • Goldsmith Cluster • Fruit & Vegetable Cluster • Silversmith Cluster • Tourist & Cultural Industry Cluster • Shipbuilding Industry Cluster • Rubber & Plastic Materials Cluster • Spa Cluster • Wood Furniture Cluster • Biobuilding Cluster • Tourist Industry Cluster • Artistic & Cultural Heritage Cluster • Refrigeration & Conditioning Cluster • Wine Cluster • IT & Advanced Technologies Cluster • Fairground Equipment Cluster • Food Service Equipment and Catering Cluster • Dairy Industry Cluster • Fashion Cluster (2) • Tanning Cluster • Packaging Cluster • Fish Industry Cluster (2) • Murano Artistic Glass Cluster • Thermo Mechanics Cluster • Graphic & Printing Cluste • Veneto Nanotech

6. 2781 companies 2135 companies 1684 companies 2392 companies 4283 companies The Italian Sportsystem Cluster The whole North Eastern Italy and, more, the Treviso’s area experienced an huge and fast development passing from an agricultural to a manufacturing society focused on various businesses and largely labour intensive. 13275 companies

7. The Italian Sportsystem Cluster A success story: keypoints strategy management people technology Link to the territory Labour division Ancient tradition Product diversification Relation with bigger player Supply Chain organization Competences available Cross contamination Niche Market serving Family run business Design and NPI skills Product substitution Product diversification Business with Multinationals Service oriented Technology stretching New market orientation Market orientation Collaboration Innovative materials Widening product range Merge & acquisition Technicians exchange Flexible networks Patenting & Branding Process segmentation Designer & stylists Incremental innovation Manufacturing delocalization Openness to new industries SME’s Marketing Professional services

8. The Italian Sportsystem Cluster Key facts and figures Treviso province and the Sportsystem Cluster • 1° italian province in density of companies 95.000 (1 Vs 8 inhabitants) • 4° italian province in export 8.328 mln € • 3° italian province in trade balance 3.972 mln € (half of Veneto’s total and 3 times italian average) Ratio: 100€ imported Vs 191,2€ exported (128,8 Veneto and 100,4 Italy) Data 2004 • Sportsystem direct companies 428 • Employees 9.000 • Turnover 1.542 mln € • Export 1.300 mln € • Export/production 70% To be added to the second tier and connected companies (~ 1700 total)

9. The Italian Sportsystem Cluster

10. The Italian Sportsystem Cluster

11. The Italian Sportsystem Cluster Current situation: export

12. The Italian Sportsystem Cluster Current situation: delocalisation in 2004

13. The Italian Sportsystem Cluster Current situation: delocalisation in 2004

14. The Italian Sportsystem Cluster Current situation: delocalisation in 2004

15. The Italian Sportsystem Cluster Current situation: delocalisation in 2004

16. The Italian Sportsystem Cluster Current situation: key players

17. The Italian Sportsystem Cluster Organisation: Competences • Clusters show a full employment situation, with an high turnover and inner mobility rates • Learning procedures are basically internally managed (learning-by-doing) and allow to technical workers to acquire fast a complete knowledge on managing a specific production process autonomously • Internationalisation is opening new scenarios for competences to be exported setting up structured training programmes for workforce • Professional services and competences for R&D and Style and Design play a key role in the internationalised scenario for the cluster being the main phases located in the Montebelluna area • Strong collaboration with local university in Industrial Design and institutions results a key to success in developing new talents

18. The Italian Sportsystem Cluster Organisation: Professional Communities – project eKM Dicamo Il progetto eKM-DICAMO (e-Knowledge Management per il Distretto della Calzatura di Montebelluna) is aimed at • To facilitate aggregation and relationships between local designers, consolidating their community an enhancing their outer visibility • To implement a methodological model for a distributed knowledge management for a cluster on a pre-competition level www.ekmdicamo.org

19. The Italian Sportsystem Cluster Organisation: Professional Communities – project eKM Dicamo • Our on-field researches proofed still a lack of identity and clear boundaries for the designer’s competences, roles and contribution • Major findings go from a sense of insulation and a mixed figure, covering design but also engineering, industrialisation and production issues to a low attention paid by the top management • Main causes • High fragmentation of the local designers’ community and lack of opportunities to meet up and discuss precompetition themes • Low official (national/international) visibility and endorsment • Lack of a shared system to rule and qualify competences needed to define the professional profile of a designer • Few direct collaborations and projects with research institutes, universities and public institutions • Industrial model basically focused on manufacturing side

20. The Italian Sportsystem Cluster Organisation: Professional Communities – project eKM Dicamo

21. The Italian Sportsystem Cluster Findings and results • Awareness of the own professionalism and identity (with a specific new local association TrevisoDesigners) • Relevant interest and increased committment within the enterprises and institutions for the capabilities in design as startegic key to a renewed competitiveness and to the innovation processes (governance’s new player) • Facilitation in the knowledge sharing process among experts, professionals and young graduates in Design – ClaDis (community as a bridge among university and professional sphere) • Domain enlargement with close and collaborative networks/clusters interested in design and creativity (Wood & Furniture, Eyewear, Mechanics and Mecatronics) present in theVeneto area

22. SMEs are late on large enterprises? Evolutionary trends for clusters • Large enterprises and multinationals have a sound usage of ICT finalised to • Internal processes optimization (effectiveness) and efficiency • Internal knowledge assets valorisation and sharing within the organization • SME have up to now used ICT on specific segments leaning on the local relationships network to better manage productive processes and to innovate their own business

23. Evolutionary trends for clusters Clusters as local manufacturing systems of SMEs have developed an important set of specialized competencies and knowledge assets, based on the productive processes and social dynamics rooted on the local area Globalization Opportunities to exploit and share knowledge on a global scale, beyond the local context (open innovation processes) Network technologies Potentialities in terms of information management and online interaction to redesign internal processes and B2B relationships

24. Cluster internationalization Evolutionary trends for clusters • Commercial internationalization • local firms are not only able to sell abroad directly (export), but they are investing to create their own sales networks in the global markets. Through these strategies they promote a more stable presence abroad; • Manufacturing internationalization • productive processes traditionally managed at the local level are now carried out also by suppliers located in other countries. Opposite to large corporations, SMEs do not only directly invest abroad (FDI), but they are also interested in promoting or exploiting local networks of suppliers in foreign countries

25. ICT adoption in Italian industrial districts Evolutionary trends for clusters Source: TeDIS Survey 2004 (45 industrial districts)

26. Patterns of ICT adoption Evolutionary trends for clusters According to a recent TeDIS survey realised within Veneto region, the paths of ICT adoption within clusters are characterized by: • Consistency with firm’s strategy (selection of the ICT solutions the most coherent with firm’s competitive model) • Incremental innovation in ICT investments • Bottom-up approach, without a “master mind” able to coordinate the cluster digitalization process

27. Cluster internationalisation is modifying the commercial and supply relationship’s network and geography balancing differently local and global components Network technologies allow to manage communication processes, interaction and distance commercial exchanges Virtual cluster as a group of firms (SMEs) vertically linked and operating in the same specified supply chains that leverage network technologies to manage manufacturing and commercial processes and activities at distance Evolutionary trends for clusters

28. • Tilesquare Wood industry cluster • MeccanicaUtile.com Bravobuild InteRegioNet Tool cluster Steeltrading • Leccomech • • • • • Evolutionary trends for clusters Virtual clusters Platform for Technology services High Vertical communities Relevance of technology services • E-opti.com • Acrib . it • Textilebusiness . it Specialized Information portal Low Low High Relevance of information services

29. The Italian Sportsystem Cluster Relevance to Ecolead Project New challenges of internationalization and network technologies led to cope with three main strategic issues for our clusters for the time being: • Growth: as a strategic answer to the need to be global • Innovation: as a key factor in a mid-long term planning • Governance: as a way to be more effective and efficient in managing an internationalised business

30. The Italian Sportsystem Cluster Relevance to Ecolead Project Growth: why? Source: McKinsey research – 2005 on 90 significant Veneto’s companies

31. The Italian Sportsystem Cluster Relevance to Ecolead Project Growth: how? External leverage Source: McKinsey research – 2005 on 90 significant Veneto’s companies

32. The Italian Sportsystem Cluster Relevance to Ecolead Project Three model for growth in a internationalised cluster • Cooperation in support functions: administration, payroll, legal and ICT services - no share of industrial projects • Cooperation in operational function: purchasing, plant and equiment exploitation, optimization of logistic services or selling networks - share of some industrial nproject • Cooperation in strategic function: marketing and R&D - share of mid term industrial project

33. The Italian Sportsystem Cluster Relevance to Ecolead Project: traditional cluster as operational integration • BE • In a traditional manufacturing cluster consists of a strong link with the territory, its history and tradition, capabilities and competencies • Low diffused management skills • Family run businesses • VO – support functions • It’s a vertically integrated network, led by a major player (e.g. shoe factory), focused on some support on process development and ongoing operations for extreme flexibility. Competition and strong individualism did not allow any business/VO among competitors but not core activity • Project – VO operational functions • A specific declination (product or a family of similar products) within the vertical integration in SCM • PVC/Team • Fragmented competencies in the territory aggregated by each VO • High mobility of key resources between competitors\ SCM driven organization BE VO PVC Focusing business opportunity project team

34. Market The Cluster business model Competitive Cluster • Industrial product with a large craftmade component • Several leaders with own production networks (stable/unstable) • Many companies belong simultaneously to many logistical-productive networks with different standards

35. The Italian Sportsystem Cluster Relevance to Ecolead Project: trends driver to a virtual organization • BE • link with the territory = branding, style/design, competencies on core processes • Openness = external inputs and trends, export of technologies/manufacturing • Technological innovation as key competitive factor • VO • Distributed network, still led by a major player (e.g. shoe factory) and shared with strategic partners • Strategic issues (new sourcing/outlet markets, manufacturing organization etc) are shared in wide project for common internationalization • Common research project (eg innovative materials) • Project • A specific declination within the vertical integration in a extended/not geographically defined SCM • PVC/Team • Awareness and identity of new professionalities, especially on R&D, Design and Style • Relevance of IPR issue and exploitation • Emerging professional services Network technologies internationalisation Driver to a virtual organization BE VO PVC Focusing business opportunity project team