“ Made in Italy ” : morphology, role and economic data on industrial districts

1. Prof. A.Sinatra a.a. 2011/2012 “Made in Italy”: morphology, role and economic data on industrial districts

2. The performances of the Italian industrial system Italy shows exceptional performances in the fields of consumer products such as textiles, clothing, footwear, eyewear, furniture and interior design, that economic theories were reserved for countries with low production costs (labor). The numbers are impressive: • 40% of the global exports of the ceramic industry comes from Sassuolo; • Biella and Prato rule the wool industry with a quarter of the world exports • The women's hosiery of Castel Goffredo controls the 40% of the global exports • 15% of the world exports in the following sectors: silk (Como), jewellery (Arezzo and Vicenza) eyewear (Belluno), marble (Carrara).

3. ..a paradox! The tie between these goods and their innate Italian characteristics (their Italianism) does not only reflect the life-style, but also the product of a particular “road to an industrial development”, which draws its strengths from local institutions, social networks, organizational forms and entrepreneurship, which history lies in the sediment of the Italian industrial districts.

4. Made in Italy’s “4A” The industries where the Italian economy has peaks of excellence may refer to three basic systems and the mechanic-automation specialized industry in support of each one of them. From this interpretation comes the expression "Le 4 del Made in Italy“ (Made in Italy’s “4A”) Fashion mechanic-automation Food Forniture

5. The Italian industrial structure • Is therea typical Italian business model? • The Italian industrial structure includes: • A small group of very big companies with a long tradition history, deeply rooted in some important families (Agnelli, Pirelli, Falck, etc.) supported by financial institutions (MedioBanca, Assicurazioni Generali, etc.). • A group of big companies formerly controlled by the italian government supervision (now privatized or in a privatization process) as Telecom Italia, Enel, Finmeccanica, which aspire to become global corporations. • A dynamic system of SMES that cater mostly to foreign markets, specializing in the typical fields of the Made in Italy and operating within the industrial districts.

6. The Italian industrial structure: the classification schemes 1/3 • What is the meaning of large, medium or small enterprise: the employment policy • In Italy we consider the following levels: • Small companies: < 50 employees • Medium companies: 50 < employees < 500 • Large companies : >= 500 employees • According to the European Union : • Small companies: < 50 employees • Medium companies: 50 < employees < 300 • Large companies : >= 300 employees

7. The Italian industrial structure: the classification schemes 2/3 What is the meaning of large, medium or small enterprise:the mixed method • Used by the office of the “Studi Mediobanca e Unionacamere” (2004) • Small companies: 1-49 employeesand less than 13 mil € turnover • Medium companies: 50-499 employees and 13< turnover < 260 mil € • Large companies: more than 500 employees and more than 260 mil € turnover • According to this classification the small companies represent the 62% of value added in the manufacturing industry, the medium ones the 14% and the large ones the 24%.

8. The Italian industrial structure: the classification schemes 3/3 The large companies: the classification of enterprises according to the Edison Foundation • It adds specific levels of turnover to the occupational requirement • “Grandi Pilastri” (big pillars): companies with more than 10 billion € turnover • “Pilastri”(pillars): companies with turnover between 2 and 9,99 billion € • “Colonne”(columns): companies with turnover between 0,5 and 1,99 billion € • Italy has only 4 “Grandi Pilastri”; 22 “Pilastri” and 86 “Colonne”. But only 43 are part of the 4 sectors of excellence of the Made in Italy

9. The Italian industrial structure of “Made in Italy” 1/2 LUXOTTICA BARILLA MERLONI FERRERO BENETTON The Made in Italy typical sectors do not include any “Grande Pilastro“, 5 “Pilastri” and 36 “Colonne”.

10. The Italian industrial structure of “Made in Italy” 2/2 • Basic role of SMEs for the manufacturing italian industry • 90,7% employment • 77,6% export • The majority of these companies is located in the so-called "industrial districts”

11. Examples of industrial districts in the textile-fashion sector.. The footwear of Asse del Sempione or of Vigevano The wool clothing of Prato and Biella The knitwear of Carpi (MO) The eyewear of Belluno The silk of Como The sport shoes of Montebelluna (TV) The women’s hosiery of CastelGoffredo (MN)

12. Examples of industrial districts in the interiors-furniture sector.. The kitchens of Pesaro The furniture of Alto Livenza (PN) The sofas of Matera, Altamura and Santeramo The interiors of Brianza

13. Examples of industrial districts in arts.. The dolls of Canneto sull’Oglio (MN) The gold jewelry of Arezzo, of Valenza Po or of Vicenza The glass of Murano The musical instruments of Cremona or Castelfidardo (Marche)

14. Examples of industrial districts in ornamental materials.. The marble of Carrara The slate of Lavagna (Liguria) The ceramics of Civita Castellana (VT) The marble and granite of Valpolicella (VR) The granite of Gallura The fired roof tiles of Possagno (TV) The ceramic tiles of Sassuolo The porphiry of Val di Cembra (Trentino)

15. Examples of industrial districts in food products.. The truffles of Acqualagna and Alba; The ham of Parma or of San Daniele (Friuli); The sheep products of Thiesi (Sardegna); The preserves of Nocera Inferiore (Campania); The olive oil of Imperia.

16. Industrial districts in Italy

17. The “third Italy”..

18. Italian Industrial Districts.. • This economic model is known as the industrial district: • a limited territorial system where a rich permeation has been created over time between the daily life and the production activities of its inhabitants. • Drivers: • a) historical and natural heritage; • b) artisanship – path dependency; • c) agglomeration of firms; • d) close community; • e) interplay between society and business.

19. Italian Districts in the World.. Industrial Districts are present not only in Italy. They have been identified in Japan, USA, Germany, France, Spain, Portugal, Denmark, Sweden, Brazil, Mexico, India, even if… …the Italian case has stimulated an international debate, involving not only academicians, but also politicians and entrepreneurs, and imposing itself as a development model worldwide. The economic role played by the Industrial Districts in the Italian economy is evident in the light of their relevance with respect to the manufacturing industries as a whole.

20. Recent picture of Made in Italy.. Made in Italy and typically Italian industrial districts are still the wealth of this Nation, but in order to maintain such wealth it is necessary to react to the global competition and internal weaknesses with appropriate strategies. Until 1990 the global market for “Made in Italy” symbols was growing at a rate of 10% per year. This was an almost-paradoxal situation since demand was higher than the offer. Among 1996 and 2000 “Made in Italy” had again a sort of «goldenage», but the new millenium has started with a deep crisis for typically Italian productions. 2003 has been so far the worst year in competitive terms on a global scene. As showed in the following data, today, “Made in Italy” has to face important and urgent strategic issues…

21. Today’s Strategic Issues of Made in Italy 1/2 Is the average Italian company size (small) an impediment to the overall development and growth of the system? Is the model of industrial districts still capable of generating a competitive edge worldwide? Is the specialization of Italy in traditional industries (the paradox of Made in Italy) sustainable in the long run? Whether and how Italy may overcome a Made in Italy anchored on traditional industries?

22. Today’s Strategic Issues of Made in Italy 2/2 Can Made in Italy still shift the basis of its competitive advantage from material (manufacturing) to immaterial elements (style)? After 40 years of absolute leadership in traditional sectors, Italy is facing a new competition coming from low-cost countries. District companies in the Made in Italy industries are excellent in continuous incremental product and process innovation, but they face difficulties in sustaining R&D projects.

23. Prof. A.Sinatra a.a. 2011/2012 “Made in Italy”National Observatory Report 2012 Italian Regions

24. Districts of Observatory: summary of the most important phenomena from the Report III The Report 2011 showed the alternation of a brief revival and some structural problems in the regions. Some positive signs, such as the increase in turnover and export, are very important but the forecasts for 2012 still do not portend the start of the recovery.

25. Districts of Observatory: summary of the most important phenomena from the Report III However, what matters is once again the ability of the regions not only to face the permanent recession, but also to anticipate the trends and to show the capacity for interrelation and cooperation between businesses, as a way to attract investments, to get to new markets and to reach sustainability.

26. Districts of Observatory: summary of the most important phenomena from the Report III Strategic vision of the regional business: returning again to eco-compatibility not only by investing in the production level but also by inserting specialized staff: The "green way" is not an imposed cost or a stratagem but a characteristic element of the production processes, the driving force to increase competitiveness required in order to get to the international markets.

27. Districts of Observatory: summary of the most important phenomena from the Report III The grow is not only caused by the new investments in innovation but also by a cultural shift that starts, first of all, from the entrepreneurial class and the major players operating in the local dimension.

28. Districts of Observatory: summary of the most important phenomena from the Report III "We must think about the manufacturing industry - so important for a country like Italy - more than in terms of sectors of industries or individual companies, as a reality of localized industries that makes significant part of its competitiveness from the happy union of a production structure with a historical, infrastructuring and cultural consolidation in the long term”. (Becattini, Sole 24 Ore December 29, 2011)

29. The industrial districts in numbers The numbers of Italian industrial districts *-Years 2008 and 2009

30. Industrial districts: exports and markets Main sales markets of the district companies in 2010 and in 2011 (in% of the total of the respondentcompanies)

31. Industrial districts: investments Investments by the companies in the district (in% of the total enterprises)

32. Industrial districts: investments Reasons why the district companies intend to ask a bank loan in the first six months of 2012 (in% of the total enterprises that intend to ask credit resources, net of non-responses)

33. The competitive model of the district systems Market strategies followed by the District companies in 2012 (in% of the total enterprises; multiple answers)

34. Industrial districts: profitability

35. Industrial districts today: a perspective Districts: evolution of turnover (% change in turnover; median values)

36. Industrial districts today: a perspective Districts: evolution of the margins and rotation rate of capital invested (median values)

37. Industrial districts today: a perspective NET operating margins in% of turnover (median values)

38. Industrial districts today: a perspective Districts: evolution of ROI and ROE (median values)

39. Districts in a stronger growth January-September 2011 (expressed in €)

40. Export per sector of the 101 main Italian manufacturing districts towards EU countries: January-September 2011

41. Industrial districts today: innovation and internationalization District and district business not according to the indicator of innovation (val.) Imprese distrettuali e non, e processi di internazionalizzazione (val. %)

42. Strategic Issues of Made in Italy Q & A ? Prof. Alessandro Sinatra A.A. 2011/2012