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Presenting the medium-tech industry: competitiveness and better social equilibrium

Italy is leading the way in technologically sophisticated manufacturing because we are able—particularly in the “medium-tech” segment—to combine the strength of our roots in industry and craftsmanship that are embodied in our culture of enterprise with a vibrancy in innovation that, despite it all, drives the Italian economy, especially in the more dynamic, more industrialised parts of the country—from the large-scale enterprises of the northwest across to the northeast, where we are finally seeing an end to the idea that “small is beautiful” accompanied by a growing quest for the organisational size best suited to carving out high-end niches in the international marketplace; from Emilia and its engineering districts to the “Adriatic backbone”, and on down to the (more fragile, but still significant) manufacturing “islands” of Lazio and southern Italy. In other words, this form of cutting-edge manufacturing—a unique blend of industry and digital technologies— is an essential tool in achieving more sustainable growth for the country as a whole. According to a recent Confindustria study (as published in IlSole24Ore on 11 April), production has shown signs of a slight recovery, growing by 0.7% in March, for an economic landscape that could give some small room for hope. It is true that, compared to 2008, the year in which the “Great Crisis” began, there has been an overall decline of 23.6%, so there is nearly a quarter of industrial production to be recovered, but it is also true that a large part of medium to large-scale enterprises, many industrial districts, and Italy’s leading industrial value chains have all confirmed that the recovery has, indeed, begun, driven by exports (to the EU, to the US and, above all, to emerging nations such as China and Brazil), but slowed by stagnation that is still evident on the domestic market.

So how are we to support this mild recovery and “start the economies engines”? A few, highly interesting ideas can be found in a book by Gianfelice Rocca, president of Assolombarda and chairman of the Techint Group (an Italian multinational with a wealth of history). The book, with the inspiring title Riaccendere i motori (literally “Restart the engines”), speaks of Italian innovation and rebirth and explains the importance of Italian production founded in the medium-tech industry, i.e. high-quality engineering and metalworking, chemicals, plastics, electronics, nautical technology, automotive-related industries, and the medical and diagnostics industries. These industries find their strength in “incremental innovation” and are rich with “compact multinationals” that are able to react to competition from Germany, Europe’s manufacturing powerhouse, while ensuring jobs and taking advantage of exports to help drive GDP growth. They are open, dynamic, used to investing abroad (not to take advantage of low labour costs, but to succeed as insiders in growing markets), while never losing sight of the Italian mindset and the typically Italian strategies, research techniques, and high-end production that ensure greater value added.

This book by Rocca is as important as it is necessary, and it backs up the work already under way in the directions of the “manufacturing renaissance”, industrial pride, the revitalisation of manufacturing through international investment, “smart manufacturing” (to come back to a topic much loved by the economic historian Giuseppe Berta, of whom we spoke right here just a few weeks ago), the “fourth capitalism”, and the examples of excellence in those cornerstones of Italian industry (agriculture, interior design, fashion and, above all, machine automation) throughout a nation that is rich in both human and social capital.

This medium-tech industry has achieved much innovation over the last twenty years, and it has been driven to do so since the end of the long season of the lazy competitive tactic of devaluation brought about by Italy’s participation in the Maastricht treaty and the restrictions of the euro, when it became no longer possible to take advantage of low prices (by devaluing the poor Italian lira) and so became necessary to respond to the high cost of production with innovation, quality and creativity. It is worth recalling those times when populists and demagogues mused about the end of the euro and the return to the lira, boasting of this “competitive devaluation” as one of the positive consequences. These naysayers would throw away two decades of positive industrial transformation and efficient, effective competitiveness only to find themselves on the sidelines of European industry.

As Rocca suggests, it would be better to look to the strengths of our successful medium-tech enterprises, including research, training, infrastructures, credit, a more dynamic, more creative start-up culture, a lower burden of bureaucracy and taxation, lawfulness, and timely justice— not to mention the institutional and social reforms of a nation seeking to give a brighter future to the next generations. “A nation is competitive,” Rocco says, “when the businesses that operate within its borders are able to successfully compete in the global economy, while also ensuring high—and growing—standards of living for the average citizen.”

These medium-tech firms also play a role in improving social balance. They require good, long-lasting human capital; demand that skills be kept constantly up to date, promote meritocracy, maintain beneficial roots to their territory, and, by demanding a high-quality supply chain, improve social capital in general. “A constellation of values that, over the long term, contributes to making a society more solid, more stable, and also richer.” There are six areas on which to focus: innovation, productivity, human capital, meritocracy, social cohesion, and intergenerational mobility. It’s all about uniting good culture of enterprise with the principles of sustainability and development. It’s about Italy’s rebirth and providing a positive paradigm for elsewhere in Europe and throughout the world.