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Provincial Italy which speaks ill of itself and the companies which innovate and invest.

One of the favourite great passions of Italians is to speak ill of Italy. But also to take offence at those who criticise the country. Fan talk. Sports Bar-room chatter elevated to political values. An insistence on declaring, like Bartali, that “everything’s wrong, everything needs sorting out” (but without his rough and ready amiability). Or having a go at the “jinxers” and “people who row against the current”. “Provincialism”, is the sentence passed by Angelo Panebianco in the “Corriere della Sera” newspaper, where he rightly challenges “the complaints of an immobile Italy”.

However, it is better to examine the data and the facts without partisan passions. To construct well-founded criticisms. To appreciate the work of those Italians who act rather than speak of doom. And to apply in their everyday lives (and in their political, administrative and cultural pursuits) the lesson in civil duty from Italo Calvino, in the latter pages of “Invisible Cities”: “Hell for the living is not something which will happen in the future; if there is one, it is the hell which is already here, the one in which we live every day, which we are building as we live together. There are two ways not to suffer from it. The first is easy for many people: accept the hell and become part of it until you no longer notice it. The second is risky and demands continual attention and examination: look for and recognise who and what, in the midst of the hell, is not hell, and make them last, and give them room.”

Let us look more closely, then, within this hyper-critical Italy yet which is also so often hostile to changes and reforms (we have spoken about this several times in our blogs), at what “is not hell” and to what we should “give room”.

One item of data, above all: the return of investment by industrial companies in new machinery. A positive sign of activism, entrepreneurship, and willingness unshackled by decline.

After years of stagnation, orders for machine tools grew by 22% during the first quarter of 2017 (compared with the same period of the previous year) on the internal market and by almost 11% on the international markets (data from UCIMU, the joint industrial association for the sector). What does this increase mean? That Italian industry has finally realised that it is housing old machinery (the average age of plant and equipment is 13 years old) and has decided that now is the time to play the innovation card. This card is obligatory, if it is to take on international competition. It has been boosted by the tax incentives from the government’s “Industry 4.0 Plan”: the super-depreciation rate of 120% and hyper-depreciation rate of 140%.

There is in fact a virtuous combination between private initiatives and industrial policy (the choices made by the Renzi and subsequently the Gentiloni governments and commitment by the Minister Calenda have been positive). And the awareness is growing on the part of the most dynamic section of Italian manufacturing that they need to seize the opportunity of industry’s “digital” shift: hi-tech and quality manufacturing, services, the use of “big data”, the whole innovative universe of “4.0 Industry”, precisely. It is on this that Italian companies are basing a robust competitive capability. What portion of industry? A fifth, or at the most, a quarter, reply those who are familiar with the strength of companies, sectors and manufacturing networks, local centres, medium-sized companies specialising in mechatronics and rubber, pharmaceuticals and chemicals, new materials and the most highly sophisticated foodstuffs. And what about the rest of industry? Selective changes are under way. This is, nevertheless, a world which is moving ahead. 20% of the companies account for 80% of exports and added value. The rest are plodding along, albeit with varying degrees of speed. The challenge (for company culture and industrial policy) is to grow that 20%. Precisely by insisting on innovation and competitiveness.

There is another item of data relating to what “is not hell” about which it is worth reflecting. And it is the one relating to the confidence of companies, which has finally improved. The monthly confidence index compiled by ISTAT indicated in April a level of 107.4 points, compared to 100.8 in December 2016: this is the highest level since October 2007, the eve of the Great Crisis (during which Italian industry lost 25% of its manufacturing capacity, suffered in terms of activity and employment, and started to revive itself by investing, innovating and finding new outlets in the international markets: a dynamic worthy of appreciation and to be “given room”). Confidence, then. Which also stimulates those long-term investments in plant and machinery, of which we have already spoken.

The best companies, therefore, are in a state of flux. Their confidence data should be read alongside another item of data, the one which tells of the fall in the confidence of consumers. It is reversing. “Bipolar Italy. Companies and families, their paths are diverging”, comments Paolo Bricco in “IlSole24Ore” (28th April). ISTAT speaks of 7.2 million Italians who “live in dire economic conditions”. Consumption is not growing, or only marginally. The internal market is static. The companies which are active predominantly in this market are suffering (building activity is in decline for the tenth year running, and things are moving only in the major cities of the North, starting with Milan).

In such a climate, political, economic and social challenges meet head-on. The future for growth resides with the most dynamic companies, with the ability of those hi-tech and medium-tech manufacturers in the North, those which are the most “European”, to drive things forward. But there is no single sector or economic or geographical area which can play the role of locomotive, unless the entire system of the Country embraces the idea of a strong and decisive choice for long-term reforms. Specifically, the one which it has refused to make so far. This, then, is the “challenge of what is not hell”. Without speaking ill of ourselves. Without vain optimism. But by growing things which we know how “to do, and to do well”. We are worthy of better than chatter in the wind.

One of the favourite great passions of Italians is to speak ill of Italy. But also to take offence at those who criticise the country. Fan talk. Sports Bar-room chatter elevated to political values. An insistence on declaring, like Bartali, that “everything’s wrong, everything needs sorting out” (but without his rough and ready amiability). Or having a go at the “jinxers” and “people who row against the current”. “Provincialism”, is the sentence passed by Angelo Panebianco in the “Corriere della Sera” newspaper, where he rightly challenges “the complaints of an immobile Italy”.

However, it is better to examine the data and the facts without partisan passions. To construct well-founded criticisms. To appreciate the work of those Italians who act rather than speak of doom. And to apply in their everyday lives (and in their political, administrative and cultural pursuits) the lesson in civil duty from Italo Calvino, in the latter pages of “Invisible Cities”: “Hell for the living is not something which will happen in the future; if there is one, it is the hell which is already here, the one in which we live every day, which we are building as we live together. There are two ways not to suffer from it. The first is easy for many people: accept the hell and become part of it until you no longer notice it. The second is risky and demands continual attention and examination: look for and recognise who and what, in the midst of the hell, is not hell, and make them last, and give them room.”

Let us look more closely, then, within this hyper-critical Italy yet which is also so often hostile to changes and reforms (we have spoken about this several times in our blogs), at what “is not hell” and to what we should “give room”.

One item of data, above all: the return of investment by industrial companies in new machinery. A positive sign of activism, entrepreneurship, and willingness unshackled by decline.

After years of stagnation, orders for machine tools grew by 22% during the first quarter of 2017 (compared with the same period of the previous year) on the internal market and by almost 11% on the international markets (data from UCIMU, the joint industrial association for the sector). What does this increase mean? That Italian industry has finally realised that it is housing old machinery (the average age of plant and equipment is 13 years old) and has decided that now is the time to play the innovation card. This card is obligatory, if it is to take on international competition. It has been boosted by the tax incentives from the government’s “Industry 4.0 Plan”: the super-depreciation rate of 120% and hyper-depreciation rate of 140%.

There is in fact a virtuous combination between private initiatives and industrial policy (the choices made by the Renzi and subsequently the Gentiloni governments and commitment by the Minister Calenda have been positive). And the awareness is growing on the part of the most dynamic section of Italian manufacturing that they need to seize the opportunity of industry’s “digital” shift: hi-tech and quality manufacturing, services, the use of “big data”, the whole innovative universe of “4.0 Industry”, precisely. It is on this that Italian companies are basing a robust competitive capability. What portion of industry? A fifth, or at the most, a quarter, reply those who are familiar with the strength of companies, sectors and manufacturing networks, local centres, medium-sized companies specialising in mechatronics and rubber, pharmaceuticals and chemicals, new materials and the most highly sophisticated foodstuffs. And what about the rest of industry? Selective changes are under way. This is, nevertheless, a world which is moving ahead. 20% of the companies account for 80% of exports and added value. The rest are plodding along, albeit with varying degrees of speed. The challenge (for company culture and industrial policy) is to grow that 20%. Precisely by insisting on innovation and competitiveness.

There is another item of data relating to what “is not hell” about which it is worth reflecting. And it is the one relating to the confidence of companies, which has finally improved. The monthly confidence index compiled by ISTAT indicated in April a level of 107.4 points, compared to 100.8 in December 2016: this is the highest level since October 2007, the eve of the Great Crisis (during which Italian industry lost 25% of its manufacturing capacity, suffered in terms of activity and employment, and started to revive itself by investing, innovating and finding new outlets in the international markets: a dynamic worthy of appreciation and to be “given room”). Confidence, then. Which also stimulates those long-term investments in plant and machinery, of which we have already spoken.

The best companies, therefore, are in a state of flux. Their confidence data should be read alongside another item of data, the one which tells of the fall in the confidence of consumers. It is reversing. “Bipolar Italy. Companies and families, their paths are diverging”, comments Paolo Bricco in “IlSole24Ore” (28th April). ISTAT speaks of 7.2 million Italians who “live in dire economic conditions”. Consumption is not growing, or only marginally. The internal market is static. The companies which are active predominantly in this market are suffering (building activity is in decline for the tenth year running, and things are moving only in the major cities of the North, starting with Milan).

In such a climate, political, economic and social challenges meet head-on. The future for growth resides with the most dynamic companies, with the ability of those hi-tech and medium-tech manufacturers in the North, those which are the most “European”, to drive things forward. But there is no single sector or economic or geographical area which can play the role of locomotive, unless the entire system of the Country embraces the idea of a strong and decisive choice for long-term reforms. Specifically, the one which it has refused to make so far. This, then, is the “challenge of what is not hell”. Without speaking ill of ourselves. Without vain optimism. But by growing things which we know how “to do, and to do well”. We are worthy of better than chatter in the wind.