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The decline of the 120,000 abandoned factories and signs of renewed investment and recovery

The figures tell of an industrial decline: 120,000 factories lost between 2000 and 2013 and 1,160,000 jobs up in smoke. “A mass erosion in the production base,” said a study to come out of Confindustria. At the same time, the manufacturing gap between Italy and the rest of the world is widening, with an increase of 36% in volumes produced (from the start of 2000) as compared to a drop of 25.5% in industrial production in Italy for a trend moving clearly in the opposite direction and a gap which had already opened prior to 2007 and has now widened quite dramatically. Another symptom of Italy’s struggles is the fact that, over the last six years, the nation has gone from the world’s fifth leading producer down to eighth place, being passed by South Korea, India and Brazil and now tied with France (falling from 4.5% of global manufacturing in 2007 in current dollars to just 2.6% in 2013). In short, Italy is still the second leading manufacturing nation in Europe, behind Germany, but we continue to slip in terms of both productivity and competitiveness.

The alarm bells on the risk of decline that the Confindustria Research Centre sounded on 4 June are to be taken extremely seriously because it is precisely manufacturing that is needed to give a decisive boost to economic development and because other nations are reassessing the role of manufacturing and providing both support and stimulus in order to drive recovery after these years of the Great Crisis of bad finance. This includes the US, the UK, France and, naturally enough, the strong Germany and dynamic BRICS nations (i.e. Brazil, Russia, India, China and South Africa), but here in Italy?

Italy’s minister for economic development, Federica Guidi, pointed to the central importance of manufacturing when speaking to Confindustria on 29 May, as well as to a commitment in Europe to strengthening the “industrial compact” and to concrete measures both to create a more favourable climate for business (i.e. less bureaucracy, greater transparency and efficiency in order to combat alarming levels of corruption, fiscal and justice reforms, and so on) and to stimulate investment (with a much needed helping hand from Mario Draghi and the ECB, which again cut rates and gave banks great support in the form of liquidity so long as that liquidity goes to small and medium enterprise). How exactly? Such as by providing new  funding to the “Sabatini” law, which grants subsidised lending to renovate plant and machinery, in addition to the 2.5 billion already earmarked for 2014.

Actually, some good news has come from the numbers on this Sabatini law to offset this decline in industrial production: some 3,000 business owners have submitted requests to invest in new machinery to renovate their businesses through more advanced, safer and more productive equipment. “It’s the end of the moratorium on investment,” noted Dario Di Vico in Corriere della Sera (on 7 June).

“New investment is necessary,” said Gian Maria Gros-Pietro, a respected economist, “because demand is starting to grow again, both domestically and internationally, and we need to be ready to respond.”

The Italian association of manufacturers of machine tools and robotics, UCIMU, has confirmed the boom in orders seen in recent months, so, in addition to heeding the warnings regarding the economic and social cost of the ongoing crisis, it is also worth making note of the modest signs of recovery in manufacturing, particularly in the more industrialised areas of Italy, such and the northeast, northwest and the great manufacturing platform of the Emilia region, signs in which we can also hear the echo of the annual meetings of Confindustria’s regional branches, such as the general meeting of Assolombarda in Milan (held in the greatly symbolic Pirelli HangarBicocca, once a site of manufacturing, now a factory for contemporary art), where a great deal of emphasis was placed on the key role of “medium tech” and of “additive manufacturing” and on the virtuous relationship between entrepreneurship, innovation, training, lawfulness, competitiveness and internationalism, or the one in Varese, where the association’s members are convinced of the importance of the hi-tech industry and the need for radical change in the organisation of production in order to take full advantage of the opportunities in manufacturing being provided by 3D printing.

Important encouragement has also come from the Young Industrialists, who met for their traditional early-summer conference in Santa Margherita. “New industrial humanism,” said their chairman, Marco Gay, when speaking of the central importance of manufacturing, the knowledge economy, a culture based on merit, and leaving room for the younger generations (and of a commitment to combat corruption and the delocalisation of businesses in search of lower costs of labour). “Italy is a leader in product innovation in 100 industries,” he added, and there is a significant number of businesses that are now beginning to bring their production back to Italy in search of quality, an initial flow of reshoring that is to be promoted through a sort of “industrial shield” and fiscal incentives in order to strengthen the bond between legitimately earned profits and their territory of origin.

So we are reacting to the crisis. Italian industry is certainly struggling, but it remains highly vibrant, and we are seeing real signs of efforts to combat the decline.