What happens when an industry shuts down
The consequences on the local economy of the failure of a large factory
When an enterprise closes, a piece of human history is lost and the wings of development are clipped . Experience tells us this, although there are many cases of rebirth and revival. But the path is always tortuous and tiring, full of unknowns. So, it is important to analyse some of the most notable cases. Francesco David, an economist from the Analysis and Territorial Economic Research Division of the Bank of Italy’s Palermo office, has done just that in his Occasional Paper, ‘Gli effetti della chiusura di un grande stabilimento industriale sull’economia locale’ (The effects of the closure of a large industrial plant on the local economy), which refers to the closure of the FIAT plant in Termini Imerese, Sicily.
David starts with the assumption that the presence of large industrial plants can benefit local economies but may also result in territories becoming overly dependent on the decisions of individual operators, particularly when a significant proportion of employment is concentrated within them. The case of Termini Imerese is precisely the demonstration of this. The paper then analyses the socio-economic consequences of the 2011 closure of the FIAT plant, which employed 43% of the local industrial workforce.
After framing the topic and summarising the history of the plant since its creation, the research uses statistical methods to investigate the impact of the closure on employment and the local area. David shows that, following the closure, employment in Termini Imerese fell substantially compared to a scenario of continued activity (1,500 employees), with an estimated decrease in the employment rate of 3.9 percentage points by the end of 2021. The impact was mainly on direct employment, with limited effects on induced employment. However, there were also other consequences: a decrease in population, local income and property values.
Francesco David thus highlights, in quantitative terms, the significant impact of effective business management and its repercussions on the local area, which extend far beyond mere economics. This demonstrates the consequences of industrial policies that are not always attentive, as well as the need for a production culture that considers a multitude of factors.
Gli effetti della chiusura di un grande stabilimento industriale sull’economia locale
Francesco David
Bank of Italy, Questioni di Economia e Finanza (Occasional Papers), No. 952, July 2025
The consequences on the local economy of the failure of a large factory
When an enterprise closes, a piece of human history is lost and the wings of development are clipped . Experience tells us this, although there are many cases of rebirth and revival. But the path is always tortuous and tiring, full of unknowns. So, it is important to analyse some of the most notable cases. Francesco David, an economist from the Analysis and Territorial Economic Research Division of the Bank of Italy’s Palermo office, has done just that in his Occasional Paper, ‘Gli effetti della chiusura di un grande stabilimento industriale sull’economia locale’ (The effects of the closure of a large industrial plant on the local economy), which refers to the closure of the FIAT plant in Termini Imerese, Sicily.
David starts with the assumption that the presence of large industrial plants can benefit local economies but may also result in territories becoming overly dependent on the decisions of individual operators, particularly when a significant proportion of employment is concentrated within them. The case of Termini Imerese is precisely the demonstration of this. The paper then analyses the socio-economic consequences of the 2011 closure of the FIAT plant, which employed 43% of the local industrial workforce.
After framing the topic and summarising the history of the plant since its creation, the research uses statistical methods to investigate the impact of the closure on employment and the local area. David shows that, following the closure, employment in Termini Imerese fell substantially compared to a scenario of continued activity (1,500 employees), with an estimated decrease in the employment rate of 3.9 percentage points by the end of 2021. The impact was mainly on direct employment, with limited effects on induced employment. However, there were also other consequences: a decrease in population, local income and property values.
Francesco David thus highlights, in quantitative terms, the significant impact of effective business management and its repercussions on the local area, which extend far beyond mere economics. This demonstrates the consequences of industrial policies that are not always attentive, as well as the need for a production culture that considers a multitude of factors.
Gli effetti della chiusura di un grande stabilimento industriale sull’economia locale
Francesco David
Bank of Italy, Questioni di Economia e Finanza (Occasional Papers), No. 952, July 2025