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District projections toward the year 2000 The industrial districts have been a major driving force of Italy's development from the post-war period to the present day, and their vitality, in spite of certain difficulties associated with the changing world economic scenario, doesn't seem to be running out, as confirmed by the fact that the over 100 "local systems" operating in Italy contribute between 20 and 25% of the countries exports, GNP and employment, and have a dynamism (as revealed by Censis research in 1994) often far greater than the performance of the overall Italian economy. The origins of these successes can be found in certain strong points, mainly associated with the peculiar conditions of operation of the small industries, that represent the basic component of the districts: the ability to "create systems"; productive specialisation and widespread recourse to sub-supply; rapid circulation of information and the consequent formation of a pool of know-how at area level; the informal diffusion of technology through direct working relations between operators; highly qualified workforces having experience acquired above all in the field. As a result of these strong points, that make up equally numerous competitive factors, the industrial district has also become a role model for developing countries, and is seen as the ideal structure on which to base industrial development programs, particularly in the third world. The UNIDO, for example, is working on this theme in the firm belief that this kind of structure in the developing countries could form the basis of self-maintaining growth able to mobilise the human and material resources available in loco. The Italian industrial districts are also the object of studies by the OCSE, that intends to propose them to their member countries as instruments for local development. But despite these positive aspects, current trends indicate numerous clouds forming over the future of the districts. For the districts too, the globalisation of the market is a source of profound and significant change. Increased competition as a consequence of this kind of market expansion can cause competitive instability, wasted resources and shifts in previous purchasing habits, as well as rapid obsolescence of the technologies and working strategies adopted up until now. In the light of this increased rapidity of market and technological development, small industries operating in the districts, that have learnt flexibility from past experience of changing economic scenarios, will once again have to fall back on their ability to develop new strategies, to avoid degeneration of "local systems" into areas of marginal development; strategies different to previous experience, that have to find appropriate solutions not simply to front inadequacies in local context resources, but that look to the wider opportunities present at global levels. Thus the need to reach beyond the local area to find more adequate combinations and productive dimensions is clear, building relations, synergy and competence on a wider economic base in order to regain those competitive advantages that the district has difficulty in ensuring. This calls for a change in traditional working horizons, and the development of strategies outside the district to assist "weaker" aspects of companies (such as research, logistics and industrial co-operation) in making the necessary 'quality jump'. The Confederation of Italian Industry has recently become involved in such strategies through an initiative aimed at "productive decentralisation", aimed at assisting collaboration between companies operating in various "local systems" by promoting the creation of a meeting point between demand and production capacity supply, for the moment limited to the mechanical sector. But over and above such strategies there is a need to bolster specific district potentials, and consolidate "horizontal" development factors such as professional training, protection of the environment, infrastructure and public services, as well as local "standards of living", that require the intervention of public authorities and resources. These strategies are essential to ensure a future for the industrial districts, that have been defined by Censis as "a solid and reliable patrimony that distinguishes the Italian economy", that if properly managed and sustained will be able to maintain their fundamental role in the Italian economy in the year 2000 and beyond. Innocenzo Cipolletta Director General, Confindustria. The Club delegation to Brussels On the 14th and 15th of March this year, a delegation from the districts Club, lead by Club president Enrico Botto Poala, met with a groups of Italian functionaries working in EEC General Management and Commissaries offices. The first comments regarding this experience are "general impressions". One thing that surprised us was the lack of visibility given to phenomenon of the industrial districts. This "image deficit" is far more severe than foreseen, strengthening the importance of the decision to invest resources on the Brussels front. Effectively, the Italian districts have become aware of their role, and have become an interesting "case study" for the academic world, but beyond this dimension they are still just a "budding movement". The functionaries we met were very open and reasonably well disposed, but were quite frank about the number of obstacles that the Club has to get round in its effort to be heard in Brussels. The following picture emerged from the various meetings: In the first place, the need to give a trans-national dimension to the Club was expressed. This must be created by searching for links with territorial systems in other countries. The demands of the Club can only be taken into consideration if presented with other partners. A second obstacle is represented by the guiding principles of EEC policies, aimed at "territorial re-balancing". The districts tend to develop in a somewhat different direction, and thus can only gain indirect access to general type Community programs. The Club has to offer its "expertise" in projects concerning SMI systems, such as the "work group on competition", lead by A. Ciampi; considerations on new forms of work organisation currently being developed at the DGV; the "Fifth outline plan" for research (1999); the "Green book" on innovation, to be presented in following months and the forum on SMI to be held in June at the conference that concludes the first six months of Italian Presidency. In exchange for recognition by the EEC, the Club has to be prepared to offer assistance to countries with which the EEC is developing co-operation programs (the ex-Soviet Union, Mediterranean, etc....) With a view to this, considering the revision of structural funding and Community initiatives (1999), it is essential to be prepared with imaginative projects and experimental proposals. An initial short term project (for next autumn) prepared in Brussels consists of a convention on the industrial and operative policies of European industrial districts. Finally, before the summer, a day in Milan is to be organised with European functionaries who have a good working knowledge of programs for technological innovation (Esprit, Craft) to analyse together the principle obstacles between the district SMI and European funding. This meeting should have two types of spin-off: the first towards the Commission and the second towards the companies and service centres in the districts. The "Optician's Citadel" Resources and structures for company competitiveness The production of glasses in Belluno The socio-economic system that gravitates around the production of glasses in the province of Belluno is a fine example of an industrial district. There are 160 industrial companies in the sector employing 9000 persons, with a further 600 small companies employing 2000 persons. Production value is estimated as over 2,000 billion Lira (85% of the National total), with exports reaching 60%. Various world leaders in the field operate in the district, specialising above all in metal frames (local lens production is marginal). The production is characterised by micro-mechanics, typified by the coexistence of extremely customised production and automated plant and processes.
Active industrial policies In 1992 the Province , the Chamber of Commerce, the 'Centro Cadore' Mountain Community, the 'Magnifica Communità di Cadore, the Association of Industry, the Artisan's Union, the "Appia" Association of small industry and craft along with the trade unions CGIL, CISL and UIL in Belluno established the "Committee for Development of Glasses Production in Belluno". The Committee, a non-profit making organisation, has the scope of co-ordinating the presence and activities of sector groups and associations in the province. Its activity includes preparation of development programs for glasses production in Belluno, as well as management of projects for consolidation, innovation, growth and internationalisation of the province's companies. The Committee's primary objectives are: - to create a centre (the "Optician's Citadel") to act as focus for the activities of numerous institutions and services for the industry's development, and to promote exchange between industry, university and research; - to establish and realise high level training programs; - to strengthen physical infrastructures and promote real services to companies; When developing this project, the Committee started out from the idea that a future strategic factor consists of making structures available to companies (particularly smaller companies) able to supply indispensable services for growth and consolidation of competitiveness. On this basis, the Committee has identified five priority areas for assisting the sector's adaptation process, these are: - the district economy - quality certification - the transfer of technology - training - the promotion of company
image. A focal point within the district Through the creation of the "Optician's Citadel", the Committee has developed an articulated project that is intended to make way for a co-ordinated system of services for local enterprise (see table 1). Numerous organisations able to supply essential services for the sector are directly involved in the project. The Citadel's "mission", acting as a focal point, is that of facilitating interaction and exchange of information between the various institutions, and between these and the district's companies, as well as creating an organic link between the "world of knowledge" (institutions outside the district such as universities and research centres) and the "world of production" (the diffused know-how of the companies). The operative units sustaining the project are: 1 - The observatory for monitoring district dynamics. A permanent, qualified centre able to monitor and continually interpret the development and consistency of the Belluno glasses manufacturing district; 2 - The 'Certottica' institute for certification. This represents an extremely important aspect of the program. "Certottica" (the Italian Institute for the Certification of Optical Products) is a mixed consortium company, both public and private, already active in the field of certification of optical products in accordance with both national and EEC standards. 3 - An information and technical consultancy centre - the "Optical Services Centre", being another consortium which is to have its offices in Tai di Cadore, managing a data bank linked with major global research centres. Sector companies and associations will have access to this centre for services regarding transfer of technology, diffusion of information, market analysis and demand for specialist production. On the theme of specialist production, the Centre will collaborate with 'Certottica' as regards specialised processing, new materials, etc .... 4 - The optical college, acting on two levels. The first is university level, consisting of short degree courses on glasses technology. As from the academic year 1995/96, on the basis of an agreement with the Engineering Faculty of the University of Padova, a "short degree" in Glasses Technology (Mechanical Engineering course) has been established. The second level regards permanent training, with particular reference to teacher technical training. This is to be managed together by Certottica and the Association of Industry that, with the collaboration of the 'Centro Cadore' Mountain Community, have already undertaken this type of operation for CAD experts (Euroform); 5 - The Foundation for a glasses museum, to be the promotional organ for the district image. The museum constitutes the ideal connection between the working history and culture of the Belluno district and its future prospects. The individual organisms with the task of achieving the Committee's objectives (economic analysis, certification, research and technology transfer, training and image promotion) will be chiefly concerned with establishing contacts with major national and international centres for research and training, thus creating a network of contacts and relationships. This serves to acquire the knowledge and experience necessary for consolidating the competitiveness of companies in the glasses producing sector.
The current stage of the project As of February 1996, the "Optician's Citadel" project was at the following stage: CERTOTTICA, established in 1992, financed for 2 billion Lira, 40% of which from public organisations. A further investment of 2.3 billion Lira is envisaged, with half a billion coming from public funding, as well as a another 450 million Lira for the three year '95-'97 period. The other components of the project have been legally assigned 1.7 billion Lira by the Region of Veneto (though not as yet received), inferred from funds from legislation concerning Border Areas, to be divided as follows: - The observatory of district dynamics (450 million); - The Museum (300 million); - The training college (170 million); - The technical information centre (800 million).
The overall development strategy of the glasses district and its 'Citadel' project finally includes the "Belluno International Award for Innovation in the Glasses Sector", with the second edition of the award to be held next autumn. This award attracts particular attention from the exponents of the district, encouraging company action aimed at product improvement and process innovation. The Award is international, and thus open to persons, companies, organisations or groups, even academics, from any nation. The Committee is a member (and a great promoter) of the "Industrial Districts Club". District profiles Lumezzane (Brescia) The Lumezzane district is situated slightly north of Brescia. Its residents number 24,000, with industry employing 10,000. Of this total, 80% are employed in the production of metal artefacts, in particular household articles, valves and fittings. The industrial character of the area is also highlighted by the number of companies operating in this sector: 1,000 out of a total 1,800. Another particular of the area is the high entrepreneurial density: - one company per 13 inhabitants (meaning one company every three family units); - one industrial sector company per 24 inhabitants (practically every 7 family units); - an average size of industrial sector companies of 10 employees, with 70% of the companies present being in the size category between 1 and 10 employees, 27% in the 10 - 49 employees category and the remaining 3% in higher categories.; - 88% of companies are personal liability, with only 2% being capital stock type, though even among those, family enterprise predominates. The industrial turnover of Lumezzane is estimated at around 1599/1800 billion Lira, of which 40/45% exports. For quite some time, the effective borders of the valves/fittings and household metal goods district of Lumezzane have also included a wider area which stretches into certain boroughs outside the province of Brescia. In this new, wider definition, certain other companies may be included in the district, belonging to entrepreneurs from Lumezzane that, though not operating in the borough of Lumezzane, are closely interrelated with the district, as well as a certain number of specifically linked sub-supply companies. Thus the overall number of companies rises to 2,000, with an overall total of 20,000 employees producing a turnover in the region of 3,800 - 4,000 billion Lira. In employment terms, specialisations (in declining order) are taps and fittings (27%), valves (17.9%), household goods (pots and pans, cutlery, kitchen accessories: 10.5%), non-ferrous metal foundries (9.7%), metal treatment and plating and general mechanics (6.5%). Important, though less consistent groups of companies specialised in machine tool and die construction still operate in the district (6.4%) as well as companies manufacturing Ironmongery and window frames. (5.2%). The incidence in terms of productive units and employees in these categories in the borough of Lumezzane is extremely high on a provincial scale. Indeed, over 50% of the provincial total is concentrated here, from both the valves, taps and fittings sector and that of household goods.
Montebelluna (Treviso) Situated in a beautiful hilly area in the province of Treviso, 50 km from Venice, Montebelluna is world renowned for its production of footwear. The first records of this activity go back to the start of the 18th century: historic documents from that time record the presence of a number of cobblers (10 artisans out of a total 4000 inhabitants) that, due to the availability of raw materials (leather for uppers and wood for soles), manufactured "gallozze" (type of shoe) for local woodcutters and farm workers in the district. Two centuries have passed since that time, and now the footwear district, with its centre still in Montebelluna, extends over 15 boroughs, 320 square kilometres with a total population of almost 100,000 inhabitants. The sports footwear sector was the catalyst for local development, mobilising resources and energy even in the agricultural sector, by exploiting the free time of farm working families, as well as in the services sector, with numerous companies and professional activities opening up in the wake of the footwear boom. In the strictest sense, Montebelluna can't be described as a mono-cultural area (only 18% of the working population is employed in the footwear sector), but fully qualifies as an industrial district. 550 artisan and industrial companies are active in the field of sports footwear, employing over 8,000 persons. A major product of the district is the ski boot, with the area manufacturing a surprising 75% of total world production. The companies of Montebelluna also produce mountain boots, cycling shoes, cross-country and snowboard ski boots, ice-skates, and even apres-ski and ballet shoes. Strengthened by their brand success, local companies have also begun to produce sportswear. The overall production is around 38-40 million pairs of shoes per year, with a global turnover estimated at 2,200 billion Lira. The local growth rates since 1991 has averaged 10/12%. Even though a part of the
production process has been decentralised to Asian countries to exploit
differences in labour costs, the product quality of Montebelluna's companies
is among the highest in the world, above all in products requiring
particular manual abilities or with significant technological content. The
ingredients for the success of the district lye in the particular blend of
tradition and technology, as well as the valuable contribution of specialist
sub-suppliers. Therefore, while production of the more simple articles is
being shifted to Eastern block and Far Eastern countries, foreign companies
export their production of more technical articles (ski-boots, motorcycle
scrambling boots and cycle shoes), to Montebelluna. Andrea Saba The 160 pages that Saba dedicates to the industrial districts is one of the liveliest text published on the phenomenon in recent years. The author manages to use the analytical instruments of economists and journalist's narrative with the same ease, and to great overall effect. If it weren't for one chapter (the eighth) that wanders a little off the main theme, the book could be recommended as a guide to local small industry systems. Saba, professor of industrial economics at the 'Sapienza' in Rome, doesn't hide his fascination for the districts, that he considers the highest achievement of Italian economic development, "not simply for efficiency, but for flexibility, territorial balance and the diffusion of industrial culture". The book is structured along two intersecting analytical themes. The first theme attempts to analyse the consistence of the Italian economic system from the district point of view. The second effectively summarises the most significant lessons in industrial politics learned from the district experience. Written with style, the introduction recalls a theme most dear to researchers into local small industrial systems, regarding the problems of conventional economic theory have when attempting to give a plausible and coherent explanation of the competitive advantages of our groups of small companies. Italy is a country full of contradictions. Seemingly, it can't be trusted; its "foundations" are fragile; it has a low R&D/GNP ratio; its productive system is biased towards mature sectors with uncertain development prospects; international scales that use numerous competition related variables often give Italy a poor placing. But despite all this, our country is still an economic power. Per capita income is among the highest in Europe. Italy is the third largest world exporter of machine tools, and is leader in many other sectors that compete face-first with the entire world. In reality, a highly efficient system hides behind the apparent chaos that dominates the Italian scenario, confirming the metaphor of the bumble-bee that, despite the laws of physics, still manages to fly. Saba sustains that the key to this lies in the typically Italian peculiarity of the industrial districts, and in the "invisible variables" that form the basis of their competitiveness. The book effectively summarises the ways and means by which different results were achieved and their explanation. The districts started out and developed in a particular context characterised by an industrial culture that drew on the organisational tradition of share-cropping families and on the sense for beautiful artefacts and commercial ability of the district's artisans. At their outset, many companies exploit the weaker points of the administrative control network, and so the "invisible economy" often functions as incubator for new entrepreneurial resources. Gradually the small companies emerge from this "invisible" period to give life to a more authentic form of capitalism, more independent of political power than larger industrial groups. "The small scale entrepreneurs in the industrial districts chose a more risky, less comfortable lifestyle, but as a result are free men that depend only on their own resources and enterprise". Saba comments that this particular mode of organisation "presents indubitable advantages in terms of diffused social well-being, and the foundation of a democratic culture". Another two ingredients in district development are formed by the presence in our country of leading companies in the field of instrumental mechanics, and by the "Sabatini" legislation that has created a positive circuit of investment and technological renovation. The most original and stimulating comments on "the Italian model" regard standards. Drawing on the Italian experience, the author attempts to distil certain general criteria for the industrial policies of developing countries. Considering that the development of districts like ours doesn't depend simply on mechanical factors, but requires a certain mix of rather complex economic, social and cultural factors, Saba proposes what he considers as the most effective mechanisms for industrial policies directed toward stimulating a grass roots level growth similar to that of our districts. These consist of credit concessions for plant and machinery purchase, the creation of consortium structures and associations able to supply services to smaller companies (from accounting to promotional and training initiatives), as well as equipped industrial areas that permit time savings and cost reductions during 'start-up' phase. Throughout the book, Saba shows himself to be an astute and intelligent observer of the district experience, though in a few passages, as we mentioned beforehand, he does indulge a little in journalistic narrative, resulting in generalised or marginal values being attributed to particular circumstances. In our opinion, the significance given to tax evasion is unfounded, specially for the way it is presented, with particular reference to the "invoices market". In the same way, the remarks on the "merchant bank" role played by accountants and notaries, and the financial circuits operated by these to provided liquidity for companies are not convincing. From a historical point of view, the role of local banks has always had more importance. A final remark is directed not only toward Saba, but towards most of the researchers involved with the industrial districts. In this era of market globalisation, it is impossible to sustain that the basis the industrial district's success lies predominantly in "invisible variables" like the artisan ability, industrial atmosphere, creativity and versatility that characterise the Italian scenario. Such explanations have a distinctly "pre-industrial" feel, and do no justice to the managerial and organisational solutions adopted by the small companies in our industrial districts. News and Events New members The Lemetel agency in the Lumezzane district (Brescia) and the Ski-Boot Museum in the Montebelluna district (Treviso) have become members of the club.
Club annual assembly The annual Club assembly was held on the 22nd March at the Innovation Centre in Lecco. The new program of Club activities was approved, that includes the creation of a joint district observatory, the opening of a page on Internet, the organisation of specific event for presenting the 'phenomenon' of the districts to the foreign press and the launch of an inter-district project concerning the future district demand for professional personnel, that is to use the resources of Objective 4, axis 1 of European structural funding. Furthermore we are still proceeding with our action to accredit the Club in Brussels, and the newsletter will continue to act as the Club's mouthpiece.
The Club and local district authorities On the initiative of the Mayor of Carpi, Demos Malavasi, and the deputy Mayor of Prato, Antonio Lucchesi, a meeting between a number of district capitals was held on the 22nd March. During this meeting, the foundations were laid for an inter-district information exchange network between industrial district capital local authorities. The aims of this new network (that has a lot in common with the Club) are: - to create a network between industrial district local authority administrators and managers to assist the exchange of information and experience; - to promote activities (management and administrator training, the development of telematic and computerised citizen services,...) in which the participation of numerous local authorities is able to produce significant project synergy; - to create a scale for measuring the effectiveness and efficiency of local authority activity (creating a "bench-marking" system of reference); For further information, contact the Mayor of Carpi (Corso Alberto Pio, 91, Carpi; tel 059-649111 / fax: 649200) or the deputy Mayor of Prato (Piazza del Commune di Prato; tel: 0574- 616232 / fax: 21763).
Teleconference On the 22nd of February, the Club work session was held in Teleconference. Biella, Belluno, Carpi, Lecco and Prato were connected during the conference. The sitting lasted approximately one hour, and this conference method proved to be an very effective means of reducing distances between members.
Club organs The Club participated in the following events: - The Artisans Confederation and C.N.A. Local productive systems and fiscal reform Prato, 17th February 1996 - The Province and sector associations in Ascoli Piceno, Fermo, Meeting on the industrial districts with economists and politicians. Ascoli Piceno, 28th February 1996. -Sviluppumbria (Umbria development) Systems of local enterprise: A boost toward industrial development Perugia, 27th March 1996.
Publications (books, projects and documents regarding industrial districts and their development) - D. Caramanti, A. Cartotto, M. Ricchetti The economic cycle and balance sheet results of textile companies in the Biella district 1990 - 1994 The Industrial Union of
Biella, research volume n. 9, Biella 1996
Copyright©1996 by Club dei Distretti Industriali
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