n° 6 - November 1997

Finally something is moving in the chapter, which up to now had been neglected, on industrial cluster policies which concern various fronts.
The first, and in many ways most important, involves new institutional-administrative rules. The battleground is that of the Bassanini decries which give the Government the power to give "to the regions and local entities, in observance of the principle of subsidiarity…, all administrative functions and jobs related to caring for the interests and promoting the development of the respective communities, including all administrative functions and jobs which can be localized in the respective areas" (art. 1). This is a line of principle that the Club of clusters fully shares and will try to implement even if, for the moment, nobody has been able to understand exactly from where (ministry, commissions, regions) the new rules are being written.
A second novelty is finally taking shape from the small window that opended up in 1991 with art. 36 of law 317. As of today more than 71 industrial clusters from nine regions have been recognized (see article on pages 4-5); in some cases the "cluster plans" have already been approved and financed. Taking a quick look over the objectives and resources involved, one gets the impression that for the moment the game is being played on second rate fields but that, thanks to expierence gained, regions and clusters will refine their planning and participation skills.
And that's not the only novelty that 1.317 has provided. Last July 31 the Chamber has finally approved the "Urgent intervention for the economy" bill (Bersani bill) which will assign 50 billion liras in two years time to cluster programs (those recognized by the regions) for the development of service networks, starting with telmatic and information services.
There are still drafts on the chambers' work agenda that could have a significant impact on the industrial cluster system, like the norm on subsupplying. The proposal has aroused controversy and reactions that vary greatly amongst the associations involved; the impact that the law could have on cluster flexibility has not escaped the most careful industrial economists.
The last item for the record is the political debate wherein proposals are often presented for district-favoring projects.
In the La Repubblica Newspaper (7 July) Paolo Sylos Labini advocated industrial cluster reform based on a new training policy and on the estabilshment of three main areas of focus: bureaucratic-tax, financial and technological.
On the topic of commercial promotion, Giacomo Becattini urged in the Il Sole 24 Ore newspaper (15 August) the tying of Made in Italy to Italy's cultural images, thus appealing to the clusters' distinctive characteristics.
Finally, in the Corriere della Sera newspaper (11 September), the President of ICE, Fabrizio Onida, clearly maintained that public policy must be directed toward "increasing the value of the tens of local specialized clusters".
Between laws, decries and comparisons, an important game has begun for the industrial clusters that the Club will constantly stay abreast of. In the coming months we will dedicate large parts of this newsletter and our Internet site to this topic. Regarding provisions that are about to be taken, we will collect contributions which we will then discuss in special meetings and seminars.

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The Club of Clusters in Tokyo

On the occasion of the 5th edition of the "Japan Investment Promotion Fair" (Tokyo, 27-30 May 1997), Enrico Botto Poala, president of the Club, showed a group of presidents from the most important Japanese companies how the industrial clusters work.
The encounter was organized by ICE to introduce the participants (people looking for places to invest large sums of money in industrial projects) to the advantages Italy offers, and rightly the topic of choice was the Clusters, or rather all those territorial systems that, with their businesses, maintain Italy's high image throughout the world.

The following notes summarize the report "Italian industrial clusters; areas of excellence for investors" presented by Botto Poala.

An economic system similar to Japan's

On the international chess board Italy plays the role of a top cultural and economic pole as it is an ideal bridge between the different countries of the European and Mediterranean areas. With a population of nearly 57 million people, it makes up 5% of the world's GNP. The amount of businesses (there are nearly five million businesses) is higher than in other European countries (it is probably amongst the highest in the world) and is also a world leader in some foreign trade sectors: interior decoration, fashion, industrial machinery.

This was achieved from an economic and productive (and in some respects even political) system that holds more similarities to the Japanese model than any other European country. Like Japan, Italy is a country lacking in raw materials and founded its development on its abilities to conceive, develop, produce and commercialize manufacturing products. As in Japan, business skills are widespread and the productive structure lends to the prevalence of small and medium-sized businesses. Companies of great size and international notoriety (just think of Fiat, Olivetti, Ferrero, Barilla, Buitoni) are present in Italy, but the true backbone of Italy's economic stature in international markets is sustained by a widespread structure of small and medium-sized businesses. Italian economic development has been fed by a fertile social and cultural context: this context includes widespread skills in the areas of productive processes, the use of original technologies, efforts in professional activities, a high propensity toward risk and a value system that motivates factory workers and technicians, often encouraging them to transform themselves into entrepreneurs.
The combination of all these elements results in Italy's competitive strength in a number of manufacturing areas; from those typical of the Made in Italy label (fashion, food, furniture, interior decoration, glasses, etc.) to the most modern plant and machinery builders.

Competitive advantage

The competitive advantages of Italian industry emerge with particular emphasis placed on the economic areas that lead the clusters (productive systems that are widespread even in Japan, where they are called "sanchi"). The industrial clusters are social and economic entities with a well-defined local territorial base where a large number of medium and small businesses operate; the dominating presence of businesses that belong to the same product and territorial areas creates an identity that keeps people and productive processes tied together.
A recent analysis carried out by the Italian Institute of Statistics identified 199 industrial clusters employing 2.2 million people, that is to say over 40% of the Italian manufacturing sector. These numbers attest to the fact that the clusters are not just a marginal part of Italy's economy, but rather one of its greatest componenets.
The manufacturing activity carried out in the clusters can be grouped into four large families of goods: fashion items, products for the home, foodstuffs , and specialized industrial machinery.
The first three product lines either directly or indirectly involve the markets of consumable goods and make up that which has always been identified as "Made in Italy". The fourth product line, that of specialized machinery, is no less qualified nor important. If it is true that style, design and taste were and still are decisive factors for the success of many Italian industrial clusters, there is also a relevant technological component in the industrial panorama next to which a large and articulated productive reality based on highly technical business has emerged. This all has precise numerical backing: of the 199 clusters, 69 are specialized in textile and clothing manufacturing, 27 in footwear, animal skins and leather goods, 39 in products for interior decorating, 17 in foodstuffs and 32 in machine construction.
The clusters, through their small business networks, have had the possibility of relying on the technical expertise of the machinery manufacturers who make them up, and who have also managed to set up the structures necessary for making themselves known throughout international markets with their different types of manufacturing and competitive costs.

There are many factors at the base of this collective success in sectors that are difficult to defend for a country with a cost structure like Italy's:
Amongst these the President of the Club highlighted the focus on each cluster's specific offerings and the balanced mix of competitive and cooperative relations. Internal competition in the clusters assures efficiency and a continuous ability to innovate, but at the same time, innovation quickly becomes common knowledge for all those operating in the area who then involuntarily find themselves working together along a path that is pushing toward the borders of economic efficiency. Relations among the clusters' businesses are not ruined by competitive comparison. One of the mechanisms that characterize the cluster machine is the sharing of work between businesses; this guarantees conditions of flexibility, elasticity and economic efficiency.
The most abundant resource in the clusters is entrepreneurialship, and its greatest strength is flexibility: the clusters are socially cohesive systems and are generally less conflictual in respect to Ford-type organizational forms.
The founding of new companies is always encouraged in the clusters as they enrich the local economy with new energy.
The social, cultural, productive and localizing characteristics present in the clusters can constitute, as President Botto Poala emphasized, a rich context that favors the development of new business initiatives. Being present in the Italian clusters means being in the heart of Europe, being at the heart of certain world markets, and having access to an endowment of excellent cultural, human and technological resources.

The clusters' success

The clusters often sprout up around small centers and small to mid-sized cities where a sense of well-being is wide spread and the quality of life is good.
The above-cited conditions about the cluster economies have precise backing in terms of performance: the per capita income of cluster residents is amongst the highest in Italy, and the standard of living is in line with that of Europe's richest areas. The economic growth rate is among the most dynamic, and export is growing at double that of national averages.
However the clusters also know how to face change and they know how to adapt and evolve rapidly as demonstrated by the winning stories of the single districts and confirmed by their ability to arouse international interest, from the G-7 summit to the top of the EU; they are recalled in the research of company policies adopted by the clusters where many companies are considreing key international development through the realizations of joint-ventures with foreigh partners. This qualifies the business culture of the clusters as dynamic and open.

In conclusion, Botto Poala asserted that the industrial clusters can be considered as areas of excellence, as places of sure interest for making investments, places where qualified speakers from both inside and outside the business world abound. The social, cultural, productive and localizzing characteristics present in the clusters demonstrate a rich and particularly favorable context for the development of new foreign business initiatives, as has already been the case in some clusters from Emilia Romagna and the Veneto.

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The regions and the industrial clusters

With the approval of law 317 October 5, 1991 "Innovation and the development of small businesses", which includes the first legal recognition of the industrial clusters, an attempt has finally been made to fill the void of industrial policy in Italy: it had become difficult to maintain that such an important reality for the Italian economy as the clusters should continue to be so obviously ignored at an institutional level. Secondly, enactment of the new laws opened the door to decentralization from the State to the Regions of a subject - industrial policy - that was traditionally in the hands of national bodies.
As was established in art. 36, le Regions were to have identified the industrial clusters that were present in their territories within 180 days of the law's enactment - based on a decrie by the Ministry of Industry which set the limits. The Regions would then have been destined to receive regional financing in the area of "innovative projects which involve more than one company, based on a program contract stipulated among the consortia and the Regions themselves, who would define the priorities of the undertaking".
The ministerial decrie was approved, though late, on 21 April 1993. This indicated, as territorial areas to be used as a reference, the "local systems" in which Italy was subdivided by ISTAT and IRPET on the basis of daily moves by the inhabitants between their places of residence and those of work. The main characteristic of a local system defined as such is the fact that the majority of the residential population works within it, and that the employers hire the majority of their employees from that geographical area. In order for local system to be "upgraded" to clusters, they should satisfy five requirements: 1) an average of 30% more people employed in the manufacturing industry than the national average; 2) an index of the industry's density of business, calculated in relation to the residential population, above national average; 3) an index of productive specialization "calculated in terms of employees as a percentage of employment respect to the total number of people employeed in the sector, 30% above the same national data; 4) a level of employment in specialized areas that is 30% above the number of employees in the area: 5) an employment rate for small specialized business that is 50% above the number of those employed in all the specialized companies in the area.

Nine Regions, 71 clusters

Since approval of the ministerial decrie, nine Regions have recognized the industrial clusters: Abruzzo, Campania, Friuli-Venezia Giulia, Liguria, Lumbardy, Marche, Piedmont, Tuscany and Sardinia. Some of these - such as Piedmont - have since made changes in their choices, once they had access to more updated data (that of the latest census). Piedmont also saw to it to group together contiguous clusters with the same sectorial specializations, promoting the constitution of a single cluster committee. Of the original 25 districts 14 were definitively determined. Others concluded their studies by identifying the clusters, though they still have not formalized their choice. All together the local systems which have up to now been officially "upgraded" to industrial clusters total "only" 71, for reasons inlcuding the fact that regions like the Veneto (which officially counts more than thirty clusters) and Emilia Romagna, in which the model of widespread industrialization seems particularly rooted, still have not responded. The clusters recognized up to now are still highly representative of the varied industrial panorama that Italy offers: their specializations range from textiles to furnishings, musical instruments to machinery.
The case of Emilia Romagna is of particular interest, as exemplified by the difficulties that one can run up against in wanting to apply rigid "statistical grids" to the multiform reality of the local systems of small and medium-sized companies: delays in application of the law are explained by the fact that identification based on the parameters of law 317/91 would have deprived from recognition those areas that have traditionally been considered industrial clusters, first of all that of Sassuolo. However, Emilia Romagna is not the only one to have encountered this type of problem: the Lazio Region, for which no local system meets the set criteria, requested either a change or an integration of the parameters established so as not to find itself having to exclude from its list of industrial clusters such as that of, for example, Civita Castellana, which produces 35% of ceramic bathroom fittings (sinks, toilets, bathtubs, bidets) manufactured in Italy.
Campania, together with the seven clusters identified, has also identified five "areas of productive development" - one for each province - "to encourage growth of manufacturing and promote degrees of development for the entire region" (words of the Industrial councillor of the Region of Campania). Molise, Calabria and Sicily have not identified the presence of any specialized productive systems.

Cluster committees

As provided for by article 36 of law 317/91, and as deduced from the entirety of existing deliberations on the identification of priorities (relative to Lumbardy, Piedmont, Tuscany, Abruzzo, Liguria), the most frequently proposed subjects for the stipulation of "program contracts" (also called "development program plans") with the Regions themselves are made up of provinces, towns, mountain comunities, inter-comunitarian and inter-company consortia, various business associations, chambers of commerce, artisan and entrepreneurial associations, and trade union organizations. The representatives of such organisms (which, as in the case of Liguria, can also be experts designated by the organizations themselves) are variously joined within "cluster committees" (in Tuscany, area committees).
The most important aspect of setting up a committee is the recognition that is finally given to all those whose action is important at a local livel, in applying the principle of subsidiarity. As is well-stated in the Region of Piedmont's deliberation, "the function of the cluster Committee is (in fact) that of setting up a local base for comparing the subject of the local industrial policy of those interested.

Objectives

The range of programs that the Regions have considered for the cluster committee initiatives is very wide, a decision that therefore leaves ample choices for the individual clusters. The only catch is for the recipients, who must not be the individual companies but rather the entire cluster system.
The programs for which the Regions are attempting to contribute to 40% of costs, can have as their objective the development and modernization of the existing local production system (even through measures of cohesion and cooperation among businesses) or that of favoring internal reconversion processes (with particular reference to the introduction of advanced technologies or quality control procedures) or toward other sectors of the resources that are presently being used for traditional productive specialties and the phenomena of industrial decline. All of this should be done in accordance with the existing projects at a regional, national and EU level.
Of the two tables that go with the text, one lists the areas identified by the Regions as industrial clusters; the other is a summary that includes some of the main contents of the program plans, as resulted from the regional deliberations. The Region of Abruzzo deserves a special mention in that, as opposed to the others, it mainly used a sectoral-type approach, rather than a territorial-type one, limiting some interventions to just the electromechanical, foodstuffs and wood/furniture industries. Lumbardy and Tuscany have already moved on to the operative phase.

Maria Gabriella Cerreta

Main contents of the program plan:

• The realization of service centers (with particular reference to highly innovative activities), relative to the need for consolidation-development, that is to say requalification-reconversion of the productive activities in which the industrial cluster is specialized;

• The creation of promotion and assistance outlets to use the financial support allotted for regional, national and EU interventions, or for the spreading of information on innovation;

• Supporting commercialization and promotional activities for the cluster's products

• Promotion of the cooperation among PMI (involving the specifications indicated for Tuscany: "…cooperation… among key businesses and PMI subsupplyers, among PMI, no less among producers, suppliers and clients"), even for carrying out R&S activities, technology transfer among companies in the area, and acquisition of new technologies from outside.;

• Creation of research and development labs (particular emphasis is placed on qualitycertification) and for the training of personnel;

• Recuperation of dismissed industrial sites;

• The realization of urbanization projects destined for industrial and/or artisinal use;

• Predisposition of analysis and innovative methodologies for working on environmental problems or in telematics.

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The clusters of the province of Ascoli Piceno

In the province of Ascoli Piceno two industrial clusters operate:

• The footwear cluster located in the Fermano area;

• The agro-foodstuffs cluster located in the Tronto and Tesino Valleys.

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Courses for political planning in the industrial clusters

The topics covered will be as follows:

• local-global relations;

• the dynamics of local systems;

• the diagnosis of cluster systems;

• intermediate structures and subjects and the consolidation of competitive advantages;

• regional legislation for cluster policies.

News and Events

The Club has participated in the following events:

• Tecna Pinta - Japan Investment Promotion Fair, Tokyo, 27-30 May 1997

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Copyright©1997 by Club dei Distretti Industriali