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How long do the Clusters still have to wait?

Last October we let ourselves go a little in forecasting the start of a new chapter in policies for the industrial clusters. On the horizon there was the appointment with the Bassanini rulings to transfer industrial policy to the Regions; there was the decree by which Minister Bersani freed the definition of the clusters from the bonds of its statistical parameters leaving the Regions with greater autonomy; there were the works of the Regional State conference which saw constitution of the Fondo Unico Nazionale per l’Industria (the single fund for industrial); there was the round table on the industrial clusters held at the Parliamentary Observatory for Small Industry; there was interest in the industrialisation programs for Southern Italy based on the clusters model; the clusters really were in the limelight.

Just as the goal seemed to draw near, the Government collapsed and two steps forward rapidly became three steps backward. All the appointments have been deferred. A good portion of the Regions didn’t even prepare for the functions expected of them; the Bersani decree, which suffered the same fate as the Government, is now back to square one in its round through the Parliamentary Committees, and the attention has returned to the Single Currency, the Social Contract for Development and the Enel privatisation situation.

All this leads one to believe that our system can’t handle even the smallest doses of federalism. The Parliamentary Committees for Economic Planning and Employment is working on a proposal to put definition of the industrial clusters back under the Government’s wing, being "delegated to issue a legislative decree according to which the national territory is subdivided into local employment Systems and identifies economic/productive clusters among these on the basis of statistical indicators. Such indicators are elaborated by the National Statistics Institute, also responsible for the updating of the same. The indicators consider demographic, social and economic phenomena as well as infrastructural development and the presence of localising factors, orographic situations and environmental conditions. Such identification shall form the sole basis for development policy programming..."

Evidently, Italy’s production of legislative dispositions doesn’t follow the straight course it does elsewhere, and there’s little else we can do but resign ourselves to the pushing and pulling of an ever-changing Government as it swaggers its way into the new millennium. The populations of the clusters is neither raising its voice nor agitating for yet another crisis; so, let it swagger on like it’s been doing until now, with no-one paying any attention to the warning lights ominously flashing over the clusters economic situation and exports.

This break in policy for the clusters can only be repaired by the rapid approval of the Bersani decree and, above all, by some quick action from the Regions. Up until now Regional programs for the clusters have been of little import; some haven’t even made provision for their recognition and many haven’t implemented any form of intervention.. A bit of a speed up could be given by the decree on the reorganisation of the electrical energy market; the Club has asked the Parliamentary Committees to allow companies in Clusters recognised by the Regions to form consortiums and become primary clients. The main aim is obviously electrical energy cost reduction, but this kind of client definition proposed by the Club could forces a step forward on a course that, at present, nobody seems seriously enough determined to take.

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The Artimino seminars on Local Development‹

The importance of the territory

The eighth series meetings on local development organised by Iris (Institute for social research and intervention) took place last September, in the Renaissance setting of the Medicean villa of Artimino, a small town on the outskirts of Prato.

For an entire week, experts and young researched passionately discussed "Policies and instruments for Local Development". In recent years "Artimino’s free school", as the meeting’s indefatigable animator, Giacomo Becattini affectionately calls it, has been one of the most qualified centres for interdisciplinary confrontation and discussion for researchers working on the theme of industrial clusters and local development.

At Artimino this time around, the main topics for discussion were policies and instruments for local development in Italy.

Today’s most pressing challenges to local industrial systems are, among other things, the introduction of the single currency and market globalisation.

A decisive step in the direction of greater federalism has been recently taken by the Government through the reforms of the "Bassanini" decree and, in terms of industrial policies, the "Bersani" decree.

The latter has the plus-point of modifying State intervention in industry by unifying the procedures for granting funds and subsidies, but nevertheless has come under fire from Sebastiano Brusco. His contribution to the event highlighted how the lack of a procedure that allows for clear assessment of specific intervention doesn’t allow for evaluation of the implemented industrial policy effectiveness either. Moreover, the Bersani reforms lack an industrial policy for local systems capable of responding, for example, to the need to identify actuators, sources of finance and management procedures. In the experience to date it is pretty clear that the resources available to the Industry Ministry have been for the most part parcelled out to individual companies in the medium to large range, and utilised by these to consolidate their respective positions. So the call to introduce real policies for local systems remains fundamentally unanswered. Brusco also emphasised how mistaken it was to support the need for policies exclusively for the clusters when indeed all local territorial systems have an effective need for real industrial policy. The kind which originate from the place in which they take effect, and as far away as possible from State and Regional meddling. This new way of managing development within local economies has to be realised by specific "area companies", meaning private companies delegated public authority for territorial intervention.

Territorial promotion policies

The reasons which lead local development economists and researchers to firmly sustain the need for a new kind of public intervention strategy are to be found not only in the failure of the territorial policies implemented to date, but above all in the fact that the clusters and local small/medium industrial systems, the real protagonists of the local and national economy, have until now been substantially neglected by the institutions.

Gianfranco Viesti’s contribution highlighted how the instruments for territorial promotion have to be diversified according to the specific needs of the target territories. At the same time he warned against uncontrolled proliferation of such instruments ("additive policy"). Even the simple possibility of choosing between territorial agreements and area contracts, for example, has to be accompanied not only by competition between companies within a specific area, but also by competition between the areas themselves. And this in relation to Southern Italy’s development problems, where a company deciding to invest has to have the chance to choose the most appropriate area to ensure effective development prospects.

As Enzo Rullani stressed, it is important to understand that territorial policies shouldn’t be limited to creating new subjects and new bureaucracy. They must instead have the task of instigating the institutions to favour the passage from a Fordist type of system , that is to say, based on the parcelled division of charges, to a post-Fordist scenario, the only one capable of handling the necessary flexibility in the emerging socio-economic situation. The globalisation of the economy and the increasing complexity of the competitive arenas are obliging companies to transform themselves, to alter their market positioning and the co-ordinating logic of their activity. In turn, the institutions also have to transform to become more modern and flexible.

The transformation and growth of industry in the NEC (North, East and Central) Regions has been characterised by aggregational processes that lead to the formation of formal (or informal) groups of companies. This is the case in the Alto Livenza furniture industrial cluster, an area straddled between the provinces of Pordenone and Treviso where, since the ‘eighties and subsequently through affiliations and acquisitions, a number of local companies have created a group made up of an average 4 –5 furniture manufacturers with distinct production specialisation. The cluster currently counts around ten such groups, some of which include leading national and European home furnishing producers, with turnover in the order of 100 billion plus. The NEC model seems to be off to a good start, confirming itself as a winner, even at the global competition game.

As Valerio Balloni sustained, the peculiarity of this production system, based on small/medium companies, has to be given due consideration in the formulation of industrial policy.

As regards exports, in 1996 the NEC region’s share of national export (as shown by the table) was around 42%, a marked increase over the 1987-91 five year average (38.5%). The data shows, for example, that the woodworking sector is still fundamental to overall Italian exports.

Just the same, it also highlights that the principal reference for industrial policy over the last decade, whether for the better or worse, has always been large scale public and private industry, leaving subjects like small/medium industry in the shadows.

A section of the meetings was dedicated to the theme of training. In no uncertain terms Vittorio Capecchi sustained the need to encourage continual training in every way possible, a field in which Italy is seriously lagging behind with respect to other European countries, particularly due to the enormous contradictions emerging from the difference between the North and South of the country: a well organised North capable of effectively managing community resources in contrast to a South where allocated funding "still goes to financing ‘friend’ structures".

Industrial policies for the clusters

The industrial clusters for one of our economic system’s fundamental realities. According to an ISTAT census, Italy has around 200 clusters employing a total of 2,200,000 people (42% of Italian manufacturing sector employment). Given the importance of these industrial nuclei, that boast a balance of trade of over 150 billion Lira, the formulation of specific industrial policy and a little more State attention for these particular local systems seems like simple good sense.

Instead, the Italian institutions have implemented no form of intervention targeted toward the clusters, a fact that everyone finds surprising, especially the many foreign observers who come to Italy to study this phenomenon. The role of small and medium companies is emphasised in European Union programs, but even in these cases the attention isn’t focused on the territorial dimensions binding the SMI; policies for the clusters shouldn’t be addressed to the individual company, but must involve the industrial systems and their relations.

These anomalies depend on many factors. Perhaps the clusters are considered as successful systems not needing any particular resources or specific intervention.

It’s also true that the industrial clusters haven’t managed to coalesce effectively enough to make a direct claim for action on their behalf. For the time being there’s the "Industrial clusters club", an association which has already forwarded some concrete proposals, but that as yet doesn’t wield the kind of political weight that the more powerfully organised representatives of industrial interests, like the Confederation of Italian Industry, the unions, etc.

In the emerging scenario of globalisation and the single currency there is ample space for targeted intervention to strengthen the collective patrimony both tangible (roads, purification plant, infrastructures) and "intangible" (inter-company relations, diffusion of knowledge, professionalism) of each cluster. Among other things, the clusters system demands a reduction in fiscal pressure, reductions in the public administration and greater flexibility in the employment market.

Andrea Balestri, the Industrial clusters club secretary, outlined a number of fundamental bench marks for actuating effective policies for the Clusters, the most important of which being:

- the institution of a "Conference for the industrial clusters" with the participation of all competent Ministries (Industry, Treasury, Foreign Trade, Telecommunications, Scientific Research), the Regions and representatives of the clusters with the purpose of favouring the adoption of development plans for the industrial clusters

- diffusion of "cluster committees", expressing local economic life, animated by category associations, unions, chambers of commerce, services centres and Local Authorities, with the sole function of design, orchestration and evaluation, without introducing a new administrative level;

- the application of negotiated programming as the fundamental instrument in the clusters, as envisaged by the European Union;

- technological innovation in the district industrial systems as a lever on demand. The clusters must be given the freedom to manage their own resources for research (generating competition between research institutes: CNR, Enea, Universities…);

- campaigns and international events to which move the clusters to promote the content of "made in Italy" products;

- adjustment of the electrical energy market to allow cluster consortia the same privileges as large industry.

Even though subjected to strong competitive pressure, the industrial clusters have demonstrated great vitality and capacity to adapt. They sailed safely through the problems of the ‘eighties and early ‘nineties, showing an appreciable capacity to restructure and marked propensity for innovation but now, in the rougher waters of globalisation and the Single Currency, things are looking a little more uncertain.

For this reason, many believe that a new way of developing industrial policy is needed, that starts from the centrality of the territory, and that involves its local actors. Only be strengthening the clusters can the National economy in turn be strengthened, and by transferring this unique made of organising local production in Southern Italy’s disadvantaged areas and other crisis regions.

In conclusion, this eighth series of Artimino meetings on local development pointed out that despite the amount that has been written in recent years about the measures and steps taken and that must still be taken in the various local realities, there is still nothing which vaguely resembles a concrete policy instrument for the clusters worth mentioning. The political class now has to do something about this problem, that can be put off no longer, and could start by making use of the invaluable contribution of this original forum on local development.

synopsis by Andrea Massarotto

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Blue ribbon for Lumezzane

The European Business Innovation Network (EBN), which has its headquarters in Brussels, has nominated the Lumetel agency a Business Innovation Centre (BIC).

This coveted acknowledgement, from Directive XVI of the European Commission, allows Lumetel to become part of the European Business and Innovation Centres, these being organisations dedicated to assisting the birth of industrial companies and diffusing innovation in existing small/medium industry.

Luciano Consolati, director of the Lumezzane agency, had this to say about this success: "we are proud of this prestigious result, that takes on even greater value if you think that there are only two BIC in all Lombardy. The nomination from Brussels is an acknowledgement of the supporting role Lumetel plays for small/medium industry. Our company has always had the requisites of a BIC, in practise it has always been one. In this sense I’m referring to the "company incubator" project (inaugurated 28^th November last year) that involves the Gardone Valtrompia and Vestone areas: this is an action in total harmony with the operative role of a BIC. The acknowledgement we have been given will now serve to broaden the horizon of our activity ".

The idea of establishing Business and Innovation Centres arose from the understanding that creating small and medium industries is one of the most effective ways of producing wealth and employment.

Investigations into industrial systems conducted at international level in recent years has revealed two fundamental aspects. The first stresses that industry is still the primary source of regional economic activity, but that it is undergoing transformations which could put over half the jobs it offers in jeopardy by the end of the century, which means over twenty million people. On the other hand, the second aspect concerns the vulnerability of new born companies. It has been calculated that only 85% of these survive beyond their first year, while 50% fail within five years. The causes at the root of this problem are many. They range from poor management to market difficulties, while never forgetting that the creation of an innovative company is also an exceedingly delicate operation. Indeed, along side the natural difficulties of a technical kind there are also at least two "risk" factors: on one hand, the uncertainty associated with the marketing of a new product, and on the other, the heavy investments required by the sector.

In an attempt to respond effectively to these problems, in 1984 a specific European Commission deliberated to create specific instruments to attenuate these difficulties and contribute to local economic development: these took the form of the BIC. Europe currently has over one hundred centres.

As a Business and Innovation Centre the services offered by Lumetel are dedicated to the creation of innovative companies. In general these concern analysis project feasibility in concrete terms, support for the professional training of new entrepreneurs, technical support over the company’s most vulnerable years and practical assistance in the fields of technology, marketing and finance.

Lumetel operates predominantly in the Val Trompia and Val Sabbia industrial clusters and numbers 200 members, among which the Brescia Chamber of Commerce and the mountain municipalities of Val Trompia and Val Sabbia.

The cluster’s characteristic production ranges from household products to civil and industrial taps and valves, door handles and civil and sporting weapons. Lumetel also promotes its member companies in China, through its office in the Lombardy building in Shanghai.

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Among the officially acknowledged clusters in the Piedmont Region pursuant to law 317/91, one of the better known, and from certain angles the most fascinating is the one straddling the provinces of Vercelli and Verbania.

On the map, the Omegna, Varallo Sesia, Stresa cluster lies between lake Maggiore (known as Verbano), Lake Orta (called Cusio) and the Val d’Ossola. The cluster numbers 41 municipalities with a total population of around 60,000, distributed over a territory of 975 square kilometres .

This is a zone with a non-linear morphological profile, divided between planes (20%), hills (50%) and high mountains (30%). This explains the low overall population density (61 inhabitants per square kilometre) compared to most clusters.

Nevertheless, in its centres this figure rapidly rises: in Omegna, on the banks of Lake Orta at about 50 kilometres from Novara, population density stands at 150 per square kilometre. And Omegna is also the focus of most of the cluster’s production activities.

The employment rate is around 60% compared to the 42% national average, while the unemployment rate stands at 7.7% compared to the 12% national average.

Analysis of the production sector shows around 4% of companies operating in agriculture and mining associated sectors, 35% in industry with the remainder in various other sectors, in particular building, commerce, services and tourism. Companies number 5,554 (equal to one every 11 inhabitants!) and of these 2,487 (45%) are artisan.

Companies in the manufacturing sector number around 1,260 (23% of the total) and half of these, totalling around 4,850 employees, operate in the cluster’s characteristic sector: metal products manufacturing.

The district’s organisational structure is typical of this type of reality: half of the companies are individual companies (of which most are artisan) and just 15% are joint-stock companies.

The cluster’s centre of gravity is situated in Alto Cusio, to the north of Lake Orta, where the municipalities of Omegna, Gravellona Toce and Casale Corte Cerro are to be found, all along the banks of the river Toce, going upstream toward Val d’Ossola.

The cluster’s major products are household implements, valves of various kinds and taps; a secondary industry subsequently developed around this base producing machine tools for their production.

The cluster’s fame is linked above all with the production of metal utensils for the kitchen and the table. And the influence of this production on the local economy is demonstrated by the fact that household utensils represent 60% of the provinces metalworking sector exports.

The production of these artefacts boasts a long tradition. The first modern industrial companies were established around the mid-nineteenth century, as an evolution of the local artisan tradition, and even today, many of these are still managed by descendants of the original founders.

The overall turnover of the household metal utensils sector exceeds 600 billion Lira (around 30% of the national total); 40% is sold abroad and 60% on the domestic market. The cluster employs 2,000 of the national total of 7,000 persons occupied in this sector.

The character of this industrial cluster with its particular atmosphere is also revealed by how its production is structured: The major sources of employment are family owned artisan companies operating mostly in sub-supply. And even though parcelled into tiny production units, their "employment capacity" is estimated at around 1,000. These are mostly micro-companies operating on the side.

Profilo del distretto

OTHER SIGNIFICANT SECTOR: Taps, valves, trimmings, founding, casting

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We are currently living through a period of significant change. Since the 1^st of January we have become part of the European Monetary Union, while computers, omnipresent, have also become a recurring "fear" of recent years: Indeed, as the year 2000 draws near, it is feared that many systems will not be able to handle the triple zero necessary for the new calendar date, a problem that seems pretty banal but that could have unimaginable consequences.

With this in mind, and above all considering the inevitable transformations that their companies will have to face in the future, the Biella and Prato clusters have been investigating the "computer problem" as a whole, promoting studies that, while concerning areas not all necessarily equivalent, analyse the telecommunications situation and the incidence of information technology at local level in the lives of the companies in their respective territories.

In Prato, research was made into the theme of "Cable and the telematic development of the Prato area" and involved the Municipality, the Province, the Chamber of Commerce, the Pin (local seat of Florence University), the two international consortiums "Macrolotto 1 and 2", the Consiag, the Interport and the Prato Industrial Union.

The Biella Industrial Union and Information Technology Forum instead presented their "Third report on the computerisation of Biellese industry " as a follow up to the two surveys made in 1988 and 1993.

The Prato work group’s aim last summer was to verify the economic sustainability of a local telecommunications service handler and to examine the territorial level of Information Technology development.

The research highlighted the local telephony market’s lack of attractiveness in the light of the investment needed, for example, to cable the area; this is explained, according to the research, by the consistency of the area’s overall data traffic. Telecommunications services costs ascertained in 1997 (including fixed costs, mobiles and dedicated lines) reached 18.4 billion Lira , meaning an average cost per company of around 52 million Lira. If data for the Municipality, the Consiag, the Engineer studies centre and the two Prato Industrial Union service companies (all so-called Large Users) the average drops to 40 million. So, on the whole, the incidence on overall costs for companies rarely exceeds 0.26% of turnover, with the area’s average standing at around 22.3 billion.

A separate evaluation concerned the diffusion of mobile phones. It was found that on average, each company has about four mobile phones and spends little under 30 million lira per year in mobile phone bills. The market is valued at 12.5 billion, with 18.7% of telephone costs going into cellular network hardware.

The data given by the Biella report on computerisation, although not exactly comparable with the data obtained from the Prato studies, was nevertheless significant in highlighting the increasing diffusion of Information Technology and its applications in the area.

In 1988 the number of personal computers connected to local networks was 52; now there are 2,730, and the majority of the 173 companies that took part in the research were envisaging upgrades to their systems in the near future. The average incidence of Information Technology costs on company turnover stood at around 1.55%. Half of the sampled industries employed an Information Technology manager, although only 1 in three made budgetary provisions for IT expenses. 61.4% of companies were found to be connected to the Internet and more than half of those not already connected planned to do so in the near future.

But technology isn’t only progress, and does have its share of defects. One industry in five is not satisfied with their current computer systems (in 1993 this was 1 in 6) and the general feeling was that services and systems have deteriorated somewhat over the last five years. Nevertheless, the most pressing problem at this time were understood as the measures that have to be implemented for handling the Single Currency and, naturally, the arrival of the year 2000 (the so-called Millennium bug). Only 22% of companies currently have procedures capable of handling both of these problems, but over half of the others have already taken steps toward upgrading. Among those that have as yet done nothing (38,7%), most are small companies with less than 50 employees.

This differed from the Prato research theme which, as previously mentioned, aimed at quantifying the opportunity offered by the area to a local telecommunications services handler. The conclusions are very cautious, but sector scenarios, as we well know, change rapidly and all projects, even the most apparently ambitious, can become actual again.

Among the initiatives proposed by the work table to accelerate sector development was the idea of a "provider’s provider", meaning the establishment of a consortium of Prato Internet connections and ISP (Internet service providers). The hypothesis contemplates a single high-performance connection to the Net and could even include the common management of basic technical infrastructures like modems and servers. The estimated saving to each ISP would be around 10%.

The point of departure for the realisation of future projects nevertheless remains collaboration between the various bodies and the institution of round tables to discuss problems that concern the entire urban fabric.

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The Club’s voice

The Club took part in the following events:

• Ceram Sophia Antipolis

The industrial clusters in Italy

Sophia Antipolis, Nice, 20^th November 1998

• Forem

Seminar on Local Development

Liege, 26^th November 1998

• Spisa Bologna University

The domestic market and reorganisation of the national electrical system

Bologna, 11^th December 1998

• The Censis Foundation and Brescia Industrial Association

Industrial clusters: infrastructures and logistics service

Brescia, 14^th December 1998

• The Lumetel Agency, Brescai Chamber of Commerce, the Lucchini Foundation and Bipop Group

Between efficiency, mutuality and reputation. The succession of companies in a cluster reality

Brescia, 17^th December 1998.

Representation for the Clusters. The Club has met:

• Assotec

Programs and research contracts for the Clusters

Milan, 1^st December 1998

• Electricity and Gas Authorities

The new trim of the electrical energy market

Milan, 1^st December 1998

• Senator Umberto Carpi – Industry Undersecretary

Industry Ministry decree on the electrical energy market

Rome, 9^th December 1998

• 10^th Senate (Industry) Commission and 10^th Chamber (Production activities) Commission

Investigation into the reorganisation of the electricity sector

Rome, Wednesday 20^th January 1999

CD-Rom on the Italian Clusters

In its 1999 promotions program, the Ice has included realisation, in collaboration with the Industrial clusters club, of a CD on the clusters as the diamond tip of the Made in Italy concept.

The CD will give a general picture of the clusters phenomena (maps, data, dimensions, specialisation, standards) and detailed insights into the individual clusters which make up the Club: profiles, production, addresses of economic associations, chambers of commerce, traditional product museums, artistic heritage, tourism and gastronomy. The CD’s text will be backed up by an evocative selection of images from the clusters.

The Club will be present with a delegation and its own stand at the Argentina and Italy: countries in motion fair scheduled in Buenos Aires between the 10^th and 16^th May 1999. This participation is intended to strengthen the image of the clusters at international level as places where Italian production truly excels. The Club will occupy an area of around 100 square metres as a virtual shop window on Made in Italy products from the clusters.

During the fair, in collaboration with the Ice, a seminar will be held on the clusters reality for the press as well as local private and public operators.

Publications

• Marco Fortis

Made in Italy

Montedison and Cranec – Cattolica University of Milan

Il Mulino, November 1998

• Censis

VIII National Forum on Localism. Industrial clusters, infrastructures and logistics services

Censis foundation, December 1998

• Assopiastrelle, Snam-Eni

Integrated report. Environment, Energy, Health and Safety, Quality

September1998

• Biella Industrial Union and Chamber of Commerce

The economic cycle and final results of district textile and textile machinery companies (1994-1997)

UIB and Cciaa, October 1998

• Prato Industrial Union and Chamber of Commerce, Cgil, Cisl, Uil, Confartigianato and Cna

Annual report on the Prato district economic system 1997

La Spola, November 1998

• Treviso Chamber of Commerce

New challenges for the industrial clusters: cognitive systems and transnational networks

Convention minutes 19-20^th January 1998 – Economic Profiles, 3