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The competitiveness of the industrial clustersAll it took was some figures indicating a downturn in Made in Italy exports (that nevertheless, as Marco Fortis' figures remind us, continue to perform better than the Italian economy on average!) to reawaken doubts in the minds of many exports as to the weakness of our small industries and the defensibility of the productive specialisations of the industrial clusters. Legitimate doubts, but however the same ones that dominated the question of the economy almost twenty years ago. It seems that every time the GNP slows up, the same refrain comes from high technology sectors, the country's major industries, the finance sector and the stock market. The question of our country's declining competitiveness, reopened at Cernobbio by honorary President of Fiat Auto, Gianni Agnelli, seems once again influenced by the two distinctly Italian factors these being, on one side, the incapacity of large industry to withstand the onslaught of international competition, and on the other, the generalised arthritic condition of the Italian system as a whole. There seems to be little central ground, but nevertheless that is the ground on which most of the Italian manufacturing system's development possibilities appear to be based at present. In Il Sole 24 Ore, after having let it slip that production from the clusters accounts for a mere third of national production, Cesare Romiti stressed the need for strong companies capable of withstanding the onslaught of international competition. Romiti pretty much ignored the fact that the industrial clusters are effectively on of the principal motors of the Italian economy, and the fact that they are a reality that has "withstood the onslaught of international competition" for a good many years now and that, with their conspicuous surplus, are effectively sustaining our country's balance of payments. This lack of attention to the cluster's doesn't finish here. A lot was said about premier Aznar's recipe for development in Spain, but this has done nothing to call more serious attention to our own industrial clusters, that are looked on with great interest both by Spain itself and many other countries. Obviously, this doesn't mean that the companies that make up the industrial clusters don't have their fair share of problems. It is true that in Italy there are a great many small industries; maybe there are even too many, or better, maybe they are too small. It is also true that globalisation lays down challenges that many of the smaller industries are not prepared to take on. But the lesson that the clusters and their development has really taught, and continues to teach, is that the competitiveness of the small industries that make up the clusters is reinforced by the inter-relations and bonds that develop within a given territory as a result of its specialisation in a given sector. Small industries alone are not capable of competing on the international market, but this is not necessarily true for industrial clusters. A policy in favour of SMI is a market policy that works, that is flexible and lightweight in an administrative sense, meaning that reinforcing the industrial clusters is certainly the most direct way of reinforcing the fabric of the Italian industrial system as a whole. The Industrial Cluster's Club is following events in the clusters themselves with great concern. With everything that is happening on the various markets, with continually emerging new technologies and distribution networks and all the rest, it is right to question whether the well defined organisational formulas like those of the companies within the clusters, are necessarily correct. For ourselves first and foremost, we absolutely have to clarify what are the fundamentals of the competitiveness of cluster companies; we have to actively share information and experience to get the best understanding of how companies are reacting to the challenge of globalisation, so that we can act as a sounding board for the companies themselves. But we also want to offer them the backing of a new way of creating industrial policy with specific instruments aimed at reinforcing, at grass-roots territorial level, the research, training and promotion of these authentic bastions of Made in Italy. Reinforcing the clusters, reinforcing the Italian economy "THE MANTOVA CONVENTION" "Reinforcing the clusters, reinforcing the Italian economy", was the theme of the convention organised by the ICE and the Industrial Clusters Club, held in Mantova last 24th and 25th September. The question of cluster company competitiveness was taken on by Foreign Trade Minister Piero Fassino, the President of the ICE, prof. Fabrizio Onida and the President of the Clusters Club, Paolo Sarti, along with a series of experts involved, in one way or another, with SMI productive systems. The real protagonists of the event, however, were ten entrepreneurs from as many local production systems; as Paolo Sarti emphasised, "we invited them because only through their experience can we really understand how the clusters are reacting to the challenge of globalisation, and take the necessary steps to take on new challenges this poses for the Italian economy as a whole ". Following greetings by Prof. Roberto Gianolio, vice-president of the Banca Agricola Mantovana and an introduction by Gioacchino Gabbuti, Director Genreal of the ICE, the real proceedings began with a contribution by Luca Paolazzi (Sole 24 Ore).
The Situation The recent situation, he observed, has been severe for the clusters, hitting in particular their ability to penetrate foreign markets. However, Paolazzi invited the participants not to let the figures for the last twelve months lead them to thinking the cluster model has, or is about to reach the end of the line; the secret of their competitiveness has to be found in the specific dynamism intrinsic to these systems. Their problems, in effect, have become more acute also as the result of a number of highly significant structural changes, among which:
These transformations, stressed Paolazzi, are obliging cluster based companies to alter their modus operandi and that have given rise to difficulties in adapting to the new competitive scenario. The effects can be felt, if to varying degrees, in the ‘pulse' of all the clusters: textiles, glasses, marble, household artefacts, machine tools, leather goods and footwear ... But there are still a good number of distinctions to be made: the clusters, like the companies within them, are reacting in different ways to these changes in external condition. In general, where their main market outlets are less influenced by Far Eastern competition, the clusters are holding their own, like in the case of the Matera ceramics and furniture sector. In closing his analysis of the current situation, Paolazzi offered a number of good reasons why the next six months should be viewed with a certain optimism, based on optimistic forecasts for growth in world demand, that promises new opportunities and outlets for commerce. The onus is on the clusters to find the strength to keep up. On the other hand, the clusters have always surprised for their capacity to confute the forecasts of both economists and research institutes.
Made in Italy On this particular point Marco Fortis recalled that around 1/3 of all Italian exports and almost 60 percent of exports in the fashion - furnishings - household goods - Mediterranean food - machinery sectors come from the Italian industrial clusters. From analysis of international market share it emerges that Italy holds the leadership, or co-leadership in 36 different products which, to the point, are those that best characterise the concept of Made in Italy. These market shares are the solid base that the clusters have always date managed to defend even against intense competition from emerging South East Asian countries because, as Fortis sustains, these competitors simply don't have what it takes to beat a centuries long tradition of design and that innate aesthetic sense that characterises the industrial system of the clusters.
The Entrepreneurs It was then the turn of entrepreneurs from the districts of Belluno, Biella, Castelgoffredo, Cusio-Valsesia, Fermo, Lecco, Lumezzane, Pesaro and Prato to voice their opinions. Prato is the setting for the story of Lineapiù, a textiles group with a turnover in the order of 300 billion Lira and 1050 employees. As Giuliano Coppini told the meeting "It was here that in 1975 myself and three others left our jobs in other companies in the cluster to found Lineapiù; this would not have been possible without the experience and know-how that the cluster was able to offer us". The group grew over time into a reality somewhat anomalous, in terms of size and organisational structure, for the Prato district, nevertheless it has never cut its ties with the area; as Coppini went on to explain, "we could never do without the cluster. We feel we're truly a part of it, like its children, and we still live in close symbiosis ". The problem, noted Coppini, is that the culture and particular modus operandi of the cluster is not always up to the demands of a company that operates on very broad horizons, and is in open competition with the entire world. For this reason, Lineapiù was obliged to look for managers and other qualified professionals outside the district. The future, not just of the Prato cluster but all the others as well, depends on training and the development of more modern organisational forms. Inadequate infrastructures, mortifying bureaucracy, little of attention from the public sector and a whole range of other problems tend to have an extremely negative influence on new investment: this was the idea that repeatedly emerged from the contributions of the invited entrepreneurs. To this cahier de doleance Fortis added the unexplainable delay in liberalising the energy market and the inadequate protection of Made in Italy products against the incessant international fraud that damages not only exports, but the very image of the quality Italian product as well. In his disquietingly direct testimony, Savinio Rizzio from the Cusio Valsesia valves/taps cluster explained how as a result of extensive market dumping and counterfeiting, his products simply can't compete with competition from China, and couldn't even if he didn't pay his employees for a full year and a half.
The experts Even though the situation is improving, Mr. Francesco Serao, president of the National Accountants Council, highlighted the lack of sensitivity of the Italian political world to the problems of industry in general, and in particular toward small/medium businesses. Lorenzo Boscarelli, a company management consultant, analysed the impact of increased competition on the strategies of the companies that make up the clusters, with his hopes based on an increased effort in terms of innovation and internationalisation, while Leonardo Simonelli, from Milan Polytechnic, illustrated the fruit of the recent collaboration between a group of industrial design tutors and a number of industrial clusters. René Ghesquierre, economics councillor for the French embassy, referred that the French government and the country's entrepreneurs are also taking a great interest in the phenomenon of the Italian industrial clusters. In the final contribution, Piero Fassino expressed his great faith in a short term recovery, finding comfort in the encouraging signs given by export performance, although in the medium term, he added, many companies will be obliged to increase their level of production delocalisation to cut their labour costs. For this reason he hoped for closer collaboration between government and industrial clusters in developing policies better suited to the companies within them. The convention thus offered a great deal of empirical material and analytical contributions which all served to reaffirm the centrality and richness of the industrial clusters system in the Italian economy, as well as an insight as to the road to take in terms of economic policy and company strategy. The Asem conference in Bari The Industrial Clusters and the transfer of technology as a means for promoting the commerce of goods and services was the theme of the ASEM conference ("Asia Europe Meeting"), a Euro-Asiatic forum launched in Bangkok in March 1996 aimed toward facilitating co-operation and dialogue (political, economic, socio-cultural) between the fifteen European Union countries and ten Asian countries (China, Japan, South Korea, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam). The conference, organised by the Italian Foreign Trade Minister, was held in Bari on the 5th of October with the support of the ICE, the Confederation of Italian Industry, the Region of Puglia and the Province and Municipalities of Bari International attention on the Italian industrial clusters for has increased over recent years, and this local development model is now beginning to interest many Asian countries. In reality, the clusters are neither a phenomenon nor an Italian exclusive, even though in our case they are exceptionally developed and numerous. "In effect", noted Giancarlo Viesti, "industrial clusters can develop anywhere there are natural resources, qualified labour, entrepreneurial capacity and specific know-how. In reality it is far more complicated, and indeed it is rare that a cluster develops just from these basic conditions ". So, how do clusters come into being? "Industrial clusters emerge from a combination of the resources and input present in a given territory; resources and input that can differ extremely from case to case ", he added; "but the basic ingredients of clusters are often similar: history, common traditions, shared values and knowledge ". The historic roots of the Italian industrial districts often date back to very ancient artisan traditions and, according to Fabio Sforzi, this peculiarity has contributed in a determining manner to cementing that particular "feeling of belonging to the community " that favours the creation of a dense network of interpersonal relations and continual exchange of information that oils the economies of developing clusters. He further pointed out that it was not correct to affirm that the clusters are a product of a sort of "post-Fordism"; these already existed even before the establishment of the grand manufacturing and urban concentrations of the great Fordist era. It is true, though, that their development coincided with the decline of the principles of mass production, but this was chiefly due to the growth of a more fragmented and variable demand, that gave new market opportunities to the already existing or developing clusters. Sforzi provided an effective panorama of this phenomenon based on ISTAT census data for 1996: the industrial clusters represented 25% of Italian local production systems, and 71% of manufacturing. Over 24% of the Italian population live in clusters (13.7 million), and they employ 32% of the workforce. All in all, 44.8% of employment in the manufacturing sector, and 43% of exported products can be found in "district" realities. At territorial level, 33% of the "districts" are located in North East Italy, 30% in Central Italy, and around 30% in North West Italy; Southern Italy has just 8% of Italy's industrial clusters, but their numbers are growing. In terms of employment, the North Western clusters have a greater weight (41.5 percent) than the others, probably as a result of the size of the medium large scale industries in these clusters. While in the North Eastern districts companies are predominantly "medium-small" (from 50 to 250 employees), the Central and Southern districts are characterised by "micro-companies" (with 1 to 9 employees). The relevance and weight of the districts in the Italian economy has changed over time: in 1951, for example, only 15 percent of all productive systems, throughout the entire national territory, had the distinctive characteristics of industrial "clusters" (specialisation, SMI, ..) and employed a meagre 360 thousand people. By 1971, although the proportion of districts was substantially the same, they employed over one million people, and by 1991 the districts were employing over two million. Sforzi also pointed out that in these "district" realities employment, wages, profitability and exports were decidedly above the national average. He put this down to the "cluster effect", which makes a measurable difference to the efficiency of the companies operating within industrial clusters. The contribution of the districts to the Italian balance of trade was analysed by Rodolfo Helg, who focussed on the positioning of these systems on the international market. Against an average district contribution to Italian manufacturing exports of 43.3%, the weight of the leather sector rise to over 69%, while that of the ceramics sector is 66.2% (the Sassuolo district alone accounts for over 51%) Helg highlighted the fact that the Italian clusters have an enormous capacity for competition, credit for which is certainly attributable to the quality and image that characterise Made in Italy products in general. All this does not necessarily exclude the possibility of companies within the districts intending to consolidate their presence on the international market by adopting a more articulate and rational approach: the differentials in labour costs are forcing local industry to shift their production outside their districts, but what is really important in terms of sustaining district development is the range of activities that are actually to be farmed out. The contributions and debate that followed presented an interesting outline, even if not without its share of problems; the districts, as Andrea Balestri underlined, are a phenomenon which offers the experience and practical means for development processes aimed more toward mobilising the resources of the Regions than attracting capital and organisational entrepreneurial factors from other countries thanks to tax incentives and subsidies. Among other things, he went on, a "district-oriented" development has in itself the possibility of containing the tendency of polarisation toward larger centres, an effect which is creating, and will continue to create big problems for many Asian, African and South-American countries. In concluding the proceedings, Viesti paused on the concept of the re-proposing the cluster model into other contexts. What conditions would this effectively need? Supporting policies are important for the degree to which they attempt to complete the formation processes of existing districts, but however do not seem to be capable of creating them "green field". The Italian model could thus serve Asian countries as a example; a concrete phenomenon as an aid for understanding the nature and mechanisms that make it operate, from the initial ingredients (history, values, knowledge) without which, according to the Italian experience, there would be no districts.
The contribution of the districts to Italian exports in a number of sectors (1996) SECTORS (%) Textiles, apparel 42.6 Leather, footwear 47.4 Furniture and ceramics 37.9 Jewellery and musical instruments 39.6 Machine tools 18.1 Source: ISTAT (1999)
The contribution of a number of districts to exports of furniture and household artefacts (1996) District production % Desio chipboard panel products 15.1 Valpolicella stonework 25.6 Udine chairs 10.7 chipboard panel products 13.3 Sassuolo bricks 51.3 Civita Castellana sanitary wear 11.4 Source: ISTAT (1999)
Products for which Italy is world leader In terms of positive balance of trade: Wool yarns Ornamental stone Wool fabrics Ceramic tiles Silk fabrics Chairs and divans Socks Furniture and kitchens Pullovers Lights and lighting Ties and scarves Valves and taps Glasses Stoves Goldsmiths, jewellery Refrigerators Tanned hides Washing machines Footwear Foodstuffs Source: M. Fortis, Università Cattolica, Montedison.
Products for which Italy is second in the world in terms of positive balance of trade: Leather articles Pans and cutlery Men's clothing Wines Women's clothing Source: M. Fortis, Università Cattolica, Montedison. The Carpi knitwear districtThe Carpi district is one of the most important in the Italian textile/apparel sector; it employs around 11,000 people distributed predominantly between Carpi, Cavezzo, Concordia, Novi di Modena and San Possidonio, and spreads into a number of neighbouring municipalities. The quota of employees in the T&A sector is over 60%, making this the dominant specialisation which defines the cluster and its identity, although numerous companies specialising in woodworking machinery and apparatus for biomedical applications are also present in the district. Almost 2,000 local production units are occupied in the production of knitwear and apparel. These are for the most part small and very small companies, and their numbers have effectively suffered a reduction since the beginning of the ‘nineties. However, after 1995 the balance between companies being established and companies closing has been zero; this is effectively due to new activities between sub-contractor companies above all in the knitwear sector, with the weight of the final companies declining. The most consistent number of sub-contractor companies is made up of companies specialising in machine knitting (also referred to as weaving), following those occupied with manufacturing (stitching) and those occupied in the final phases of the production process (pressing, quality control and packaging). The processes are performed in small series and have a high fashion content, in terms of range and models. The limited series of process batches and the absence of effective instruments for programming work loads tend to reduce productivity and cut into the profit margins of many producers, in particular those occupied in the manufacturing process (sub-contractors). In recent years sub-contractor companies have attempted to broaden the composition and content of the orders to reduce their dependence on their major client companies and thus distribute any risk over various fronts. Even if relations between client and sub-contractor company tend to be stable and long-lasting, the production system is effectively fragmented and this at times makes for relational problems within it. The entire system of relations between client companies and external contractors is riddled with tensions that often lead to discussions and dialectic confrontation. And it is precisely from this kind of reflection on the prospects of the district that come the ideas for associations of sub-contractors or for "new district instruments " to compact the chain of relations between these companies and the companies for which they work. Interventions of this type are important for ensuring a level of service which makes recourse to sub-contractors outside the district itself less interesting for the client companies. This reorganisation of the value chain could take the form either of consortiums of phase companies or the creation of new operators specifically engaged in co-ordination and management of the network of sub-contractors. This would allow the client companies, freed of organisational problems, to concentrate resources and efforts in the development of new markets and alternative distribution channels to the wholesalers that currently handle a consistent part of local production. The Carpi district has been through, and is still in a difficult period due to strong competition from the Far East and internal problems that demand rapid and effect solutions. Despite these difficulties, companies can still take advantage of belonging to a cluster, meaning they can count on professional competence and a know-how accumulated over time, backed by the strong social fabric of the district. This is a consistent heritage, that is stronger in Carpi than possibly any other textiles district, and that makes it unique in a certain sense. Even though today, in the Carpi district, the feeling of unease about the future is almost tangible, although the majority of companies do feel that there is still a concrete possibility if not of development, then of defending their market position. This is accompanied by a general awareness that to exploit the full potential of the district requires targeted investments to increase the managerial and entrepreneurial capacity of the district, service structures and the very image of the district itself. Indeed, on the whole the district does not use marketing instruments in proportion to its industrial weight; it is true, there are some companies that do this in a highly effective manner, but there are others whose relations with the market still pass mostly through commercial intermediaries , with all that this implies in terms of market perception and response times to fluctuations in demand. The district as a whole is subject to extremely intense forces that are redesigning its organisational architecture and relations between companies and markets, and it is probable that these forces will give rise to a somewhat different, more structured district, although always strongly tied to the territory of Carpi. Graziella Borrelli ReviewsTerritorial marketing for the Montebelluna cluster Reports from the Treviso Chamber of Commerce Treviso, December 1998 Can territorial marketing instruments facilitate the process of transformation of an area or district in crisis? This extremely actual theme for many districts was the subject of the convention "A territorial marketing project for the Montebelluna cluster " held in Treviso on the 16th of December 1998. The publication of the minutes of the convention by the Treviso Chamber of Commerce allows us to return to this question, in the light of some of the ideas presented on that occasion. What it is that makes Montebelluna a special case is its acknowledged capacity to attract external investment; for a good many years now, precisely as a result of the innovative climate and the quality of service the cluster offers in the realisation of prototypes, this district (along with Mirandola and "packaging valley" in Emilia) has attracted, even without the aid of specific instruments, significant investments from external companies (in particular multinationals in the sports system). This is the point of departure for reflection on the possibility of actively exploiting these factors of excellence in terms of district territorial marketing, aimed at the competitive repositioning of local production. It has been noted that the fertility of the territory does not only concern its ability to attract external investment; indeed, the companies have to (as already is the case in some areas) reinforce their presence on the international markets (foreign investment, delocalisation, etc.) According to Livio Barnabò, Managing Director of Progetto Europa, "to avoid running the risk of losing control of the production phase " we have to give some thought to adequate support for delocalisation which, in this sense, is one of the many different instruments for territorial marketing. For this reason it is necessary to pay great attention to the "re-qualification of the high phases and recovering niches of excellent technical competence to substitute the share of production lost, in a territorial sense, by the process of delocalisation. The central issue on which the book focuses attention is the need for co-ordinated and concerted actions between operators in the district, to guarantee the success of territorial marketing initiatives. It is not so much a question of a new "Territorial Pact", that reflects the need for co-ordination, but rather of increased collaboration between the competent protagonists, which means "arriving at a defined process, with responsibilities assigned to a place [the district] where the processes are managed in an integrated manner ". On an operative level, various initiatives have been recommended, but the accent has often fallen on co-ordination functions. For example, the Chamber of Commerce has allocated resources for innovation, research and development; these resources must be co-ordinated with the project of the Galileo Science Park and all the other initiatives that can be managed in a territorial sense by the Entrepreneurs Association.
Local manufacturing systems in Sicily: analysis of potential industrial clusters By F. Mazzola and A. Asmundo Banco di Sicilia, 1999 While the "historic" clusters mark the pace and are making efforts to reposition themselves on the markets, the phenomenon of the new Southern Italian clusters is advancing rapidly. The development of new local productive systems and SMI in Southern Italy is one of the most interesting factors for national policies to reduce existing regional differences. Something is certainly happening in Sicily as well, even though the deficit of factors and external problems seem to hinder the formation of local networks and specialised SMI. A valuable study of these aspects has been realised by the Observatory of the Banco di Sicilia, and its results have been published in the a volume entitled "Local manufacturing systems in Sicily: analysis of potential industrial clusters". On the basis of the infamous Guarino decree of ‘93, which outlined the statistical parameters for identifying industrial clusters, the authors, in a forced application of the decree, managed to identify four Local Manufacturing Systems in Sicily. The investigations undertaken both into databases and in the field highlighted the presence of various obstacles to the development of the Sicilian local manufacturing systems (or "proto-clusters") that are: Custonaci, for stonework (marble); Santo Stefano di Camastra, for ceramics; Milazzo, metals; and Brodo, for T/A. These are systems that denote a certain dynamism interpreted with courage, and with a consistent proportion of independent enterprise. Nevertheless, there is a persistent deficit of relations of a social and community nature, and this goes against the experience of cluster development in the classic sense: the phenomena highlighted by the investigation reveals the presence of obstacles to the transformation of the Sicilian manufacturing areas. To get around these, the authors propose the use of "transformation agents" such as, for example, dedicated centres and financial investors. In Emilia Romagna, for example, this role is taken partly by Local Administration, but in Sicily relations between Local Authorities and companies in the Local Manufacturing Systems are blighted by mistrust, that certainly is no good if these are to play such a delicate role. Where to start, then? In this sense the authors have no doubts: only by working on horizontal policies (infrastructures, training, promotion ...) can the development of local manufacturing systems be assisted in Sicily, to transform them into healthy industrial clusters. Events and NewsThe Voice of the Club The Club took part in the following meetings:
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