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Strategies and policies for the districts The Italian newspaper Il Sole 24 Ore once again turned its attention to the subject of industrial districts with articles on Vigevano and Valenza on 1 September and 7 October. We immediately thought of "Gioelli, bambole e coltelli" (Jewellery, dolls and knives) and that it was a pity that the issue was closed so quickly. Against the background of the cases examined, Garofali (the author) heeded the problems faced and put forward some proposals regarding local policies. Valenza and Vigevano are primary districts that, in different ways, have difficulty in adapting to the concentration of organised large scale distribution and new technological applications; like all districts, they are strong on production but are vulnerable and this weakness is reflected in the fall in employment figures and in the number of companies that fail.
According to Garofali, they are weak "in their ability to plan strategically;
there is a lack of systemised vision; there is no understanding of common
problems…". In addition, they will not be able to halt the decline unless
they develop a "widespread understanding" of the challenges to be faced and
if they do not put together a general strategy. The controversial subject of the "personalities" of industrial districts has often brought the attention of experts to bear. However, this emphasis on explicit strategies and collective reasoning seems to us to be unjustified for various motives, some of which are practical. There are conscious strategies in industrial districts or their development parabolas. A number of studies have been made, it is true, and in some cases scenarios have been drawn up. These documents have been useful in guiding the actions of collective bodies (district committees, associations, service centres etc.) and public bodies (investments in infrastructure, training etc.), but their influence over corporate policies regarding market positioning, innovation, internationalisation or providing marketing leverage has been practically nil and could not be anything else.
The district committee (in whatever guise it adopts) is unable to influence
the behaviour of companies because that is a role for which the weapons at
the disposal of associations and local bodies are unsuitable. A good analysis of a district's problems (including those of the companies) and a good strategy aimed at local development are certainly useful in guiding investments in infrastructure (roads, industrial areas, telecommunications etc.), for understanding training needs and, in some cases, for understanding how relations between companies should be regulated. The final choice, however, on how a company should operate within markets has always been and must remain with the company alone. There is no evidence that shared strategies in a district are better than those developed individually by companies that, knowingly, follow different paths. With regard to districts, the Regions march in open order Eppur si muove
A decade after the creation of the normative on industrial districts (art.
36 of Law 317/91), a new map of this phenomenon is emerging. So far, ten
Regional governments have recognised their districts and another four
(Lazio, Puglia, Umbria and Basilicata) are hurrying to do so.
There are about 90 recognised districts and the body of regional normatives
regarding their development is becoming not only solid but chaotic. It
should be said that we are at the start of a true industrial policy for
districts and that there is still a long way to go.
Yet, behind the delays, the fragmentariness of the measures taken, the
scarcity of the resources made available and the conceptual confusion, it is
possible to make out that there is a handful of interesting actions taken,
though more related to development policies for the districts than to the
results achieved. Consortia and companies Lombardy has been the most enterprising Region. In 1992 it had already recognised its districts, defined the procedures for the arrangement of development plans, and set aside resources for their realisation. Other Regions, slower to take action, borrowed many elements from Lombardy: targets, procedures and the quotas of the grants.
Emilia Romagna followed a different path by choosing not to recognise its
industrial districts formally but to aid in financing development projects
regarding "territorial contexts corresponding to the territory of a province
or infra-provincial areas in which there is social and economic uniformity,
as well as neighbouring inter-provincial areas with common production and
economic aspects" (Regional Law 21/99). Aside from limiting the situation to projects involving more than one company (dictated by the concern of transferring handling of incentives to individual companies to the Regions), the concepts of the programme contract and the consortia - if applied to the letter - reduced the margins for manoeuvre to almost nothing. Not for nothing did the Regions force alterations to extend the benefits to the consortia and to innovation centres, and also skate over the programme contracts as regional development programmes were sufficient for the distribution of grants.
As regards scheduled negotiations, intervention on behalf of the districts
only concerns the drawing up of development programmes by the district
committees. With the same objective in mind, Campania has included in its Regional Operational Plans the possibility for local administrations to contract with the Region for the necessary resources. Some Regions have by-passed the requirement for a joint nature for plans by creating temporary bland associations of the companies in question. In most cases, the beneficiaries of the districts' programmes remain collective (consortia or syndications of small and medium-sized companies, service centres, Chambers of Commerce, Public Administrations) but the temptation to retrace the incentive schemes for single companies is flourishing, for example, in the Regions where localisation of industrial districts is one of the parameters that give the greatest chance to obtain benefits under Law 488. District committees Another recurring institute in the policies so far actuated is the District Comittee (in Tuscany Area Committee and, in the Marches, Guidance and Coordination Committees), which have been designed to bring the local institutions and companies together to draw up development plans, to identify objectives and priorities, and to oversee the progress of the projects. The choice of the composition and the role of the committees varies from Region to Region depending on particular preferences. In Lombardy, for instance, the committee consists of few people, all of whom are close to the world of production; the secretariat and logistical assistance functions are carried out by one of the local organisations. In Tuscany, on the other hand, the committee is more political and heavily structured: it numbers the President of the provincial council, the mayors of the district councils, and representatives of all associations, OO.SS. etc. The committees of other Regions vary between these two extremes. Another discriminating factor is the functionality of the Committees. Most of the Regions do not subsidise their committee so that the cost falls on the local associations and institutions. In the Marches, however, three billion lire were set aside in the 1999 budget to support the "planning, implementation and information" of five Coico; the Council in Basilicata also provides financial support for their district committees.
The well-founded reasons for the creation of a "light" committee in Lombardy
was to avoid creating a new administrative body with all the bureaucratic
problems and potential political wrangling involved in running it. Recently,
"light" committees have shown themselves to be decidedly more effective and
have proven their functionality in well-organised districts capable of
mobilising adequate resources. The normatives generally allow a wide range of possible action: the promotion and constitution of service centres, various types of assistance (including publicising European Union calls for tender), consortia, support to innovation, incentives for the promotion and internationalisation of companies, support for the certification of products and corporate quality systems, renewal of disused industrial areas, professional training etc. Topics that differentiate the Regions include action regarding employment and safety at work, the diffusion of district telematic systems (actually a sub-category of those systems already discussed), plans for economic partnerships between companies, and territorial marketing. The Region of Emilia has extended the claim for cases of corporate crisis and corporate economy to territorial contracts. These are very general objectives, as indeed they should be, leaving individual districts to set their own goals depending on their requirements. Overall, however, there seems to be little attention paid to investments in material capital (specific infrastructures for characteristic activities), or rather, one of the main nodes that suffocate the development of many districts. This brief overview throws up two considerations: first, it is clear that the methods and procedures with which the districts can gain access to financial aid is more important than the objectives The second, unfortunately, is the disparity between the practically all-embracing objectives and the resources set aside for related action. The inclusion of districts in various regional development plans (POR, Docup etc.) is increasing, however, and this, in a certain sense, increases the volume of the resources available related to the development policies of districts and their companies. Public sector aid As occurred in Lombardy, many Regions have set their limits on contibutions at 40% (50% in Campania) and maximum limits have been set for projects as well as for single companies.
In Lombardy, the aid per project cannot exceed one billion lire per three
year period or 500 million lire per year. Campania is more generous with
totals of 5 and 2 billion lire respectively. Liguria offers incentives of
200 million lire per three year period and offers a competition for 50% of
admissible expenditure with a maximum limit of 50 million lire per
individual company.
Experience over the last few years tends to show that, rather than groups of
companies, it is service centres or projects of a much more general nature
that tend to qualify (for example, institutional image campaigns, portals,
district projects etc.). A cura di Andrea Balestri e Annalisa Caloffi
The
Ruvaris Project Following referrals from Ceris Cnr, we present a case of district innovation written by two of its members. The article is a "miniature" case study of the cross-connections that arise during innovation at district level. Districts and the science of complexity An "Adaptive Complex System" (ACS) comprises a set of autonomous elements (in the case of a district, the elements are the companies it is made up of) which are able to act freely in a not completely predictable manner on the basis of their own strategies. Their actions are interconnected so that any action undertaken by one element (company) can effect the actions of the others. The behaviour of the ACS (industrial district) is conditioned by its environment and by the interaction of its elements, nor is its behaviour linear.
Great changes can be absorbed by the system without creating practical
consequences although small changes may set off substantial evolutions. As in every biological ecosystem, the technologies compete or collaborate. For example, the technology of the production of petrol cooperates with the technology of the car and, at the same time, car technology competed with (and beat) horse technology in the field of transport. This particular ecosystem may be represented in the "Technological Landscape"; it can also be represented mathematically and modelled on a computer. In the Technological Landscape, successful technologies occupy the points close to the "peaks" of high efficiency while unsuccessful technologies fall into the "troughs" of low efficiency.
Technological innovation in districts Successful technological innovation can be seen as a route that leads a technology from an existing situation towards a high efficiency peak in the Technological Landscape. It should also be noted that the Technological Landscape is a dynamic system as the improvement or the apparition of new technologies can lower or flatten the efficiency peaks on which other technologies are competing. This vision of the Science of Complexity may help in resolving the problem of technological innovation in districts. An effective action consists of promoting multi-client studies to identify innovations to be developed and, at a later date, of involving the companies in industrialisation. Multi-client studies and multi-industrial co-operation are the ACS of the Science of Complexity, and knowledge of how they can be generated and managed given their nature is of great importance to ensure their success.
Taps, valves and complex systems This approach was tackled with success in the case of developing RUVECO technology in districts where brass taps and valves are made, i.e. in the provinces of Brescia, Novara and Verbania which are European leaders in their sector. The project came about as the result of a meeting between the then director of Lake Maggiore Technopark and a leading businessman in valve production. During the meeting at the start of 1996, the problem of corrosion was raised and the possibility of developing new techniques for treating surfaces or new materials for the manufacture of taps and valves to be used with drinking water. The meeting led to a series of actions that resulted in RUVECO technology. The starting point of the project was the suggestion by a technological innovation expert that the problem should be examined under the aegis of a Multi-Client study whose costs and results would be shared by the various participants. The formal definition of the project as a multi-client study required a series of actions to define the goals in order to attract a large enough number of participants to cover the forecast costs. However the nature of a multi-client project ACS means that it is not necessary to wait until that number has been reached. The start of the study generates positive communications to potential participants which in turn brings further companies into the fold. A second positive communication occurs at the end of the study when the possibility of giving precise results may cause other companies to wish to purchase the report. In practice, several meetings were held during the definition stage that resulted in the proposal of a two stage project being proposed to potential participants: the first phase was related to identification of technological innovations in the field of materials and surface treatments that might have been of interest to the industrial districts involved; the second phase was aimed at the development of the identified technological innovations and their implementation in production. Once the study proposal had been defined, the promotion phase was entered with further corporate meetings, presentations of the objectives at ANIMA-AVR (the Valve and Tap Association), the creation of tightly focused questionnaires, and contacts with potentially interested companies. A broad exchange of information with these companies was necessary not just to promote the project, but also to see whether improvements could be made. Twenty three companies from three districts wished to be a part of the multi-client study meaning that the cost to each participant was 2.5 million lire. The forecast budget was for 50 million lire to be divided between 20 companies. The study was begun once 10 companies had confirmed their participation and the positive buzz that it generated led to more than double that number within the next two months. At an operational level, the study consisted of an examination of the state of the art, interrogation of databases, visits to companies and the organisation of a series of meetings of the participants to discuss directions.
The carrying out of the study The multi-client study focused on three innovation routes:
The first innovation (the elimination of lead) was unquestionably the most urgent and it was on this that efforts were concentrated. One of the first ideas related to the construction of a consortium treatment plant to test the existing technologies industrially but this idea could not be realised due to the lack of companies who supplied this technology available to participate in this type of consortium. The second idea was to develop a lead elimination technology in the Lake Maggiore Technopark by the companies themselves. In the end, it was decided to create a company whose primary goal was the development of a lead elimination technology. The company (called RUVARIS) was founded in June 1998 with offices in the Technopark. The time that had passed between the founding of Ruvaris and the meeting between the businessman and the Technopark director was approximately two years. The patent The
continuation of the research and development activities of Ruvaris brought
changes to the structure of the elements of the ACS. On the R&D front, studies have been conducted in the laboratory of the founding company that supplies galvanic products while industrial testing has been carried out on the premises of the founding company which provides galvanic services. In practice, Ruvaris has operated as a "network" company with the minimum of resources or structures of its own. Having perfected an original technique for the treatment of the finished tap or valve, an application for European and US patents was made in the first half of 2000. The technology has already been applied in two production companies in Brescia and Novara. The construction of a testing laboratory at Ruvaris has attracted the interest of a large American certifying company; significantly, the US is the country with the largest market for these treatment systems. With mass production, the first sales of RUVECO technology and the construction of the laboratory, the first phase of the project came to an end and the technological innovation became a new industrial technology. The time
that passed between the founding of Ruvaris and the industrialisation of
the Ruveco technology was about 20 months of which 18 were dedicated to
R&D entirely financed by the 6 shareholders. The self-financing certainly
contributed to the rapidity with which the results were achieved.
Angelo
Bonomi, Technological Innovation Expert FOUNDING AND DEVELOPMENT OF RUVARIS (1996/2000) March 1996: Technopark/Businessman meeting
Valenza, the jewellery district The city of Valenza in the province of Alessandria gives its name to one of the best known and important districts in the jewellery industry. It is bordered by the Po and Monferrato rivers and lies right in the middle of the industrial triangle cornered by Milan, Genoa and Turin. The district spreads over Valenza and eight contiguous local councils as well as touching the borders of three Lombardy councils. On the Piedmont side of this district, an area of little more than 50 square kilometres with 33,590 inhabitants is in large part dedicated to the production of jewellery. The jewellery industry here numbers 1300 companies and employs 7000 people. Half of its production (approx. 1.5 billion euros) is exported and, each year, the companies process roughly 30 tons of gold and 80% of the precious stones imported into Italy. The most common forms of company in this area are partnerships and limited liability companies; in most cases they are family businesses with a strong overlap between companies, entrepreneurs and family members. The average size of these companies is small with 5.6 employees, but they ahve a high entrepreneurial turnover, signifying intense social mobility. The specialised work force is almost all local and the concept of sub-supply is very common as a result of the stability and continuity of the relationships between the purchasers and suppliers. The strong points of the district are a huge amount of experience and technical and professional know-how resulting from over 150 years of local tradition, the presence of skilful workers with knowledge that is assimilated on the job, the close relationships between the companies, and the flexibility to adapt to new market demands with rapidity. The high degree of entrepreneurialism in the district is an important resource that has enabled the entire production system to make use of all segments of the population, in particular women. Over the last few years, marketing has become one of the critical functions for many small companies, and in particular for those that do not mass produce. The contractual strength of these tiny companies is very limited despite their established positions within the network of relationships that make up the district. With few exceptions, the promotion is little used, and for many of the companies, a presence at specialised trade fairs, both in Italy and abroad, is the only real occasion that they have to find new markets. Recently, however, many companies that used to specialise in marketing and kept close contacts with each customer have entered into the orbit of large international companies that, on the one hand, offer certainty of work but, on the other, limit the autonomy of the supplier. Compared to large companies, the degree of dependence is less in contracts in which the Valenza jewellers sell their wares exclusively to one purchaser, but there are many cases of single orders when the Valenzan companies produce one-off jewellery based on the customer's designs. In addition, the market is undergoing rapid change that has profoundly altered its characteristics. In the past, the small producers worked directly for the final market or through a network of representatives in contact with small independent jewellery shops. Today, with the increase in organised distribution, the fame of international brand names and the many advertising campaigns, there is much less space for manoeuvre by small craft companies.
Despite its enormous production experience and knowledge, the district must
learn quickly to strengthen its product marketing. This, for many companies,
is a new challenge and one on which relationships with the final customer
are based differently. Alejandro Cunat, Giovanni Peri
The paucity of jobs created over the past twenty years cuts right across the
unemployment debate in Italy: between 1981 and 1996, unemployment rose by an
annual average of 0.07% compared to a decrease of 1.74% in the USA, 0.72% in
Great Britain, 0.37% in Germany, and 0.15% in France. This is one of the results shown up by an analysis that attempts to understand the influence played by the various characteristics of the local socio-economic environment on the creation of workplaces between 1981-96. The study was based on the census data of the 784 Local Work Systems (LWS). As is commonly known, the LWS are self-contained areas identified by the daily movement of residents as they go to work. The boundaries of a LWS are formed to reflect the fact that 75% of the residents of a LWS work within the area, thus constituting a local work market with all that this implies in terms of the circulation of information. With the application of a series of parameters, the Statistics Institute identified 199 districts within the 784 LWS. The authors have estimated to what extent the differentials in the creation of work in the various LWS is explained by what we might call the "cluster effect", i.e. density of trading and sub-supply relationships, diffusion between companies of new technological applications, infrastructures, and the concentration of skilled labour (though scholastic levels were not taken into consideration). Although clusters and industrial districts are sometimes considered synonymous, the two do not coincide exactly: the latter are marked by nuggets of social psychology rooted in local history, local culture and local policies, not to mention the "multiplication factors" of competitivity often known as external economies and/or agglomeration. In any case, the districts are found within the LWS and the investigation was limited to detecting and measuring the influence of local factors on development. The study was carried out assuming (as is usual in these cases) that a higher employment rate corresponded to a high level of competition; the existence of external economies was estimated using an index of the concentration of links between the activities of a LWS with suppliers and customers based in the same area. Analogous procedures, that combined the LWS information with input output matrices and other employment related data, were used to weight the degree of externality that could be traced to specialised work markets, and to technological innovations and their diffusion amongst local companies. As far as material capital is concerned, the authors used the increments in the provision of nine different categories of public assets and, within these, the infrastructures of transport and telecommunications were examined as a specific factor related to development. Working with econometric tools on this broad set of data, Cunat and Peri estimate that roughly a third of the differentials in the creation of work in Italian LWS is explained by the concentration of input output exchanges within LWS and by the investments in transport infrastructures. A brief glance at the map reconstructed with the data examined shows that the regions in North East Italy and the southern axis along the Adriatic (part of Abruzzo and Puglia) are the most encouraging; Benevento and Foggia are ready for take-off; and southern Campania, Calabria, Basilicata and Sicily are the regions that have most to do to catch up. Overall, the study shows that local factors - as far as it has been possible to reconstruct their effects - catalyse processes that lead to an increase in employment and strengthen the uncertainty surrounding the effectiveness of development measures so far taken, in particular Law 488. Events and News New members The voice of the Club
Publications on districts General Essays F. Vidal G. Viesti Quantitative Research Unione Industriale Biellese e Camera di Commercio di Biella Unione Industriale Biellese e Camera di Commercio di Biella A. Balestri (editor) Districts in the south of Italy D. Cersosimo, C. Donzelli G. Viesti G. Viesti G. Viesti (editor) Upcoming events Districts Club - Telecom OECD, Datar
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