n° 16 - April 2001

 

 

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The idea of a territorial policy

Few notions have been as controversial and equivocal as that of policies for industrial districts. Article 36 of Law 317/91 was an act of strength for a structure fundamentally so centrist that the ministerial decree of 1993 that specified the parameters for recognition of districts confined the intervention of Regional governments to the realm of exceptions.

District policy grew, in fact, from the defects of a system of discriminatory intervention that touched the nerve of politicians, local administrators, category associations and trades unions; it grew with the demand for a strong policy (with a capital "P") as if local development were able to regulate or promote itself with an ad hoc law and a specific stake in the Region's accounts.
Thus restricted and encumbered, district policy made little headway particularly as the Regions were not at all entrepreneurial.

Recently, however, the idea of a territorial policy has met with unexpected consensus. Freed from the shackles of the selectivity of a country rightly proud of its parochialism, it is entering the various levels of the system as occurred with the recent framework law on tourism that neatly created the role of "local tourist systems".
And there are other indicators that suggest how the climate is changing.

In the 17 March edition of the newspaper Il Sole 24 Ore, Davide Paolini wrote that a special plan has been put together for the agroindustrial district of Parma with the aim of "making local councils, industry and organisations collaborate on questions of new centres, employment, the environment, services and training". And this in Emilia Romagna, the region that has not been (and is still not) among those that have been pushing hardest for formal industrial policies.

In recent months Tuscany and Lombardy have redrawn their maps, Campania has set up district committees, Liguria has promised support for the Genoese electronics district, and Basilicata has modified a law and is preparing to identify a first group of districts with their own committees.
Meanwhile, Coico (an ugly acronym signifying district committees) are operating in the Marches, Lazio and Veneto are preparing to take a step forward and, most important of all, references to districts and local production systems are becoming more frequent in Regional Development plans.

The results of these measures will take time but for the moment we can see that the machinery has been put into motion.
However, a good policy for districts is based on the entire range of actions able to strengthen business competitivity at local level: training, specially equipped business areas, consortia, collaboration with universities, trades union agreements, certification laboratories etc.

It is a framework policy, one with a small "p", that does not concern itself with introducing a new subject or packaging yet another group of recipients of public funds. Stripped of unsuitable goals and discriminatory procedures, the notion of a policy styled to meet the needs of industrial districts can now undoubtedly make progress.

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Policies for districts in Piedmont

Three years of activity of the Biella district committee

Three years on from the constitution of the Biella District Committee, the moment has arrived to take stock of its experiences to date, bearing in mind the many novel elements introduced in Regional law 24/1997, "Steps for the development of business systems in the industrial districts of Piedmont".

The law financed innovative projects that, unlike what happens for most of the industrial policy tools in force today, did not affect an individual company but groups of companies.
This is because the industrial landscape of districts is mostly characterised by small and medium-sized companies that often need to overcome common problems.

Many flexible and innovative sme (small and medium-sized enterprises) are not always able to make the investments necessary to remain competitive at a world level when acting alone. Consider, for example, the objective problems they meet when they are obliged to deal with complex and far-off markets like China or South America where, before getting to grips with cultural differences, they must dedicate human resources in sufficient numbers.

One of the problems met in this first stage of district policies in Biella has been that of publicising the opportunities offered by regional regulations to business.
One occurrence to be recorded in the favour of the District Committee has been that after the first phase (when familiarity with the new regulations was limited and only organised consortia profited from it), many temporary business associations presented plans - in addition to those of the consortia who were the first to make a move in this respect - aimed at specific improvements to business processes.

This was a very important fact as it forced companies to join forces using production-based logic. They came together voluntarily in order to achieve more efficient and qualitatively higher products to meet market requirements. These business associations also crossed business sector barriers, for example, textile and service companies united to produce ways to optimise response times by exploiting opportunities provided by the new economy.

Another aspect of this experience was the District Committee's role as a reference point for the development of local plans, in particular, regarding the convergence of the public and private sectors which, following results seen in the study promoted by the Province of Biella "The district of Biella in the world market", resulted in the launch of a project heavily supported by communications both within the district and aimed outwards. The project brought into existence a trademark for the district with the purpose of creating a lever to promote a local identity.

Various promotion means have been perfected using this lever: an institutional folder, three theme-based brochures, a video, three monographic films, a CD-ROM and a modular exhibition area.
These tools have all already been used and will continue to be used both within the district to strengthen the image of the industrial world (e.g. in schools to promote the idea of work in the textile industry and the possibility of self-fulfilment that this offers to youngsters), and to promote the image of Biella province in a co-ordinated manner.

The new trademark has already been used in the fairs "La Tavola delle Meraviglie", the first edition of the "Bitec" show of textile technology, "Eurochocolate", the Convention of the Association of Textile Districts in Guimarães (Portugal), the Convention on industrial districts recently organised in Paris by Datar and Ocse, the overview of Biella "Un tessuto di sapori" organised at IdeaBiella, the promotional events by Filo in Japan, and IdeaBiella in China.
The District Committee was also responsible for the involvement of the local system in the creation of an Internet site (e-biella.net) that has the aim of representing Biella in a unified manner.

Then there was the conception and creation of "Casa Biella" which is a modular and mobile system that can be used in any part of the world to give a focused idea of the district based on the trademark as a distinctive identification of Biella.
The experiences to date, some of which have only been partial as this has been a period of perfecting and mobilising a system of territorial representation, have on the whole been encouraging.
In part they reflect economic, social and cultural realities peculiar to Biella and therefore not easily repeated in other districts, and in part they suggest yet again collective processes common, if not to all, then undoubtedly to the more stable districts in which the culture of work is firmly rooted.

This integration of the worlds of industry, work, finance and institutions has also been responsible for important projects even at international level, for example, the Zegna Oasis, Burcina Park (originally named Piacenza Park), the archives of the Lamarmora, Piacenza and Sella families, etc.

It is, however, impossible to describe the experiences of the Committee objectively, appreciation of which includes intangible values linked to the promotion and communication of the identity of the district. And it is exactly these values that have so far been the most important work of the District Committee.

(with Marco Giraudo)

 

Steps taken in the jewellery district of Valenza Po

A District Committe has also been established and begun to operate in the District of Valenza in collaboration with the Province of Alessandria and businessmen's associations.
The rapid progress of globalisation and changes in technological innovation are changing the business world on which the district was based and they must be met with adequate responses by the local companies.

The District Committee places great importance on the cultural growth of local businessmen, both in order to meet the challenges offered by competition and to grasp opportunities that changes currently taking place offer businesses in Valenza.

The District's programme is based on four work plans:

1. A series of conventions and seminars to focus attention on the economy of the district and on the challenges that the district faces.
Two conferences have been held, one in December 2000 ("Industrial Districts and Local Development" with Prof. Garofali from the Insubria University and Franco Vergnano of Il Sole 24 Ore), and one in February 2001 ("Globalisation and Local Development" with Prof. Bagnasco of Turin University and Prof. Garofali).
In the next meetings the following themes will be discussed:

  • Jewellery districts and jewellery making in Italy

  • Investigation and formation of development policies in Valenza district

  • Organisational changes and relationships between companies: what's happening in the world of the sub-supplier

  • Innovation in small companies: the roles of research and intermediary institutions

  • The relationship between the economy and culture in the development of jewellery districts

2. The launch of an investigation into the organisation of the district to find out - among other things - companies' needs and the main problems to focus attention on; in addition, a plan is to be created for the Local Development Agency being set up.

3. Establishment of permanent work groups with the participation of businessmen (the forum of local businessmen).

4. Formation of panels with expertise in systems and adequate knowledge of methodologies and strategies for local development.

Two plans by small and medium-sized enterprise consortia have been presented to Valenza District Committee regarding promotional activities for participation at international exhibitions and trade fairs.
The projects are based on an investment of 2.5 billion lire and will benefit from a contribution of roughly 1 billion lire.

(with Paolo Ghiotto)

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The footwear district in Fermo and Macerata

The industrial district covers an area involving 49 district councils (34 in Fermo and 15 in Macerata) and roughly 240,000 inhabitants.
The specialisation in the production of footwear dates back to the Middle Ages when footwear manufactured in Fermo was sold in Tuscany and the north of Italy as well as locally, and, on occasion, as far away as the Balkans.
There are 3,000 shoe-making companies here employing 24,000 people and supplying 30% of the Italian footwear market.

As in many other districts, in this hilly area there is a slight tension between local administrators, banks, industrial associations, trades unions and Chambers of Commerce who are debating - in a mixture of pride and worry - on the next steps to take on the path of development that has so far been almost laid out for them.

For some time, the industrial landscape in this district has been splitting on the inside: there are companies who have created brand names that are famous internationally such as Della Valle, Pizzuti, Botticelli and others but there are also "anonymous" networks (though no less dynamic) of small companies.
However, apart from their common context made up of extraordinary professionalism, auxiliary services and a unique mix of development-related factors (attitude to risk, healthy competition and civic pride), they seem to have little in common.

Will the area's entrepreneurial spirit, cohesion and local identity survive? This question has been aired for some time, perhaps more from a need for security than from a fear of traumatic events.
Those most worried raise the spectre of delocalisation to countries in eastern Europe, Rumania in particular, where many companies have already gone in search of lower costs, whereas the more trusting are convinced that the wealth of local professionalism and expertise will survive for many more years.

Images of the culture of footwear production, fashion successes, entrepreneurial flair and the difficulty of finding young new designers pop up continuously in no particular order with the result that local businessmen tend to cling to local policies that are partly coloured by demands for "autonomy", the demands of parochial Italy and emphasis on the province.

And this is the starting point for the commitment of Fermo (66,000 inhabitants and perhaps the town that more than any other is striving to create an identity and look after its local interests) to recognition of the district and to an industrial policy for the territory.

A strategic factor is the strengthening of the infrastructure that currently creates many obstacles to companies and the mobility of residents.
The footwear industry is spread across the hills of the area (as the names of the local councils indicate: Montecosaro, Monte Urano, Montegiorgio, Montegranaro, Montottone etc.) and now is attempting to put a little order into connections and to relationships within and outside the district.

The landscape is changing: the nodes and points of contact between settlements created so long ago are growing as companies leave the outskirts of towns and villages and move to unoccupied areas between the surrounding hills.
Although the changes taking place are slow and creeping, the signs of the growth are clearly apparent: the Adriatic coast is now a long uninterrupted ribbon of commercial buildings publicised by large signs, the countryside is stained with "urbanised" areas, and the chains of small inhabited centres with their old hierarchies are loosening.
The belief is quite justiified that something must be done and done well and fast to improve the inadequate infrastructures around which the area's social life, work opportunities and logistical systems are being reshaped.

The Regional government of the Marches recently unveiled its first plans for districts. Under the leadership of the Mayor of Porto Sant'Elpidio, the Coico (co-ordinating committee) was established which has drawn up a development plan with the first measures ready to be acted upon.
The Region has laid down that the following activities may be financed:

  • services to companies

  • commercial promotion

  • consortia for R&D and technological transfer

  • redevelopment of industrial sites

  • professional training

  • environmental protection

This is a wide-ranging series of activities. The policy for local development, by its very nature, embraces many aspects but above all involves the participation (besides the Coico with 30 representatives of the private and public sectors) of all organisations that affect the processes of local development.

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Districts and industrial design

One of Italian industry's strong points is industrial design.
In the widest and most current meaning of the discipline, industrial design is the material representation of a company's overall strategy, i.e. the combination of products, services and communications with which it presents itself to its market.

Recognition of the role of industrial design has recently been sanctioned by the Ministry of Scientific and Technological Research which finances the project "Sistema Design Italia" involving twelve universities that teach Industrial Design.
The aim of the project is to develop the roles and potential of design resources of industry in Italy with particular emphasis on relationships between design activities and specific territorial areas.

Within this framework collaboration has begun between the degree course in Industrial Design at Milan Polytechnic and the Agenzia Lumetel in the district of Valle Trompia-Valle Sabbia.
The result of the alliance is an international Design Prize based on products typical of the district that allows the potential of design in a specific district to be proven; in this case, the products are household objects, cutlery, handles etc.

The competition - still in an experimental phase - is designed to involve both the companies in the district and Milan Polytechnic in a series of integrated processes of product innovation and business communication. The establishment of the prize also had the more general aims of promoting the overall image of Lumezzane and of the spreading of the culture of industrial design as a competitive tool.

The first competition concluded with the presentation of the projects at the Palazzo delle Stelline in Milan on 16 February 2001. They were divided into three sections: Product Design, Communication and Service Design.
The participants in each section were asked to produce designs for either individual companies, groups of companies or for the entire district.

Each student, whether as an individual or as a member of a group, put together a proposal for a particular goods sector in one of the three sections. The places where the experimentation took place were the companies and the authorities in the district.

A large number of students from the 5th year of the Industrial Design course at Milan Polytechnic took part. This interdisciplinary sub-course lasted about 350 hours and the students were guided by a team of teachers.
The first phase (15 October 1999 - 30 January 2000) included:

  • Pre-design educational activities related to analysis methodologies, product research etc. under the guidance of Polytechnic teachers;

  • Pre-design educational activities aimed at incorporating district characteristics and the policy of local development to be contextualised in the projects - under the guidance of external teachers;

  • Seminars by experts relating their personal experiences in the sectors in question;

  • Exercises for the building of the project briefing;

  • The creation of "idea tanks".

During the second phase (1 March 2000 - 15 June 2000), the students:

  • Carried out apprenticeship at the companies;

  • Began design activities under the supervision of teachers.

A group of companies in the district of Lumezzane offered to produce a prototype or full-size model of the students' designs.
The students' designs were judged by an international jury and presented in an exhibition and a catalogue.
The project was conceived and supported by Agenzia Lumetel, Milan Polytechnic - Degree Course in Industrial Design, Club dei distretti industriali, the Region of Lombardy, and the Chamber of Commerce of Brescia.

The teachers involved were: Flaviano Celaschi, Giulio Ceppi, Luisa Collina, Luciano Consolati, Silvano Custoza, Makio Hasuike, Perry King, Santiago Miranda, Annamaria Scevola, Francesco Scianchi and Giuliano Simonelli.

Alessandro Gorni

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Internet and e-commerce in industrial districts

The growth of Internet and electronic trading has had a sizeable impact on the manner in which companies deal with one another.
Industrial districts, in particular, have been taken by assault by the digital revolution, above all, in their relationships.
Alteration of the characteristics of information causes, on the one hand, the deconstruction of businesses with consequent spin-offs on costs and, on the other, an alteration in the social mechanisms that regulate relationships between companies.

In order to give an empirical comparison on the changes wrought in networks and fiduciary relations in industrial districts, primary analysis have been carried out on a sample of eighteen districts sorted by territory and business sector (mechanical, textile, furniture, tile, glasses, footwear, cork, knitwear etc.).
To provide an idea of the dimensions of the sample, the areas in question comprise more than 37,000 companies, have an overall turnover greater than 53 billion lire, and employ about 265 thousand people: a worthy "test bench".

Field research revealed a fairly uniform overall picture regarding the spread of digital technologies in the districts as well as the beliefs of what will occur in the years to come.
For each case, an observer body (Chamber of Commerce, business association etc.) was identified that was able to provide a representation of the impact of electronic trading on operational methods in the district based on data and subjective observation.
Table 1 gives a picture of the spread of Internet in the districts on a scale rising from 1 (low) to 9 (high).

Table 1: Current and expected spread of Internet in the districts
 

 

Current

Expected

B2B activities between companies in the district

1,8

4,1

B2B activities with companies outside the district

2,8

4,6

B2B activities with commercial companies

2,7

4,7

B2C activities with on-line sales

1,7

3,2

Promotional sites able to accept orders

2,9

4,9

Communications and e-mail

5,9

6,9

 

 

 

 

The first column clearly shows the districts are behind in their use of Internet. Currently, it is used as a simple means of communication even if it should be emphasised that it is used more for communications with companies outside the district rather than inside. However, it is expected that district intranets will spread that will improve internal exchanges.
The next table illustrates how digital technologies have influenced internal relations with regard to commercial functions and it tends to confirm the phenomena already mentioned

Table 2 - Impact of electronic trading on district relationships

Within the district

5,1

With suppliers of raw materials

5,1

With suppliers of plants and technology

5,3

In distribution

6,4

With customers

6,5

With universities and research centres

4,6

With public administration

4,6

With service companies

6,1

With consultancies

5,4

 

 

 

 

 

Developments are mostly related to trade; only a tiny proportion of district companies sell directly to the final consumer.
Also high are the values assigned to changes in relations with service and consultancy companies and this underlines the importance of the role of "third parties" in the development of the potential of electronic trading, particularly in the field of Business to Business.

There already exist a number of "district portals" and these are bound to increase in the future; they are managed by private or public service companies with the aim of aiding companies preserve the web of relationships created in the past in these new and forbidding areas.

One question in particular highlighted the expected impact of electronic trading on district structures and its tightness see Table 3). First, no-one believes that the impact will be marginal, however, that will not cancel out the rooting of the district which will continue to co-exist in parallel with new and different groupings of companies - some of which may be virtual - via networks.
This is a confirmation of the dual evolution that districts are undergoing: that, in parallel with realities that will assimilate virtual relationships into the web of existing relationships, there will probably be new communities that will try to reproduce the fiduciary and cognitive mechanisms of the districts regardless of their geographical location.

Table 3: Impact of e-commerce on the structure/survival of districts

 

Media

Sarà trascurabile

3,1

Cambierà gli attori vincenti e quelli perdenti nel distretto

4,8

Cancellerà la dimensione locale del distretto

3,1

Provocherà una riaggregazione su base virtuale del distretto

4,9

Provocherà uno sviluppo del distretto

5,8

Ridisegnerà i rapporti fra le imprese

5,5

Ridisegnerà i rapporti con clienti e fornitori

6,6

 

 

 

 


Many of those interviewed still believe that digital technologies will alter the "geography" of winners and losers in the district and that the most important changes will take place in the industrial chain, upstream and, particularly, downstream.

The deconstruction of businesses will cause a broadening of horizons within which districts will be able to operate and, for companies, there will be a considerable increase in opportunities for establishing new relationships, both inside and outside the district.
In this sense, it is true that the change in extension and density of the webs of relationships will have important consequences, including on social relationships. All this predicts completely new scenarios that must be analysed in order to identify the paths of most rewarding development for our districts.

(with Andrea Ordanini, Bocconi University)
 

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Edited by L. F. Signorini
Local development.
An investigation by the Bank of Italy into industrial districts
Meridiana books, Donzelli, 2000

In its investigation of the eccentric battlefield of the phenomenon of industrial districts, the Study Centre of the Bank of Italy has not renounced its customary detached style based on careful objective comparisons, and has trained its artillery on some of the well-known anomalies of Italian industry (the specialisation in traditional business sectors, the high proportion of small companies etc.) for which it tries to give plausible explanations.

The investigation is founded on three precepts that share the same methodological rigour. The first is mostly descriptive and "takes the measure" of the phenomenon.
The second is more empirical and attempts to check the "tightness" of some of the theoretical foundations used to support the competitiveness of local systems of small companies. The third is more technical in the sense that it is based on the Bank of Italy's chosen research methods of investigating the relationships between credit institutes and the district companies.

In the fifteen pages that present the investigation, Signorini effectively describes the more important passages on the journey that has brought industrial districts into the economic spotlight in Italy and abroad. His careful reconstruction omits nothing of importance regarding the original competitive alchemy of the districts: external economies; their technical and organisational dimension (chains of relationships, the division of work between companies, flexible specialisation, technological spill-over etc.); the work market (implicit understandings, mobility, the circulation of information etc.); the social psychology (identity, interpersonal trust, attitudes, internal rivalry etc.); and the benefits of agglomeration (proximity to specialised auxiliary services such as mechanics, transport, credit, trade fairs etc.).

The importance of districts in terms of employment, geographical spread and contribution to exports is shown by analysis of the data of the 199 Local Work Systems identified by Istat as industrial districts. The authors tell us that these districts employ 44.7% of personnel working in the manufacturing sector. This exceptional proportion of employment at a national level reaches its highest points in the industries dealing with leather (66%), textiles-clothing (63%), glasses and sofas (58%), machinery construction (49%) and paper treatment (41%).

Measurement of the district effect - that results in the increased competitiveness of individual companies strengthened by the links that they build up amongst themselves and the context in which they operate - produces these consequences: "the return on invested capital (RIC) and the return on own capital (ROC) are systematically higher for companies belonging to industrial districts, regardless of size or business sector. In 1995, the RIC of district companies was on average two percentage points higher and the ROC more than four points higher".

In the final paragraphs of his introduction, the editor quickly reviews two topics that recur constantly in studies of industrial districts: policies for districts and the challenges of the future.
In both cases his observations do not yield anything to the opposing opinions that are often to be read on the subject: "districts are no more than a particular form of industrial organisation with strong and weak points; they adapt themselves to certain types of production and circumstances and not to others" (page XXXI). Signorini opportunely distinguishes between active policies aimed at the creation of new districts and policies that exist to support already established districts.

Overall, Signorini is quite sceptical on the need for ad hoc intervention to mobilise the energies of industrial districts, in particular regarding monetary benefits. Action taken in past years (Law 317 and, for the south of Italy, territorial agreements) suggest that often they are not even sufficient to strike the spark of these forms of development. Much more important and effective are the sphere of action and the attitudes of the local administrations towards the creation of infrastructures (industrial areas, roads etc.) and actions taken on training and territorial promotion.

As far as the problem of the future of the districts is concerned, squeezed by globalisation, the spread of new technologies, dimensional growth, processes of vertical integration, the loosening of local roots and the loss of community values, the book does not give unequivocal answers. Beneath the precision of their quantitative analyses, the investigators of the Bank of Italy do not hide a certain sympathy for districts. For them too, "the systems of small companies will not disappear in the future, quite the contrary".

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Events and News

New members
The footwear district of Verona (570 companies, 7,000 employees, 2,400 billion lire turnover half of which comes from exports), represented by Centro Integrato Servizi al Calzaturiero (CISCAL SpA).

The voice of the Club
The Club has attended the following events:

  • Datar, OECD
    Local Clusters. Local Network of Enterprises in the World Economy
    Paris, 23-24 January 2001

  • University of Padua
    Formative institutions and agents of development in northern Italy (19th-20th centuries)
    Padua, 25-26 January 2001

  • Cnel
    Logistics and industrial districts
    Rome, 24 January 2001

  • Federindustria Campania, Region of Campania
    Industrial districts in Campania. Development potential
    Naples, 30 January 2001

  • Irs, Business economists' group
    Rethinking industrial policy today
    Milan, 19 February 2001

  • Issi, Montedison Foundation
    Districts and SME: environment, technological innovation and competivity
    Milan, 6 March 2001

  • Assindustria Lecce, Banca 121, Copac
    Presentation of the books by G. Viesti, How industrial districts are created & Districts in southern Italy
    Lecce, 5 March 2001

  • Confindustria. Regional Federation of Basilicata
    Companies in Lucania and the regional normative for industrial districts
    Potenza, 12 March 2001

Publications on districts

General

L. F. Signorini (editor)
Lo sviluppo locale. Un'indagine della Banca d'Italia sui distretti industriali
Donzelli - Meridiana Libri, 2000

S. Micelli & E. di Maria (editors)
Distretti industriali e tecnologie di rete: progettare la convergenza
Franco Angeli, 2000

Datar
Réseaux d'entreprises et territoires. Regards sur les systèmes productifs locaux
La documentation Française, 2001


 Research on districts

Nomisma
Brianza globale. I percorsi dello sviluppo
Idea Brianza. Assindustria Monza e Brianza & Milan Chamber of Commerce, 2000

Comitato Indirizzo & Coordinamento del distretto Fermano Maceratese
Programma di sviluppo
Porto Sant'Elpidio, 2000

F. Belussi
Tacchi a spillo. Il distretto calzaturiero della riviera del Brenta come forma organizzata di capitale sociale
Coop. Libreria Editrice Università di Padova, 2000

G. Ganna, G. Grampa, P. Macchione, G. Morreale
Colline e ciminiere. I distretti industriali di Tradate e della Val d'Arno
Unione degli Industriali della Provincia di Varese

V. Albino, N. Carbonara, G. Schiuma
Relazioni inter-organizzative e conoscenza nei distretti industriali. Forme di sviluppo industriale nel Mezzogiorno: i distretti industriali in Basilicata
D.A.P.I.T. Ricerche Un. Degli Studi Basilicata, September 2000, n. 8

D. Paolini
I luoghi del gusto
Baldini e Castoldi, Rome 2000
 

 

 

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