The italian industrial districts

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The italian industrial districts

  1. 1. Dott.LucianoConsolati Federazione dei Distretti Italiani Via Torino 151/C 30172 Mestre – Venezia Tel: 041 2517511 Email: federazionedistretti@siav.net FEDERAZIONE DEI DISTRETTI ITALIANI Dott. Luciano Consolati Comitato Tecnico Nice, 15/10/2010Nice, 15/10/2010
  2. 2. Dott.LucianoConsolati The Agenda • S.M.E. The model of Italian Manufacture • The framework from the official statistics; • Under the official statistics data; • One of the key factors of success of the italian model of SME: The Industrial Districts;
  3. 3. Dott.LucianoConsolati The definition of SME • Micro enterprises as those with less than 10 employees; • Small enterprises as those which are independent (less than 25% of capital owned by enterprises with other dimensional parameters) with less than 50 employees, a yearly sales revenue not above 7 million Euro or a total yearly balance not above 5 million Euro; • Medium size enterprises as those which are independent, with between 51 and 250 employees and a yearly sales revenue not above 40 million Euro or a total yearly balance not above 27 million Euro; • Large enterprises as all those with more than 251 employees and with a yearly sales revenue exceeding 40 million Euro
  4. 4. Dott.LucianoConsolati SMEs’ contribution to Europe… 32,8% 67,2% SMEs (87,9mio) Large enterprises (42,9mio) 42,4% 57,6% SMEs (13,5 trln EUR) Large enterprises (9,9 trln EUR) 0,2% 99,8% SMEs (20,4mio) Large enterprises (43 ths) 1,1% 6,9% 92,1% Micro (18,8mio) Small (1,4mio) Medium (0,2mio) 25,0% 30,8% 44,2% Micro (38,9mio) Small (27,1mio) Medium (22,0mio) 33,9% 32,7% 33,4% Micro (4,4 trln EUR) Small (4,5 trln EUR) Medium (4,6 trln EUR) Number of enterprises Contribution to employment Contribution to value added SMEs vs large enter- prises Micro vs small vs medium enter- prises 2002-2007: 84% of new jobs through SMEs
  5. 5. Dott.LucianoConsolati The SME Italy vs. Europe B DK D EL E F IRL I L NL A P FIN S UK NO Enterprises Micro 92.10 79.70 81.40 93.00 92.10 94.90 91.30 83.20 93.00 90.20 93.30 85.50 Piccole 6.70 16.40 15.50 6.20 6.70 4.50 7.30 14.20 5.90 8.10 5.60 12.20 Medie 1.00 3.20 2.60 .070 1.10 0.50 1.10 2.20 1.00 1.50 0.90 1.90 Grande 0.20 0.70 0.50 0.10 0.20 0.10 0.30 0.40 0.10 0.20 0.20 0.40 Employment Micro 30.00 13.90 19.10 40.60 24.50 47.80 22.30 22.40 43.40 22.50 28.00 21.70 25.50 Piccole 21.40 23.80 22.50 24.40 21.20 21.90 24.30 24.20 21.30 18.40 19.00 18.10 24.40 Medie 15.30 23.50 19.50 14.80 16.60 12.50 14.90 20.40 17.30 17.60 16.10 15.30 18.90 Grande 33.30 38.80 39.. 20.30 37.70 17.80 38.50 33.00 18.00 41.50 36.90 44.90 31.10 Turnover Micro 24.30 11.80 10.10 27.80 20.40 30.50 16.50 32.50 15.30 19.60 16.20 Piccole 22.90 18.50 16.90 24.90 20.40 23.70 21.60 22.50 15.40 19.20 16.70 Medie 19.30 22.70 20.50 19.40 17.60 17.50 24.60 21.60 18.30 18.80 17.40 Grande 33.40 47.00 52.50 27.90 41.60 28.30 37.20 23.40 51.00 42.50 49.80 Value Added Micro 19.00 13.10 8.50 30.00 19.50 32.50 16.70 30.60 17.50 20.10 20.90 Piccole 20.90 20.70 16.40 23.90 19.10 23.40 21.70 20.00 15.60 17.70 20.00 Medie 18.70 22.70 20.60 18.60 16.90 16.60 21.90 20.70 16.20 17.80 18.30 Grande 41.40 43.50 54.50 27.40 44.50 27.40 39.70 28.60 50.70 44.40 40.80
  6. 6. Dott.LucianoConsolati The central role of the manufacturing industry Value Added in the Business Services in % del GDP Value added manufacturing industry in % del GDP 0% 5% 10% 15% 20% Giappone Spagna Italia Stati Uniti Germania Francia Regno Unito 1980 1990 2002 0% 10% 20% 30% 40% Stati Uniti Regno Unito Giappone Spagna Francia Italia Germania 1980 1990 2002
  7. 7. Dott.LucianoConsolati The Specialisation… (value added 2002, composizione %) The Weight… (employment for size of turnover 2002, composizione %) ... The Specialisation on low technology and … the weight of SME 0 10 20 30 40 50 60 70 Italia Spagna Regno Unito Francia Germania Bassa tecnologia Medio-bassa tecnologia 0 10 20 30 40 50 60 70 80 90 Italia Spagna Francia Regno Unito Germania 1_9 10_19 20_49 50_249
  8. 8. Dott.LucianoConsolati 96 98 100 102 104 106 108 2001 2002 2003 2004 2005 2006 Italia Francia Germania 90 95 100 105 110 115 120 125 130 2001 2002 2003 2004 2005 2006 Italia Germania Francia Labour cost / u.p (2001.T1=100) Output /employ (produttività) (2001.T1=100) Higher costs….., low productivity
  9. 9. Dott.LucianoConsolati The higher energy costs Media of total energy costs 2006 (numeri indici: Italia=100) Fonte: elaborazioni CSC su dati Eurostat 40 50 60 70 80 90 100 Italia Germania Irlanda Danimarca Belgio Paesi Bassi UE-15 Austria Regno Unito Spagna Portogallo Francia Finlandia Svezia
  10. 10. Dott.LucianoConsolati R/D su PIL 0 1 2 3 4 5 6 italia francia germania uk usa giappone cina israele russia R e D Expenditure / G.D.P.
  11. 11. Dott.LucianoConsolati Italy is specialised in production and export of traditional manufacturing (different from Germany) Traditional Sectors (Quota del valore aggiunto e dell'occupazione sul manifatturiero 2004) 0 5 10 15 20 25 Germania UE Italia Spagna Francia UK Value Added Employment Fonte: Eurostat
  12. 12. Dott.LucianoConsolati Static specialization however does not mean that Italy has not reacted …. • Within Italian sectors important changes: • Offshoring of low value added phases of production • Quality upgrading, especially on traditional sectors and on UE markets
  13. 13. Dott.LucianoConsolati Indici di delocalizzazione internazionale tassi di crescita 1995-2003 0 2 4 6 8 10 12 14 16 A bbigliamento C o ke e petro lio M achine per ufficio ed elabo rato ri A ltri mezzi di traspo rto C uo io e calzature P ro do tti chimici M etalli e lo ro leghe P ro do tti tessili A limentari e bevande T OT A LE Strumenti medici e di precisio ne M acchine ed apparecchi elettrici M eccanica Delocalizzazione in senso stretto Delocalizzazione clothing Delocalization of italian firms by sectors
  14. 14. Dott.LucianoConsolati A strategic answer 90 100 110 120 130 140 150 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Indice valori medi unitari esportazioni italiane (1996=100) Indice di prezzo delle esportazioni italiane (1996=100) Skill ugrading: a way out of price competition
  15. 15. Dott.LucianoConsolati OECD, consumer confidence index: una misura della fiducia dei consumatori Ma attenzione all’Italia Area OECD: fiducia dei consumatori
  16. 16. Dott.LucianoConsolati Area OECD GERMANIA ITALIA
  17. 17. Dott.LucianoConsolati Nella globalizzazione i paesi emergenti e i paesi sviluppati crescono diversamente, ma cadono nello stesso modo
  18. 18. Dott.LucianoConsolati Industrial Districts Model
  19. 19. Dott.LucianoConsolati ITALIAN DISTRICTS: THE NUMBERS Source: Istat • 156 districts: 12.5 millions of citizens • 215.000 manufacturing enterprises • 2 million people employed • 46% of Italian exports • Il 27% of Italian PIL
  20. 20. Dott.LucianoConsolati % MANUFACTURING ENTERPRISES 40 PEOPLE EMPLOYED (of all productive sectors) 25 PEOPLE EMPLOYED (manufacturing sector) 39,3 TOTAL EXPORTS 46,1 EXPORTS AND DIFFERENT SECTORS −Textiles and clothing 67,0 −Leather and footwear 66,9 −Glass and ceramics (non metal mineral) 60,4 −Wood and wood products (furnishings not included) 55,8 −Mechanics 51,6 −Metals and metal products 51,0 Source:Istat(2005) THAT IS TO SAY:
  21. 21. Dott.LucianoConsolatiDott.LucianoConsolati
  22. 22. Dott.LucianoConsolati SOME CHARACTERISTICS OF A DISTRICT • High concentration of SME in a specific area; • High specialization in a productive sector; • Cooperation among enterprises; • Integration of enterprises with the local place of reference, its tradition and its culture • A DISTRICT IS A SPONTANEOUS AGGREGATION OF ENTERPRISES
  23. 23. Dott.LucianoConsolati - DistrictDistrict IndividuationIndividuation LocalLocal production systemproduction system indicatorsindicators High production specialisation Quite important production which covers a remarkable quota of the specialisation sector production Multiplicity of minor enterprises and lack of leader enterprises Common professionality of workforce High turnover rates among workers High turnover of enterprises Wide social articulation together with continuous social mobility processes Complex production inter-independence system among local enterprises
  24. 24. Dott.LucianoConsolati Districts setting up MKT Production cycles possible to be decompose into their single phases
  25. 25. Dott.LucianoConsolati A wider classification • Areas of production specialisation concentration of companies within the same industry in a local area • Local production systems concentration of companies within the same industry in a local system, with intensive intercompany cooperation and exchanges • System-areas local concentration of small production units from different industries relateb by intensive relationships and exchanges
  26. 26. Dott.LucianoConsolati DistrictDistrict FactorsFactors of Successof Success Flexibility Professionality High competitiveness between firms Continuous investement Important role played by local banks Co-operation with public bodies
  27. 27. Dott.LucianoConsolati TheThe mostmost importantimportant characteristiccharacteristic The first product of the District is its people and its enterpreneurship, its will to set up its own business. The first product of the DistrictThe first product of the District is its people and itsis its people and its enterpreneurshipenterpreneurship, its will to set, its will to set up its own business.up its own business.
  28. 28. Dott.LucianoConsolati The model of industrial districts Four groups of key factors for local networks • locational and spatial • social and cultural • economic and organisational • institutional
  29. 29. Dott.LucianoConsolati Locational and spatial factors • geographical proximity and sectoral specialisation • small urban dimensions reduction of transportation and transaction costs circulation of information and knowledge lower labour and land costs, social cohesion
  30. 30. Dott.LucianoConsolati Social and cultural factors • central role of the family and job sharing among the family members heritated from the rural society; • common social background and values; • high social mobility and entrepreneurship attitude trust as a the key issue in business relationships
  31. 31. Dott.LucianoConsolati Economic and organisational factors • Possibility of extreme specialisation • Balance between cooperation and competition • Specialisation of the workforce as “public good” (repository of common knowledge) joint scale and scope economies collective learning (learning by localizing, learning by specializing, learning by interacting partnershipping (stability, long-termism, know-how exchange)
  32. 32. Dott.LucianoConsolati Economic and organisational factors 11 System of factories with an integrated vertical production cycle and greater division of work among single concern which minimises costs and promotes new businesses External economies of scale: each concern operates as a supplier and user of different goods Constant technical innovation Phases and components high specialization High competitiveness among enterprises about a specific product
  33. 33. Dott.LucianoConsolati Cooperation between enterprises and public bodies about external economies Weak entry barriers are increasing because of burocracy problems Exit barriers: the artisan can do just one specific task and cannot change his business Professional and skilled workforce who learn locally Learning by interacting in the area of the most important machinery products Economic and organisational factors 2
  34. 34. Dott.LucianoConsolati Surplus outsourcingMarket expansion Production with real unitary decreasing costs Outdoor purchase of products at lower prices Space contiguity between enterprises and existence of consolidated relationships Reduced transaction cost and higher intrinsic reliability ““SubSub--divisiondivision”” determiningdetermining factorsfactors Outsourcing of diseconomies and unbalancing factors Unbalance of production processes
  35. 35. Dott.LucianoConsolati Highly skilled workers (“Learn-by-Doing”) Saving and optimization of time Development of specialized machines in the production for sub-contractors and intended to improve the production processes HIGHER PRODUCTIVITYHIGHER PRODUCTIVITY Elastic managing of production timetable (work timetable) AdvantagesAdvantages comingcoming fromfrom ““subsub--divisiondivision””
  36. 36. Dott.LucianoConsolati Institutional and policy factors • Marginal role in establishing competitive local systems, but key role in supporting their growth and innovation • Interventions mainly at local or regional level (both public and private actors) regional agencies, business service centres, entrepreneurs’ and artisan associations, consortia of firms
  37. 37. Dott.LucianoConsolati Articulation ofArticulation of industrial districtsindustrial districts Raw materials Machinery Semi-finished SUPPLIERS Trust Job market SOCIAL CAPITAL Attitude Value Accessibility Transports Water purifying Building land INFRASTRUCTURE CAPITAL Banks Designers Transports Agents PRIVATE SERVICEPRIVATE SERVICE TYPICAL ACTIVITIES Sub contractors CUSTOMERS Markets Schools Trade associations SOCIAL SERVICESSOCIAL SERVICES Services centres Consortiums Research Marketing ProductionSub contractors Sub contractors
  38. 38. Dott.LucianoConsolati ProductionRationalizationInterventions Low Medium High LowMediumHigh aa bb cc Market Strategies aa bb cc Medium large enterprises central to the local producing system Semi-finished products and high precision tooling suppliers Satellite phases sub-contractors and phases sub-contractors Strategic map of District
  39. 39. Dott.LucianoConsolati Relationship models TRADITIONALTRADITIONAL SUPPLIERSUPPLIER NETWORKNETWORK Leader Leader C. SS SS SS SS SS SS SS SS SS SS SS SS Supplier
  40. 40. Dott.LucianoConsolati Limits of industrial districts • Excessive localism and closure to the external world “Death by asphyxia” • Difficulty to face radical changes and innovation outside the existing technological framework • Lack of guidance and strategies for growth and renovation • Competition by low labour cost countries
  41. 41. Dott.LucianoConsolati Challenges and responses • Re-configurations of supply chains on a global basis • Increasing cost competition from NICs • Need for strategic flexibility and proactiveness beyond more short-term responsiveness • Development of Innovation capabilities to differentiate • Managerial capabilities to stay competitive within global supply chains
  42. 42. Dott.LucianoConsolati Customer CustomerCustomer SS SS SS SS SS SS SS SS SS SS SS SS Supplier Leader CoLeader Co.. SSSS SSSS SSSS SSSS SSSS SSSS SSSS SSSS SSSS SSSS SSSS SSSS PSPS PSPSPSPS PSPS Primary Supplier (Comaker) Secondary Supplier Leader INNOVATIVEINNOVATIVE GLOBAL SUPPLIERGLOBAL SUPPLIER NETWORKNETWORK Relationship models
  43. 43. Dott.LucianoConsolati THE DISTRICTS’LIFE CYCLE source: Federazione dei Distretti Italiani Currently the Italian districts have entered a phase of maturity and, as is the case in such instances, it is necessary to adopt revitalisation strategies in order to avoid crisis and sustain development DEGREEOFINTERACTION TIME Formation Development Maturity Revitalisation Districts Revitalisation / Development Crisis
  44. 44. Dott.LucianoConsolati • Some districts are undergoing strong development (the dynamic districts: provided with efficient governance, they put forward strategies that guarantee development as well as a constant increase in income and exports) • Others are in acute crisis (vulnerable districts: lacking in governance, poorly integrated in their area, marked by competition between enterprises) THE DISTRICTS’ SUCCESS - OR CRISIS - DEPENDS ON THE STRATEGIES ADOPTED
  45. 45. Dott.LucianoConsolati THE NEW CLASSIFICATION OF ITALIAN DISTRICTS source: Federazione dei Distretti Italiani • Dynamic districts • Mature districts • Vulnerable districts • Virtual districts Efficient governance, strategies that guarantee development and constant increase in income and export quotas, intense cooperation among enterprises presenting strong interdependence in their production cycles; lacking in governance, poorly integrated in their area, marked by competition between enterprises. They do not develop cooperation strategies, the businesses operate separately, and district membership, in times of negative short-term fluctuations, represents a factor of risk rather than an opportunity; only exist on paper, “imposed” by regional decrees; these actually only represent industrial areas. strongly rooted in their area of origin and in their local community, but do not have an efficient governance, while the cooperation between businesses is spontaneous rather than planned. The district aggregation gives way to positive performances, but the advantages are not evenly distributed, favouring only a few enterprises;
  46. 46. Dott.LucianoConsolati FEDERAZIONE DEI DISTRETTI ITALIANI PRINCIPAL AIMS • To promote links and the exchange of information and experiences: to develop the network • To promote relations with the decision-making centres of industrial policy (national and EU levels) • To promote international relations with other districts and organizations • To promote the “know-how” and communicate the situation of Italian economy
  47. 47. Dott.LucianoConsolati THE MEMBERS OUR DISTRICTS 76.000 enterprises76.000 enterprises 490.000490.000 people employedpeople employed
  48. 48. Dott.LucianoConsolati Made in Italy: the 4”A” Associated districts 12 11 10 7 0 2 4 6 8 10 12 Abbigliamento/Moda Automazione/Meccanica Arredo/Casa Agro-alimentare
  49. 49. Dott.LucianoConsolati WHAT ABOUT THE FUTURE? encouraging technology transfer and process innovation; supporting internalization and exports among the districts’ enterprises; promoting innovative finance instruments; developing cooperation among district enterprises to create networks of enterprises. THE ITALIAN DISTRICTS ARE THE DRIVING FORCE OF OUR MADE IN ITALY PRODUCTS
  50. 50. Dott.LucianoConsolati Critical success factors in cluster development 0 10 20 30 40 50 60 70 80 Networking partnership Innovative Technology Human capital Access to finance Presence of large firms Enterprise entrepreneurialism Physical infrastructure Specialist services Access to markets Access to business support services Competition Access to information Communications Leadership Virtual aspects/ICT External economic impacts SuccessCriteria
  51. 51. Dott.LucianoConsolati The Demand of the clusters:internationalisation strategies of networks
  52. 52. Dott.LucianoConsolati SOME WORKS IN PROGRESS • Italian District Observatory • Observatory on Mechanic clusters • Observatory on textile clusters • District rating • Research in operative application of Innovative finance tools • Agro-foodstaff online: product promotion and internalisation • Promotion and technological innovation projects • Pilot scheme for renewable energy • “Tracciabilità” project

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