The Italian Pride

The success of the Milan Furniture Fair is just the most recent in a series of positive signs of national excellence. Facts and figures for Italy’s top four sectors

Fiat present "Fiat 500 Design Collection" | ANSA/MILO SCIAKY

What’s needed is a burst of pride—at least according to comments April 18 by Confindustria director general Giampaolo Galli—to face the country’s current difficulties and provide a boost to the economy. And yet, in their own way, Italy’s small- and medium-sized companies have already had their burst of pride. Starting with

Furniture and Furnishings: sales on the rise

Furnishings sector facts and figures. €21.3 billion: Turnover of the wood and furniture sector in 2010 as reported by Federlegno Arredo. Up 1.8% on 2009. Exports +5.4%: increase in sector export share in 2010 over the previous year. The largest growth was to China. Employees -2.1%: The number of those employed in the furniture and furnishings sector fell 2.1% between 2009 and 2010, from 227,227 to 222,456 individuals.

Furnishings at the top of the list of good news which made 2010 the first year of partial recovery for the Italian economy. With the closing April 17 of the 50th Milan Furniture Fair (with a record number of 321,320 visitors), adding up the initial numbers and toasting the sector’s staying power (in itself, something in the current climate) was quickly accomplished. The sector trade association, Federlegno Arredo, released figures for the sector showing a 21.3 billion euro turnover for 2010, up 1.8% on 2009, with an export share over 5.4%.
Sales increased in France (+6.9%), Germany (+5.9%) and the United Kingdom (+6%). While exports to China virtually exploded: +45.8%. And forecasts for 2011 are optimistic, despite the fact the furnishings sector saw a slight drop in employees (in 2009 they were 227,227 and in 2010 222,456, a drop of 2.1%), the result of a mix of factors, including post-crisis natural selection, acquisitions and reorganization. Fewer employees, but the number of companies more or less the same as the previous year: 73,548 compared with 73,618 in 2009.
But the Furniture Fair only focused the spotlight on one of the sectors that has shown itself capable of withstanding the crisis which began in 2007. The other Made in Italy sectors of excellence (apparel, food and automotive) have faired just as well. In 2010, the turnover of the Italian clusters that group together these sectors of excellence rose by 7.1% at current prices, nearly a half point more than the average of the entire Italian manufacturing sector.
According to information from the experts of the 2010 National Outlook prepared by Federdistretti, the association which brings together the major Italian productive agglomerations (101 in all for a total of 285,000 companies sampled, 98% of which with less than 50 employees and 85% with less than nine), these results were thanks to the high standing of their products and opening of new markets.
Export is, in fact, one of the strong points in the 2010 recovery of Italian clusters. The figures, which refer to the first nine months of the year, show a real boom in precision mechanics (+23.7%), fashion (+10.7%) and hi-tech (+7%), while for food, the percentage only reached 1.8% due to the increase in raw material prices. And leading the pack are Asian markets, with China at the top, followed by near-by Hong Kong and Singapore. And also Russia. Before the crisis in North Africa, the turnover and export figures for Made in Italy products were expected to be positive, both in 2011 and 2012. Now the scenario is changing rapidly, and perhaps a new burst of pride will be needed.

Automotive. The secret: customize

Automotive. turnover +9%: Forecast sector growth in 2011 compared to 2010. €2,790 million: 2011 export forecast (+7.1% over 2010). sales +12%: Increase in domestic sales forecast for 2011.

The password is “customization”. This is the secret that in 2010 allowed the Italian machine tool industry to break into the BRIC countries (first of all China which last year became the no. 1 market for Italian-made goods in this sector). But this should come as no surprise. For a number of years, half of Italian production has been destined for markets beyond domestic borders. And Italians around the world have a jump on their competitors. They are capable of creating special products all different from the others, and developing custom projects for clients. A feature which, together with a high technological standard, allow Italy’s small- and medium-sized companies to be at the top of international lists: fourth in terms of manufacturers and third in exports, despite the fact that comparison is with German and Japanese giants in this sector.
But what is it foreigners buy from Italian small- and medium-sized companies? “The lion’s share is automotive which absorbs over 50% of Italian output, but interesting and important new sectors are the aerospace industry, especially in the United States, energy and appliances,” explains Giancarlo Losma, president of Ucimu – Sistemi per produrre, the association of Italian machine tool, robot and automation manufacturers.
And the march of machine tool producers would seem unstoppable, as seen in the association’s forecasts for 2011 which indicate a trend towards improvement in all key economic indicators: production at 4,160 million euros (+9%) compared with 2010; exports at 2,790 million euros (+7.1) and sales to the domestic market of 1,820 million euros (+12%), driven by the expected increase of 11.5% in consumption at 2,770 million euros.

Food. €124 billion: food sector 2010 sales. Export 76%: brand name product share. 410,000: sector employees in 2010.

Food: Brand success
It has always been the jewel in the Made in Italy crown. And, despite the crisis, it has withstood well the consumption crunch in Italy and abroad. We are talking about the food sector in its broadest sense, from raw materials to pre-processed products and wine. And whose export share, according to the annual index of the Edison Foundation, increased 4.7% in the first nine months of 2010 compared to 2009 with prospects at a constant level for 2011. At the end of 2010, overall turnover for the sector reached 124 billion euros, up 3.3% on the previous year. The sector employs overall 410,000 people in 6,500 small, medium and large companies that purchase and process approximately 70% of Italian raw materials.
The Italian food sector is also synonymous with real excellence. Over 76% of exports are comprised of brand-name products for a total turnover of approximately 21 billion euros. One point of note: second place in the list of top twenty companies for export growth is the Parma dairy product cluster (+46%). The same cluster under the microscope in recent weeks for the battle to control Parmalat.


Apparel: Recovery at-risk

Apparel. €48.5 billion: 2010 turnover of the Italian fashion industry. Exports +18.8%: increase in exports to the United States. 458,000: employees in the textile and clothing sector in 2010.

Holding their breath. 2010 marked the turning point for the Italian fashion industry. Turnover registered 48.5 billion euros (+4.6%) and driving this was, above all, exports worth half the market, or nearly. Top destinations: Germany and France.
But it is the Far East that is hungriest for Made in Italy goods, with orders from China up 28.9% in 12 months. Also good the United States which registered a leap of 18.8%. “The preconditions for returning to pre-crisis levels were all there,” Michele Tronconi, president of Sistema Moda Italia tells Panorama Economy. But he warns: “This is no longer the case”. There are three factors that could compromise recovery. First: uncontrolled increase in the prices of raw materials. “Cotton is quoted today at 2 dollars per pound, compared with 60 cents a year ago,” Tronconi explains. In economic terms: +140% in 12 months. Second: the rise in euro zone interest rates with consequent strengthening of the euro against the dollar. “The euro has returned over the 1.40 mark, and it will remain there,” explains Tronconi. “With obvious repercussions on the export front.” Third: energy costs. “They are increasing and the prospects are not rosy,” says the head of Sistema Moda Italia.
It’s a shame that energy costs are so high and impact so strongly on the prices of semi-processed goods. On the runway, they’re optimistic, but a bit of caution never hurts.


Ilaria Molinari
(additional contributors, Massimo Morici and Zornitza Kratchmarova)


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