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Federazione dei Distretti ItalianiVia Torino 151/C

30172 Mestre – VeneziaTel: 041 2517511

Email: federazionedistretti@siav.net

FEDERAZIONE DEI DISTRETTI ITALIANI

Dott. Luciano Consolati

Comitato Tecnico

Nice, 15/10/2010Nice, 15/10/2010

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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;

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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

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SMEs’ contribution to Europe…

32,8%

67,2%

SMEs(87,9mio)

Largeenterprises(42,9mio)

42,4%

57,6%

SMEs (13,5trln EUR)

Largeenterprises(9,9 trlnEUR)

0,2%

99,8%

SMEs(20,4mio)

Largeenterprises(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 (4,4trln EUR)

Small (4,5trln EUR)

Medium (4,6trln 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

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The SME Italy vs. Europe

B DK D EL E F IRL I L NL A P FIN S UK NO

EnterprisesMicro 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

EmploymentMicro 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

TurnoverMicro 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 AddedMicro 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

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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

RegnoUnito

1980

1990

2002

0% 10% 20% 30% 40%

Stati Uniti

Regno Unito

Giappone

Spagna

Francia

Italia

Germania

1980

1990

2002

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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 RegnoUnito

Francia Germania

Bassa tecnologia Medio-bassa tecnologia

010

2030

4050

6070

8090

Italia Spagna Francia RegnoUnito

Germania

1_9 10_19 20_49 50_249

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96

98

100

102

104

106

108

2001 2002 2003 2004 2005 2006

ItaliaFranciaGermania

90

95

100

105

110

115

120

125

130

2001 2002 2003 2004 2005 2006

ItaliaGermaniaFrancia

Labour cost / u.p (2001.T1=100)

Output /employ (produttività) (2001.T1=100)

Higher costs….., low productivity

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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

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R/D su PIL

0123456

italiafranc ia

ge rmania uk

usagiappone c in a

israele

ru ss ia

R e D Expenditure / G.D.P.

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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 EmploymentFonte: Eurostat

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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

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Indici di delocalizzazione internazionaletassi di crescita 1995-2003

0 2 4 6 8 10 12 14 16

A bbigliam ento

C o ke e pe t ro lio

M achine per uf f ic io ed e labo ra to ri

A lt ri m ezzi di t raspo rto

C uo io e ca lza ture

P ro do t t i chim ic i

M eta lli e lo ro leghe

P ro do t t i tess ili

A lim entari e bevande

T OT A LE

Strum ent i m edic i e di prec is io ne

M acchine ed apparecchi e le t t ric i

M eccanica

Delocalizzazione in senso stretto

Delocalizzazione

clothing

Delocalization of italian firms by sectors

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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

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OECD, consumer confidence index: una misura della fiducia dei consumatori Ma attenzione all’Italia

Area OECD: fiducia dei consumatori

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Area OECD GERMANIA

ITALIA

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emergenti e i paesi sviluppati crescono diversamente, ma cadono nello stesso modo

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Industrial Districts Model

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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

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%

MANUFACTURING ENTERPRISES 40PEOPLE 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

Sour

ce: I

stat

(200

5)THAT IS TO SAY:

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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

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-

DistrictDistrict IndividuationIndividuationLocalLocal production system production 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

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Districts setting up

MKTProduction cycles possible to be decompose into their single phases

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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

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DistrictDistrict Factors Factors of Successof Success

Flexibility

Professionality

High competitiveness between firms

Continuous investement

Important role played by local banks

Co-operation with public bodies

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The The 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 District The first product of the District is its people and its is its people and its

enterpreneurshipenterpreneurship, its will to set , its will to set up its own business.up its own business.

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The model of industrial districts

Four groups of key factors for local networks

• locational and spatial

• social and cultural

• economic and organisational

• institutional

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Locational and spatial factors

• geographical proximity and sectoral specialisation

• small urban dimensions

reduction of transportation and transactioncosts

circulation of information and knowledge

lower labour and land costs, social cohesion

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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

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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 byspecializing, learning by interacting

partnershipping (stability, long-termism, know-how exchange)

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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

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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

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Surplus outsourcingMarket expansion

Production with real unitary decreasing costs Outdoor purchase of

products at lower pricesSpace 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

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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 from from ““subsub--divisiondivision””

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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

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Articulation of Articulation of industrial districtsindustrial districts

Raw materials

Machinery

Semi-finished

SUPPLIERS

Trust

Job market

SOCIAL CAPITAL

Attitude

Value

Accessibility

Transports

Water purifying

Building land

INFRASTRUCTURECAPITAL

Banks

Designers

Transports

Agents

PRIVATE SERVICEPRIVATE SERVICE

TYPICAL ACTIVITIES

Sub contractorsCUSTOMERS

Markets

Schools

Trade associations

SOCIAL SERVICESSOCIAL SERVICES

Services centres

Consortiums

Research

Marketing

ProductionSub contractors

Sub contractors

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Prod

uctio

n R

atio

naliz

atio

nIn

terv

entio

ns

Low Medium High

Low

Med

ium

Hig

h

aa

bb

cc

Market Strategies

aa

bb

ccMedium large enterprises central to the local producing system

Semi-finished productsand high precision tooling suppliers

Satellite phases sub-contractors and phases sub-contractors

Strategic map of District

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Relationship models

TRADITIONAL TRADITIONAL SUPPLIERSUPPLIER NETWORKNETWORK

Leader

Leader C.

SS SS SS

SS SS SS

SS

SS

SS

SS

SS

SS

Supplier

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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

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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

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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

INNOVATIVE INNOVATIVE GLOBAL SUPPLIERGLOBAL SUPPLIER

NETWORKNETWORK

Relationship models

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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

DEG

REE

OF

INTE

RA

CTI

ON

TIME

Formation Development Maturity Revitalisation

Districts

Revitalisation / Development

Crisis

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• 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

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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 developcooperation strategies, the businesses operat e 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;

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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

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THE MEMBERS

OUR DISTRICTS

76.000 enterprises76.000 enterprises

490.000 490.000 people employedpeople employed

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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

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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

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Critical success factors in cluster development

0 10 20 30 40 50 60 70 80

Networking partnershipInnovative Technology

Human capitalAccess to finance

Presence of large firmsEnterprise entrepreneurialism

Physical infrastructureSpecialist servicesAccess to markets

Access to business support services

CompetitionAccess to information

CommunicationsLeadership

Virtual aspects/ICTExternal economic impacts

Succ

ess

Crit

eria

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The Demand of the clusters:internationalisation strategies of

networks

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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