Fulvio Coltorti, “The economic crisis and manufacturing prospects in

The economic crisis and manufacturing prospects in
Italy
Fulvio Coltorti,
Director Emeritus, Mediobanca Research Area
4 April 2014 – Maserati, 100th anniversary
Where have we come from? Decline and transformation
Crises and decline in Italian large enterprise
Index of Large firms’ value added related to Italian GDP index (based on Mediobanca and Istat data at current prices)
Bad investments
Lack of research
Financial crises
1,05
First restructuring
Rescues and clean-ups
Robots; group organization
0,95
Second restructuring
Rescues and clean-ups
Lean production;
relocations
0,85
Technological decline
Loss of market share
Relocations
0,75
0,65
Large firms' value added/Italian GDP
3
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
0,55
Dualism reversed: fewer and fewer large companies
Istat – manufacturing industry census: firms with 1,000 and more staff
339
324
3.877
3.228
3.631
241
2.503
2.438
223
176
1971
1981
1991
No. of firms
2001
Avg. size (no. of staff)
4
2011
Manufacturing industry in Italy: the four capitalisms
Our history
1
The first large firms (late 1800s)
2
State capitalism (1933)
3
Industrial districts (1960-70)
4
MSEs and others (1990s)
5
After the Euro: Italy vs European competitors; market shares/productivity
Relative indicators calculated based on Eurostat data as % of sum of European competitors (France, Germany, UK and Spain)
25,2
24,9
24,4
82
81,4
24
80,8
24,2
24,2
24,1
23,9
23,9
80,2
79,8
23,5
79,7
79
78,7
23,1
23,2
77,5
76,7
76,6
75,9
21,6
21,3
73,2
2000
2001
2002
2003
2004
2005
2006
2007
VA per employee (left axis)
6
2008
2009
2010
Market share (right axis)
2011
2012
2013
The new factor: “fourth” capitalism
European MSEs: productivity and competitiveness – Italy versus the rest
Figures compiled on the basis of Confindustria, R&S and Unioncamere data from 2009 financial statements
Figures in €’000 per employee
Italy
France
Germany
Spain
Value added
51.0
52.1
56.1
47.9
Italy = 100
100.0
102.2
110.0
93.9
Cost of labour
39.6
43.6
46.7
36.8
Italy = 100
100.0
110.1
117.9
92.9
EBIT
11.4
8.5
9.4
11.1
Italy = 100
100.0
74.6
82.5
97.4
8
European MSEs: productivity – dwarves versus giants
Net value added per employee in €’000 by staff category – source: Confindustria-R&S-Unioncamere survey, 2013
78,1
62,1
60,4
59,3
52,1
51
46,6
57,4
55,7
51,4
48,5
48,9
44
Italy
France
50-99
Germany
100-249
250-499
2009 data
9
Spain
500-749
MSEs: size, productivity and unit cost of labour
Increasing size from left to right (headcount); median values based on rolling sets of 200 observations
Net value added per employee
ULC
Net value added per employee
ULC
Net value added per employee
ULC
Net value added per employee
ULC
Source: compiled by R&S
10
Is the fourth capitalism sufficient?
Large multinationals and MSEs: competitiveness
Mediobanca Research Area
Unit cost of labour %
Net VA per employee
(€’000)
83
78
71
70
68
72
84
77
70
61
56
51
Large multinationals
(2008)
52
48
MSEs (2009)
Italy
Large multinationals
(2008)
Germany
France
12
Spain
MSEs (2009)
Italy vs Germany
2012 data
Italy
Population
Germany
Italy vs
Germany
59.4m
81.7m
73%
€86.2bn
€102.9bn
84%
€7.9bn
€203.5bn
4%
Export-import balance:
districts & fourth capitalism/Mittelstand
large groups
13
Who produces/destroys value: during periods of growth and crisis
Compiled based on Istat data – changes in value added based on current prices
2000-2007
Goods produced in Italy
€bn
2007-2012
%
€bn
%
by large firms
+12.7
+16.2%
-15.1
-16.6%
by district and fourth capitalism systems
+24.4
+18.9%
-19.5
-12.7%
2012 levels vs 2000 (based on current prices):
Large firms
Districts/fourth cap.
96.9% (88%)
103.8% (93%)
14
Origins of Italian balance of payments
Net export and import flows in Euros from territories classified according to Becattini-Coltorti method (2004ff. – UA = To, Mi, Rm, Na)
mln
60.000
40.000
20.000
0
-20.000
-40.000
-60.000
1999
2000
2001
District areas
2002
2003
2004
2005
2006
Large industry areas
15
2007
2008
2009
Urban areas
2010
2011
2012
Others
2013
The future: what’s missing, and the keys to success
Italian manufacturing turnover: domestic demand in short supply
Quarterly moving averages based on Istat data – January 2009-December 2013
160
150
140
130
120
110
100
Sales (Italy)
Exports
17
nov-13
set-13
lug-13
mag-13
mar-13
gen-13
nov-12
set-12
lug-12
mag-12
mar-12
gen-12
nov-11
set-11
lug-11
mag-11
mar-11
gen-11
nov-10
set-10
lug-10
mag-10
mar-10
gen-10
nov-09
set-09
lug-09
mag-09
mar-09
90
Lack of investment: Italy vs France, Germany and the U.K.
Gross fixed investments in manufactoring sector, relative values (% of Eurostat national accounting data based on current prices)
120
110
100
90
80
70
60
50
1999
2000
2001
2002
2003
as % of France
2004
2005
2006
2007
as % of Germany
18
2008
2009
2010
2011
as % of UK
2012
2013
But in demand worldwide: Italy vs France, Germany and the U.K.
Export-import balances; values in €m (source : dati Eurostat national accounting data based on current prices)
165.000
115.000
65.000
15.000
-35.000
-85.000
-135.000
1999
2000
2001
France
2002
2003
2004
2005
Germany
2006
2007
2008
2009
United Kingdom
19
2010
2011
Italy
2012
2013
Keys to success: competitiveness based on revenues not cost
1) Quality of work force (measured by unit salary levels): companies which use staff employed on low wages
tend to be less productive than those with a more expensive workforce in terms of cost of labour per unit
matched with a capital stock per staff member and with high-quality production. A workforce which
“merits” a €1 increase in salary levels ceteris paribus generates a €1.4 increase in productivity (in value
terms)
2) Inverse correlation between size and productivity: production specialization and a commercial policy
which is geared towards leveraging market niches on the back of capabilities and innovation tend to be
successful strategies (as confirmed by the data shown in the previous slides)
3) Knowledge Intensive Services (KIS): there is a need for firms which supply high knowledge-intensity
services
4) Managerial capabilities and quality of infrastructure: the former is the product of training; the latter
tends to differentiate between performances (e.g. deteriorating performances in southern Italy)
Source: econometric analysis based on MSEs’ data taken from the Mediobanca-Unioncamere surveys published in the last decade (F.Coltorti and
D.Venanzi, “Produttività, competitività e territori delle medie imprese italiane”; in I nuovi distretti industriali. Rapporto di Artimino sullo sviluppo
locale 2012-2013, ed. by M. Bellandi and A. Caloffi (Bologna: Il Mulino, forthcoming)
20
Mediobanca indicator of attractiveness of fourth capitalism
Normalized average of 7 indexes calculated based on MSEs’ data
1,0
0,9
0,8
Territories identified by Giorgio
Fuà in his North-East-Centre
(NEC) model developed in 1981
shown in blue
0,7
0,6
0,5
0,4
0,3
0,2
0,1
21
Veneto
Lombardia
Emilia-Romagna
Marche
Friuli VG
Umbria
Trentino AA
Piemonte + VdA
Abruzzo
Toscana
Campania
Liguria
Puglia
Basilicata
Sicilia
Molise
Sardegna
Lazio
Calabria
0,0
Mediobanca Research Area
www.mbres.it
22

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