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Federazione dei Distretti Italiani

Via Torino 151/C

30172 Mestre – Venezia

Tel: 041 2517511

Email: federazionedistretti@siav.net

Dott. Luciano Consolati

Cluster Branding in ItalyFederazione Distretti Italiani

Technical Committee

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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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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

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ITALIAN CLUSTERS: THE NUMBER

• 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 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

Sou

rce:

Ista

t (2

005)

THAT IS TO SAY:

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SOME CHARACTERISTICS OF A

CLUSTER

• 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/CLUSTER IS A SPONTANEOUS

AGGREGATION OF ENTERPRISES

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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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Static specialization however does not mean that Italy has not reacted ….

and in particular the clusters

• 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

Abbigliamento

C oke e petrolio

Machine per ufficio ed elaboratori

A ltri mezzi di trasporto

C uoio e calzature

P rodotti chimici

Metalli e loro leghe

P rodotti tessili

A limentari e bevande

TOTALE

Strumenti medici e di precisione

Macchine ed apparecchi elettrici

Meccanica

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

I ndice 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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Area OECD: fiducia dei consumatori

OECD, consumer confidence index: una misura della fiducia dei consumatori

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EDISON FOUNDATION Export Index of 101 major industrial districts: 1995-2009 cumulative export growth over last 4 quarters

(EUR billions at current prices)

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The Members of Federazione Distretti Italiani

OUR DISTRICTS

76.000 enterprises76.000 enterprises

490.000 490.000 people employedpeople employed

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FEDERAZIONE DEI DISTRETTI ITALIANIPRINCIPAL 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 clusters and organizations

• To promote the “know-how” and communicate the situation of Italian economy;

• To promote cluster branding to improve quality and enlarge the model in new sectors of activity ( rural, technological, services).

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The Federazione Approach

• But…………… before considering the merits of the action is necessary to understand the characteristics of the Italian model, beginning with the birth of the district.

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Districts/Clusters setting up

MKTProduction cycles possible to be decompose into their single phases

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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

““Sub-division” determining factorsSub-division” determining factors

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)

Advantages coming from “sub-division” Advantages coming from “sub-division”

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District/Cluster Factors of SuccessDistrict/Cluster Factors of Success The first is its people and its enterpreneurshipThe first is its people and its enterpreneurship

its will to set up its own businessits will to set up its own businessthen………………..then………………..

Flexibility

Professionality

High competitiveness between firms

Continuous investement

Important role played by local banks

Co-operation with public bodies

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Articulation of Articulation of industrial districtsindustrial districts

Raw materials

Machinery

Semi-finished

SUPPLIERS

Trust

Job market

SOCIAL CAPITAL

Family Role

Value

Accessibility

Transports

Water purifying

Building land

INFRASTRUCTURECAPITAL

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

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The model of industrial districts/clusters

Four groups of key factors

• 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, that means:

reduction of transportation and transaction costs

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 by

specializing, learning by interacting

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

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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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THE DISTRICTS’LIFE CYCLEsource: 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

DEGREE OF INTERACTIONTIME

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 from low cost countries)

THE DISTRICTS’ SUCCESS - OR CRISIS - DEPENDS ON THE

STRATEGIES ADOPTED

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THE NEW CLASSIFICATION OF ITALIAN DISTRICTS/CLUSTERS

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 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;

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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/CLUSTERS ARE THE DRIVING FORCE OF OUR MADE IN ITALY PRODUCTS

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Support process for a policy cluster of revitalisation/development versus cluster branding. A collective process…… 1

• Phase 1: Cognitive survey and creating relationships based on trust (problem: who are the actors).

• Phase 2: From research…. to possible action (problem: building-up of consensus and identifying the right representative of local interests whilst preserving entrepreneurs as the focal point).

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Support process for a policy cluster of revitalisation/development, versus cluster branding.

A collective process…… 2

• Phase 3: Shared definition of a strategic vision for the singling out of priorities and the creation of specific work groups (problem: building -up of a leadership that will convey the vision and characterise the process’s institutionalisation).

• Phase 4: One must proceed through the constitution and the identification of collective subjects appointed for the realisation of projects and specific actions (problem: starting-up of processes and initiatives that do not come into conflict with Bodies and existing situations and that will bring results in a short term).

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The Four Main Phases

I. Build-up trust

II. System of relations/ connections

III. VISION / Management strategy

IV. Action and Feedback

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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

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- promote the networking of all relevant actors at the local level to avoid dispersion of resources and increase the effectiveness of interventions and the integration of different components of the local economy within the system

- generating local leading institutions, which act as "catalysers", able to develop strategic development guidelines for the cluster by involving and coordinating different local actors in policy initiatives to fulfil common objectives;

- Public Policies as support to development and cooperation among local energies and competencies and not as substitute

Final SuggestionsFinal Suggestions