Global manufacturing production has almost returned to its pre-Covid level, driven by demand for final products and an excellent recovery in orders from intermediate industry. Things go quite differently for service activities, especially those related to tourism and leisure. Worldwide, restaurant meals are down 30-40% from 2019, while the number of scheduled flights is still halfway through. These are the data of a recent article in theEconomist ( "The 90% economy revisited, Is the world economy recovering?").
The different trajectory between the manufacturing and service sectors has important consequences on the recovery capacity of individual countries. While Germany has been able to benefit from its large industrial base, comments theEconomist, Italy and Greece, which rely more on retail trade and tourism, appear more vulnerable. Even if the juxtaposition may seem questionable, it contains a great truth, namely the excessive weight that the catering, hospitality, tourism and related activities sector has assumed in Italy.
LET'S REWIND THE STORY BACK A FEW YEARS
The Italian manufacturing industry, protagonist of the economic miracle, has found itself threatened in recent decades by the competition of countries such as China and burdened by the constraints of its structural conditions: small size, low capitalization. While Germany was creating industrial plans to protect and strengthen its industry, Italy was talking about something else.
In particular, a narrative was spreading in successive governments and their sponsors which, retracing old paths, placed the beauty of nature, cultural heritage, food, as the country's strong point. It will perhaps be recalled that someone predicted enormous leaps in the national GDP only thanks to the development of tourism.
But without investments in our cultural sites (which are falling into disrepair), without a flag carrier able to bring flows of tourists directly to Italy avoiding uncomfortable stopovers in European hubs, without structures to accommodate these flows (six of the top ten groups hoteliers operating in Italy are foreigners), a low-cost tourism model has spontaneously developed.
From individual airports that have sold off slots to Ryanair and the like, to the transformation of apartments into bed & breakfasts, passing through the destruction of the rich and precious network of historic shops in the cities, transformed into an endless succession of fast or street food chains. In 2017 an article by New York Times headlined: "Venice, invaded by tourists, risks becoming Disneyland on the Sea".
EUROSTAT: AN UNRIVALED PICTURE OF RESTAURANTS AND HOSPITALITY IN ITALY
The size of our establishments is the smallest in Europe: small establishments in Italy are equal to 84,3% of the total. Greece and Spain also do better than Italy (81,2% and 75,2% respectively). In the UK, small businesses account for only 46,1%.
Small size means low productivity, irregular employment, low wages, high business mortality rate, underground economy. A large pocket of inefficiency and marginality, not new in Italy, and which in the last ten years has inexplicably been talked about as a winning model rather than an indicator of the country's decline.
THE RECOVERY OF THE INDUSTRY
The manufacturing industry, on the other hand, apart from commercials and effective announcements, showed an unthinkable capacity for recovery. Today our industries are among the first robot manufacturers in the world, we have universally recognized excellence in mechatronics, leading companies in aerospace and in many other advanced sectors. In many of the automotive components, Italian companies are the main partner of the German automotive sector.
Despite all the past difficulties, Italy remains the second European manufacturing country in terms of employees and the third in terms of GDP. It is second only to Germany in its trade balance surplus. And if we manage to grab the recovery it will be thanks to the manufacturing industry, which has resisted and is growing.
LET'S GO BACK TO TODAY
While The Government Appears tangled up on the Recovery Fund, local politics seems tightly anchored to its old narratives and its own vote pool. For this reason, perhaps, the nightlife has been restarted, the discos have unfortunately reopened (to then be forced to close them, but in fact only formally), there are few checks on the distances in restaurants and public places. Finally, the government is being forced to reopen the stadiums.
Meanwhile the infections go up and we are returning to very worrying alert levels. The Spanish flu developed in three successive waves and the second was much more lethal than the first. This is also feared for Covid (see, for example, the report by the experts of Sage, the English government committee made up of the best scientists in the country).
IT'S TIME TO CHANGE COURSE (AND STEP)
To avoid falling off an abyss that we are almost on the verge of, it is essential first of all to realize that we are living in a new world. For a long time (some sources estimate four years), tourism flows will be reduced, airlines will fly little and cruise ships will move with difficulty. Smart working has definitively canceled a now obsolete organizational model, based on the concentration of work in offices and cities.
Today, the numerous restaurants and bars that have sprung up under the large business centers are facing as uncertain a future as the skyscrapers that tower above them. The hospitality and restaurant sector risks becoming a zombie business.
THREE RECEPTION SERVICE EMPLOYEES ARE NEEDED TO PRODUCE THE ADDED VALUE OF ONE WORKER
But was it ever anything else? Again from Eurostat data, labor productivity in this sector is just under a third of that of the Italian manufacturing industry. As if to say that to equal the value that a manufacturing worker realizes in one day, a little more than three employees in hotel and restaurant services must be employed.
It's time to acknowledge that a wrong direction has been taken: the Covid effect is demonstrating it dramatically. With courage and determination, therefore, new strategies must be pursued quickly.
THE INDUSTRY AT THE CENTER OF THE RECOVERY
First of all, placing the manufacturing industry at the center of the economic policy interventions linked to the Recovery Fund. The German Industry 4.0 Plan was announced in 2011 and will continue until 2030 with investments initially estimated at twenty billion euros (but likely to be many more). The Italian plan was launched only in 2016 and does not have a multi-year reference period: every year new and different measures, with companies unable to plan in the medium term. So let's start from here, creating long-term plans, supporting the changes taking place, supporting the never dormant dynamism of our businesses.
And as an absolute priority, today, we should take care of protecting the manufacturing industry from a possible new lockdown. Except in a few sectors, work islands prevail in the factories, the workers are naturally distanced, the risks of contagion are reduced. It's what happens outside that creates risks. Is it worth keeping a bar open and risking closing a factory?
WHAT TO DO WITH THE TOURISM AND FOOD SECTOR IN THE MEANTIME?
First of all, to safeguard employment, in addition to subsidies, incentives should be provided for the transition to artisanal, agricultural and industrial activities. The manufacturing industry has been complaining for some time about the lack of manpower, while year after year there has been a boom in attendance at hotel establishments. This trend must be reversed. Even the understandable liberalization of commercial licenses should be rethought quickly and radically in the light of the post-Covid world.
Finally, it is the entire tourism sector that needs to be rethought, as well as its link with the territory. The industrial enterprise creates rich employment, research and innovation which spread. The tourism we have witnessed so far resembles rather a process of rapid withering, in which the life of cities is taken away: cities to be consumed, transformed into simple postcards, victims of great anthropological pollution, as Richard Ingersoll already commented a few years ago, well-known architectural historian. We invite you to reflect seriously on the very different value of these two sectors and on what Italy's future needs.
