It's a bit like when you have back pain, you go to the physiotherapist and you are told that your problem is a decrease in muscle tone. What to do? Simple, at least in words. Getting to work, with effort and perseverance, to restore the tone that is missing. A bit the same thing happens in the economy, in our Italian economy.
Recession means a decline in production. To get out of the recession, there is no other remedy than to oppose the drop in production with an increase in production. Easy to say. Hard to do. Not impossible, though. Few believe in the not impossible mission of "reindustrialising" a mature economy. Among them, recently, the case of the American president Barack Obama stands out. Three of the seventeen pages of the 2012 edition of the State of the Union address are dedicated to the "blueprint for manufacturing", the project to revitalize the American manufacturing industry through a mix of corporate cost reductions, tax incentives and the repatriation of jobs relocated abroad.
Hearing that in the USA they set themselves the goal of pushing manufacturing makes us think. If the Americans take care of it, why not try it in Italy too? The manufacturing question should be placed at the center of the action to contrast the current recession and to build a medium-long term development project. In 2008 it was said that the American sub-prime financial crisis would cause less damage to Germany and Italy because the two economies had a strong manufacturing base and could draw large and lasting benefits from the growth of new non-European markets. The prediction turned out to be half right: spot on for Germany, but not for us. German final balances and American hopes can now help us understand what we have been missing and what could now help us reverse the trend.
There are two deficits to be repaid in order to return to producing more in Italy: a demand deficit, and a competitiveness deficit. The recession certainly does not help fill the demand deficit. It's a cat chasing its tail. The weaker domestic demand, the lower output, the lower incomes and employment, the worse the recession gets. To try to break the vicious circle, the instrument is that of foreign demand, which continues to remain significantly stronger than domestic spending. It is the consequence of the fact that, unlike in 2009, in 2012 there is a recession in Italy, but not in Germany, France and, least of all, in China. Those who export, therefore, fare better than those who sell only on the domestic market, and can continue to play their cards, even in a very difficult context. Economic data confirms this. In the third quarter of 2011, while GDP and consumption fell respectively by two and three tenths, export volumes grew by more than one and a half percentage points. Imports have decreased. Italy's trade balances, starting with those with major partners such as Germany and China, are improving.
While positive, the dynamics of Italian exports is not however sufficient to affect the twenty percentage points of retreat which, on average, our overall industrial production shows compared to the levels of spring 2008, on the eve of the last recession. Trying to detach yourself from that fund requires taking a decisive step towards making up the competitiveness deficit from which Italian companies suffer. This is a deficit that has many faces. The proposal is to choose some, and attack them. A gap that has always inhibited a greater projection abroad of our companies is that of size. The average size of Italian manufacturing companies amounts to nine employees, the fourth part of the German one. We are too small to fully grasp the advantages of moving the new center of gravity of world growth to non-European markets. This is demonstrated by the fact that, out of a total number of four and a half million businesses, export operators slightly exceed two hundred thousand units. Between 2001 and 2010, while the value of international trade grew by one and a half times, the number of Italian export operators increased by just eight percent. Let's not argue whether small is still beautiful today. However, it is a statistic that labor productivity doubles when a non-exporting micro enterprise with up to nine employees manages to make the leap in size to become a small exporting enterprise with between ten and nineteen employees.
We know very well what and how many difficulties and resistances there are to the growth in size of smaller companies. Among others there is the legitimate aspiration of the entrepreneur to remain at the center of the development process of his company, not to lose his identity. But size means productivity and competitiveness. Size means innovation. It is therefore necessary to try to overcome the obstacle. A new, intelligent way to grow without losing the entrepreneur's identity exists today. Is called business network. Law 122 of 2010 consolidated the framework of rules and the right amount of tax incentives to get the networks that now exceed two hundred units and involve about a thousand businesses off the ground.
Two hundred networks and a thousand associated companies are still very little compared to the goal of reversing the course and moving towards reindustrialization. The quality of the tool, however, is there, because the networks are born and grow on the basis of programs of innovation and improvement of competitiveness. Looking at concrete cases - from the pioneering network of Brescian metalworking companies of the "Five for Foundry" to the pasta network of Sienese agri-food companies, to the case of the big name in fashion that networks with small Italian subcontractors - one immediately perceives the development potential of the networks. And, last but not least, among the advantages of the new instrument is that of making small businesses more “bankable”.. The network project, when well constructed on the basis of convincing prospects, can represent a strong element for improving the judgment on the creditworthiness assigned to the company by the bank. It is no small advantage in times in which the risks of a "credit crunch" remain tangible. Networking to improve your rating. For some, both companies and banks, it is already an open building site today.
Business networks are a new tool which should be confirmed as supported by adequate public incentives. It is money well invested, useful for triggering a virtuous circle aimed at replacing growth with recession. The networks between small businesses serve to hold back the manufacturing fabric and avoid further landslides. In addition to the new networks, the fiscal lever can make a major contribution to reducing the competitiveness deficit on a more general level. We are talking about the tax wedge which greatly affects the conditions of convenience relating to investing in Italy or in other countries. To cite a number, it is enough to recall the statistic reported in a recent hearing at the Senate Finance and Treasury Commission: as a percentage of labor cost, the amount of the tax wedge to be paid by the employer in 2011 was fifty per cent higher in Italy than in Germany (24,3% against 16,2%). It is a gap that needs to be corrected if we want to increase the net flows of foreign direct investments in Italy. We are talking about investments by foreign companies, but also the possibility of repatriating to Italy quotas of work located abroad by medium and large Italian multinationals.
In America, the manufacturing recovery program announces important interventions in support of the so-called "back-shoring", i.e. relocations to the USA of at least part of what was previously outsourced to emerging economies. The debate is open. Will be difficult. The labor cost gaps between the West and the Far East or our closest Eastern Europe remain wide. However, the gaps have started to close and in some important cases this is happening at a faster pace than previously anticipated. In 2009, according to Istat data, the per capita cost of labor sustained annually by an Italian manufacturing company for an employee employed in a Chinese factory amounted to four thousand one hundred euros, roughly the tenth part of what is paid in Italy. Only a year earlier, in 2008, the cost of the Chinese employee was two thousand seven hundred euros, fifty percent less. Of course, if labor costs in China continued to rise by fifty per cent a year, Italy's competitiveness deficit could be resolved in a not very high number of years. The problem is that Italian manufacturing cannot wait ten or even five years. It is the same "growth economies" of the emerging world that ask us to act first because they continually raise the bar of competition, operating in turn productive relocations and increasing, through investments and innovations, the average quality of their productions. The challenge, therefore, is three hundred and sixty degrees.
Regaining competitiveness to relaunch our manufacturing can be done by networking among companies, reducing the wedges on labor costs and setting the goal at all levels of increasing Italy's ability to attract productive investments, those of foreign companies and those of Italian companies that have successfully built a network of entrepreneurial realities abroad which in 2009 employed over XNUMX workers, of which at least XNUMX in the manufacturing sector.
Between the spring of 2008 and the fall of last year the component that lagged furthest in Italy in real GDP accounts is gross fixed investment, more than consumption and more than exports. It is necessary to start afresh from investments, industry and manufacturing, to give tone to a winning growth project and contain the negative results of the recessive passage.
