The current image of Italian manufacturing shows a productive fabric in search of a strong transformation to be ready for new challenges in an increasingly competitive scenario. The analyzes on company data show how the severe selection of recent years and the recent intensification of M&A operations have returned a leaner but also healthier production fabric, with improved accounts in most sectors.
In 2015, turnover continued to increase in a widespread manner and without significant jerks for companies of all size classes (the dispersion of results in terms of growth remained at levels below the pre-crisis level).
In almost all groupings by sector and size, the ability to generate financial resources has improved and the share of companies with negative cash flows has decreased, i.e. operators who could be more at risk of insolvency in the future.
With reference to profitability, the overall favorable context in terms of growth and margins (for the latter recovery favored by limited pressure on input costs) allowed the continuation of the improvement trend in ROI (Return on Investment). On this front, however, the dispersion of results has continued to increase in all size classes (confirming a trend that has been underway since 2011), evidence of the fact that the recovery of the production fabric has not yet been completed.
In this framework of virtuous transformation, however, a crucial weak point remains: despite the generalized financial improvement, the uncertainties about the future - in terms of demand prospects, but also of strategic technological trajectories, an element in ever more rapid evolution - have kept the business investment. In 2015, a limited increase in investments was observed, and only for medium-sized enterprises, against a substantial stability - on the low levels of recent years - for the other size classes.
However, the ongoing process of improving the accounts risks being interrupted by the slowdown in turnover observed in 2016. A lower contribution from domestic demand (in slowdown since spring, in the face of a climate of growing uncertainty), but, above all, a trend in exports revised downwards by almost 2 percentage points compared to the forecast for May (despite the stability of Italian market shares in the first part of the year and expectations of an improvement in international trade in the second half) have led to a downward revision of forecasts for the whole year.
In 2016, the growth in the turnover of the Italian manufacturing industry will stop at 1,2% (at constant prices), 7 billion euros less than forecast in the May ASI Report.
In the two-year period 2017-18, domestic demand will still support a modest acceleration in manufacturing activity, estimated at an average annual rate of 1,5% (at constant prices), due to a substantially zero net contribution from the foreign channel. The expected growth for internal demand will, in fact, be more sustained in those sectors in which the Italian production base has been struggling to satisfy the market for years, due to a mix of causes, from the erosion of the manufacturing fabric, to the lack of competitiveness in comparisons of the offer of foreign producers. The high elasticity of imports to the dynamics of the national market will therefore be confirmed, which will lead the balance with foreign countries to remain stable at the 2016 level, around 80 billion euro.
In order for the prospects for success of Italian manufacturing to improve significantly, compared to a scenario that is not very dynamic, it is necessary for companies to reverse the course of investments. The evidence of the fact that the (few) sectors that started investing again last year – Automotive, Electronics, Electrical Engineering, Furniture – have been repaid by an improvement in results is a stimulus in this direction.
In 2015, many companies did not invest, despite having the resources. However, the accumulation of liquidity and financial assets that can be quickly divested indicates that, if (at least some) of the uncertainties weighing on the scenario were reduced, the companies themselves would have the means to do so, even in the short term.
