Intesa Sanpaolo detailed release - Intesa Sanpaolo Bank
Intesa Sanpaolo presents its 11th annual report on the economy and finance of industrial districts in 2018 analysing 82,000 companies
• Districts remain key players in the Italian manufacturing sector: their turnover has increased by 7.7% over the two-year period 2017-18. Between 2008 and 2017, districts grew 5% above non-district based areas. • Labour productivity was 10% higher than in non-district based areas. • The close proximity of supply chains is a comptetitive advantage for districts: suppliers are much closer to customers here than elsewhere (on average 100 km vs 118). • The agglomeration of businesses in these districts encourages the adoption of 4.0 technologies, which are now already widely deployed especially in the mechanical sector (38% vs 30% in non-district based areas). • Human Capital: companies struggle to find skilled workers, especially in connection with 4.0 technologies (in 78% of cases).
Milan, 12 March 2019 - The Chief Economist of Intesa Sanpaolo, Gregorio De Felice, and the Head of Industry & Banking Research, Fabrizio Guelpa, today presented the 11th Annual Report of the Research Department, that this year covers the economic and financial evolution of Italian district-based companies. The Report is based on an analysis of the financial statements of about 20.000 companies based in 156 industrial districts and over 62.000 non-district based companies over the period 2008-17, all operating in the same industries. The study also provides insights on the structural changes affecting the organisation of production in districts.
Results 2017-18 • TURNOVER AND PRODUCTIVITY GREW MORE IN DISTRICTS THAN NON-DISTRICT BASED AREAS In 2017, districts continued to have a higher growth in the turnover as compared to non-district based areas (+4.3% at current prices vs +4%). Over the ten-year period from 2008 to 2017, the growth differential exceeded 5%. In 2018, growth in turnover continued (+3.4%) in the districts, though at a lower paceas as result of a brisk slowdown in the economic cycle in the second semester. In 2017, labour productivity rose to 56,000 euro per worker, 10% higher than in non-district based areas operating in the same industries as the districts. Results are also driven by several “champion” companies that successfully lead the supply chains operating locally. There are many areas of district excellence in Italy. The best 20 districts have been ranked in terms of growth and profitability. All Italian macro-areas are represented. The North-East (10) and North-West (6) districts dominate. Central and Southern Italy are represented by two districts each. All the primary production supply chains are represented, with a prevalence of Agri-food (4) and especially metal working and mechanical engineering (12) districts. Sebino Rubber in Bergamo, Leather Goods and Footwear in Florence and Confectionery from Alba and Cuneo top the ranking.
Signs of an extensive transformation • The close proximity of supply chains has been confirmed as a competitive advantage of districts: suppliers are much closer to customers here than elsewhere (on average 100 km vs 118), with minimum distances of 56 km in the goldsmith working districts. These results were obtained by building a newdatabase with 7 million transactions between district-based companies and their suppliers. • Districts continue to offer localisation advantages, which are especially relevant to smaller businesses. At any rate, the link with the territory is also significant for larger companies, which consider the district as a factor facilitating the innovation (44%) and internationalisation processes (42%). • Proximity also encourages the adoption of 4.0 technologies, which are now already widely deployed especially in the mechanical sector (38% vs 30%), where they are the driving factors for medium-sized and large companies (52%). • Innovation has also been implemented through the interaction with innovative start-up companies and SMEs. Though these companies tend to be located in the larger urban areas,they are also significantly present in the district-based regions (in districts, 8.4 for every 1000 limited companies operating vs 9.5 in non-district based areas). • The advantages of a local integrated supply chain, representing one of the strong points of traditional districts, are also validated in other less typical specialisations in the district structure: this is evident with the development of a cosmetics segment in Lombardy and the vehicle-component districts around Turin and Brescia. • Districts have also been enhanced with the contribution of foreign investmensts in company shareholdings: 43% of inflows came in after 2001, compared to around 30% in non-district based areas, with peaks of over 63% in the case of French investors and a high percentage for German investors (44%). German investors are well represented in the district areas with greenfield investments, whereas French investors have a higher shareholding in the fashion sector. • Company officers and managers in district companies mostly include people that were born in the area where the business is based. 76% of district companies have boards made up of directors that were born in the region where the company operates; this percentage is down to 70% in non-district based areas. Therefore, cultural diversity is less prominent than elsewhere, even though larger companies are more open in terms of governance, with directors that are not from the region or are foreigners (55% and 26% of companies respectively). A more open governance might as well be a way to hire managers with cross-sector skills and international experience. • More generally, with regard to Human Capital: district companies struggle to find skilled workers, especially in connection to 4.0 technologies (in 78% of business vs 71% in non-district-based companies). A review of hiring channels in districts is needed to overcome this critical issue, as they are still largely based on informal procedures (in around 75% of companies), relying very little on the more formal channels including recruitment agencies, vocational schools, tertiary technical colleges and universities.