Mon, May 30, 2011 - Page 10 News List

Struggling Italian companies look abroad

DECLINE:Italy’s GDP grew by 45.2% in the 1970s, 26.9% in the 1980s and 17% in the 1990s, but only 2.5% in the past 10 years as the nation faces a host of problems


Workers rioting in Italy’s historic shipyards last week were only the latest sign of a sense of national economic gloom that is pushing businesses to look abroad for growth and profits.

The riots over the announced closures of the Castellammare di Stabia and Sestri yards, with the loss of 2,500 jobs, coincided with a decidedly downbeat meeting of the Confindustria, Italy’s powerful employers’ federation.

The conference addressed sluggish growth, high youth unemployment and a renewed sense of unease about Italy on eurozone financial markets after ratings agency Standard & Poor’s downgraded the country’s credit outlook this month.

“Italy is immobile. We have to go for international markets,” Stefania Brancaccio, owner of Coelmo, a medium-sized company that produces electricity generators near Naples, said on the sidelines of the meeting in Rome.

Brancaccio complained that Italy’s technical schools are turning out engineers ill-equipped to use the computers needed for her business.

And the time required for any type of bureaucracy was far longer than in other markets in the Middle East and Asia where her company operates.

Fiat and Chrysler chief executive Sergio Marchionne has stoked controversy in recent months with his critique of Italy’s low productivity and has suggested the bulk of his historic auto giant could move from its homeland.

“Can you blame him? There’s deadweight here. China and India are rising, but we have remained blocked. He finds himself in a country that hasn’t grown, that isn’t competitive, where the transport system doesn’t work,” Brancaccio said.

Simone Santi from Leonardo Business Consulting, a Rome-based company which advises Italian firms wanting to invest in foreign markets, said: “Looking abroad is becoming a necessity for many companies, not just an opportunity.”

“Construction companies, even medium-sized ones, are looking abroad because of the problems in the Italian market. Contracts in Italy have dried up and the market is shrinking, they are in grave difficulty,” Santi said.

The trouble for Italy’s family-based business model is that many companies are reluctant to make major investments abroad because it would mean sending relatives to increasingly distant markets to be managers, he said.

“It’s mainly the large companies that are moving,” he said.

Another problem for Italian companies in a globalized world, he said, was the lack of foreign managers on company boards — just 2 percent.

Confindustria chief Emma Marcegaglia, a steel industry executive, encouraged Italian exporters to look abroad beyond traditional markets in Europe and the US, towards the fast-growing economies of Brazil, China and India.

“We have to commit to improving the level of internationalization of all our businesses,” Marcegaglia told the Confindustria conference, saying that just 1.4 percent of companies accounted for 50 percent of exports.

She painted a bleak picture of Italy’s domestic economy, saying that the country had endured a “lost decade” of low growth and zero increases in productivity.

“We have to move quickly,” she said, in a speech peppered with warnings about a situation she described as “difficult,” “dramatic” and “urgent.”

She said the official data pointed to a dramatic decline, with GDP growing by 45.2 percent in the 1970s, 26.9 percent in the 1980s and 17 percent in the 1990s — but just 2.5 percent in the past decade.

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