1. Dott.LucianoConsolati
Federazione dei Distretti Italiani
Via Torino 151/C
30172 Mestre – Venezia
Tel: 041 2517511
Email: federazionedistretti@siav.net
FEDERAZIONE DEI DISTRETTI ITALIANI
Dott. Luciano Consolati
Comitato Tecnico
Nice, 15/10/2010Nice, 15/10/2010

2. Dott.LucianoConsolati
The Agenda
• S.M.E. The model of Italian Manufacture
• The framework from the official statistics;
• Under the official statistics data;
• One of the key factors of success of the italian
model of SME:
The Industrial Districts;

3. Dott.LucianoConsolati
The definition of SME
• Micro enterprises as those with less than 10 employees;
• Small enterprises as those which are independent (less
than 25% of capital owned by enterprises with other
dimensional parameters) with less than 50 employees, a
yearly sales revenue not above 7 million Euro or a total
yearly balance not above 5 million Euro;
• Medium size enterprises as those which are
independent, with between 51 and 250 employees and a
yearly sales revenue not above 40 million Euro or a total
yearly balance not above 27 million Euro;
• Large enterprises as all those with more than 251
employees and with a yearly sales revenue exceeding
40 million Euro

4. Dott.LucianoConsolati
SMEs’ contribution to Europe…
32,8%
67,2%
SMEs
(87,9mio)
Large
enterprises
(42,9mio)
42,4%
57,6%
SMEs (13,5
trln EUR)
Large
enterprises
(9,9 trln
EUR)
0,2%
99,8%
SMEs
(20,4mio)
Large
enterprises
(43 ths)
1,1%
6,9%
92,1%
Micro
(18,8mio)
Small
(1,4mio)
Medium
(0,2mio)
25,0%
30,8%
44,2%
Micro
(38,9mio)
Small
(27,1mio)
Medium
(22,0mio)
33,9%
32,7%
33,4%
Micro (4,4
trln EUR)
Small (4,5
trln EUR)
Medium (4,6
trln EUR)
Number of
enterprises
Contribution to
employment
Contribution to
value added
SMEs vs
large
enter-
prises
Micro vs
small vs
medium
enter-
prises
2002-2007: 84% of new jobs through SMEs

5. Dott.LucianoConsolati
The SME Italy vs. Europe
B DK D EL E F IRL I L NL A P FIN S UK NO
Enterprises
Micro 92.10 79.70 81.40 93.00 92.10 94.90 91.30 83.20 93.00 90.20 93.30 85.50
Piccole 6.70 16.40 15.50 6.20 6.70 4.50 7.30 14.20 5.90 8.10 5.60 12.20
Medie 1.00 3.20 2.60 .070 1.10 0.50 1.10 2.20 1.00 1.50 0.90 1.90
Grande 0.20 0.70 0.50 0.10 0.20 0.10 0.30 0.40 0.10 0.20 0.20 0.40
Employment
Micro 30.00 13.90 19.10 40.60 24.50 47.80 22.30 22.40 43.40 22.50 28.00 21.70 25.50
Piccole 21.40 23.80 22.50 24.40 21.20 21.90 24.30 24.20 21.30 18.40 19.00 18.10 24.40
Medie 15.30 23.50 19.50 14.80 16.60 12.50 14.90 20.40 17.30 17.60 16.10 15.30 18.90
Grande 33.30 38.80 39.. 20.30 37.70 17.80 38.50 33.00 18.00 41.50 36.90 44.90 31.10
Turnover
Micro 24.30 11.80 10.10 27.80 20.40 30.50 16.50 32.50 15.30 19.60 16.20
Piccole 22.90 18.50 16.90 24.90 20.40 23.70 21.60 22.50 15.40 19.20 16.70
Medie 19.30 22.70 20.50 19.40 17.60 17.50 24.60 21.60 18.30 18.80 17.40
Grande 33.40 47.00 52.50 27.90 41.60 28.30 37.20 23.40 51.00 42.50 49.80
Value Added
Micro 19.00 13.10 8.50 30.00 19.50 32.50 16.70 30.60 17.50 20.10 20.90
Piccole 20.90 20.70 16.40 23.90 19.10 23.40 21.70 20.00 15.60 17.70 20.00
Medie 18.70 22.70 20.60 18.60 16.90 16.60 21.90 20.70 16.20 17.80 18.30
Grande 41.40 43.50 54.50 27.40 44.50 27.40 39.70 28.60 50.70 44.40 40.80

6. Dott.LucianoConsolati
The central role of the manufacturing industry
Value Added in the Business
Services in % del GDP
Value added manufacturing
industry in % del GDP
0% 5% 10% 15% 20%
Giappone
Spagna
Italia
Stati Uniti
Germania
Francia
Regno
Unito
1980
1990
2002
0% 10% 20% 30% 40%
Stati Uniti
Regno Unito
Giappone
Spagna
Francia
Italia
Germania
1980
1990
2002

7. Dott.LucianoConsolati
The Specialisation…
(value added 2002, composizione %)
The Weight…
(employment for size of turnover 2002, composizione %)
... The Specialisation on low technology and
… the weight of SME
0
10
20
30
40
50
60
70
Italia Spagna Regno
Unito
Francia Germania
Bassa tecnologia Medio-bassa tecnologia
0
10
20
30
40
50
60
70
80
90
Italia Spagna Francia Regno
Unito
Germania
1_9 10_19 20_49 50_249

8. Dott.LucianoConsolati
96
98
100
102
104
106
108
2001 2002 2003 2004 2005 2006
Italia
Francia
Germania
90
95
100
105
110
115
120
125
130
2001 2002 2003 2004 2005 2006
Italia
Germania
Francia
Labour cost / u.p
(2001.T1=100)
Output /employ (produttività)
(2001.T1=100)
Higher costs….., low productivity

9. Dott.LucianoConsolati
The higher energy costs
Media of total energy costs 2006
(numeri indici: Italia=100)
Fonte: elaborazioni CSC su dati Eurostat
40 50 60 70 80 90 100
Italia
Germania
Irlanda
Danimarca
Belgio
Paesi Bassi
UE-15
Austria
Regno Unito
Spagna
Portogallo
Francia
Finlandia
Svezia

10. Dott.LucianoConsolati
R/D su PIL
0
1
2
3
4
5
6
italia
francia
germania
uk
usa
giappone
cina
israele
russia
R e D Expenditure / G.D.P.

11. Dott.LucianoConsolati
Italy is specialised in production and export of traditional
manufacturing (different from Germany)
Traditional Sectors
(Quota del valore aggiunto e dell'occupazione sul manifatturiero 2004)
0
5
10
15
20
25
Germania UE Italia Spagna Francia UK
Value Added Employment
Fonte: Eurostat

12. Dott.LucianoConsolati
Static specialization however does not mean that
Italy has not reacted ….
• Within Italian sectors important changes:
• Offshoring of low value added phases of
production
• Quality upgrading, especially on traditional
sectors and on UE markets

13. Dott.LucianoConsolati
Indici di delocalizzazione internazionale
tassi di crescita 1995-2003
0 2 4 6 8 10 12 14 16
A bbigliamento
C o ke e petro lio
M achine per ufficio ed elabo rato ri
A ltri mezzi di traspo rto
C uo io e calzature
P ro do tti chimici
M etalli e lo ro leghe
P ro do tti tessili
A limentari e bevande
T OT A LE
Strumenti medici e di precisio ne
M acchine ed apparecchi elettrici
M eccanica
Delocalizzazione in senso stretto
Delocalizzazione
clothing
Delocalization of italian firms by sectors

14. Dott.LucianoConsolati
A strategic answer
90
100
110
120
130
140
150
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indice valori medi unitari
esportazioni italiane
(1996=100)
Indice di prezzo delle
esportazioni italiane
(1996=100)
Skill ugrading: a way out of price competition

15. Dott.LucianoConsolati
OECD, consumer confidence index: una
misura della fiducia dei consumatori
Ma attenzione all’Italia
Area OECD: fiducia
dei consumatori

16. Dott.LucianoConsolati
Area OECD
GERMANIA
ITALIA

17. Dott.LucianoConsolati
Nella globalizzazione i paesi
emergenti e i paesi sviluppati
crescono diversamente, ma
cadono nello stesso modo

18. Dott.LucianoConsolati
Industrial Districts Model

19. Dott.LucianoConsolati
ITALIAN DISTRICTS: THE NUMBERS
Source: Istat
• 156 districts: 12.5 millions of citizens
• 215.000 manufacturing enterprises
• 2 million people employed
• 46% of Italian exports
• Il 27% of Italian PIL

20. Dott.LucianoConsolati
%
MANUFACTURING ENTERPRISES 40
PEOPLE EMPLOYED (of all productive sectors) 25
PEOPLE EMPLOYED (manufacturing sector) 39,3
TOTAL EXPORTS 46,1
EXPORTS AND DIFFERENT SECTORS
−Textiles and clothing 67,0
−Leather and footwear 66,9
−Glass and ceramics (non metal mineral) 60,4
−Wood and wood products (furnishings not included) 55,8
−Mechanics 51,6
−Metals and metal products 51,0
Source:Istat(2005)
THAT IS TO SAY:

21. Dott.LucianoConsolatiDott.LucianoConsolati

22. Dott.LucianoConsolati
SOME CHARACTERISTICS OF A
DISTRICT
• High concentration of SME in a specific area;
• High specialization in a productive sector;
• Cooperation among enterprises;
• Integration of enterprises with the local place of
reference, its tradition and its culture
• A DISTRICT IS A SPONTANEOUS
AGGREGATION OF ENTERPRISES

23. Dott.LucianoConsolati
-
DistrictDistrict IndividuationIndividuation
LocalLocal production systemproduction system indicatorsindicators
High production specialisation
Quite important production which covers a remarkable quota of
the specialisation sector production
Multiplicity of minor enterprises and lack of leader enterprises
Common professionality of workforce
High turnover rates among workers
High turnover of enterprises
Wide social articulation together with continuous social mobility
processes
Complex production inter-independence system among local
enterprises

24. Dott.LucianoConsolati
Districts setting up
MKT
Production cycles possible to be decompose into their single phases

25. Dott.LucianoConsolati
A wider classification
• Areas of production specialisation
concentration of companies within the
same industry in a local area
• Local production systems
concentration of companies within the
same industry in a local system, with
intensive intercompany cooperation
and exchanges
• System-areas
local concentration of small production
units from different industries relateb by
intensive relationships and exchanges

26. Dott.LucianoConsolati
DistrictDistrict FactorsFactors
of Successof Success
Flexibility
Professionality
High competitiveness between firms
Continuous investement
Important role played by local banks
Co-operation with public bodies

27. Dott.LucianoConsolati
TheThe mostmost
importantimportant characteristiccharacteristic
The first product of the District
is its people and its
enterpreneurship, its will to set
up its own business.
The first product of the DistrictThe first product of the District
is its people and itsis its people and its
enterpreneurshipenterpreneurship, its will to set, its will to set
up its own business.up its own business.

28. Dott.LucianoConsolati
The model of industrial districts
Four groups of key factors for local networks
• locational and spatial
• social and cultural
• economic and organisational
• institutional

29. Dott.LucianoConsolati
Locational and spatial factors
• geographical proximity and sectoral specialisation
• small urban dimensions
reduction of transportation and transaction
costs
circulation of information and knowledge
lower labour and land costs, social cohesion

30. Dott.LucianoConsolati
Social and cultural factors
• central role of the family and job sharing among the
family members heritated from the rural society;
• common social background and values;
• high social mobility and entrepreneurship attitude
trust as a the key issue in business relationships

31. Dott.LucianoConsolati
Economic and organisational factors
• Possibility of extreme specialisation
• Balance between cooperation and competition
• Specialisation of the workforce as “public good” (repository of
common knowledge)
joint scale and scope economies
collective learning (learning by localizing, learning by
specializing, learning by interacting
partnershipping (stability, long-termism, know-how exchange)

32. Dott.LucianoConsolati
Economic and organisational factors 11
System of factories with an integrated vertical production
cycle and greater division of work among single concern
which minimises costs and promotes new businesses
External economies of scale: each concern operates as a
supplier and user of different goods
Constant technical innovation
Phases and components high specialization
High competitiveness among enterprises about a specific
product

33. Dott.LucianoConsolati
Cooperation between enterprises and public bodies about
external economies
Weak entry barriers are increasing because of burocracy
problems
Exit barriers: the artisan can do just one specific task and
cannot change his business
Professional and skilled workforce who learn locally
Learning by interacting in the area of the most
important machinery products
Economic and organisational factors 2

34. Dott.LucianoConsolati
Surplus outsourcingMarket expansion
Production with real
unitary decreasing
costs Outdoor purchase of
products at lower prices
Space contiguity
between enterprises
and existence of
consolidated
relationships
Reduced transaction
cost and higher
intrinsic reliability
““SubSub--divisiondivision”” determiningdetermining factorsfactors
Outsourcing of
diseconomies and
unbalancing factors
Unbalance of
production processes

35. Dott.LucianoConsolati
Highly skilled workers (“Learn-by-Doing”)
Saving and optimization of time
Development of specialized machines in the production
for sub-contractors and intended to improve the
production processes
HIGHER PRODUCTIVITYHIGHER PRODUCTIVITY
Elastic managing of production timetable (work
timetable)
AdvantagesAdvantages comingcoming fromfrom ““subsub--divisiondivision””

36. Dott.LucianoConsolati
Institutional and policy factors
• Marginal role in establishing competitive local
systems, but key role in supporting their growth and
innovation
• Interventions mainly at local or regional level
(both public and private actors)
regional agencies, business service centres,
entrepreneurs’ and artisan associations, consortia of
firms

37. Dott.LucianoConsolati
Articulation ofArticulation of
industrial districtsindustrial districts
Raw materials
Machinery
Semi-finished
SUPPLIERS
Trust
Job market
SOCIAL CAPITAL
Attitude
Value
Accessibility
Transports
Water purifying
Building land
INFRASTRUCTURE
CAPITAL
Banks
Designers
Transports
Agents
PRIVATE SERVICEPRIVATE SERVICE
TYPICAL ACTIVITIES
Sub contractors
CUSTOMERS
Markets
Schools
Trade associations
SOCIAL SERVICESSOCIAL SERVICES
Services centres
Consortiums
Research
Marketing
ProductionSub contractors
Sub contractors

38. Dott.LucianoConsolati
ProductionRationalizationInterventions
Low Medium High
LowMediumHigh
aa
bb
cc
Market Strategies
aa
bb
cc
Medium large enterprises
central to the local
producing system
Semi-finished products
and high precision tooling
suppliers
Satellite phases sub-contractors and
phases sub-contractors
Strategic map of District

39. Dott.LucianoConsolati
Relationship models
TRADITIONALTRADITIONAL
SUPPLIERSUPPLIER
NETWORKNETWORK
Leader
Leader C.
SS SS SS
SS SS SS
SS
SS
SS
SS
SS
SS
Supplier

40. Dott.LucianoConsolati
Limits of industrial districts
• Excessive localism and closure to the external world
“Death by asphyxia”
• Difficulty to face radical changes and innovation
outside the existing technological framework
• Lack of guidance and strategies for growth and
renovation
• Competition by low labour cost countries

41. Dott.LucianoConsolati
Challenges and responses
• Re-configurations of supply chains on a global basis
• Increasing cost competition from NICs
• Need for strategic flexibility and proactiveness beyond
more short-term responsiveness
• Development of Innovation capabilities to differentiate
• Managerial capabilities to stay competitive within global
supply chains

42. Dott.LucianoConsolati
Customer
CustomerCustomer
SS SS SS
SS SS SS
SS
SS
SS
SS
SS
SS
Supplier
Leader CoLeader Co..
SSSS SSSS SSSS
SSSS SSSS SSSS
SSSS
SSSS
SSSS
SSSS
SSSS
SSSS
PSPS
PSPSPSPS
PSPS
Primary Supplier
(Comaker)
Secondary Supplier Leader
INNOVATIVEINNOVATIVE
GLOBAL SUPPLIERGLOBAL SUPPLIER
NETWORKNETWORK
Relationship models

43. Dott.LucianoConsolati
THE DISTRICTS’LIFE CYCLE
source: Federazione dei Distretti Italiani
Currently the Italian districts have entered a phase of maturity and, as is the case in
such instances, it is necessary to adopt revitalisation strategies in order to avoid crisis
and sustain development
DEGREEOFINTERACTION
TIME
Formation Development Maturity Revitalisation
Districts
Revitalisation / Development
Crisis

44. Dott.LucianoConsolati
• Some districts are undergoing strong development (the
dynamic districts: provided with efficient governance, they put
forward strategies that guarantee development as well as a
constant increase in income and exports)
• Others are in acute crisis (vulnerable districts: lacking in
governance, poorly integrated in their area, marked by
competition between enterprises)
THE DISTRICTS’ SUCCESS - OR CRISIS - DEPENDS ON THE
STRATEGIES ADOPTED

45. Dott.LucianoConsolati
THE NEW CLASSIFICATION OF ITALIAN
DISTRICTS
source: Federazione dei Distretti Italiani
• Dynamic districts
• Mature districts
• Vulnerable districts
• Virtual districts
Efficient governance, strategies that guarantee
development and constant increase in income and
export quotas, intense cooperation among enterprises
presenting strong interdependence in their production
cycles;
lacking in governance, poorly integrated in their area,
marked by competition between enterprises. They do
not develop
cooperation strategies, the businesses operate
separately, and district membership, in times of
negative short-term fluctuations, represents a factor of
risk rather than an opportunity;
only exist on paper, “imposed” by regional decrees; these
actually only represent industrial areas.
strongly rooted in their area of origin and in their local
community, but do not have an efficient governance,
while the cooperation between businesses is
spontaneous rather than planned. The district
aggregation gives way to positive performances, but the
advantages are not evenly distributed, favouring only a
few enterprises;

46. Dott.LucianoConsolati
FEDERAZIONE DEI DISTRETTI
ITALIANI
PRINCIPAL AIMS
• To promote links and the exchange of information and experiences: to
develop the network
• To promote relations with the decision-making centres of industrial policy
(national and EU levels)
• To promote international relations with other districts and organizations
• To promote the “know-how” and communicate the situation of Italian
economy

47. Dott.LucianoConsolati
THE MEMBERS
OUR DISTRICTS
76.000 enterprises76.000 enterprises
490.000490.000 people employedpeople employed

48. Dott.LucianoConsolati
Made in Italy: the 4”A”
Associated districts
12
11
10
7
0
2
4
6
8
10
12
Abbigliamento/Moda Automazione/Meccanica Arredo/Casa Agro-alimentare

49. Dott.LucianoConsolati
WHAT ABOUT THE FUTURE?
encouraging technology transfer and process innovation;
supporting internalization and exports among the districts’
enterprises;
promoting innovative finance instruments;
developing cooperation among district enterprises to create
networks of enterprises.
THE ITALIAN DISTRICTS ARE THE DRIVING FORCE OF
OUR MADE IN ITALY PRODUCTS

50. Dott.LucianoConsolati
Critical success factors in
cluster development
0 10 20 30 40 50 60 70 80
Networking partnership
Innovative Technology
Human capital
Access to finance
Presence of large firms
Enterprise entrepreneurialism
Physical infrastructure
Specialist services
Access to markets
Access to business support
services
Competition
Access to information
Communications
Leadership
Virtual aspects/ICT
External economic impacts
SuccessCriteria

51. Dott.LucianoConsolati
The Demand of the
clusters:internationalisation strategies of
networks

52. Dott.LucianoConsolati
SOME WORKS IN PROGRESS
• Italian District Observatory
• Observatory on Mechanic clusters
• Observatory on textile clusters
• District rating
• Research in operative application of Innovative finance tools
• Agro-foodstaff online: product promotion and internalisation
• Promotion and technological innovation projects
• Pilot scheme for renewable energy
• “Tracciabilità” project