Italy Has a Very Diversified Manufacturing Economy

Italian manufacturing

In the globalized world of today more and more the economies of the countries seek to diversify in manufacturing. Given the volatile prices of commodities, diversification is a risk that not many can take. Manufacturers generate greater added value for their countries, and in turn, greater profits for a homeland.

In the case of Italy, we find that it is the eighth largest economy in the world and the third largest in the eurozone, only behind Germany and France in that order. Italy also one of the countries that achieved a successful transition from the agricultural economy to a manufacturing economy. This success change gives Italy 23.9% to the nation’s GDP by 2016.

Italy’s real growth rate has been 0.8 percent the last two years. Between 2017 and 2018, according to OECD data, the Italian economy is estimated to grow another 1% each year. This recent advance in the Italian manufacturing industry awakens mixed feelings among opinion makers and public policy makers. It is considered favorable by many because of the greater ability of companies to penetrate foreign markets. On the other hand, many fear economic activities that may lead to the opening of factories abroad.

Iron and Steel

The consumption of iron and steel was considered for decades a standard indicator capable of measuring the economic development of a nation. Italy’s steel industry has often been a driving force in the expansion of the industrial sector. The availability of raw materials, the low transportation costs, and most of all the sea, have contributed to the birth of large steel centers in coastal countries.

Economy Hits Automotive Industry

It is not a secret to anyone that the automotive industry is a vital sector to Italy, due to its high demand and a high degree of added value which translates into higher profits. Italy, along with Germany, is one of the countries with the most developed auto industry. Unfortunately, between 2004 and 2013 cars produced downsized by 51% compared to the previous decade. The economic crisis in Italy and Europe resulted in decreased consumption. The effects were particularly problematic for cars. But this is not the first drop in auto production. Statistics show the automotive sector has been declining for a long time. Between 1994 and 2003, the production recorded an 18% decrease.

Despite these falls, what the future holds seems to be interesting for the industry, since the projections for the automotive industry for 2020 speak of a growth of 2.6%.

Textiles

In the textile sector, we find that the Italian district of Emilia-Romagna is one of the most prominent and prosperous clusters of the textile and clothing industry in the world. Italy is the second largest exporter of both textiles and clothing if the intra-EU trade is included. However, in this segment of the market, there is a trend towards the relocation and outsourcing of production to decrease costs.

In fact, Italy exports approximately 50 percent of its production of clothing. Their competitive advantage lies in the positioning of their products in the minds of consumers. This has allowed, beyond the problems of the industry (such as high costs of electricity, government bureaucracy, and legal rigidity) to charge a “Premium” that allows covering the costs and thus to obtain profitability.

Classic Ceramics 

The birth of the industrial ceramic districts was facilitated by the simultaneous presence of several factors, including the centenary tradition. Other factors include the availability of skilled labor and capital. The Italian ceramic industry is now a sector with 236 companies and 27,000 employees, capable of invoicing 5.5 billion euros. The main destination area for Italian ceramic products is France and Germany which are foreign historical markets. Also significant is the presence of Italian products in the Americas, mainly in the United States.

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