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Centuries Of Experience

Traditional trade district system benefits Italian textile industry.

Eric Vonwiller, Senior Technical Editor

Italian Textile IndustryBy Jim Phillips, Executive Editor Centuries of Experience Traditional trade district system proves advantageous for Italian textile industry. In the mid-20th century, America was a nation heady with its rapid ascent to the top of the worlds economic ladder. Industries were clustered around the areas in which they were born or evolved. Detroit, for example, meant cars. Akron, Ohio, was noted for tires. Pittsburgh was North Americas preeminent steel town. The Southeast was the home of cotton spinners and weavers, and the Northeast was known for its wools, apparel and shoes.As is often the case, however, when manufacturing techniques transcend the laborious and loving handmade techniques passed down from generation to generation, economic necessity facilitates change. Manufacturing like lightning seems to always follow the path of least resistance. The norm is to go where the labor, resources and materials are cheap and plentiful. Automobile assembly plants, for example, can now be found in Tennessee and Georgia, as well as in the more traditional locations. A large number of the nations tires are made in the Carolinas. Steel is as likely to be found in Alabama and Arkansas as in Pennsylvania. Few textile plants of any kind remain in the Northeast. Cut-and-sew operations have forsaken the American mainland for the more hospitable climes of the Caribbean. The American shoe industry is but a thin shadow of its former self.In many ways, this passing is to be mourned. While economic diversity including the transition from a manufacturing economy to a service economy continues to make the U.S. the worlds leading economic power, the sense of identity associated with regionalized industries and economies is a fading phenomenon. In the textile industry, Dalton, Ga., the home of the U.S. carpet industry, is perhaps the sole remaining industrial cluster of significance.Other industrialized nations, with neither the vast geographical expanse of the United States nor the plethora of natural resources, developed differently. Areas of expertise developed within certain regions and remained there. Over time, art and craft were combined with efficiency and partnership to create thriving, self-contained economic districts that ranked among the worlds finest producers in their respective fields of expertise.Perhaps no nation symbolizes this better than Italy.With a population and gross domestic product (GDP) only a fraction of that of the United States, Italy today boasts a textile industry much more robust than that of the United States, the United Kingdom, France or any of the other major Western economic powers. In export volume and value, Italy trails only China and is ahead of such prolific exporters like Korea, Hong Kong and Taiwan. The country, as well, is the worlds second largest exporter of textile machinery.Designers in the worlds fashion capitals continue to covet the quality, style, color and finish of Italian fabrics, particularly silk and wool. Moreover and this is crucial to the continued success of the countrys textile industry the Italian public is loyal to its native industry, eschewing less expensive imitations from Asia Minor and the Far East.No doubt there is a collective ego to go along with the success of Italys textile and apparel industries but that is part of both the Italian mystique and its success. Italians are excellent at such endeavors as dyeing and finishing, well aware of their talent and completely unabashed in proclaiming superiority. But, in the end, the proud statements made by Italys most vociferous proponents are backed up by the industrys reputation and success in the world markets. Ultimately, as one knowledgeable observer close to the Italian industry notes, There is a whole lot of know-how in Italy expertise built on century upon century of experience and it is all brought to bear in the manufacture of Italian textiles. Collective ExpertiseA key element of this know-how, according to Trade Commissioner Antonio Avallone of the Italian Trade Commission in Atlanta, is that knowledge and opportunity have worked hand in hand for generations. Unlike nations such as the United States where automobile manufacturing, for example, will leave Detroit and its pool of well-educated workers for less-expensive cities a significant portion of Italys industry remains in its respective area of origin.

The districts constitute the largest reservoir of resources and know-how in Italian industry, according to information provided by the Italian Institute for Foreign Trade. They are the structure that has best preserved the vast patrimony of handicrafts, art, natural resources, culture and gastronomy of our past. "At the same time, they are also the most aware of and open to new developments, eager to meet the challenges posed by globalization. The districts constitute an original and effective response to the new systems that are rising from the ashes of the mass production systems with a new set of competitive rules.  Among the many advantages of the industrial district, particularly in textiles, is the proximity and partnership of such diverse functions as machinery assembly, product design, manufacturing and finishing. In a woolen district, such as Biella, for example, machinery is made and serviced within the district. Having a piece of machinery down for several days because of the lack of qualified local engineers is not a common occurrence as it might be in other countries.There is a collective expertise that has been built up over the centuries that no other nation on earth can match, said Alessandro Mussa, assistant trade commissioner. It is a pervasive sense of unity, and it continues to work because there is substantial reinvesting in the industry from every aspect. This holds the manufacturing clusters together and allows them to continue to thrive. Flexibility And AdaptabilityThe profitability of companies within the Italian trade districts is further enhanced by the make-up of the companies themselves. In general, they are small-to-medium-sized enterprises that focus on being flexible and adaptable. They are able to run small lots very efficiently to meet the demands of a global market. In textile categories, Italy is the world leader by trade surplus in woolen yarns, woolen fabrics, silks, ties, shawls and footwear. The country is second in the world in its trade surplus for menswear and womenswear.Approximately one-third of Italian exports are produced by companies that operate in the industrial districts, according to the Italian Institute for Foreign Trade. These small companies have managed to secure large shares of international markets with a series of products that are rich in non-material content such as fashion and design, display a sensitivity for beautiful things, and are sustained by historical, cultural and social factors tied to the history of our country and its particular lifestyle. In every sector in which Italy is a protagonist on the international market, the role of the districts is decisive.The Italian Trade Commission concedes the concept of trade districts might not be the best model for every nation, but it provides definite benefits that most governments aspire to achieve. Among the most significant are:dynamic companies, rooted in the territory and projected toward international markets; limited unemployment rates in the presence of above-average levels of activity; high level of participation of the female population in economic activities; and,per capita incomes above the national average (and often above European averages). Italys industrial districts are very limited regional systems, the largest of which contain 400,000 to 500,000 residents. The districts are characterized, according to the commission, by specialization in the production of a particular family of products the knitwear of Carpi, the womens hosiery of Castel Goffredo or the silks of Como, for example. Generally, the districts are populated by smaller companies with a large number of individual business owners. There are few vertical companies within the districts, but instead a number of operations that tend to specialize in a single phase of the production process. Every company concentrates on what it does best, says Mussa. The basic ingredients are widespread expertise, good credit relations, a spirit of emulation and well-established channels for the circulation of information. Additional characteristics, according to the commission, are: the presence of an efficient network of public and private services that operate in direct contact with the companies of the particular sector; an economic and social life regulated in a non-conflictual manner by trade associations and labor organizations; an elevated civic awareness that characterizes entrepreneurship, as well as cultural and administrative life; and a strong relationship between economic activities and the cultural and social life of residents (schools, training institutes, industrial museums, local newspaper reporting).Trade districts first developed in the central and northeastern regions of the country. But, in the past few years, the concept has been spreading to other areas as well. The Italian National Statistics Institute has made an effort to map the various trade districts within the country and, to date, has identified more than 200. More than 42 percent of total manufacturing employment in Italy is within the districts. There are more than 90,000 companies, $80 billion in sales, and $35 billion in exports.
 Competitive AdvantagesUltimately, the trade districts have allowed industrialized Italy, one of the most advanced nations in the world, to compete on a favorable basis in industries traditionally dominated by manufacturers with very low labor costs. The evolution of consumer habits in industrialized countries has rewarded not low costs but the capacity to offer goods with a high relational content: design, personalization, and a spirit of the times, said Commissioner Avallone. The particular organizational structure of the industrial districts, with its many flexible small and medium-sized industries and a rich patrimony of social and cultural traditions, has shown itself to be especially effective in the production of these types of goods. One must not underestimate the competitiveness and the great capacity for adaptation and innovation that characterize companies operating within the districts. Indeed, companies within these districts tend to thrive on competition and exhibit the ability to adapt to the changing needs of a global marketplace. While the last decade has been a difficult one for the worlds textile industry, Mussa said, Italian companies, unlike the industries of many other developed nations, have been able to stabilize and emerge as very strong competitors in a global market. That is because of the industrial districts and the willingness of businesses to continue to invest in their future.And unlike in many other nations of the world in Italy, the future for the textile industry looks promising indeed. February 2002