Deep in the beating heart of Italy’s manufacturing industry, there are companies facing not only economic challenges but a rapidly changing industrial landscape to which they must quickly adapt, as Jane Bordenave discovers.
Northern Italy is the country’s industrial heartland and home to a diverse range of manufacturers producing machines for virtually any and every industrial process. The history of some of these companies dates back over 100 years, and most of them have lived through the recessions of the late twentieth century, in many cases emerging stronger and more competitive as a result.
The current economic crisis, however, bears a closer resemblance to that of the Great Depression—making survival even more of a challenge. Increasing overseas competition, a factor not present during the Great Depression, creates an additional challenge. Despite the many obstacles and changes facing today’s manufacturing industry, Italian companies are by no means ready to throw in the towel.
Giuliano Radice, area manager for Milanese machine tool manufacturer Pietro Carnaghi, describes the domino effect as one of the main problems resulting from the economic downturn. Financial institutions, the first victims of the market crash, became reluctant to give credit to smaller businesses, who therefore found it hard to finance their operations. In some cases, those businesses had already received credit approval from the bank, only to have the decision overturned. This has a knock-on effect for manufacturers, who are left on hold while those small businesses—their customers—decide what to do next.
But there are opportunities in any recession, according to Maria Grazia Preda, sales and marketing coordinator for pharmaceuticals and cosmetics packaging producer Marchesini Group. “In the United States, for example, we are not selling very many new machines. However, we are still doing a good trade in spare parts and servicing.”
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Indeed, for some companies, the recession has actually led to an increase in demand and sales. Companies directly linked to the food industry have recorded a growth in sales since the first signs of the recession began. Nordmeccanica Group, a producer of coating and laminating machinery, has actually seen a rise in sales of food-packaging machinery. This increase may be explained by the increased number of people cutting costs and opting to eat at home, rather than at an expensive restaurant, notes commercial director Giancarlo Caimmi. Pasta equipment manufacturers Pavan Group and FAVA report a similar pattern. According to Luciano Mondardini, director of research and development at Pavan Group, the company’s fresh, ready-meal pasta equipment division has seen even greater sales than some of its other ranges. Modardini credits the increased sales to growing consumer interest in the convenience and low cost of ready meals.
Pavan has also created a snack food equipment division, which is constantly developing new products tailored to different markets, such as healthy snacks in Europe and the US, crunchier snacks in Germany and ‘novelty’ products in Japan.
Luigi Fava, managing director of FAVA pasta equipment, believes the factor most likely to influence the sales of pasta and other foodstuffs is diet trends. He cites the example of the 1990s, which was a tougher time for the company in terms of sales and turnover. “The Atkins diet, which was very popular both in America and Europe during the 1990s, caused a decline in the pasta industry, as the diet rules out foodstuffs containing starch. However, once the diet went out of fashion, demand picked up again quickly.”
Food is, after all, a primary need, and though people may cut back in other areas, they will turn increasingly to staples such as bread, rice and pasta in a recession and the market will therefore thrive.
The manufacturers of pasta machinery are also seeing a rise in sales in new markets, such as the Middle East and sub-Saharan Africa, specifically Nigeria and Ghana. Fava explains: “Pasta is both low-cost and nutritious. There is also the added benefit that only two ingredients are required for a basic pasta recipe—water and semolina. If wheat is not available for semolina, or is not to the market’s taste, our machines can easily be adapted to produce pasta using suitable local alternatives. The use of rice instead of wheat for the production of noodles in the Far East is a good example of how flexible the process can be.”
While the recession may be hitting them harder, manufacturers of machines used in industrial processes are also viewing the downturn as an opportunity both for growth and innovation. Pietro Carnaghi traditionally made vertical lathes for the aeronautical and automotive industries; however, the company is now branching out into markets such as wind and hydro power, as well as providing milling equipment for the European Space Agency Arianne IV and V rockets and Boeing Delta IV rockets.
Finishing machine manufacturer Gemata originally only manufactured machines for the leather industry, but recently added glass pigmentation machinery to its repertoire. Comez, a manufacturer of industrial weaving equipment, began producing machines that can weave technical textiles such as carbon fibre and fibreglass, in addition to its crocheting and lace-making products. It also manufactures equipment for the production of technical textiles used in the medical industry, such as gauze. One of the company’s recent innovations is a machine that weaves ‘plaster casts’ from a material that allows the medical professional to mould it to the desired shape before it hardens to form a rigid support.
Growing consumer and business interest in renewable energy and energy efficiency, as well as waste and pollution reduction, is opening up new markets for many manufacturers. Nordmeccanica Group has developed two energy-saving systems. The first is ‘solid glue’, which uses two chemicals mixed to form a glue that solidifies without the need for a drying system. Drying systems are required for more than three plies of material, but Nordmeccanica has developed machinery that uses 30 to 40 per cent less energy than standard machines for this purpose.
Gemata has also reduced its impact on the environment by developing a system that makes all excess pigment recoverable by collecting the excess in a trough under the pigment rollers, allowing it to be re-used.
Jobs, a milling machine manufacturer based in Piacenza, uses linear motors to save energy. These create no noise pollution, compared to the 40 decibels normally created by milling machines that use a geared motor.
While energy efficiency is standard among European customers, it remains something of a novelty in the United States, where the market is ripe for environmentally friendly development. Italian manufacturers’ commitment not only to comply with regulations and expectations in Europe but to exceed them has given Italian machinery a green dimension often lacking in similar American equipment.
Italian firms are simultaneously investing heavily in new and emerging economies and markets, and increasing their appeal and competitiveness in Europe and North America. This strategy is designed to aid Italian firms through the recession, ensuring their businesses are well-positioned when the market improves.
Gemata, for example, established a branch in Brazil ten years ago to help overcome Brazilian trade barriers developed as part of an ongoing protectionist economic policy. This move put the firm in a strong business position in the largest country in South America, even before the recession started.
The main areas of expansion for many Italian manufacturers, however, are undoubtedly India and China—but this can be a double-edged sword. Many Italian firms are wary of selling their products in China due to concerns over design copyright; some are even refusing to export their machines to China at all. Concern over industrial plagiarism has provoked various responses from Italian manufacturers. Some, such as Gemata, are laissez-faire in their attitude to their Chinese competitors, despite their ability to build and sell their products more cheaply. “The Chinese,” explains Dr. Gianni Maitan, executive director of Gemata, “are currently unable to sell their products outside of China due to the levels of pollution and waste they produce, which makes them undesirable. They are not really a threat to us, despite the price of their equipment.”
Others, like Sacmi, a producer of ceramic and packaging equipment, are confident that they are more efficient, produce higher-quality products and have greater expertise than their East-Asian competitors.
Nevertheless, all Italian manufacturers are investing more in research and development, both to supply customers with the best possible product and to prevent anyone copying the machine from being able to provide the upgrades, improvements, or new products of the original manufacturer.
While the second half of 2009 and, in all probability, 2010 are likely to be uncertain and unpredictable for companies across the globe, Italy’s world-class machine manufacturers are using their ingenuity and expertise to ensure that they not only ride out the economic storm, but emerge more knowledgeable and more competitive than ever.
Strategic management
Pietro Carnaghi S.p.A. www.pietrocarnaghi.com/Eng/index.asp
Marchesini Group S.p.A. www.marchesini.com/en/our-group/
Nordmeccania S.p.A. www.nordmeccanica.com/home.html
Pavan S.r.l. www.pavan.com
FAVA S.p.A. www.fava.it
Gemata S.p.A. www.gemata.it
Comez S.p.A. www.comez.com
Jobs S.p.A. www.jobs.it
Sacmi Imola S.C. www.sacmi.com