‘Crisis has destroyed Italian manufacturing’

Confindustria, Italy's business federation, is calling on the government to revive the economy and restore bank lending to businesses as it reveals stark figures on the country's declining manufacturing industry.

'Crisis has destroyed Italian manufacturing'
An employee works at the luxury clothes maker Brioni in Pescara in 2010. Photo: Vincenzo Pinto/AFP

Abner is only too familiar with the effect the ongoing economic crisis is having on his business. As the manager of a dozen or so clothes shops in Rome, he has slowly watched the gradual decline in Italy’s cash-starved textiles industry over the past six years.

Intense competition from Asia and Eastern Europe has led to the closure of factories and thousands of job losses in the sector, which has been among the hardest hit by the recession, according to the report released by Confindustria.

Italian manufacturing capacity on the whole declined by 15 percent between 2007 and 2012, with the textiles, pharmaceuticals and leather industries faring the worst, the report said.

Meanwhile, around 55,000 manufacturing firms have been forced to close since 2007 and the number of people in work across the sector fell by 10 percent.

Abner, who preferred to be known only by his first name, also has to grapple with rising store rents, low margins and a shortage of credit from banks. According to Confindustria, bank loans to businesses have been reduced to the point where even healthy companies are “at risk of failure”. The shortfall corresponds to about 50 billion, the report added.

A report last week by Piccolindustria, a unit of Confindustria that focuses on small businesses, said one in four small firms had its credit line cut by more than 27 percent in 2012.

“It’s a huge problem in Italy. We’re going completely down and the banks are not giving any money,” Abner, who has a staff of more than 50, told The Local.

He partly blames Italy’s fragile coalition government.

“It’s not about left or right anymore; we don’t have a strong leadership.”

Confindustria has called on the government to help restore liquidity and support access to credit for small to medium-sized businesses. The federation also suggested making bureaucratic and labour procedures less cumbersome and offering incentives and tax breaks to young people, women and less developed areas in southern Italy.  

Rafaelle, who runs a grocery stall which has been in her family for over 40 years, hopes the government takes heed of the suggested measures.

She says she has a long and good relationship with her bank, so has fairly easy access to credit. But she knows of other small businesses that are suffering.

“The other problem is that Italians just aren’t spending as much. Or when they do, they go to the bigger supermarkets. Even though they might be more expensive, they know they can get everything they need in one place,” she told The Local.

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