Italy's earthquake recovery vital

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Italy's earthquake recovery vital

Italy's earthquake recovery vital
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Many small and medium-sized companies, the backbone of the Italian economy, are struggling.
Critical for the country’s economic health, they will need special care from the next government.

To understand why, we travelled to Modena, where an earthquake last May made already existing difficulties worse.

A series of earthquakes shook northern Italy in May last year. It brought one of the most industrialised areas of the country – the wealthy Emilia-Romagna region – to its knees.

Causing 27 deaths and more than 12 billion euros of damage, small and medium-sized companies were hit hard.

Modena lies in the heart of a concentrated area which accounts for almost two percent of Italian GDP.

Luciano Galavotti co-owns a factory which makes fine metal lathe products, employing eight people.

When the earthquake destroyed the workshop, he moved into a temporary building.

He tells us that economic trends after 2009 had already made forecasts impossible, but that things are even worse now.

Galavotti said: “The earthquake has made payments harder to collect at the end of the month. It has taken a toll on companies’ cash availability.”

The mechanical-automotive sector is one of this region’s flag carriers. Here is a dense network of very small and medium-sized enterprises, with high levels of innovation.

Margherita Russo, an economic policy teacher at university, is the driving force behind “Officina Emilia”, a museum-workshop in Modena which raises awareness of its socio-economic and technological environment.

Russo said: “The peculiarity of this productive structure is the ability to satisfy extremely specific needs in any field, from haute couture to packaging machines, from the automotive sector to health care equipment.”

The Emilia-Romagna region is not only home to Ferrari and Maserati, but also of the biomedical sector.

With 300 employees, Bellco is a leader in the production of kidney dialysis machines and disposable hospital materiel.

Mirandola hosts the biggest biomedical production district in Europe, the third in the world after Los Angeles and Minneapolis.

Bellco chairman Antonio Leone said that in spite of weathering the crisis better than others, this sector is suffering also: “The first problem is getting the public sector to pay its bills. We’ve reached a breaking point. We’ve received, for instance, money from the Spanish government which is probably in bigger trouble than our country, but we haven’t received the bulk of payments due from the Italian public sector, only little ones. Small suppliers or sub-suppliers in this area are facing big problems trying to borrow money to rebuild and repair damage, and to collect payments dating back 300 or even 500 days.”

Many people hope that the recent European directive acting against Late Payments will help. Many thousands of businesses closed in Italy in 2012.

Trade unionist Vanni Ficcarelli is not optimistic: “We call on companies to be responsible and to keep their business running in our region, although we are receiving some signals telling us that many are not planning to get back in business. That would worsen the damage.”

The earthquake hurled about 600,000 wheels of Parmesan cheese from their towering shelves. Some of them were destroyed, some were recycled into cream cheese. The losses in “Food Valley”, where balsamic vinegar and Parma ham are produced, were estimated at more than 100 million euros.

Employee Fausto Gobbino said: “I was just walking out of the shelving area when I looked up and saw the wheels starting to fall. After about 20 days the factory got the green light to re-start production. When I heard, I thought it was a good sign.”

To get back on track as soon as possible, the company president Germano Tosi relied on the company’s own resources. Soon afterwards, the factory got a boost from the so-called “solidarity” cheese, sold in supermarkets and online, the proceeds of which went to cheese plants damaged in the quake.

Tosi said: “We were worried. We didn’t know how to go on. Our product was “very” destroyed. We immediately asked for help. Banks were initially supportive, but seem to have had some problems afterwards. Our will to continue against all odds was very strong, and people have shown solidarity.”

The quake has brought about 10,000 companies to a standstill and swelled the ranks of the unemployed. But the symbolic “Solidarity cheese” has brought in about one million euros for quake-struck fine food factories – seen as a sign that people all over Italy wish the region well on the road to economic recovery.