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Vertus point of view on how the future of business and people is transforming. We aim to accelerate the spread of managerial culture, through analysis, studies and ideas, which can support those who are looking forward to a sustainable growth.
We start from two significant images, which represent the more recent consequences of the past strategies of relocation abroad of production plants: the closure of car factories in Europe in February 2020, when due to the lockdown in Hubei province components no longer arrived, and the landing at Fiumicino airport of a load of masks, the production of which had almost disappeared in Europe, sent by the Chinese Red Cross.
In fact, the pandemic has only emphasized problems already encountered and that, in particular since the 2008-2009 crisis, have strengthened the phenomenon of reshoring, that is, the return to the national territory of locations and productions previously moved abroad, in Eastern Europe or Asia.
In the recent document of Confindustria “Innovation and resilience: the paths of the Italian industry in a changing world” (November 2020) a large chapter is dedicated to this theme, in which the data used were collected by the report “The manufacturing reshoring at the time of Covid-19, trends and scenarios for the Italian economic system”, developed by Prof. Luciano Frattocchi (University of L’Aquila) – who for ten years has been maintaining the only database that monitors the phenomena of reshoring in Europe and in the United States (“European Reshoring Monitor”) – by Prof. Paolo Barbieri of the University of Bologna, Prof. Albachiara Boffelli of the University of Bergamo, Prof. Stefano Elia of Politecnico Milano and Prof. Matteo Karlchschmidt of the University of Bergamo.
Why do companies “come back”?
The experience of relocation, which had so much impetus in the 80s and 90s of the last century, as said, has begun long ago to show its limits.
As Innocenzo Cipolletta, president of the Italian Investment Fund and president of AIFI and Assonime, explained to Il Sole 24 Ore, “for some years now there has been a set of elements for a new level of reflection.
Some inspiration in the business world, especially in the field of Supply Chain Strategy, had arrived.
The concepts of Resilience, Adaptability and Flexibility are lately among the major topics of interest for the CTL Department (Center of Transportations and Logistics) of MIT in Boston and of other prestigious research institutes, to develop a new paradigm to procure-produce-distribute, ensuring business continuity and even generating value in a world that is increasingly connected and unpredictable”.
In the document of Confindustria some of the problems related to relocation are made explicit:
In Italy, as highlighted in the report prepared by the 4 universities, there are 175 reshoring activities (total or partial) recently carried out and the phenomenon is accelerating due to the pandemic.
The health emergency has in fact placed in the foreground the advantages of a “local-to-local” approach, bringing supply, production and consumption points closer together.
«Among the possible long-term consequences of Coronavirus – Prof. Luciano Frattocchi explained to Vertus – there is the reconfiguration and shortening of value chains, with the aim of making them more resilient and more sustainable. In the short term there have already been cases of relocation in the country of origin due to the inability to use its own production capacity available in China or to buy from Chinese suppliers».
For Prof. Stefano Elia of Politecnico Milano “it is a unique opportunity for our country, which should try to seize it with policies aimed at encouraging the return of some of our productive activities and/or at welcoming the productive activities of other countries that decide to relocate”.
An opportunity to seize: how the European countries and the United States are moving
Before considering the Italian situation, let us have a look at how governments, in the US and in Europe, are managing the intensifying trend of reshoring.
In the United States, various measures of both the Obama and Trump administration have been dedicated to reshoring: tax deductions, tax credits and incentives, investments in infrastructure and regulatory obstacles to offshoring.
In particular, as highlighted by Confindustria, from 2012 to 2014 a grant equal to 20% of the costs for the return and the establishment of centres of cooperation between universities and enterprises, to facilitate the recovery of the skills and technological innovation also in SMEs, have further convinced the companies.
As regards the European Union, at the moment there are no plans or tools dedicated to the phenomenon, although in 2016 the policy brief “Renaissance of Industry for a Sustainable Europe Strategy” spoke about reshoring as a strategy to encourage the return to manufacturing at a level equal to 20% of the European GDP.
Some European countries instead are seizing the opportunity.
France has already implemented various measures since 2013 to encourage the return of companies and in 2020 introduced economic support and tax incentives for the automotive and aviation sectors and for SMEs.
In 2014, the UK launched the Reshore UK Plan, which provides real consulting services to assess the chances of success of reshoring activities, assistance in return procedures and various incentives.
Finally, it should be noted that some Asian countries also implement policies to support the return of manufacturing companies. Taiwan, Japan and South Korea are working to reshoring the relocated activities in China.
The situation in Italy: a path still in its early stages
Among Italian companies, the trend towards reshoring is starting and strengthening.
«In 2018 we made an analysis on a sample of 130 companies that were worth 15 billion aggregate turnover – explained to “Repubblica” Giuliano Busetto, president of Anie, which associates 1,400 Italian companies of electronics-electrotechnics – and 19% of them spoke of reshoring plans. It was only 9% a few years earlier. It can still be accelerated but it needs to reduce bureaucracy, give regulatory certainty and facilitate investments in technologies and skills».
Among the large companies already returned, we can list Asdomar, Artsana, Beghelli, Vimec, Diadora, Safilo, Zegna, Geox.
The case of Candy is significant: the Chinese property Haier has chosen to bring back to Italy the production of built-in washing machines, relocated to China by the previous owners.
The situation was photographed, in June 2020, by an in-depth article by Stefano Carli, based on data from the European Reshoring Monitor.
Italy is present abroad with almost 24 thousand companies, 9 thousand of the industrial sector and 14,700 service companies.
Many are considering returning because the cost of labour has grown also abroad, as are the costs of logistics; because they need more flexibility and quality of production; because the “made in Italy” has immediate positive effects on revenues.
Despite this, national policies aimed at encouraging reshoring have not yet been implemented at the moment, although the theme constantly recurs when it comes to relaunching the country.
In September, for example, the minister of Mise, Stefano Patuanelli, said to the Assembly of Confindustria: “We must continue to work on the systemic framework, so as to make our country more attractive, eliminating the many viscosities, which so far have made doing business in Italy more difficult and less convenient than elsewhere. At the same time, creating the conditions to bring home our exclusive productions and attract those of others, with a serious program of back reshoring”.
TurnLab opinion: create a task force between institutions, Universities and industrial transformation professionals
Our reflection in TurnLab focused on the importance, to Italy, to develop a detailed plan for the reshoring supported by task forces involving the Ministry, Regions, Invitalia, Universities, research centres, companies specialized in industrial transformation processes.
In fact, it is a question of establishing incentives, but also of providing the country with infrastructure for innovation, of recovering and expanding facilities and skills and of scaling down a bureaucratic apparatus that hinders the development of companies.
Paradoxically, from this point of view the pandemic presents itself as an opportunity. According to the “anti-fragile” model of the philosopher and mathematician Nicholas Taleb, uncertainty resulting from emergency is the engine that produces improvement. In this perspective, the phenomenon of reshoring, properly favoured, can help to create in Italy a fabric of “anti-fragile” enterprises, ready to face the critical issues and to make it the drive for growth.
At the base of each project, personal or corporate, there is always a phase of study, reflection and analysis, to lay the foundations of its realisation.
In Vertus, study, reflection and analysis are an integral part of the working method, also due to the complexity and continuous evolution of the subjects we deal with.
The result is a wealth of skills that, in addition to finding its immediate application in Vertus corporate mission, deserves to be shared.
Thus, together with the relaunch of the site, TurnLab was born, a section dedicated to the deepening of the managerial culture, edited by Vertus professionals.
The aim is to provide examples and insights on many current issues, which can contribute to the training of all those interested in the labour market and its evolution, in the processes of reindustrialization and financial support mechanisms for companies.
TurnLab, as mentioned, collects the skills and knowledge of Vertus collaborators who have chosen to join this project, getting involved with the intention of offering a clearer vision of the current and future labour market, using their own experiences.
Exchanging views in TurnLab means working in a team to stimulate the birth of new ideas to be shared first of all with the entire Vertus team and then with those who want to benefit from this new section.
Its contents will cover the 3 macro sectors in which Vertus activity is divided: reindustrialization, HR and debt & grants.
“In particular – Alessandro Ielo, founder of Vertus, who strongly wanted the creation of TurnLab, explains – the section will promote the principles of corporate social sustainability and value protection, which are the cornerstones of our actions in all three sectors. TurnLab will have to be a kind of showcase of the ideas that animate the research activity in Vertus”.
The coordination of the work, from the periodical brainstorming to the definition of the topics to be studied and published, was entrusted by Ielo to Ilaria Girino, consultant in Vertus HR Solutions Division. “I accepted this task with great pleasure and interest – Ilaria Girino comments – I follow with passion the themes related to communication and digital. For this reason, being able to take care of an online column, with which to transmit Vertus ideas, was for me an unmissable experience”.