Positive Signs for Italian Industry

Orders for Italian machine tools jumped in the third quarter of 2017, seeing an increase of 14.7% compared to the same period last year. The data published by the Research and Business Culture Center of UCIMU, the Italian machine tools, robots and automation manufacturers’ association, show the excellent performance of the internal market, +68.2% compared to the period of July-September 2016. Foreign orders also increased, but only by 1%.

According to UCIMU President Massimo Carboniero the positive results show the beneficial effect of the National “Industry 4.0” plan incentives, “that perfectly meet the needs companies have to renew their plants and introduce principles of digitalization and interconnection, that are indispensable to maintain the competiveness of Italian manufacturing.”

Carbonieri also spoke of a “rebalancing between the domestic market and the foreign market, after a period in which attention was focused principally on the latter.

The success of public incentives once again shows the need for targetted actions to promote productive activities. In recent years Italy has used various measures to provide preferential financing to companies that invest in new capital goods, from the “Sabatini Law” to the “Hyper-amortization” provisions which allow for writing off 250% of the value of new investments. This has provided important assistance to certain sectors of Italian manufacturing, that had suffered from the harsh drop in the market, in particular the domestic market, during the years of crisis. The many economists who push so-called “structural reforms” and the doctrine of “expansive austerity” may not appreciate this success, but it is obvious that such tax incentives should be continued and expanded, along with public investments for the real economy.

In terms of bank credit, on the other hand, Paolo Agnelli, President of Confimi Industria – Confederation of Italian Manufacturing Industries and Private Enterprises – sees the new European Central Bank (ECB) rules regarding non-performing loans as a negative factor for the Italian economy.

“With this umpteenth credit crunch, handed down by Europe, we’re at the end of the line: our enterprises will no longer be able to get credit,” said Agnelli in a statement. “By once again modifying the capital requirements for banks, which will be required to hold more reserves, Small and Medium Enterprises will be brought to their knees, because as usual they will be the first victims in this country, in which 4,350,000 enterprises depend on banks and not on the [capital] markets.”

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