Interview with Mr. Riccardo Gallo
Mr. Riccardo Gallo
Mr. Gallo is the President of the Italian Institute for Industrial Promotion (IPI, INSME Member) and Professor of Industrial Economics at La Sapienza University in Rome. In this interview, delivered to La Spola (an Italian weekly magazine specialising in the textile industry), he suggests players in this sector a few remedies against fierce competition from low-cost countries, that can be applied to other industries.
Favouring the passage from the industrial districts to the technological districts...
Between 1995 and 2001, Mr. Gallo explains, the textile-apparel sector "has lost about ten thousands workers. The solution lies today in favouring the passage from industrial districts - mostly market, low-cost and product promotion oriented - to the so-called technological districts, product and proces innnovation oriented."
La Spola: But it won't be a painless process for our industrial system.
Mr. Gallo: In the 80s and 90s the Italian industrial district was studied all over Europe as an economic model capable of fighting the excessive power of big enterprises and multinationals. With the changeover to euro, that has eliminated the currency depreciation, and the growth of China and Eastern Europe (cheap labour cost and big production volumes countries), this system has started to have problems. That is why it is now necessary to count on the technological innovation revival within the districts.
La Spola: The agreement with China on the re-introduction of quota will give a shot in the arm to Italian enterprises. Does IPI have a solution to avoid wasting this umpteenth last chance to hold back the Chinese advance?
Mr. Gallo: The Chinese assault might bring 63 thousand small and medium-sized Italian enterprises to their knees. Among the antidotes against Chinese advance, there is also an IPI study according to which the textile/apparel sector can recover by relying on innovative technologies. The purpose of IPI's study is to indicate the technological trends in the textile field in order to allow the entrepreneurs to move the production towards the sectors where they can be more competitive on global markets.
La Spola: Can you tell us something about the main points of your analysis?
Mr. Gallo: The themes attracting mostly the entrepreneurs' attention and interest are three. Personalization of garments, in other words the production of distinct products for different clients according to their preferences (mass customization). The traceability of products along the whole logistic chain, that is the possibility of using technology to identify and trace production and distribution phases. The so-called technical and functional textiles for product innovation and the access to market niches.
La Spola: So product innovation and personalization. What are the opportunities offered by the market? And when?
Mr. Gallo: According to IPI's analysis, in the light of the new international scenario, the Italian textile Industry must pay careful attention to technical textiles (products far high-tech uses from agriculture to construction, from health organizations to car and aviation industry, from distribution to chemistry) and functional textiles (making garments acquire advanced properties) which represent a chance to recover the quota lost in the traditional textile sector. There are interesting market opportunities. Since the consumption and production of technical textiles converge on the most industrialized countries, where their use is more developed, we can reasonably believe that in these areas 50% of the textile production is given by technical textiles. So, in order to be competitive, Italian enterprises must rely on high added value products and invest in research and development. Our delay, compared to other countries', is evident and I admit that the seriousness of the Italian economic situation has been underestimated. But at the some time, I claim that I have been personally talking about Innovation far at least thirty years.
La Spola: The small and medium-sized enterprises run into difficulties when they try to improve their innovation capability.
Mr. Gallo: The Italian textile/apparel/fashion chain (68 thousand manufacturers, 570 thousand workers, over 43 billion euro turnover) have been registering, for three years, for the above-mentioned reasons, a serious drop in production, turnover and exports. However the sector is still a pillar of the made in Italy. How to protect the sector? Through an industrial policy aimed at supporting those companies that have built their success on innovation, trademark and team sprit. IPI has given support to the small and medium-sized enterprises of the fashion system, considering the textile, apparel, leather, shoe sectors all together, through the Fashion Net project.
|by Fabiano Magi
La Spola, Sept. 2005