September 21, 2015 Center for Labor & Community Research Flexible Manufacturing Networks of Emilia-Romagna Leading the Race to the Top in

April 19, 2023Center for Labor & Community

Research www.clcr.org

Flexible Manufacturing Networks of Emilia-Romagna

Leading the Race to the Top in Global, High Performance Manufacturing

Matt Hancock



Emilia-Romagna

A region in northern Italy



A great place to live!

Population: 4 million (1 million in the Capital city, Bologna)

Unemployment Rate: 3.8% (compared to 7% in Italy and 9% in the European Union)

Leading region in Europe for female employment

The fifth richest region in Europe



A dynamic, high performance economy

Gross Regional Product increased nearly 12% from 1997 – 2005 (compared to 10.8% nationally)

Industrial GDP grew 6.6% in the same period (Piedmont and Veneto’s decreased 8.4% and 1.4% respectively)

ER is responsible for 12% of Italy’s exports (with 6% of Italy’s population)



Global leadership

Packaging Machinery Ceramics Automotive Biomedical Fashion & Textiles Wine, dairy, meats



Advanced technology

Leader in Italy & Europe in innovation

93 hi-tech spin-offs in the last three years

1,500 engineers & researchers hired by private sector since 2003

Sunny, world’s smallest motor invented!

New ‘hi-mech’ cluster



Secrets of their success!

“The success of our development model has been our ability to marry the growth of networks of small firms with community development.”

Duccio Campagnoli, Secretary of Productive Activities for the Region



How small is small?

400,000 companies in the region 1 business for every 10 residents 100,000 manufacturers Average firm size: 10 employees 99% of the firms have less than 250

employees



Networking is natural

Manufacturers began aggressively networking following WWII in an informal manner

Development of “industrial districts” or groups of geographically proximate firms operating in a particular sector or related sectors, each specialized in a particular phase of production



Flexible Network 1.0

Informal networking Also called “flexible

specialization” No “lead firm” Firms owned by skilled

workers with an entrepreneurial spirit

Continuous improvement Older equipment No management structure in

the firm



Flexible Network 1.0

End Users in Sector

Typical Small Firm Other Small

FirmsOther Small Firms



Flexible network 2.0

Emergence of “lead firms” in a cluster (OEMs)

More heirarchical, vertical relationships Smaller suppliers still specialize and sell to

different OEMs in the cluster and outside of the cluster

Strategic partnerships Longer – even transnational - supply chains




Typical Small Firm

OEM

“Lead Firm”

OEM

“Lead Firm”

2nd/1st Tier Supplier

Local suppliers

Foreign suppliers (lower value-added)

Other Suppliers

Other Suppliers




Emergence of formal, horizontal networks among suppliers

Small firms capture more value Formal structure for temporary, project-based

partnerships Creation of supplier-owned & controlled 1st tier

suppliers/OEMs Constant spin-off and integration into network as

means to increase capacity




“System Integrator”& Incubator

Specialized Supplier





OEM

End User



It takes a community

Success is a synergy of – Effective policy to help small firms network, innovate &

globalize– Business associations that provide value-added services– Business-labor-government partnership– World-class infrastructure– Social services as factors in productivity– Entrepreneurs’ commitment to quality, innovation, the

community and the long-term



CNA – Small business association

Region-wide federation of province-level organizations

Offices in every neighborhood of the region CNA Bologna has 16,000 members 600 employees that provide value-added

services to member companies



Regional Policy

Policymakers are guided by expert research into economic clusters

Social partnership is explicit Examples of effective policies

– Sector & transversal service centers– Regional innovation centers– Tech-transfer through “networked labs”– Support for hiring engineers & researchers– Public-private venture capital fund for small business– Support for start-up costs associated with network creation



Conclusion

“The success of our development model has been our ability to marry the growth of networks of small firms with community development.”

Duccio Campagnoli, Secretary of Productive Activities for the Region

Documents

September 21, 2015 Center for Labor & Community Research Flexible Manufacturing Networks of Emilia-Romagna Leading the Race to the Top in