Back on the 30th October, while I was flicking through the pages of Italian newspaper Il Corriere Della Sera, I came across a nude businessman, or rather a full page advert showing a businessman wearing no clothes. Upon being confronted by such a sight in the early morning, I nearly spilt my espresso, I can tell you.
The words on the advert read, translated from Italian, “Every day in Italy an entrepreneur risks ending up without underpants”.
The nude Italian businessman in question was one Enrico Frare who runs E-Group, of which winter sports wear maker Colle Sport, is part. It sounds as if Mr Frare’s company is doing rather well and, as you will learn, is ripe for expansion, except he can’t. Hence the frustration and the nude full page ad which cost, I understand, somewhere in the region of €100,000.
The naked Italian businessman in the ad is rather unhappy that Italy’s banks, despite being offered guarantees, simply will not lend him money. This means he cannot expand and, consequently, cannot offer more jobs to Italians.
Others have told Frare to move his business, or part of it, out of Italy, but he does not want to. However, seeing as he cannot persuade Italy’s banks to lend him any money, he might well end up having to leave Italy, which would be a shame.
Italy’s Glass Ceilings
Frare’s company is one of quite a number of Italian businesses which are doing fine, but appear to have hit a kind of glass ceiling which prevents them from growing. Actually, there are several glass ceilings, some of which appear to lie on top of each other.
Reasons why Italian companies cannot breach the ceilings are illustrated in the Forza, Italia book by ex-Economist editor, Bill Emmott. Forza, Italia is Emmott’s analysis of why Italy seems to be stuck in a rut. Seeing the naked businessman ad reminded me of Emmott’s thoughts.
Emmott concluded that Italy’s businesses do not grow for a number of reasons, or should that be ‘ceilings’?
Mentioned in Forza, Italia is Italian aircraft maker Tecnam which cannot expand because of the effect of organised crime glass ceiling. Next up is Technogym, which back in 2009 when Emmott spoke to the company’s owner was on the point of massive expansion. The planned expansion had not occurred when Emmott contacted Technogym for an update ten months later. Looking at the well-presented Technogym website today, it does sound as if the company is doing well, or that is the impression one gets from the up-to-date news section of the Technogym site. Today, Technogym employs 2,000 people – which is an increase of 250 since Emmott talked to the company back in 2009.
The reason for the sometimes slow expansion process in Italy given by Emmott was the over cautious approach many Italian entrepreneurs have – a sort of self-imposed glass ceiling.
The current economic crisis and Italy’s reluctant lending institutions also have something to do with the slow rate of growth in Italy’s businesses, and that’s not to mention Italy’s politicians who spend far too much time bickering, preserving their own interests, and not working to make life easier for Italian businesses. Italy’s high, complex, and difficult to pay taxes combined with the virtual impossibility of sacking employees tend to make matters worse. Throw in a legal system which moves more slowly than a 100 year old tortoise and it becomes clear that Italy has more than a few troubles.
It should not be like this though. There is demand for Italian goods – lots of it. Here’s the good news.
Italy’s export market is very healthy, and saw a growth of 22% in exports to the USA alone in the first 6 months of 2011 – despite the ongoing crisis. Other markets with a thirst for Italian goods are China, India and Vietnam.
Am I surprised Italy’s export market is doing so well? Not in the slightest. Italy makes a vast range of extremely desirable products, many of which fall into the virtually crisis-proof luxury sector, as you will discover if you take a look at the blog of Italian luxury adviser Salvo Spagna, who I’m happy to say I work with.
On top of exports, there is, of course tourism which is another potentially highly lucrative income stream for the old boot. Italy’s tourist sector tends to be left to go it alone and receives very little help from Italy’s institutions.
I hope Italy’s government finally gets its act together and that I will not end up spluttering into my morning coffee at the sight of another naked businessman ad.
An anti-crisis cabinet meeting is due to be held this very evening. Hopefully, smashing a few of Italy’s glass ceilings will be discussed.