Tagesarchiv: 12. Mai 2013

Competitive Advantage: Italian Manufacturing

So ein Artikel gehört eigentlich auf mein anderes Blog, dass sich mit wirtschaftlichen Themen beschäftigt und dessen Adresse hier nicht verraten werden soll. Da wir aber letztens auch schon mal Politik hatten, kann ein wenig Wirtschaft in Verbindung mit Rädern nicht schaden.

via Inner Ring

Italy’s Unique Cycling Manufacturers

THURSDAY, 9 MAY 2013

Cycling is popular in many places but few nations claim a trade surplus when it comes cycling goods. Sure there is China’s mass-production but Italy seems unique with a range of premium brands.

In fact you could go for a ride with 100% Italian products. From your helmet to your shoes and a bike with a frame complete with every component. Can any other country match this? Probably… but only just.

Why is this so? Well it seems Italy has a thriving number of small and medium sized firms that rely heavily on blending the personal touch of family ownership with modern machinery and big investment in research and development.

Belgium is the most cyclesport crazy country. But can you name a Belgian cycling brand? Well done if you got the likes of Merckx, Ridley or Sapim, the spoke manufacturer. But there are not many more and besides, “made in Belgium” doesn’t promise too much, unless you’re in the market for beer.

By contrast Italy has so many brands, probably an A-Z but certainly from ACI Alpina spokes to Vittoria tyres (Zéfal is French). Interestingly it’s across all the sectors, from frames to fashion, wheels to components. In fact you could go for a ride with only Italian gear, from your bike to every item of clothing.

What’s behind this success?
The University of Rome’s Roberto Cafferata has looked into the factors explaining the success of Italy’s small and medium sized firms. Surveying the past literature Cafferata offers a summary of the traditional reasons:

i) owner entrepreneur’s personal skills;
ii) constant renewal of manufacturing processes;
iii) efficiency either in promoting product innovation or in imitating technological leaders: this is the reason why Italian entrepreneurs were able to implement both cost-based and quality-based strategies;
iv) ability in relating organizational models (such as franchising, networks and outsourcing) to specific production and distribution needs

But these explanations are dated, Cafferata references works from the 1970s, 80s and early 90s. So he’s tried to survey things in the last few years and having surveyed hundreds of small and medium firms, his data say “83% of the whole sample attaches the greatest importance to the manufacturing process” meaning investment in plant. His report also suggests the more international the firm, the more the spend on Research and Development. But he doesn’t explore the causality, does more R&D lead to more competitive products or are these international companies just the firms that try to explore things? In his conclusion, Cafferata says price remains fundamental but companies can only offer competitive products thanks to high quality manufacturing, design and R&D. I think we can see this with cycling gear. Italian cycling has a rich heritage which is exploited by some brands but it’s rarely the selling point. The likes of Campagnolo, Colnago or Selle Italia have supplied champions of the past but promote modern products.

Other reasons
Many are family-owned businesses with owners who are passionate about the sport and able to fund their business themselves and therefore free to pursue whatever avenues they wish. A lot of the bike business is as much about fashion as it is tech and one obvious export for Italy is the fashion sector with its big brands, cycling has been able to mimic the trends.

Another reason is cost and price. For years Italy simply devalued its currency. Repeated politico-economic crises saw the lira devalued time after time in the 1980s and 1990s, a quick trick to make exports more competitive, although often at the expense of Italians with wages or salaries. Since Italy joined the Euro in 1999 this option has stopped.

The Sidi factory in Maser, Italy

Made in Italy
Of course defining what is Italian is hard. A Colnago frame made in Cambiago is obviously Italian although what about a Pinarello with Toray carbon from Japan? Or Campagnolo which produces a lot of its parts these days intwo factories in Romania. Or a Bianchi that is made in Asia and owned by a Swedish company? It’s time for that well-used phrase from Il Gattopardo, by Giuseppe Tomasi di Lampedusa where Tancredi says “If we want things to stay as they are, things will have to change” meaning this time that for these companies to continue to survive they have to move some operations to cheaper bases or risk finding themselves permanently undercut by rivals with Asian assembly lines?

It’s reminiscent of the fashion industry where the “Made in Italy” label is valuable but gamed by the manufacturers because it means clothing or leather goods to be substantially made in Italy. But it allows a leather handbag to be assembled from Turkish hides by workers in Serbia before being finished in Italy. And in recent years even the biggest brands have been caught subcontracting work to Chinese workers… employed in sweatshops within Italy itself, see the Schiavi del Lusso (“The Slaves of Luxury”) documentary produced by Italian TV. This is less of an issue for Italian cycle manufacturing but it demonstrates the lengths some firms go to. Rest assured the Giro’s maglia rosa is from a factory in Bergamo.

Guess the country

Other nations?
Try to make a 100% made-in-country bike in another nation is possible but it’s just not as easy, nor is there the choice. Sure China mass produces but what bartape would you use, which Chinese brand of shoes would you wear? You could probably get there with Japan thanks to Shimano and its subsidiary Pro components and Pearl Izumi clothing brands and tyres from Bridgestone but you would not have the choice of so many brands. Perhaps the USA is the best alternative? Go with SRAM and its associate brands and you will find most parts but where do you get the saddle from, and would the ride be clincher-only? Certainly the choice is reduced.

Summary
It’s easy to ride a 100% Italian bike dressed head to toe in Italian clothing. Perhaps some patriots do but visit Italy on a Sunday morning and you’ll find molto Shimano. But Italy has countless cycling brands that range from fashion to the relatively heavy manufacturing of chains and steel tubing.with every component. Can any other country match this? Probably… but only just.

Why is this so? Well Italy has a thriving number of small and medium sized firms that rely heavily on blending the personal touch of family ownership with modern machinery and big investment in research and development.

 

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