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Volterra DIME-SIAF WorkshopJune 23, 2007

The recent transformation of the Prato industrial district

by

Gabi Dei OttatiUniversity of Florence

Polo Universitario Città di Prato

gabi.dei@unifi.it

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PRATO PROVINCE

7 Municipalities – 365 km2

20 km from Florence

Population: 227,886 (2001) 245,033 (2006)Foreigners: 26,118 (2006)

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The interpretative model of Prato developmentafter the II world war

The Industrial District concept:

ID is a socio-economic entity characterised by the interaction of a community of people and a population of firms mainly belonging to a localised industry (economic nation)

ID main components:

• A community of people with its informal (values, attitutes implicit norms of behaviour…) and formal institutions (trade associations, local government, technical and vocational schools…)

• A cluster of firms which are specialised in different activities of a localised industry: individual firms are of moderate size, but they are many in the same locality and strongly inter-related (mainly through local inputs markets), hence the Local Production System is large

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Reasons of the ID competitive advantage

The advantages of the ID model derive from econmies that are external to the individual firm but internat to the local system

It is useful to distinguish between:

• Semi-automatic external economies, resulting from the regular working of the main district processes

• Deliberate external econmies, resulting from conscious collective action: material infrastructure, social services…

Typical ID external economies are:

• Economies of specialisation: deriving from the divion of labour among firms and the overall size of the LPS

• Economies of flexible integration: deriving from the normal functioning of the local markets (competition & cooperation)

• Economies of learning:deriving from the “industrial atmosphere”

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1951-1981 PRATO DISTRICT DEVELOPMENT

• Years 1951 1961 1971 1981

• Textile Firms 830 7.601 10.695 14.689• % Italy 2.1% 17.1% 21.7% 24.5%

• Text. Workers 21,572 41,590 49,969 61,119• % Italy 3.3% 6.9% 9.2% 12.3%

• Population 172,470 212,119 264,237 303,539

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RESTRUCTURING IN RESPONSE TO THE WOOLLEN CRISIS OF THE 80s

Changes in products:• Product diversification and quality upgrading in textiles• Growth of subsidiary industries Changes in the division of labour inside/outside the district:• Reduction of the number of local subcontractors in some textile stages

(weavers, spinners, carbonizers…)• Outsourcing (imports & subcontracting) outside the district of standard

components and new (for Prato) inputs: silk, cotton yarn and fabric…• Growth of specialised producer services (computer services, business

consulting, marketing…)Changes in inter-firms relations:• Formation of teams and groups of enterprises• From semi-automatic (competition & cooperation) integration to a more

conscious coordination

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RECOVERY AND CHANGES IN THE ‘90s

Some figures:• Total employment increased by +10.6% (‘81-91: -2%)

• Even manufacturing employment increased (+0.3%; 81-91: -21%), but the increase concerned particularly producer services employment (+ 80%)

• In spite of the drop of manufacturing firms (- 11%) the total number of establishments incresed by +10%

• Also textile exports started to increase again in 1991 and continued to grow until 2001when it reached 2,412 million Euro

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Employment in the main activities and in total in the

Prato district (12 Municipalities) 1991-2001.Economic Activities Employment Changes %

1991-2001 1991 2001

Manufacture 69,815 70,017 + 0.3

Constructions 8,798 11,122 + 26.4

Wholesale + retail 22,938 23,228 + 1.3

Real estate + producer services

7,625 13,771 + 80.6

Total 126,159 139,542 + 10.6

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Economic activities change % 1991-2001

Chnage % 2001-2005

Manufacture -11.0 -7.4

Construction +27.9 +22.2

Wholesale+retail -2.0 +6.7

Real estate + producer services

+82.6 +22.9

Total +10.1 +5.0

Establishments in the main activities and in total in the Prato Province:Changes 1991-2001 and 2001-2005

Source: ISTAT, Cesus 1991-2001; Prato Chamber of Commerce 2001-2005

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Changes in the ’90s

• Further reduction of the local textile subcontractors (spinners, weavers, knitters…)

• Textile diversification and quality upgrading went on

• Textile imports of components and subcontracting outside the district (in Italy and abroad) continued (1995-2000 imports +63%)

• Establishments and employment in producer services also continued to increase

• A clothing production system arose in the 90s: the number of firms in the Prato Province passed from 893 in 1991 to 1,593 in 2001 (Census data)

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Employment in textile (by tpe of production) and in clothing in the Prato district (12 municipalities) 1991, 2001 and change

Type of production 1991 2001Δ% 91-

01

171 Spinning 13.451 12.388 -7,9%

172 Weaving 13.558 9.325 -31,2%

173 Finishing 7.827 8.834 12,9%

174-175 Other textiles 3.590 5.632 56,9%

176-177 Knitwear 6.974 4.768 -31,6%

TOTAL TEXTILES 45.400 40.947 -9,8%

TOTAL CLOTHING 4.823 6.967 44,5%

Source: ISTAT, Census 1991, 2001 in 2001 Textile empl. is 58% of manuf. employment

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Imports of textiles and clothing of Prato province

0

100

200

300

400

500

600

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Mill

ion

€

Textiles

Clothing

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Exports of textiles and clothing of Prato province

0

500

1000

1500

2000

2500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Mil

lio

n €

textiles

clothing

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THE RECENT YEARS: 2001-2006

External changes in the new Millennium:• Drop in consumer (textile) demand in developed countries

and especially in Europe (Germany)• Appreciation of the Euro against the USDollar• Rise of new aggressive competitors in particular from China

The new textile crisis:• Sharp reduction in exports -which dropped by 31.5% from

2001 to 2006 – from about 2,400 to 1,600 million Euro• Many textile firms closed down: mainly subcontractors but

also come final firms

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Prato exports of textiles and clothing (left axis) and rate of exchange $/Euro (right axis): 19991-205

150.000.000

160.000.000

170.000.000

180.000.000

190.000.000

200.000.000

210.000.000

220.000.000

230.000.000

240.000.000

250.000.000

0,8000

0,9000

1,0000

1,1000

1,2000

1,3000

1,4000

export media mobile 12 mesi dollari per euro

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Signs of vitality of the Prato economy and society:

• The intangible (technical, stylistic, symbolic…) contents of Prato textiles in many cases is increasing

• In other cases production relocation is occurring• Employment and firms in producer services continue to increase• The local clothing system continues to grow (about 2,500 firms

in 2005)• Prato cultural life flourishes: in addition to the famous

Metastasio Theatre, and the Pecci Contemporary Art Centre, the recently establishe Polo Universitario of Prato offers 10 different courses (4 in Engineering, 2 each in Economics, Political sciences, Arts and entertainments) and hosts 15 Research Labs.

• Prato continues to attract migrant people from all over the world

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Prato municipality: % of registered immigrants over total population1991: 1% 1995: 1.8% 2000: 5.3% 2005: 10.8%

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The Chinese community in the Prato district

• Chinese regular immigrants are about 15,000• The enterprises of Chinese people registered at the Prato

Chamber of Comerce in 2006 are about 2,800, 2,000 of which are clothing firms

• Most of them are small subcontractors, but recently some have become final producers of “pronto moda” and others are wholesale traders and importers

• Number of Chinese operating enterprises registered at the Prato Camber of Commerce:

1998: 862; 2001: 1,499; 2004: 1,997; and 2005: 2,414 corresponding to 8.1% of the total stock of firms in the Prato Province

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OPEN QUESTIONS

• Is the prolonged shrinking of the textile system (the engine of the past development) damaging the reproduction of the local external economies (of psecialisation, flexible integraton and learning) ?

• Or, will Prato be able to save itself also from the present storms, being able to adapt its economy & to seize the new opporutnities of globalisation?

For sure, the Prato district preservation will depend from

• The creativity of its entrepreneurs, but also from

• The capability of its institutions to produce new deliberate external economies and to maintain social integration with the inclusion of the new immigrants