By Alberto Cavicchiolo and Federico Piazza

Giuseppe Pasini is the president of Brescia’s Confindustria, an association of Lombardy-based businesses that moreoverbrings together the best of the Italian steel industry.
He is also the head of the Feralpi Group, which is among the top European steel producers for the construction industry, with a turnover of 1.3 billion euros. 

For centuries, the history of metallurgy has linked Brescia and Venice. One can go all the way back to the Renaissance: iron mines and metalworking in Val Trompia, the production of weapons for the naval fleet built in Venice’s renowned Arsenale. In north-western Italy the working of low-fire iron in tub forges prevailed, while in the north-eastern Lombardy-Veneto region the use of different Brescia- and Bergamo-type versions of the proto-blast furnace was widespread. Venice used the Brescian method to satisfy its naval and military metallurgy needs.  

How is this sector in Lombardy and the Northeast facing the economic crisis of 2020?

Ferrous and non-ferrous metallurgy is among the best-performing Italian industrial sectors. Steel in particular has shown incredible resilience. In Lombardy and also in the Northeast, from what my colleagues from Veneto and Friuli tell me, the steel industry has not suffered any large order losses.

So there was more damage in 2008?

At that time, the financial crisis led to a lack of liquidity with global repercussions, given that the steel industry was one of the backbones of the eastern and western economies. 
However, in the pandemic crisis, the steel industry has held up well. During the lockdown we put an adequate structure in place so that we could remain competitive. An example of that would be the task forces that were quickly mobilized as well as the resilience committees that made our reaction capacity structural. There are companies that are investing over the long term. Because in the steel industry it takes 5 to 10 years for investments in the environment or processes to have effects. We decide today what we will be 10 years from now, so we have to be resilient and proactive.

How do you view the main steel companies in the northeast?

For the Italian steel industry, the northeast is a large industrial district in which different, very competitive and solid Groups are operating. They have been able to implement innovative processes over time, thanks to the adoption of the best technologies, which have also been able to progressively reduce the industry’s environmental footprint. They were also able to do this because they are well-capitalized companies, which have proven to be resilient in the face of difficulties, including those related to the Covid-19 pandemic. 
The most prominent example that comes to mind is Danieli. The Friuli-based group, which is also listed on the stock exchange, is one of the largest global players in the industry and a model of innovation that has established a remarkable industrial and financial stability.

How does the Italian industry compare with its German competitors?

After Germany, Italy is second in Europe. This is also due to the important contribution of the Northeast, which has districts established through the diffusion of skills from some of the large companies in the area. Even in Brescia, Falck has acted as a “university” for those who establish their own businesses. For example, my father Carlo started up his company with a department manager “stolen” from Falck; he got the plants off the ground and stayed at Feralpi until his retirement.

Germany certainly has a longer industrial history. Especially in heavy industry, where their coalfields have made a difference. Furthermore, the German system focuses on networks: polytechnic schools and universities are traditionally linked to businesses. The Germans have taught us a lot about the value of industrial brands. They have created quite a few. The most striking example is the automobile business, where they are synonymous with top quality. A company with a strong brand has an edge: it can’t be replaced like an anonymous supplier. 

Does Feralpi operate in Germany?

For almost 30 years, having acquired a company based in Riesa, between Dresden and Leipzig. In this case we imported some typically Italian flexibility.

What are Feralpi’s strengths?

Certainly one is that we thought about internationalization in a timely way. We went to Germany in 1992, right after the Berlin Wall came down. In the 1970s we were already selling rebar and other products for the construction market. In partnership with two entrepreneurs, German steel dealers, we went to produce in the largest European market. And we’ve stayed there. Today we have 700 employees in Germany, as well as a series of acquisitions of important client shares.

Then there’s our service; it’s not enough to produce quality steel. Today service is a major factor in beating the competition. We produce steel according to the specific needs of our clients, operating in the field of major projects and infrastructure. Furthermore, our people are central. This is why I believe in corporate welfare. Investing, for example, in the protection and active involvement of employees to build wellbeing is essential.

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How Italian industry is facing the challenges of doing business remotely

By Federico Piazza

Remo Pedon, Vice President of the Confindustria Vicenza (Italian Industry association) who is charged with the specific task of handling foreign markets, is taking stock of the current problems, strategies and tools for Italian companies to deal with the export and internationalization situation in November 2020.

Vicenza is the nation’s number one when it comes to per capita exports. The manufacturing landscape is highly varied: in addition to metalworking and mechanical engineering, there’s also leather tanning, jewelry, fashion and many other specializations.

How are companies doing in terms of international operations?

Our exports have been heavily influenced by the pandemic. Major problems have occurred because our companies have been able to establish themselves and interpret client’s needs in a sartorial way, and that work model makes it difficult to let go of in person contact and to manage the relationships remotely.

However, it’s still important to take advantage of all the opportunities offered by technology. Virtual showrooms and trade fairs for example. There’s also using social networks more effectively, to continue communicating with your established clients and to acquire new ones.

What’s the first thing that’s needed to deal with international markets? 

The complexity of the geopolitical and macroeconomic scenarios requires exporters to increasingly diversify their markets, along with the ability to analyze those scenarios and the associated risks.

As a Confindustria, we collaborate with Intesa Sanpaolo, the most structured and internationalized Italian banking group, which offers us informational and operational tools to help our companies.

In which markets are Vicenza’s companies most internationalized?

The key markets are still European: Germany, France, Switzerland and the United Kingdom top the list. Then there’s also North America. The USA is really where the internationalization of our companies has grown the most; it’s a very dynamic and complex area that calls for organized oversight.

What about Asia and Africa?

China is important for Vicenza’s exports, not only as a place to go and produce things. Today it has become a market for our products, including consumer and luxury goods.

India has enormous potential, but there are still many barriers to entering that market.
We need to invest in on-site production, but India’s economic ecosystem is not easy for our SMEs to navigate.
That said, there are still many success stories, because India offers strong engineering expertise and the fact that the use of English is widespread also helps.
With ICE (an Italian agency promoting foreign trade and the internationalization of Italian companies) we are focusing intensively on agricultural machinery and agri-food technologies, sectors where India has made substantial investments.

We also expect a lot from African markets, where our companies can play an increasing role.

Are there prospects in Russia?

It’s a market which has given us a warm welcome. The Russians have purchased a great deal without forcing our exporters to establish a legal corporate presence in their country.
Now the context has changed due to the reciprocal sanctions and the depreciation of the ruble. Today, it’s very difficult for many sectors to sell in Russia without being physically present or without producing there.
We welcome the efforts of the Confindustria Russia’s companies, which are able to offer high-level informational and relational support with local institutions.
Of course, future prospects in the Russian market, as well as for the market in the Middle East, will depend very much on trends in the petroleum industry.

Do international trade agreements help?

Trade relations negotiated by the EU are an important growth lever. The agreements with Canada, South Korea and Japan have had immediate effects on the growth of our exports. We expect a great deal from the EU’s trade deal with Vietnam, which has just come into force. Meanwhile, we’re afraid that we won’t reach a Brexit trade deal with the UK.

There aren’t many international joint ventures on the part of Veneto-based companies.

It’s an old and complex problem, often a consequence of the size limits of our companies. Naturally, our SMEs move cautiously in areas and territories that they don’t know well. It’s possible that our institutions could help more, although the commitment and efforts of the embassies, ICE, and SACE/SIMEST in recent years is commendable.

In the Confindustria’s ‘Country Guides’ we organize country communities, relating corporate experiences and offering training and discussion. In 2004 we created the Samorin industrial park in Slovakia, the first and perhaps only one led by an Italian entrepreneurial association abroad.

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By Pratapaditya Mishra and Binay Krushna Mahapatra

The aluminium industry has a high potential for creating jobs.
Consider that the production of 1 Mln MT of Aluminium would create about 200,000 jobs that can offer a living wage to well-trained workers. In order to spur growth in India’s aluminium industry, a revitalisation plan, which includes a stimulus package and dealing with tariff and non-tariff issues has been suggested.

What should such a plan include?

Firstly, there should be a higher emphasis on essential end-use sectors like power and packaging. Secondly, multiple supply chain alternatives for shipments should be established by creating strategic marketing tie-ups with competitors to utilize their marketing base in regions less-affected by COVID-19. Producers would also do well to consider alternative sales channels, such as traders, new potential end-users, e‑retailers, spot auctions, etc.

Another important aspect of any aluminium industry revamp needs to involve ramping up recycling initiatives. Why? Because recycling aluminium requires up to 95% less energy than primary production. Recycling should be given due importance in order to ensure the long-term sustainability of the industry. Secondary recycling should be promoted to contribute 30–35% of domestic metal requirements in line with the international trend.

There are also any number of more specific measures that can be taken to make the industry more sustainable, robust and efficient. On the production end, one energy-saving solution involves using  hot metal to make use of energy (gas and power) to produce high value-added products (VAP) instead of producing a high volume of lower VAP. In addition, inventory and management of raw materials and consumables will be key factors, together with developing strong data analytics to monitor the price movements of raw materials to fine tune the demand-supply and procurement cycle.

However, upstream efficiencies also mean that it will be necessary to drive downstream production in each country to keep VAP in inventory. Alternatively, there is the possibility of entering new market territories, building a wider base to mitigate the short-term risk of market fluctuations due to COVID-19.

Certainly upstream and downstream need to coordinate, focusing on and expanding R&D during the next few years in order to develop and facilitate localized sourcing. In the early stages, primary producers would play a handholding role in the development of the ancillary and downstream industry segment.

All of this requires strategic organizational structures with a commitment to investing in automation, continuous improvement efforts and employee training with the aim of keeping the cost to the company low.

There is, of course, another important player in this context: the Indian government. How could the government work towards encouraging the renewal of India’s aluminium industry?
The first step would involve support in terms of tax relief, import duty reduction and export benefit. It is also important to balance duties in the case of scrap to help both primary and secondary producers. The government could also help revive the consumer market by way of tax relief to auto buyers and sellers.

More specific measures should also be considered. There is the possibility of the allocation of coal block to the aluminium industry under the government dispensation route; aluminium manufacturing is a power-intensive industry with nearly 40% of input cost being the cost of power. A consistent supply of coal is essential for the survival and growth of the aluminium industry.

Mining and technology are also part of the equation. Bauxite needs to be conserved; India will have Bauxite for approx. 45–50 years at present reserve and consumption levels. The mineral needs to be conserved to ensure long-term benefits from value-addition within the country. With revised IBM guidelines (increasing cut-off limit of reactive silica from 3 to 5%), Indian alumina refineries will have to process lean bauxite ores thus conserving the precious mineral. The development of applications and the introduction of new technology through Industry 4.0 in a process industry, such as the aluminium sector, will be increasingly important.

When it comes to creating a level playing field vis-à-vis regional competitors, import duties ought to be reconsidered. With a view to protecting Aluminium MSMEs, import duty on cheap, end-use aluminium products from China and other countries in the series 7603 to 7612 should be increased by 5% to 10% and metal ingot (7601) and scrap (7602) import duty should be boosted by 5%.

It’s also important that the aluminium industry be given core industry status and a National Aluminium Policy needs to be introduced. What should such a policy look like?
To start with, a National Aluminium Scrap Policy should be introduced to regulate the import & use of aluminium scrap. This type of policy would also help avoid any reduction in the quality of recycled aluminium. The challenges of aluminium MSMEs needs to be studied and a comprehensive package extended. This could include handholding to be done by home plants along the lines of what is already being done in China.

The financial situation also needs to be reviewed and plans drawn up for loan restructuring and/or the long-term refinancing of loans. In addition, the aluminium industry could be encouraged by offering suitable incentives to spend CAPEX in setting up new facilities and/or updating existing ones. Another financial consideration should be a moratorium on royalty on mineral ore and coal mining & coal cess (or carbon tax) for this FY-21.

Finally, and importantly, measures must be implemented to develop demand.
The Indian Government, in consultation with the Indian Aluminium Industry, would benefit by developing policies and guidelines for increasing aluminium consumption in the applications that involve improving automobile performance, replacing steel coaches in suburban trains and goods trains with aluminium wagons, using aluminium for residential and commercial construction, promoting the use of aluminium in food packaging, and mandating the use of aluminium in Smart City Projects as a green initiative.

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By Francesca Bruni, Art Valley

The headquarters of the Ferroni steel manufacturing group, with its offices, foundry and factory, stretches out to a point on the shores of Lake Baldo in Vallelunga, as if it were a hand with well-sculpted fingers. The road leading to Vallelunga runs along one side of a small lake surrounded by high hills, fed by the flow of mountain streams. At the curve of the last bend, take the road that runs alongside Lake Baldo, and then, two or three kilometers further on, you reach Ferroni.

On the banks of the Marzo stream, in Getto, between Lake Baldo and Lake Vergine, in the province of Pressa, Mario Ferroni was born in 1918.
Since the Middle Ages, Getto has been a village dedicated to the steel industry, in addition to family farms. Mario’s grandfather, Duilio, who forged tools for agriculture and construction, had moved to Getto from Altopasso. His ancestors were carters. The water from the Marzo stream supplied the driving force necessary to power the large waterwheel that ran the workshop. 

Duilio’s son, Giovanni, Mario’s father, married Lina, a farmer’s daughter. They live in what was known as a casa-bottega: adjacent to the house is the workshop; on the ground floor, Lina manages a one-room tavern with 4 benches, a couple of tables and a large counter. She also takes care of the housework, their small farm and the farmyard animals. Every member of the family has managerial and operational duties. No natural device, but an artificial society. Around the workshop, conversation. No one is marginal, not even the children. They contribute to the saga.

Mario goes to school, wooden clogs on his feet, carrying his books and notebooks in his arms. Every morning, before school, Mario serves at mass. Every evening, Mario and Lina kneel and recite their prayers. With the arrival of summer, neighbors and friends meet on the street. The men also gather in the pub, the women in the chairs in front of the house.

Casa-bottega, home and workshop, artisans and farmers: Italy’s foundation for centuries. The year was inscribed on the large stones of the trip hammer in the Getto workshop: 1616. From 1616 to 1918, when Mario was born, that was still the trip hammer. In the Renaissance, and even later, in Italy a company that produced manufactured goods was called a “bottega”. In the Renaissance, the bottega was the device of the enterprise.

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By Maurizio Sala, entrepreneur, president of Amafond 

As the president of Amafond, an Italian foundry supplier’s association which involves approximately 100 manufacturers of essential equipment and auxiliary products for the industry, I am proud to represent Italy’s ferrous and non-ferrous metal foundries. 

Our industry employs no fewer than 6500 workers and our global turnover is more than 1.5 billion Euros, 75% of which is accounted for by the export market. I am also directly involved with the industry myself as the owner of Foundry Ecocer, a leading name in the production and sale of an expansive range of materials required by smelters, cast houses, refineries and a variety of different types of foundries.

I believe that the scope of the global crisis induced by Covid-19 means that most companies, certainly many in Europe and the U.S., will be dealing with the fallout, from a financial or market standpoint, for many years to come. However, although many industries—such as the automotive sector—were already in crisis before the pandemic, we now have to look for the best way forward in the post-covid business environment. 

My opinion is that a courageous and well-structured plan devised by a united Europe will be able to restart our combined economic system and aid our industries in evaluating and innovating new solutions to reinvigorate our economy.
Clearly, the immediate consequences of this global pandemic will be, and are currently, felt by everyone involved in the international production and supply chain: owners, managers, administrative staff and workers have all come under extreme stress and challenges.

What is necessary now is a united and shared effort on the part of each individual, making the most of their specialized skill sets and capabilities. All projects and programs launched in this new environment must be clearly set-out, the goals well-defined, and also shared throughout the corporate structure. A united and motivated team can lay the foundation for an effective relaunch.

To give you all a clearer picture let me cite an example: the sales facet of businesses,  always fundamental, must establish new objectives and a new vision.
This will entail the evaluation of the nearest markets—both domestic and European—focusing on those that may previously have been neglected while companies focused on markets outside of Europe, which have been more profitable in the past.

While these foreign markets may still be viable sources of income, sales will now need to be more targeted. To avoid doing business in the old ‘hit and run’ style, European companies will not only need to learn how to effectively explain the customs and traditions of the products they are selling, but also to become more aware of those aspects of the markets they are selling into.

This will involve a shift in the old mindset and more intensive interaction with these foreign markets to ensure that the economic and information flow becomes healthy and sustainable for all involved.

Italy, Milan, Corso Venezia street during COVID-19 outbreak — Photograph: Westend61

Let me share with you a brief sketch of the steps currently being taken by my company to cope and move forward in this difficult time.

Our business is of strategic importance for our country.
Thankfully, because our activities fall into that category, we’ve been given the opportunity to maintain continuity in our daily business. We were closely following what was happening in China through the media and we were able to plan quickly and take effective action.

Before a formal, national protocol was issued, we had the foresight to organize our activities in a way that safeguards and maintains the health of our employees in these trying circumstances.

In addition to adopting individual protection measures for our staff, we swiftly revolutionized many other aspects of the way we work.
We divided the working day into two shifts of eight hours each. Teams were also equally distributed in terms of the hours they worked so that it was possible to maintain appropriate distances and other safety measures. Our office administration involves keeping a single staff member in the office (per shift) while the others work remotely.

Everyone was kept abreast of the new rules and protocols.
However, rather than just ‘pinning a memo to the company bulletin board’, each and every employee was thoroughly briefed about the dos and don’ts of this new way of working, which ensured smooth operations.
We also introduced a simple and effective ozone air-purification system for many environments including our offices, laboratories, and small production areas, which I feel should actually have been considered earlier.

Thanks to our readiness and quick action, and the updating of our working methods, all of our employees are behaving very responsibly and, just as important, they feel secure. I think we have managed to establish a very effective system.

Of course for this to continue, financial or economic interventions at the government level are needed just as much as a motivated staff. Above all we feel no shortcuts should be allowed in order to emerge from the current crisis both stronger and better prepared for the future.

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