- Published: Tuesday, 07 May 2019 12:53
If you are based in Italy, you know that probably, three weeks away from the European Parliament elections, there are few countries within the European Union were so little is discussed on newspapers about what will affect us more in the long-term.
Even today, it is the second day that newspapers seem to be focused more on yet set of arrests for corruption, organized crime issues, discussions about quarrels within the Government, and so on and so forth: routine.
We actually really never left the aftermath of the most recent General Elections, the ones that delivered to the Italian Parliament what resulted in an uneasy alliance between two political parties that supposedly represent what is new.
Today I would like to share some items that I already discussed with somebody in Turin last week.
Personally, I am skeptical about private ownership of critical national infrastructure, but for new infrastructure that then becomes critical, or for the actual running of the infrastructure (even critical national infrastructure), I think that makes sense to consider on a case-by-case basis which blend of roles State and private enterprises can play.
I am currently in Piedmont, and, beside the European Parliament elections, we have also elections to appoint the Governor of Piedmont and renew the Regional Parliament.
At the same time, in Turin and Piedmont there are discussions about investments in infrastructure- frankly, from newspapers, most of the discussions seem to focus on Turin: ranging from what to do after winning the ATP finals 2021-2025, to an additional metro line, to the new “Città della Salute” (a new healthcare structure to replace some existing facilities).
Even while building up the lists of candidates, instead of representing the territories, some seem to be stuck in the 1970s-1980s, focusing more on keeping in office some than on considering which interests should be represented.
So, this post will be about infrastructure, political choices, and regional elections within the context of European Parliament elections and forthcoming changes for the EU (including Brexit).
You probably read about discussions on privatizations in Italy.
Increased costs, reduced maintenance, shrinking innovation, unbundling of services (a.k.a. in reality same or reduced services, higher prices): not really what you would expect, according to the traditional reasons why public services and investments are privatized, or converted into a Private-Public initiative, or generate “service agreements”.
Even the latest set of discussions show the same, usual divisions, between those who would like to nationalize any utility, down to those who would like to reserve for the State and local authorities just a “caretaker” or “traffic cop” or, at most, “watchdog” role.
Within the Government, both national and regional, sometimes it seems as if the range of opinions extends across the political spectrum- and even within each political party.
Last Friday was discussing in Turin about the Autostrade and Alitalia cases.
There is a point on this issue where I agree with the national Government: Autostrade and Alitalia are two different dossiers.
Maybe shifting a shareholder from one to the other could be solved with a form of securitization (on the remaining life of the concession, minus planned costs, penalties, etc) and withdrawing of the concession, but it is a matter of negotiation strategies.
What matters is that, since the 1990s, privatizations and PPI in Italy often weren't really based upon the lifecycle of the agreement, but that happened also in other countries (e.g. I remember the case of the C&E outsourcing while I was living in London, in the early 2000s).
The point is: probably, more agreements done over the last decade or two would require an assessment on what delivered, not just Autostrade.
Refraining from going to the opposite extreme, as I saw again in UK, when some issues with infrastructure were discovered, after review, to be due also to agreements that required to carry out investments that could be recovered in ten years or more, but on a concession lasting less than that.
In Piedmont, the current regional elections for once seem to have at last delivered different proposed development models.
This is partially a result of relative weaknesses.
As I wrote before, the incumbent Governor has been Mayor of Turin for two mandates, and now is seeking a second mandate as Governor of Piedmont: if successful, it would be 20 years in office, but frankly his model seems to be closer to what I could describe relating another model.
Long ago, while I was supporting startups in Turin, once I attended at the Unione Industriale a conference for marketing management and directors organize by a local Foundation within the arts environment.
The reason? Because there was a law to generate incentives to support arts (“mecenatismo”), and the idea was to ask companies to transfer part of their marketing budget to support arts, to be managed by the Foundation.
More interesting was another concept presented, the idea that Turin would produce art, and Milan would distribute it- akin to building up an “art-industrial complex”.
Move forward over ten years, and we have now a model that I could call “produce-to-consumption nearshoring”, e.g. as that represented by shops such as Eataly, and others.
My first project was in Turin in 1986 in procurement at FIAT Auto, then in 1988 had a group-level management reporting activity in Magneti Marelli nearby Milan, and in-between a general ledger project at Istituto Bancario San Paolo Torino, so I had a data-oriented perception of local business and local economic flows.
Thereafter? Whenever I worked in Italy, I just had more of the same, and in late 1980s to early 1990s I was travelling around Italy, so I had a way to observe first-hand (and collect plenty of funny stories).
Over the last few decades, Turin expanded its service sector but, as I keep repeating (and I am not alone), gradually the mix of services decreased in terms of value added: from logistics, consulting, etc., to an expansion of the “produce-and-consume nearshoring”: food, etc.
While in the 1980s probably made still sense to focus the development model of Piedmont on Turin, as many small companies outside town were within the supply chain of the manufacturing engine of Italy (Turin), gradually the “provinces” went back toward developing needs different from those of Turin.
But, frankly, recently the main proposal I saw for a regional business ecosystem was not from the incumbent Regional Government, as you would have expected.
Moreover, what I heard seems to be a resurrection of something that I heard over a decade ago while discussing what I had learned while working in Rome in projects at Sviluppo Italia about Italy's weaknesses in attracting foreign direct investment.
Look at the map of Piedmont, and you will see that Alessandria isn't too far from either Liguria or a bit of Lombardy, and a bit of Emilia-Romagna.
At a time when somebody in Turin relaunched the rivalry with Milan (and this was more than once reciprocated), personally I kept (even recently) repeating that the aggregate size of Liguria, Piedmont, Lombardy delivers an industrial and agricultural potential that exceeds many other areas in Europe, but it is still a smaller market, in terms of inhabitants.
So, it makes more sense to aggregate, integrate, or at least connect, than build barriers.
Recently the Milan-Cortina Winter Olympic 2026 bid showed that at the local level is possible, when focused, to work across the political spectrum, and even a centre-right Governor can work with a centre-left Mayor on a specific objective.
Sadly, this is the exception: the selling point of the centre-right bid for the governorship of Piedmont is that this will deliver three attuned Governors in Piedmont, Liguria, Lombardy (as the latter two have already Governors of various centre-right hues).
The centre-left Governor seems to be still focused on that “Turin-centric” model, and considering his experience in office, that should not be a surprise.
The only issue is if, in such a model, a periphery more focused on manufacturing and agricultural production will keep being interested being subject to choices made elsewhere for an audience that doesn't share its needs.
Yes, we are just three weeks away from the European Parliament and Regional elections- but, in Italian politics, could be equivalent to three days or three years, in terms of adjustments.
Along with the elections, 2019 brings to Piedmont also some musical chair games in private and public organizations that since the 1990s have had a significant impact on the feasibility of local political choices- from expanding higher educational facilities, to attracting (and funding) foreign students and exchange programs, to renewal and re-purposing of manufacturing facilities, to funding countless non-profit and utilities-related innovative projects.
Now, a re-balancing of power between Turin and provinces could actually help to expand internationalization, and probably enable Piedmont, joining forces with Liguria and Lombardy, into revamping attractiveness for both local and foreign direct investors.
It doesn't really imply having the same political party leading the three regions or their main cities (Turin, Genoa, Milan), but, if the current power distribution is restructured, the risk is that, instead of integrating, the North West will dis-integrate, and both companies and local authorities will find more convenient to integrate in business ecosystems of our foreign neighbors, than building up an economic development engine that, along with North East, could actually improve development opportunities for Italy as a whole.
As, in the end, the North East is already partially having an increase in presence and development coming from abroad.
So, it is not really a matter of “partisanship” (e.g. all centre-right, all centre-left, support from M5S to the centre-left on a case-by-case basis if the latter were to win again).
And, frankly, both those gloating in the past few weeks and months when centre-left politicians were picked up for corruption, and those doing the same now that centre-right politicians are walking the same road, should consider that probably neither is a good sign.
As I keep saying since the latest General Elections in Italy, my feeling is that we are back to the early 1990s, where many reforms and political shifts generated (politically) those that have been there until now.
In Piedmont, it is a matter of choosing a development model that includes all the territories, not just supportive of the self-appointed main territory that is still operating as if it were its manifest destiny to rule Piedmont.
Just an historical reminder: few centuries ago, Turin wasn't the leading business town in Piedmont- so, for all those that despise the recent manufacturing past as a company town, but would like to see the town as still the one “coordinating” the region... please sort your priorities out.
You cannot push for a model of “produce-consume nearshoring”, focusing on attracting basically tourists and non-business visitors to Turin (except for fairs, conventions, and the like), and then assume that you retain the same clout that you had when you were the industrial and higher education gravity centre of the region....
Having said that, if then Turin plans in a couple of decades to de-industrialize and turn into a leisure and assisted healthcare town, a kind of larger and more attractive American “Sun City”, then probably regional policies will have to consider Turin as one of the territories, with a specific development model.
And probably manufacturing and logistics will have to move elsewhere, while retaining in Turin just the educational and maybe shared research facilities that doesn't make sense to relocate elsewhere.
It is a choice- the point is that making such a choice in 2019 would impact way beyond the end of the forthcoming Regional Parliament mandate.
Overlapping with the restructuring of the European Union that will follow Brexit.