Europe

Italy factory jobs 'disappearing overnight'

Former employees protest outside Firem, near Modena, northern Italy
Image caption Former employees at Firem continue to stage angry sit-ins outside the factory

Italy is Europe's second biggest manufacturing power after Germany, but with rigid labour laws, high taxes, a bloated bureaucracy and fierce competition, the country is struggling to stay on the production line. Italy may have lost as much as a third of its overall industrial production in recent years, experts say.

Simona Messori, 47, peers through the locked gates of the Firem factory in Formigene, near Modena, and sighs.

"I worked here for eight years," she says "And I really loved it."

She covers her face suddenly with her hands.

"Mamma mia!" she exclaims. "Twenty-year-olds can't get jobs in Italy, so what hope do I have? Why did our boss do this to us with no warning?"

Fabrizio Pedroni runs the family firm Firem, which makes electrical parts and heating elements for domestic appliances.

Like many other struggling Italian small businesses Mr Pedroni decided to lower his production costs by moving to Poland. But fearful that his workers would stage angry sit-ins and block his factory, he chose not to tell them of his plans.

Instead while the workers were on holiday, he secretly dismantled the machinery and disappeared overnight.

"Bring work back to Formigine!" shouts Simona, with the 30 or so other employees who lost their jobs. But Pietro Trapani and his wife Vincenza Esposito, who met on Firem's production line, seem too shell-shocked to join in the chants.

"I just don't get it," Pietro says quietly. "I worked for Pedroni for 13 years and then I got this letter saying that I had to report for work on 2 September in Poland - or not at all."

He shakes his head: "We've just moved out from my mother-in-law's place and rented our first flat but how can we manage to pay for it now? When I read that letter my world crumbled."

Image caption Pietro Trapani and his wife Vincenza can no longer afford to rent their new flat

Mr Pedroni insists that if he hadn't relocated his factory, his family firm would have crumbled.

He spoke to the BBC by phone from a town near Wroclaw in south-west Poland, where he is fearful for his safety having received death threats from outraged workers back home.

One of his trucks was intercepted by his former workers while en route to Poland and the contents were held hostage.

"Of course I care!" he says. "I know what I did wasn't popular but few people ask themselves why I did it.

"Italy is on the edge of a cliff and is about to fall, and the tragedy is that politicians couldn't care less about industry, they only care about themselves.

"The banks refuse to lend to us so every day entrepreneurs like me feel the noose around their neck. My workers shouldn't hate me, they should turn their hatred to the institutions that made me do this."

'Bloated bureaucracy'

Italy is haemorrhaging manufacturing jobs. Since 2007, 55,000 manufacturing firms have folded, taking more than half a million jobs with them.

Although workers like Firem's Simona only take home about 1,000 euros (£845) a month, her company has to pay the state about the same amount again in labour charges and taxes.

And workers like Simona have little spending power to buy the products that would drive growth.

But weak demand at home and high labour costs are not the only factors prompting Italian companies to move to eastern Europe.

Carlo Carnevale Maffe, professor of business strategy at Milan's Bocconi University, blames a bloated and erratic bureaucracy.

"Who wants to invest in Italy?" he says. "Even Fiat is looking to Brazil and the US. The application of law here, the regulations, it's totally inconsistent."

He thumps his desk.

"The government has enjoyed all the benefits of the euro - the low interest rates," he tells me. "But they haven't used those low interest rates to make reforms - they've just increased the public debt and inefficiency."

Image caption Domestic appliances manufacturer Whirlpool has closed some of its plants

High-end manufacturing firms like the luxury brands Armani and Ferrari have managed to weather the economic crisis well.

But firms producing lower- and medium-cost goods, even internationally recognised firms such as the Italian arm of the domestic appliances manufacturer Whirlpool, have been unable to stay competitive in a market where the price of raw materials is rocketing and where cheaper goods from China abound.

"In 2012, we reported losses of $52m (£33m)," says Davide Castiglioni, vice-president of manufacturing operations at Whirlpool.

"Turnover was down more than 20% and the downward trend is continuing this year. So we had to take the difficult decision to close one of our plants."

That closure resulted in 500 job losses and some of the factory production was outsourced to Poland.

"It's not enough though just to drive down cost," says Mr Castiglioni. "Being competitive means more research and more networking - even big firms can't be alone today... we need the expertise of small and medium firms...

"All of us [manufacturing firms] need to work together to get back to work."

At the Firem factory, Simona knows that in a country where unemployment has hit 12% and where growth is anaemic, there is little chance she will get back to work any time soon.

And Firem is not the only manufacturing firm in the region to have upped sticks and sneaked off to lower-cost Poland over the summer; two other firms have followed suit.

"I know it must be hard to run a factory in Italy," Simona says, "but you can't just give up. If everyone does what my boss Pedroni did, then in two years' time there won't be any jobs left in Italy."

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