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In Italy's 'Red Emilia,' Socialists Mean Business

Policies foster small manufacturers in region near Milan

TEXTILE-FACTORY owner Graziano Daviddi has just gotten a complaint from a customer that the cloth is too thick. With a few taps on his computerized weaving machine, Mr. Daviddi corrects the problem and the new, multicolor wool cloth comes tumbling out.

"You notice the noise level is also quite manageable," Daviddi says, "because we installed special baffles in the ceilings and inside the machines themselves."

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State-of-the-art equipment and flexible production methods account for much of the success of more than 2,400 textile and knitwear garment factories in this small town 100 miles southeast of Milan. Small shoe manufacturers and ceramic floor tile businesses enjoy similar success here in the province of Emilia Romagna.

The region enjoys a 6 percent annual growth rate and virtually no unemployment at a time when Italy faces 11 percent joblessness nationwide.

Emilia Romagna is certainly an Italian success story, says Federico Galdi, director of International Relations for the national employers trade group Confindustria. "One of the secrets of Italian fashion," he says, "is that by using small scale production rather than the big factories with 3,000 workers, they are capable of introducing a new collection in only two weeks."

Another secret is that for years Emilia Romagna has been governed by the Communist Party of Italy (PCI) and by its successor organization, the Party of the Democratic Left (PDS). While the ruling Christian Democratic and Socialist parties in Rome promoted large-scale industry such as Fiat and Olivetti, the communists sponsored co-ops and small factories.

In one of the ironies of the post-cold-war era, large industries face serious problems in the former Soviet Union and Italy, while communist-inspired, small-scale capitalism is thriving in "red Emilia.

From cheap labor to high skills

German companies first opened garment factories in Emilia Romagna in the late 1950s, seeking low-cost labor. That surge coincided with layoffs and political purges of communist workers from some large factories, according to Angelo Orru, head of La Fenice Garment Company in Carpi. Unable to find other work, some of those communists set up small factories.

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"They transformed themselves into entrepreneurs," Mr. Orru says. "They were not investing and speculating; they were working hard."

By the late 1970s the Communist Party was voted into office in Emilia Romagna and many of its cities. The PCI was determined to show that it could effectively govern in Italy and started a campaign to promote economic growth. Those policies continued into the 1990s, as the PCI evolved into the PDS and the party adopted a mainstream, social democratic ideology.

"Small enterprises have much more difficulty getting access to capital and exporting their products," says Cinzia Ferretti, head of economic development for Carpi and a member of the PDS.

Local authorities didn't offer tax breaks or economic subsidies, she says. They worked with local employer associations to set up centers and other organizations to improve production techniques, raise employee skills and promote exports.

State-sponsored quality control

The Textile Quality Analysis laboratory, for example, tests the quality of fabric. "That quality control allows us to give the national and international customer a very high quality product," businessman Daviddi explains.

While ruling politicians in other parts of Italy were jailed for corruption, the PCI and PDS ran a relatively clean administration. Daviddi says textile and garment businessmen were happy to concentrate on making good products rather than bribing politicians.

Emilia Romagna did see scandals in the PCI-dominated co-ops, and some PDS politicians solicited bribes from construction companies. Today, small companies in "red Emilia" often avoid paying taxes, according to Angelo Gennari, research director for the Italian Confederation of Worker Trade Unions.

"That's tolerated because they create jobs," he says.

Emilia Romagna remains heavily unionized. Workers enjoy good wages and benefits compared to other parts of Italy. That creates problems from foreign competition.

Italy, like other industrialized countries, faces stiff competition from the low-wage garment and textile factories in Asia. But Italy has been able to maintain a growing industry by creating a niche market.

Talking above the noise of his textile machinery, Daviddi says, "We try to provide a more imaginative and quality product than can be made in Asian countries. The imagination of our designers and high technology of our machinery gives a special significance to the label 'Made in Italy.' "

Both Daviddi and garment factory owner Orru say they are quite pleased with local officials and their policies to promote economic growth.

When asked which party would get his vote in the upcoming April 21 national parliamentary elections, Daviddi says, "the PDS, of course."

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