Italy. Famous for the Roman Colosseum, the romantic channels of Venice, artisan wine and hand-blown glass. They are one of the largest countries in Europe, and one of the largest economies. Although their industries are changing, they remain a potent force in manufacturing. In the past, they made the transition away from an agricultural economy. Now, trends show they may be moving away from automotive production as well.

In the last two years, Italy’s economy has seen a slow growth of .8 percent, despite a major crash in their biggest manufacturing sector. Even still, according to the OECD  the economy is expected to grow and additional 1% each year for the next five years. Additionally, revenues in manufacturing are expected to grow 2.4% for the next few years. While some consider this growth a positive sign for the country, others fear it may move manufacturing overseas.

Big Changes in Automotive

Much like the rest of Europe, Italy has a long history of a strong automotive industry. However, with the economic recession in recent years, the demands and profits of the industry have dropped dramatically. Between 2004 and 2013, it plummeted as much as 51% compared to the previous ten-year period. Recent history demonstrated a pattern of decreases, but none so dramatic. Between 1994 and 2003, it also fell 18%

This decline in automotive manufacturing could be detrimental since over half of the cars produced in Italy are exported. Despite drastic falls in one of the strongest industries, economists predict a vigorous and fast recovery with a growth of nearly 26% by 2020.

Textile and Fashion Reputation

Italy has a big name in textiles and fashion. Although that status is not changing anytime soon, their manner of doing business is. Emilia-Romagna is one of the most wealthy and prominent textile and clothing groups in the world. In fact, Italy is the second biggest exporter of textiles and clothing. However, in search of a decrease in production costs, many of the Italian textile lines are moving overseas.

Currently, Italy only produces about 50% of their clothing. Their significant competitive advantage and selling point is their reputation which remains intact as they disassemble factories and reassemble them in other countries while still maintaining premium prices based on reputation, which in turn are increasing overall profits.

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