TRADE WOES PLAGUE ITALY

Byline: Phyllis Macchioni

MILAN — The outlook for manufacturing and exporting in Italy is mostly cloudy.
Manufacturers and fair organizers are concerned about business for the next six months, noting that the strong dollar could be good or bad for business.
They are also lamenting slow growth in the Far East and emerging markets, pinning the blame on high import duties.
Mario Boselli, president of Pitti Immagine and Italy’s National Chamber of Fashion, said he felt the strong dollar was a double-edged sword.
“Because textile manufactures purchase their raw materials in dollars, their costs are higher, and it will be difficult for them to pass on the increase to their customers,” Boselli said. “On the other hand, for those involved in the fashion industry, a strong dollar is beneficial. The majority of clients buying Italian fashion are not Italian, and the currency they use is the dollar.”
This year, the dollar has reached historic highs against the lira and is currently worth about 2,100 lire.
Another problem the Italians are facing is in Asia. Manufacturers and fair organizers said growth is slow in the region and duties are high.
Vincenzo Pagano, director of Prato Trade, said: “There is a little more movement in the Asian market right now, but you can’t say that there is an actual recovery.”
Pagano added that China was still problematic.
“The duty rates in China are still very high, and this continues to be a problem. In the U.S., duty is high, but the luxury market can absorb it. The producers in the bridge markets are being penalized.”
Pagano said he would like to see more programs developed to promote Italian fashions abroad, particularly in the U.S., where, in his opinion, the bridge market is still closed to Italian producers.
Others were more optimistic about trade prospects.
Leopoldo Della Porta, president of the ModaIn fair and its organizing body, SITEX, said the recently signed agreement between Italy and Japan to promote Italian textiles and fashions abroad is proceeding on schedule.
“A delegation from Korea was in Italy recently to develop a similar program for their country,” he said.
Della Porta added that he was happy with the overall 4 percent increase in attendance at the February ModaIn fair.
While ModaIn is primarily a European textile show, there was a five percent increase in foreign visitors, including more than 200 American buyers.
Della Porta is convinced the entire industry would benefit if all the Italian textile producers exhibited at one large fair, either at the Fiera di Milano or the Fortezza da Basso in Florence.
“I don’t think they should all be mixed together,” he said. “It would be best to keep area producers, like those from Biella, Como and Prato, separate, but everyone under the same roof.”
Prato’s Pagano wants a more cautious approach.
“They moved the fair date up this year, and we are waiting until the next fair is over to see what difference, if any, the change made in attendance and participation,” he said. “The question is always how to position the fair toward what is best and most useful for the market.”
In terms of uniting the fairs, Pagano thinks it is important that they maintain their separate identity and that the fair dates be carefully coordinated so buyers can get the most out of their travel time.
“If the fairs were to be combined, it would create an enormous fair that may end up overwhelming everyone, buyers and visitors included,” he said. “In addition, the dates of the hypothetical mega-fair would probably have to be extended, which could be a hardship for exhibitors who may not be able to exhibit for five or six days.”
Figures from the Italian textile association, Federtessile, show overall industrial production fell 5.9 percent and exports dropped 7.8 percent last year. Some groups, like the wool producers in the Biella area, fared slightly better due to the extremely specialized niche market in which they operate.
While small signs of recovery were starting to appear during the last three months of 1999, with a 5 percent increase in orders over the same period the year before, 2000 is not moving as fast as the industry hoped it would, even though the trend seems to be continuing.
Yarn prices are one of the key indicators for the sector, and during the first quarter of 2000, they rose between 15 and 25 percent. After closing 1999 with a 5.6 percent decline in production and exports, the 11.6 percent increase is seen as positive.
Even though it has taken longer than expected, solid indications of a recovery are evident. The first three months of 2000 saw a 10 percent increase in exports, though the jump is being measured against the low figures registered last year.