Lombard manufacturing holds up in Q2 2024

(Il Sole 24 Ore Radiocor) - Against a difficult global economic backdrop, Lombardy's manufacturing industry is showing signs of overall resilience in 2024. In the second quarter of the year, according to Unioncamere Lombardy's economic analysis, companies, both industrial and artisan, showed agrowth in employment, with turnover rising for industry and remaining stable for artisans. Lights and shadows with regard to production, which increased for the craft sector (+0.1%), while industrial production remained weaker (-0.7%). "The data once again confirm the solidity of the Lombardy system. As the Lombardy Region, we continue to look to the future with optimism and in a proactive manner with respect to supra-regional levels as regards the fundamental issues that need urgent solutions, I am thinking for example of energy costs and access to credit," commented Lombardy Region Economic Development Councillor Guido Guidesi.

Analyses show that domestic demand remains positive (+0.4% compared to the previous quarter), while foreign demand falls slightly (-0.3%). The absence of significant signs of strengthening industrial activity at global level, together with the lack of acceleration in the reduction of inflation and interest rates, influence the expectations of Lombardy's industry: most entrepreneurs expect stable levels, while pessimistic expectations prevail among the rest. Energy costs are still reported as a major factor of uncertainty, while there is an expectation of a gradual reduction in interest rates and a drop in the cost of raw materials, factors that could favour a more vigorous recovery. The trend in industrial production remains negative, recording -1.2 per cent compared to the same quarter last year. Handicraft production, on the other hand, remains at the level of a year ago, and the trend change is zero. At the sectoral level, differences remain, with some continuing to show growth such as chemicals (+3.8%), rubber-plastics (+2.7) and paper-pressing (+2.3%), which are now benefiting from the reduction in energy costs, and non-metallic minerals (+2.6%) still driven by construction, while the leather-footwear (-11.2%) and textile (-11.1%) sectors appear to be in sharp contraction. The latter were joined by sectors with a more moderate but still significant contraction: transport equipment (-3.7%), miscellaneous manufacturing (-3.5%), iron and steel (-2.6%), mechanics (-2.0%), clothing (-1.6%) and wood-furniture (-1.0%). Price growth has settled down, but small enterprises, and craftsmen in particular, still complain of significant increases for both raw materials (+17.3% trend) and finished products (+12.1%).

"According to our economic survey, the manufacturing sector in Lombardy is suffering from the negative trend in world trade and the weakness of domestic demand. However, employment figures are still positive, which is a sign of the farsightedness of Lombardy's companies, which are tackling this moment of stagnation by looking to and preparing for the future. This positive approach is also confirmed by the propensity to adopt new technologies. In this latest survey, we also investigated the intention of entrepreneurs to adopt technologies employing Artificial Intelligence. It emerges that 23 per cent of industrial companies and 7 per cent of artisan companies already use it or plan to implement it soon. Of these, more than 50% consider it a decisive factor in increasing profitability; however, the availability of the appropriate professional figures to effectively employ these new technologies remains critical,' said Gian Domenico Auricchio, president of Unioncamere Lombardia.

"Lombardy's industrial production continues to be weighed down by the complex and unstable global context, which at this stage is bringing out all the weaknesses of European industry. What worries Lombard entrepreneurs most of all is the German structural crisis: it is clear that, having lost the leverage guaranteed by the supply of cheap gas, the margins of competitiveness have been drastically reduced. This error, combined with the decision to ideologically embrace green policies by regulating and banning without providing technological alternatives and without foreseeing the consequences of such choices for companies, citizens, and workers, is leading to the disappearance of entire markets, such as the automotive industry, which have ensured European prosperity from the post-war period to date,' said Francesco Buzzella, president of the Lombardy Chamber of Commerce, said Francesco Buzzella, president of Confindustria Lombardia, calling on the European level to "reverse course by developing policies to support industry with a significant European investment fund to counterbalance the US and Chinese investment plans, - as indicated in the Draghi Plan -, energy policies based on a mix of sources and reduction of interest rates". "The fundamental parameters of growth are experiencing a relative improvement compared to the pandemic period, but we are inside the horizon of a growth weakened by a series of numerous geopolitical and geo-economic unknowns: the Russian-Ukrainian front, Israeli-Palestinian tensions, instability in the Suez Canal area," concluded Giovanni Bozzini, president of Cna Lombardia, emphasising that "our entrepreneurs continue to show great resilience and flexibility. But they are uneasy about a number of factors that they are unable to control and master. Italy still has two very important levers in the NRP and structural funds. We must accelerate in the first area and continue to improve in the spending of European funds. It is also crucial to support the SME and craft sector in the area of sustainability at all levels.