Getting smarter

Revenue and employment are up for Italian manufacturers, who are increasingly the protagonists in the digital revolution, moving in line with the Industry 4.0 principles.

by Marina Porta

Renewed confidence in the future, excellent economic figures and the path to innovation and digitalisation are solid realities. These are the signs emanating from the Italian machinery manufacturing industry, as collected by Osservatorio Mecspe, the annual survey conducted by Senaf, the organizer of Mecspe (Parma, 22-24 March), the fair of reference for Italy’s manufacturing industry.

The data collected indeed reveals a positive outlook for sector SMEs, which in 61.4% of cases ended 2017 with rising revenues and good employment: though in 43.8% of cases, employment figures went unchanged, as many as 50% of companies interviewed hired new staff and 48.4% declared that the number of employees would continue to rise in 2018. Expectations are also good for changes in revenue for the current year, as 63.1% of the interviewees expect an increase, and just 5.4% a decrease. Companies’ perceptions of their own trends also look optimistic, with nearly seven out of ten enterprises (69.4%) broadly satisfied, about 10 percentage points higher than the results recorded by the Osservatorio Mecspe last year (59.9%).

Positive scenario for machinery manufacturing
The corporate trend for SMEs in the machinery manufacturing sector is satisfactory on the whole, with 69.4% of companies that recorded very positive performance, while 27.2% claim on average to be satisfied and only 3.4% are disappointed. The satisfaction in part can be explained looking not only at the general trend in 2017, but also forecasts for the current year, which according to 63.1% of interviewees will see a growth in revenue, 31.6% expect stability, while only 5.4% foresee a downturn. Compared to company employment levels, 48.4% say they want to keep a stable number of employees, 48.4% also say they expect to increase staff numbers and only 3.2% expect lower employment figures. Exports remain a driving factor for Italian SMEs in the machinery manufacturing industry, with almost eight out of ten (78.6%) claiming to export their own products and services: 36.9% generate at least 10% of their revenues overseas, 12.1% exports between 11% and 25%, 10.2% between 26% and 45%, 11.2% between 46% and 70% and 8.3% more than 70%. Export destination are central-Western European countries (77.5%), followed by Eastern Europe (31.8%) and Asia (23.2%). The remainder, on the other hand, favour North America (21.9%), the Middle East (18.5%), Russia (15.2%) and South America (11.9%). There are no doubts about the future of the market where the companies are operating: in the next three years, only 4.1% expect a downturn compared to 61.4% who are openly convinced of its development.

The impact of Industry 4.0

According to 67.1% of employees, Italy’s National Industry 4.0 Plan is driving this positive change, and is considered to be an effective programme because of the hyper-amortisation of digitalization machinery (71.5%), tax credit for research and development (67.8%), improvement of digital enabling infrastructure (63%), and strengthening of initial capital for SMEs (52.8%). Opinions on the confirmation and strengthening of tools delivered by Industry 4.0 plan for the three-year period 2018-2020 is also deemed positive: 41.8% in fact state that it can make the difference, enabling companies to take a notable step forward, while 31% deem it as good, serving as a good starting point, falling short of being comprehensive. They are the measures companies will also use in 2018, as 22.5% of people interviewed said they will invest between 10% and 20% of their revenues in research and innovation, while 11% will set aside amounts in excess of 20%.

Toward digitalization

79.7% of machinery manufacturing SMEs think that digitalization is the main path for the company as a whole, or at least for a good section of the company. This is a direction already adopted and with positive results: more than a third (36.9%) of people interviewed feel they meet the competence requirements, while 17.2% say they are ahead of their competitors.
Another important chapter is digital conversion, which 49.7% of companies are convinced they have implemented, while 51.4% claim they have an advanced or sufficient knowledge level of digital technology opportunities available on the market. The figures reveal that the general level of digitalization reached by companies is high, particularly when talking about client relations and sales and marketing channels (62.4%), product design and development (51.5%) and relations with machinery suppliers (49.1%). About the most commonly expected implications, 60% foresee an increase in profits of up to 15%, while 69.7% expect the same result but for cost reduction.

Who’s slowing digitalization?
The main factors slowing digitalization derive from an uncertain ratio between investments and benefits (for 48.4% of companies), lack of internal resources (36.8%), the backwardness of partner companies (31%), as well as excessively high investments (29.7%). On the other hand, there is no doubt about who are the drivers stimulating/guiding the process of digital innovations in companies: 55.2% point to the entrepreneur, followed by the IT director/IT systems manager (10.9%), the technical manager (7.3%) and the R&D manager (6.1%).

Which enabling technology

Manufacturing SMEs who have already introduced new enabling technology have favoured solutions for computer security (59.9%) and connectivity (53.1%) – sectors where the greatest level of knowledge is also recorded by companies – simulation (29.3%), the Internet of Things (28.6%), cloud computing (24.5%) and additive manufacturing (19%). By the end of the current year, on the other hand, cloud computing and connectivity will be present in an additional 17.7% of companies interviewed, the Internet of Things in 16.3% and additive manufacturing and computer safety in 15%.

Training in-house and beyond

The path toward digitalization cannot happen without human resources, who must have the preparation to adequately handle the progress. Companies are moving in the right direction in this regard, also: the survey revealed that formation is perceived as a priority, with 63.1% of interviewees who have dedicated more than ten hours per employee for in-house training and 12.6% more than 40 hours. The result of these actions is measured by the perception of the level of personnel competence, which 29.3% of companies judge high and 52.1% average.
Regarding the search for new professional figures to handle the challenges of Industry 4.0, 37.1% turn to universities, 36.4% to employment agencies, 35.8% use technical institutions as a base and 23.8% consultation companies.

Methodological note: the survey was conducted by GRS Research & Strategy on a sample of 253 manufacturing companies using the CAWI method (Computer Assisted Web Interviewing). The survey was conducted in January-February 2018.