Moving Eastwards While Remaining Embedded: The Case of the Marche Footwear District, Italy

Abstract

This article contributes to the knowledge about the evolution of industrial districts specialized in traditional manufacturing industries as a result of internationalization processes. On the basis of a longitudinal field study, the article describes the change in firms' delocalization that occurred in one of the main fashion-led Italian footwear districts during the period 2001–2009. After the well-known preferential destination towards Central and Eastern Europe, a second, more recent wave of delocalization over long distances is reported. Despite intensified delocalization, subcontracting relationships remain deeply embedded, and the updated evidence indicates a possible homecoming to the original area.

Acknowledgements

I am indebted to the entrepreneurs and managers of the companies interviewed. I wish to thank Gioacchino Garofoli, Gabi Dei Ottati and Mick Dunford for their comments and suggestions on earlier versions of this work. The paper has benefited greatly from the comments of two anonymous reviewers. Needless to say, inaccuracies and omissions remain solely my own responsibility.

Notes

A conceptual difficulty with delocalization involves its exact definition. The term is often used loosely in the literature, together with a myriad of labels—especially in the International Economics literature—including “offshoring”/“outsourcing” (Feenstra and Hanson, 1996; Grossman and Helpman 2002), “fragmentation of production” (Deardorff, 2001; Arndt & Kierzkowski, 2001), “vertical specialization” (Arndt & Kierzkowski, 2001), “disintegration” (Feenstra, 1998), “vertical-specialization-trade” (Hummel et al., 1998), or “global production sharing” (Yeats, 2001).

Although the industrial district was conceived as an open system because of its relation with the wider political, economic and social environment and with other local systems (Becattini & Rullani, 1993; Dematteis, 1989), outward backward and forward linkages were not central to the initial studies, which focused mainly on the structure of local economic ties.

On theoretical terrain, the increasing importance of international networks of production which criss-cross local economic systems entailed revision of the main theoretical notions underpinning the analysis on the evolution of industrial districts. After the global value chain analysis (Humphrey and Schmitz, 2002; Schmitz, 2004), further frameworks for simultaneous analysis of regional development, local institutions and global production networks were developed (see, for example, Dunford, 2003; Coe et al., 2004; Cooke, 2005; Parrilli, 2009).

In this regard, Lazerson and Lorenzoni (1999) have pointed out the increasing attractiveness of districts to external firms and the permeability of their boundaries.

These two studies are specifically related to the present case study because they analyse delocalization patterns in Italian industrial districts specialized in footwear production.

To be noted that the same occurred in the early episodes of relocation from the district of Prato documented by Dei Ottati (1996a).

See Table A2 in the appendix for further details on the municipalities and local labour systems considered as being part of the district area by the present study.

To be noted is the presence within the district's boundaries of a complementary cluster of producers of metal accessories for the clothing industry. Also to be noted is that the agglomeration of producers of soles in the Marche footwear district is a reference segment for shoe production throughout Italy.

The increase in average firm size and the consolidation of medium and large firms are typical features of the last decade for many Italian industrial districts (see, e.g. Mediobanca e and Unioncamere, 2005; Rabellotti et al., 2009).

High value-added products imply large immaterial investments in innovation, advertising, brand and patent protection, which are reflected in high price.

It is worth stressing that China and India belongs to the subcontracting chain of interviewed firms, not simply of the supply chain as it used to be the case in the past.

In the literature, the origin of international subcontracting was explained by the need to extend the static competitive advantages based on price competitiveness, previously provided to firms by the devaluation of the national currency (Garofoli, 1999).

A limited number of firms rely on a single outsourcing destination (five in 2001 and six in 2009).

The interviews showed that most firms had been upgrading product quality during the observation period, usually starting up the production of more complicated goods requiring a wider range of local specialized suppliers. Many firms now had two or more product lines for different market segments.

“Initially, delocalization led to a selective substitution of local subcontracting relationships. While severing local ties in favour of international linkages, firms maintained in their networks the local subcontractors able to realize the highest quality level of parts and components at the lowest costs. Moreover, since price competition had increased, a crowding out of firms producing low value added goods occurred within the district” (see Cutrini, 2003). The substitution and the crowding out effects had certainly reduced, at least in part, the thickness of the local division of labour.

The information on the multi-firm relations of local subcontractors, as well as other information that substantiates the findings, are available from the author on request.

The experience of the Italian eyewear district, provides additional support to the idea, Camuffo (2003) reported that Luxottica, after experiencing delocalization, move all the production functions back to Italy.