An article in the latest Bloomberg Businessweek reminds us what can happen when a nation’s business environment stunts the likelihood of economic growth.
Early in August, Fabrizio Pedroni wished his employees a happy summer holiday and told them to return to work in three weeks. That night, he began dismantling his electric component factory in northern Italy and packing its machinery off to Poland.
“Had I told them earlier about any plans to shift the production abroad, they would have occupied my factory and seized all my stuff,” Pedroni said in an Aug. 21 telephone interview from Poland. “The plain truth is that I wanted my business to survive and there weren’t the right conditions for me to operate in Italy any longer.”
The news that Firem Srl, based in Formigine near Modena, was shifting to Eastern Europe reached the 40 employees too late. On Aug. 13, 11 days after Pedroni activated his plan, a group of employees suspicious of the movements around the plant rushed to its gates just in time to stop the last of 20 lorries packed with machinery. Firem’s move became a national controversy and the fate of its workers is still unclear.
The loss of the factory highlights the struggle Italy faces to revive manufacturing and its economy, which remained in recession in the second quarter even as the broader euro area returned to growth. Italy ranks 128th in the World Economic Forum’s global pay and productivity table, one place behind Burkina Faso, compared with 39th for Poland.
One suspect Luigi Zingales would not be surprised by this development, given his work detailing the harmful impact on cronyism on the Italian economy.
