At one end of the line: a hundred unmarked capsules. At the other: a neatly packed pallet of perfectly aligned and labelled boxes. In between, a dozen steel robots with articulated arms delicately place individual pills into the appropriate packaging. The workers look pleased: the tests have been successful. And the machines, which they have sweated over for several months, will soon be on their way to a customer in India.

In the Marchesini Group’s almost new factory in a southern suburb of Bologna, 700 staff invent machines to package medicines for companies such as Novartis, GSK and Sandoz. Some 300 kms north of Rome, in the Emilia-Romagna regime, industry is booming. This is where they build robots weighing more than a ton, which will later be shipped to Brazil, China, South Africa… As Marchesini’s communications manager, Guido Rossi, is quick to admit, “We are very exposed to emerging countries.”

At the heart of a Europe bogged down in austerity, which has undermined its capacity to produce, Emilia-Romagna’s industrial successis not simply a matter of targeted exports. “The strength of local industry has a lot to do with the extensive web of small companies in the region,” points out Massimo Marchesini, who founded the group that bears his name in 1974. He goes on to explain that the close ties between small and medium-sized enterprises have helped to soften the impact of the global economic crisis.

Welcome to ‘Packaging Valley’

Ever since Mario Monti and his team of technocrats took over in the country a little more than a year ago, “Italy’s long-term prospects have improved”, noted the OECD in its economic outlook published last week. Unemployment is shrinking, the rate of interest on 10-year government bonds has not been lower since 2010, and, according to analysts from the Intesa Sanpaolo bank, industrial production returned to “overall stability […] in the third quarter, interrupting a persistent trend towards decline earlier this year.”

The manufacturing of packaging machines in Emilia-Romagna has proved to be an exception in a Europe that has increasingly been marked by news of industrial closures (Peugeot, Petroplus, Alcoa, ArcelorMittal). The concentration of firms active in the sector is such that the area inside a 100-km perimetre around Bologna has come to be known as “Packaging Valley”. According to a study conducted by local banks Carisbo and Banca Monte Parma, in the first half of 2012, the sector grew by 9 per cent when compared to 2008. Between 2000 and 2011, exports to BRICS countries rose by 260.4 per cent.

In days gone by, the region’s industrial energy was channelled by silk production. Today, it is focused on the packaging of coffee, cigarettes, cosmetics, pasta. And tea. In an eastern suburb of the ragù sauce capital, a strong scent of wild herbs is wafting from the premises of IMA Group. Walking over a litter of half-sewn teabags, Daniele Vacchi, who manages communications for the world leader in herbal tea packaging machines, notes that “2011 was our best year in five decades. And 2012 is going to set new records. We have had too much work these last two years." And this state of affairs has prevailed in spite of the growing number of employees at IMA, which has now reached 3,524, up from 3129 in 2010

“The term ‘Packaging Valley’ is shorthand for something quite complex,” explains Daniele Vacchi in almost flawless French. He also believes that the region’s “secret weapon” has a lot to do with the relations between the hundreds of tiny companies located there. “When the crisis struck, we all stuck together. We trust each other, and we share a web of informal relations that are not spelled out in contracts, adds the 50-year-old, while fiddling with a torn teabag. The economy has been carried by the region, which has a historic industrial culture. Italy is being being strangled, but Emilia-Romagna is holding up.”

The Italian industrial alternative

At a time when the Gallois report has relaunched debate on French industry and while the German economy continues to be regarded as a model for Europe, the alternative offered by the Italian industrial model is too often overlooked. Wages are lower than they are in Germany, however higher payroll taxes mean that the cost of labour is similar. Local trade unions who spoke to us voiced concerns about the crisis and the increasingly precarious status of workers, which has notably been undermined by the growing use of temporary contracts. However, at the same time they admit that packaging “has not experienced the same difficulties” as other sectors.

Emilia-Romagna’s positive performance is a reminder that Italy still has resources. At least that is the message that one major bank is intent on communicating in the railway stations in Bologna, Parma and Milan: “L’Italia merita ancora credito” [Italy still deserves credit].