by Alessandro Decio, CEO SACE
The quality of Made in Italy and the propensity to export combine to fuel the engine of the Italian economy. Going global makes Italian companies more competitive while allowing them to grow faster, learn better, and establish their presence in international markets. Compared to the ones that stay domestic, exporting firms are more flexible and have better economic-financial performances. A country with positive net exports should, therefore, be more attractive to foreign investors.
With exports amounting to over 30% out of our GDP, Italy has indeed a great appeal worldwide, and the United States make no exception, in spite of the current complexity of the global environment for trade. Italy is currently the eighth trade partner for the US. After a record performance in 2017 (+9.6% and exported goods for a total value of 40.4 billion euros) and a positive one also in the first eleven months of 2018 (+6.2%), Italian exports to the US will maintain a positive trend also in the upcoming years. According to SACE’s forecasts, Italian sales towards the US are expected to grow by 5.1% on annual average over the next three years.
To reinforce this trend and maximize opportunities, Italian companies – and their US partners accordingly – can count on three Trump cards.
First of all quality, which makes Italian exports much more resistant to price competitiveness and other restrictive measures. In order to meet the challenge of global trade, over the years Italian exporting companies have progressively improved the quality of their products & services as well as increased their level of specialization – a process which has accelerated after the 2008 crisis. The US indeed continue to show strong appreciation both for the quality of Italian industrial technologies and for the value of “Made in Italy” consumer goods. Opportunities are there to be caught, with mutual benefits on both sides: in traditional sectors of Made in Italy (like food and beverage, fashion and luxury); in non-consumer sectors in which Italy is already well positioned worldwide (like machinery tools) as well as innovative sectors with great margin for improvement like (pharmaceutical and chemical, electric products).
The second winning card is the capacity of Italian companies to build strategic industrial partnerships, which has led many of them to position themselves as a highly specialized link in the Global Value Chains, in which US corporates often play a key role. Over time, Italian companies have chosen more advanced internationalization strategies to be closer to their final customers. Many firms, with significant trade volumes with the US, have decided to open branches (commercial or manufacturing plants) in the Country. This has led to the improvement of synergies between supplier and buyer, to customize the offer, make it more suited to American demands, and more flexible to changes. On the other hand, Italian companies have aroused the interest of many American companies. Some have decided to invest in Italian firms through M&A deals, paving the way to important success stories. One example is the historic acquisition of Nuovo Pignone by General Electric, which gave birth to “an international group with an Italian heart”, with the adequate size to face competition in the Oil&Gas market and to gain market shares.
Last but not least, the third winning card, is the extremely competitive system to support Italian trade & investment worldwide. SACE SIMEST is part of it. Recently recognized as the most active Export Credit Agency in the world for the resources mobilized to support trade & investment with Italy, SACE SIMEST supports the growth of Italian firms abroad through a series of insurance-financial products that satisfy the requirements of companies in their international ventures.
It is highly focused on SMEs, Italy’s economic backbone and true expression of our quality and excellence, making them export, enabling their internationalization, and letting them establish a bridgehead in the foreign markets. One of the issue for SMEs is to overcome the obstacles of global markets given to their small dimension. That is why SACE SIMEST is promoting supply chain exports, which enables us to help SMEs to enter successfully in Global Supply Chains.
It can be the right partner for companies to finance their activity abroad, whether they are seeking to enter the US market (such as the costs of participating in trade fairs or promotional investments) or to increase positions already acquired. The range of instruments is broad: soft loans, guarantees on bank loans, the issue of bonds or even direct equity investments.
SACE also offers support in the contract negotiation phase, where its presence may improve the competitiveness of Italian companies. Credit insurance instruments enable companies to make their offerings more attractive with extended payment conditions for their American customers; SACE facilitates small deals as well as large projects such as structured finance.
On the other side, American companies can take advantage from the involvement of SACE SIMEST in the deals. In fact in operation with Italian firms or Italian goods, we improve the conditions at which American companies can finance themselves with competitive finance and payment terms, working side by side with the local banking system.