Confindustria-BDI Bilateral Summit

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1 Contents Page Confindustria-BDI Bilateral Summit Bolzano / Bozen, 21 st - 22 nd October 2013 Roland Berger Strategy Consultants 1

2 2 Acknowledgements > Roland Berger Strategy Consultants would like to thank Centro Studi Confindustria (CSC) for the support throughout the delivery of this study > Information provided by and the interaction with CSC have been essential for Roland Berger analysis and interpretation of the underlying macro-economic phenomenon and figures

3 3 Trading in the last decade: Italy and Germany continue to be the leading European exporters and key trading partners of each other > Both Germany and Italy have remained the two top European exporters respectively #3 and 5 globally even through the years of globalization > The two countries remain key trading partners of each other, in spite of a reduction in the trade deficit of Italy vs. Germany in 2012 due to a decline of imports > By and large, the contribution of Germany's export to its GDP has been greater than Italy's also because of the strength of some high value segments such as transport vehicles and electronics > In the last decade, Germany has carried out significant economic and social reforms, especially in the labor market

4 4 Positioning along the value chain: Germany has strengthened its Client position in the global value chain, Italy has moved upstream > Since 2005 we see some diverging trends for Germany's and Italy's position in the global value chains: Germany has progressively reduced its local content of export while Italy has increased Germany has strengthened its position as Client in the global value chain while Italy has drastically reduced it > The supplier / client ratio shows Italy has become more a supplier and Germany more a client along the global manufacturing value chain

5 5 Competing at global level: Italy performed better in the "medium quality" goods, while Germany boosted its share of "high quality" > Italy has performed better in the "medium quality" goods, while Germany increased its share of "high quality" goods exports more than Italy > Germany's share increase in "high quality" goods is due to Vehicles and Electrical Products, Italy remains strong in Textile and F&B

6 Contents Page 1 Trading in the last decade 7 2 Positioning along the value chain 15 3 Competing at global level 23 Roland Berger Strategy Consultants 6

7 1. TRADING IN THE LAST DECADE 7

8 Germany and Italy have remained the two top European exporters resp.ly #3 and 5 globally even through the years of globalization Value added share of the top exporting countries in manufacturing [1995 1) ; %] 100,0% 100,0% 100,0% Rank p.p. change '95-'09 15,2% 11,6% 12,6% US #1-2,6 p.p. 3,2% 11,8% 12,3% 11,4% 10,4% 9,7% 11,9% 7,5% 7,1% 5,4% 4,8% 4,5% 5,9% 4,2% 4,2% 47,1% 49,7% 49,6% China Germany Japan Italy France RoW #2 +9,1 p.p. #3-1,7 p.p. #4-4,7 p.p. #5-0,9 p.p. #6-1,7 p.p ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 8

9 Both Germany's and Italy's export have grown steeply since the introduction of Euro, with Germany benefitting the most Italy's and Germany's worldwide manufacturing exports [ ; 2000 = 100] 200 Index Italy s exports Germany s exports Source: Istat, OECD 9

10 Export has contributed to Germany's GDP more than Italy's has Export of goods 1) [ ; % of GDP] % of GDP % 41% 40% 43% 44% 43% % 30% 30% 31% 33% 36% 35% % 22% 21% 20% 20% 21% 24% 23% 19% 22% 24% 25% 24% Italy Germany 1) Does not include export of services Source: Eurostat 10

11 Italy and Germany excel in specific sectors, with Italy leading in textiles and Germany in vehicles and both strong in machinery Exports by manufacturing sector 1) as share of total exports [ ; %] ITALY'S TOTAL EXPORT GERMANY'S TOTAL EXPORT Food and beverage 5% 7% 4% 5% Textiles and leather 12% 16% 4% 3% Wood, paper and printing 2% 2% 4% 3% Coke refined products 2% 5% 1% 1% Chemicals 6% 7% 10% 9% Pharma 3% 5% 3% 5% Rubber, plastic and non metallic minerals 6% 7% 5% 5% Metal products 8% 14% 8% 10% Electronics and optical appliances 3% 6% 10% 13% Electrical products 6% 5% 5% 6% Machinery 17% 19% 15% 16% Transportation vehicles 10% 12% 24% 23% 1) Excluded the category "Other manufacturing" Source: Istat, United Nations, OECD 11

12 Germany remains the key trading partner for Italy among the most industrialized countries % 30% Italy's EXPORT to Germany as a share of total exports to G10 1) 28% 26% 26% 24% 25% 25% 25% 26% 26% 27% 26% 26% 26% 25% Italy s exports to GER as a share of exports to G10 1) Belgium, Canada, France, Germany, Japan, Italy, Netherlands, Sweden, Switzerland, US, UK Source: Istat, OECD 12

13 Likewise, Italy continues to be a key trading partner for Germany % 16% 15% 14% 14% 14% 15% 15% 13% Germany's IMPORT from Italy as a share of total imports from G10 1) 13% 14% 13% 12% 13% 13% Germany s imports from ITA as a share of imports from G10 1) Belgium, Canada, France, Germany, Japan, Italy, Netherlands, Sweden, Switzerland, US, UK Source: Istat, OECD 13

14 Italy's historical trade deficit with Germany has drastically shrunk in 2012 because of the fall of imports Italy Germany manufacturing trade balance [ ; EUR bn] EUR bn 60 54,5 59,5 56,4 54,7 57, ,1 37,8 45,0 37,9 44,6 35,1 44,2 34,5 47,7 36,3 49,7 36,8 41,1 44,4 44,2 46,2 34,6 41,4 46,7 50,5 46,0 46,9 43,9 30 6,3 7,1 9,5 9,7 11,4 12,9 13,4 15,2 12,1 11,6 13,4 10,6 4,5 3, ) Export to Germany Import from Germany 1) Preliminary estimates interpolating Jan-Jun 2013 trade data Trade deficit Source: Istat 14

15 2. POSITIONING ALONG THE VALUE CHAIN 15

16 16 Methodology Note > Data presented for the following sections are mainly provided by OECD > Most recent available data are until (2011 data are expected to be released in November) > Therefore, although the analyses we will present are until they still take into consideration medium to long term trends that can offer a perspective on the present and future situations

17 Germany has progressively reduced its local content of export while Italy has slightly increased it since 2005 Value added of exports by country of origin [1995 1) ; %] ITALY'S EXPORTS GERMANY'S EXPORTS 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 18,3% 21,5% 23,2% 19,6% 17,3% 17,3% 22,9% 23,9% 26,1% 24,9% 3,6% 3,8% 3,9% 3,2% 2,8% 1,4% 1,5% 1,7% 1,7% 1,7% 78,1% 74,7% 72,9% 77,2% 79,9% 81,3% 75,6% 74,4% 72,2% 73,4% Rest of the World 2005 Germany Italy ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 17

18 Italy's and Germany's exports have been analyzed on the basis of the change of their relative positioning on the global value chains INDICATOR A Supplier perspective Client B perspective NATIONAL value added of FOREIGN manufacturing exports FOREIGN value added of NATIONAL manufacturing exports C Supplier / Client Ratio A higher value shows a higher propensity to become supplier along the value chain Source: Centro Studi Confindustria based on OECD data 18

19 A SUPPLIER PERSPECTIVE Since 2005 both Germany and Italy have reduced their position as suppliers in the global value chains Supplier perspective [1995 1) ] National value added of foreign manufacturing exports [%] Manufacturing sectors: examples 20% 30% 15% 14% 16% 12% 16% 13% 13% 12% 20% 10% 0 30% Chemicals 10% 10% 20% 10% 5% Electrical products ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 19

20 B CLIENT PERSPECTIVE However, since 2005 Germany has strengthened its position as Client in the global value chain while Italy has drastically reduced it Client perspective [1995 1) ] Foreign value added of national manufacturing exports [%] Manufacturing sectors: examples 35% 40% 30% 30% 32% 28% 31% 30% 20% 27% Transportation vehicles 25% 10% 25% 23% 40% 20% 21% 30% 15% % 10% Metal products ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 20

21 C SUPPLIER / CLIENT RATIO The supplier / client ratio shows Italy becoming more a supplier and Germany more a client along the global manufacturing value chain Supplier / Client ratio [1995 1) ] Ratio between the supplier and the client perspectives Manufacturing sectors: examples Transportation vehicles Metal products ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 21

22 Italy's participation in the global value chains is decreasing over time Germany relies more on integrated production networks Total participation in global value chains Manufacturing [1995 1) ] ITALY GERMANY Supplier perspective 2000 Client perspective Total participation ) Trade in value added (TiVA) latest OECD data are only available until ; therefore, although the analyses we will present are until, they still take into consideration medium to long term trends that can offer a perspective on the present and future situations Source: Centro Studi Confindustria based on OECD data 22

23 3. COMPETING AT GLOBAL LEVEL 23

24 Germany increased its export share of "high quality" goods more than Italy, which however performed better in the "medium quality" Manufacturing exports by quality of goods 1) [2001 ; %] ITALY GERMANY 100% 100% 100% 100% High quality goods 30% 37% High quality goods 35% 46% Medium quality goods 34% 30% Medium quality goods 43% 32% Low quality goods 36% 33% Low quality goods 23% 22% ) Quality of goods defined according to the Average Unit Value of export flows ("Valore Medio Unitario"), i.e. the ratio between the value and the volume of units exported Source: Servizio studi e ricerche Intesa Sanpaolo 24

25 Germany's export share in "high quality" goods increased due to Vehicles and Electrical Products, Italy is strong in Textile and F&B High quality goods 1) as share of total exports by sector [; %] 70% 60% 50% 40% 30% 20% 10% 0% Italy Pharma Germany Metal products Machinery and equipment Transportation vehicles Chemicals Electrical products Food and beverage 1) Quality of goods defined according to the Average Unit Value of export flows ("Valore Medio Unitario"), i.e. the ratio between the value and the volume of units exported Textile Source: Servizio studi e ricerche Intesa Sanpaolo 25

26 Italy's relatively higher share of lower quality goods exposes its export to the Chinese competition Italy's and China's share of the German market by quality of goods 1) [2001 ; %] LOW QUALITY GOODS MEDIUM QUALITY GOODS HIGH QUALITY GOODS ITALY 9,8% -2,5 p.p. 7,3% 8,2% -1,5 p.p. 6,7% 6,4% -0,6 p.p. 5,8% CHINA +10,9 p.p. 6,6% 17,5% 3,6% +3,5 p.p. 7,1% 2,1% +1,1 p.p. 3,2% ) Quality of goods defined according to the Average Unit Value of export flows ("Valore Medio Unitario"), i.e. the ratio between the value and the volume of units exported Source: Servizio studi e ricerche Intesa Sanpaolo 26

Facts&figures of the Pharmaceutical industry in Italy. July 2018

Facts&figures of the Pharmaceutical industry in Italy July 2018 Key figures of the Pharma sector in Italy Pharma industry in Italy by nationality of ownership (% on total) 40% Italian-owned companies 200