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Machine tool manufacturing highlights Italy’s pandemic recovery

August 1, 2022
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Why this is important to Wisconsin businesses: The Italian market holds promise for Wisconsin’s strong machine manufacturing sector.

Italy was the first European country to face a massive COVID-19 hit, and lockdowns forced by the pandemic took a great toll on the country’s economy. The gross domestic product (GDP) fell 8.9% in 2020, exports declined 14.5% and imports were down 13.1%, according to the Organization for Economic Cooperation and Development (OECD).

But recovery began within a year. In 2021, Italy’s GDP grew by 6.6%, according to the European Union (EU)—the strongest rise in 45 years—and was projected to increase another 4% or more in 2022. Both exports and imports were up 12% and anticipated another 7% gain in 2022, according to the OECD.

Italy’s recovery plan includes $1.98 billion from the EU’s Recovery and Resilience Facility, the key financial tool of NextGenerationEU, a wide-ranging plan for Europe to bounce back from the pandemic and to become stronger and more sustainable in the long term. Italy’s funding focuses on six goals: digitization, innovation, competitiveness, environmental prioritization, ecological change and sustainable mobility.

According to the Italian National Institute of Statistics, mechanical engineering was Italy’s most important manufacturing segment in 2019—after food production—with an output valued at $87.9 billion. Italy is the second largest producer of machinery and equipment in Europe, after Germany, and the U.S. is its top export partner. The U.S. purchased more than 11% of Italy’s machinery and parts exports in 2020.

As of 2018, more than 20,000 companies operated in the mechanical engineering field in Italy, employing 466,000 people, according to the statistics organization. While there are some large, multinational corporations, more than 90% of Italy’s mechanical engineering firms are small, local businesses with fewer than 50 employees. Many of those companies seek to modernize in order to meet global competition, and will need updates in areas that include automation, predictive maintenance, collaborative robots and artificial intelligence.

Italy’s government subsidizes purchases of conventional goods with tax credits of 6% and acquisition of Industry 4.0 technology with tax credits of up to 40% in 2022. An innovation fund is also available, allowing state participation in innovative companies.

Italy’s mechanical engineering industry offers significant potential for Wisconsin companies, particularly in power transmission, motors, metalworking machinery, materials handling, valves and construction machinery.

Italy’s leading trade fair for the industry is Smart Production Solutions’ SPS Italia, which will be held May 23-25, 2023, in Parma.


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