MIRAFIORI CASE and the role of the cluster in business attraction policies Paola Elia Morris Torino, 8 November 2007 “Network of Automotive Regions”

 4.3 million inhabitants = 7.4 % of the national total‏  9% of Italian GDP = more than € 118 bln  11% of the total national exports = € 35 bln  450,000 companies, 1,400 of which in the automotive sector  1.8% GDP invested in R&D (national average: 1.1%) over 700 foreign companies have already chosen to locate in Piemonte (Source: Unioncamere Piemonte 2007) ‏ 1 Torino and Piemonte: the economic background

Piemonte: Italian leading region in automotive  1,400 companies - 75,000 workers  sector’s output: about €10 billion ( 40.6% of the national total )  40% of the national automotive suppliers and 33% of the workforce located in the region  peaks of 75% for suppliers of modules and systems  about 70% of the automotive supply system concentrates in the province of Torino 2

Italian leading region for cooperation between companies and universities “ There is fertile ground for new partnerships. The research centers of Motorola, GM and Microsoft, are bringing Torino in the limelight. We want to be there, too ” MIT, Boston “ We chose Torino for its quality of research: fantastic ” “ We chose Torino for its quality of research: fantastic ” Jennifer Tour Chayes, Microsoft Politecnico business R&D Centre labs and facilities dedicated to develop RTD projects and training in cooperation between Politecnico and both Italian and foreign companies 3

Learning from the past… The heritage: a traditional concentration of expertise and skills in car-related activities and a long-standing specialization Public/private partnership working for a renewed automotive sector The new regional strategies and guidelines are supporting the evolution towards a more innovative competitive sector –Internationalization and clustering: From concept to car, Automotive Regions Network and FDI attraction policy –Diversification, Integration –Research & Development and Innovation –Technology-Platforms to promote a better integration between engineering, electronics and telecommunications 4

largest industrial plant in Europe  Mirafiori has been the largest industrial plant in Europe since 1939 and was the symbol of car manufacturing in Torino with more than 50,000 workers an area of3,000,000 sqm Covering an area of 3,000,000 sqm, the industrial complex was the most characteristic feature of southern Torino bilateral agreement was signed in 2005 between the local institutions and Fiat based on the redevelopment of an area of 300,000 sqm.  After the crisis and reorganization of the automotive sector, a bilateral agreement was signed in 2005 between the local institutions and Fiat based on the redevelopment of an area of 300,000 sqm. a catalyst for innovation and research  This area will become the home of the new Mirafiori Technology Centre: a catalyst for innovation and research on the industry new technological drive (eco-efficiency and environmental sustainability) Designing the future: the new life of Mirafiori 5

,000 sqm. to promote integration between manufacturing, R&D activities and top-level training

 Torino Nuova Economia SpA is a corporation set up by Piemonte Region, City of Torino, Province of Torino and FIAT SpA  Its mission is to increase the value of the old Mirafiori industrial plant purchased from FIAT  Its main objectives −To preserve the original industrial character of the area −To create facilities for further development of local economy −To fund and support R&D initiatives −To promote training programs  Corporation stock: € ,00 The role of public-private partnership: T.N.E. 7

9 R&D and training Production and services Advanced services P  Smes and companies  micro-co-generation  light production  applied research  expansion of start-up  cluster hub  mobility services  financial services  green areas  Politecnico and Design Center  laboratories and facilities p/pp  Galileo  incubator  exhibition and convention areas  guesthouses The development of the area

Mirafiori: the strategic actions  Creation of a dedicated fund −To bring financial resources and managerial skills to help SMEs grow in international markets and find new partners through commercial and technological agreements  Furthering SMEs size −To increase SMEs size in order to compete internationally  Supporting R&D and Innovation −To help R&D regional system through increased financial resources, the attraction of new talents and R&D investment  Creation of links between R&D and enterprises −To spread IPR and knowledge from public and private centers to SMEs 9

The strategic role of location factors in Mirafiori  Infrastructures  R&D capacities  Skills, education and training  Open-minded public administration/government  System-cooperation between local stakeholders  Incentives and grants  Clustering policies and opportunities  Presence of multinational enterprises 10

Place marketing and FDI attraction Local economic development Investment attraction FDI international market Financial M&A To create conditionsTo maximize and promote strenghtsTo develop value proposition employment growth clusterknow-howInternational mkt integrationinternal marketsocial conditions technologies Local market,actors and clusters Productive 11

FDI produce and are driven by intangible assets such as knowledge, technology, know-how, access to market, they: Strategic importance of FDI z “Il capitale straniero fa bene alla crescita” F.Onida, Il Sole 24 Ore, z  create opportunities of qualified labour  improve companies competitiveness  foster technology transfer  increase the competitiveness of territories 12

Strategic importance of clusters Clusters help to become more successful in attracting FDI and to increase the economic value FDI generates.  First, cluster will be attractive because it provides established markets, suppliers, skilled employees, facilities for research  Second, the negotiations with foreign companies can move away from financial incentives alone and concentrate on the quality of the cluster-specific business environment and how it can be improved, especially when the competitiveness on financial packages is limited such as in the EU  Third, attracting FDI not only creates direct benefits through job creation. It also improves the quality of the location for the companies already present in the cluster, by adding relevant activity in the cluster and upgrading the business environment facilitating new investment This will increase the sustained impact of the FDI attraction 13

GM chooses Torino… It is the first time that a leading foreign car company chooses Italy for its R&D activities, thanks to the presence in Piemonte of  a unique automotive cluster  a comprehensive value chain  strong cross-sector competencies  a favourable business environment …to locate GM Powertrain Europe headquarters and to set up its design and engineering centre for diesel engines 14

World’s leading automotive companies in Piemonte 15

Piemonte: 10 years experience in attracting FDI : Piemonte was the 1st Italian region to create an agency dedicated to attracting FDI. In 10 years, ITP supported over 90 companies in Piemonte Piemonte Agency for Investments, Export and Tourism, 2007: To meet the new challenges of global competitiveness the Regional government creates Piemonte Agency for Investments, Export and Tourism, a single organization devoted to strengthen the international development of the region by : attracting foreign investment, talents and tourists  attracting foreign investment, talents and tourists  increasing the competitiveness of local companies on international markets 16

Piemonte Agency is a unique, free reference point  information on macroeconomic factors and local market  research of location opportunities  project funding and fund raising for investment  selection of financing and incentives  assistance in the relations with public & private institutions, Universities, R&D Centers, Smes…  aftercare activities and retention of existing companies Inward investment advisory support 17

Thank you for your attention! 18 Thank you for your attention!