Cradle of the Renaissance, and home to Michelangelo and Dante, Florence and the Tuscany region of Italy is not perhaps the first place you might think of as a forward-thinking investment location for high tech industry. Sure, tourism, agribusiness and fashion account for a large proportion of the region’s economic activity, but nowadays the birthplace of Leonardo da Vinci is targeting advanced industry sectors such as life sciences and ICT.
Filippo Giabbani, Executive Director of Tuscany Region discusses the region’s new opportunities with Julia Lemagnen. He explains how the region’s artistic and cultural heritage is only part of the picture today: “We have a very strong and well-organised district for life sciences companies, with a good multinational presence, for example GSK, and in ICT we have a developing cluster in particular in the Internet of Things, with good players in the universities.” In fact, Tuscany was Italy’s fastest growing region for the number of research and development personnel (both in total and full-time equivalent) between 2010 and 2014. There were over 25,800 researchers based in Tuscany in 2014 – a growth of 21% compared with 2010. The region accounted for 7% of total Italian R&D expenditure in 2014. And there is a large workforce employed in high technology sectors in general – 44,000 people in 2015.
Italy has a strong tradition in pharmaceuticals, and Tuscany itself has a long history in vaccine research and development. One of the founding fathers of modern hygiene practice and a pioneer in vaccinology, Achille Sclavo, lived and worked in the region. He made discoveries of worldwide importance, including developing a vaccine against anthrax in the early 1900s. The company he founded, the Sclavo Institute (now part of GSK), produced the first anatoxin against diphtheria and tetanus, and also the smallpox vaccine. The world-leading non-profit institute The Sclavo Vaccines Association, a group of 12 institutions from 6 countries, researches advanced vaccine technologies at its base in Siena.
There is a vibrant life sciences cluster in Tuscany, comprising over 300 companies generating 8 billion Euros of revenue (2014 figure), and there are four specialist business incubators. There are 320 life science companies in the region covering a range of markets including medical devices, biotech, pharma and software/services. Eli Lilly employs over 1,000 people in the Florence area including at one of their most innovative biotechnology insulin production plants. One of GSK’s three global R&D hubs for vaccine development is based in Siena. 19,000 students are enrolled in science courses in the three universities and two postgraduate schools in the region.
In the IT sector, Tuscany has a long history too. The University of Pisa has particularly strong expertise in this field; the first electronic computer entirely built in Italy, the CEP (Pisan Electronic Computer) was designed and built there. Tuscany’s ICT industry has applications in diverse areas including: robotics; bioinformatics; IT for management and big data; media entertainment; telecoms; photonics and aerospace. The Italian national research centre (CNR) has eight centres in and around Florence, the capital of the Tuscany region. 2,400 ICT companies are based in Tuscany, generating 3 billion Euros of revenue (2014 figure) and employing around 15,000 people, of which just over 13% work in R&D. Major IT companies already here include Bassilichi SpA, Dedalus SpA and Aruba. Notable start-ups include Kiunsys (urban mobility systems), JOS Technology (smart charging technology), Papermine (content marketing platform) and a spin off from the University of Siena, Glitch Factory (design and interactive technology). So, the region has a solid foundation to build on for the future in this sector.
Looking at the overall picture for this central region of Italy, Tuscany has a population of 3.7 million inhabitants (a lower population density than the national average), a GDP per capita of 28,300 Euros and exports of 32 billion Euros per annum. It is the sixth largest economic region in Italy and has total employment of over 1.5 million people. It is rich in mineral resources, most famously marble, and has large agricultural, and textile industries. A number of artisan districts specialise in ‘Made in Italy’ branded goods, a stamp of quality and design applied to fashion, food, furniture and mechanical engineering products which commands a price premium around the world. It also has a 300km of coastline with a noteworthy boat building industry.
The region’s economic development is now being enhanced by major planned investments by the national and regional government in the city and Port of Livorno. Part of a project financing scheme to re-industrialise the coastal area of Livorno, this work will see the creation of a new container terminal and rail links to the Italian national network aimed at attracting logistics investors into Tuscany.
Mr Giabbani concedes that, although they hope to grow their ICT and life sciences sectors, realistically the greatest appeal of Tuscany is often in their traditional industries, including wood working, wine making, design and apparel. Part of the Tuscany region’s President’s Office, the Invest in Tuscany agency is mainly focused on attracting inward investment from developed economies, specifically the US, Japan, Germany and France. Their biggest foreign investor currently is General Electric, who entered the oil and gas industry in the 1990s with the acquisition of Florence-based Nuovo Pignone. There are 100 US companies located in Tuscany, and the region has a good track record in attracting German investors too. Around 30 companies from food and drink to clothing and audio equipment producers now display the ‘Made in Tuscany’ brand in a scheme approved by the regional government.
Despite its focus on developed countries, the Tuscan regional government recognises the great potential of working with emerging markets, and it has built a close relationship with the Chinese textiles industry over decades. Tuscany has the second largest Chinese community in Italy, after Milan. In the 1980s, Chinese textile workers settled in Prato, near Florence, and today there is a large industry serving the European textile market and, in a parallel industry, importing raw materials from China and re-exporting fast fashion to Asia. Leveraging their experience in one of their centuries-old industries has helped the Tuscan development agency to attract inward investment by Chinese companies interested in fashion, textile machinery knowhow and even vineyards.
Well aware of the reputation of Italy for red tape and its currently sluggish economic situation, Invest in Tuscany has developed a programme of support and aftercare assistance for investors. “We helped a new Japanese investor with obtaining visas and even applying for a driving licence. And recently we ran a workshop for an existing French investor as part of a detailed aftercare programme. We brought together 32 potential suppliers and research centres, not just from Tuscany but from around Italy as a whole,” says Mr Giabbani. “We like to take the hand of investors and accompany them through the process”. This ‘in-field’ practical support, and willingness to engage with and actively seek out new investors, sets Tuscany apart from other regions in Italy, he feels. So, for companies who are interested in investing in Italy and don’t have a strong preference for a region, Tuscany is well worth consideration.
Data sources: Invest in Tuscany, from different databases and surveys.
Julia Lemagnen has worked in international business for 25 years in both business-to-business and business-to-consumer market research. She previously worked as Market Intelligence Manager at Unipart Group, and as part of a UK-based brand research agency she handled marketing and research assignments for clients such as Microsoft and 3M. She is experienced in a wide range of industries and research methods and has been working in the field of economic development and foreign direct investment since 2002. Julia co-founded MCJ Lemagnen Associates in 2010.