Italy's iconic homeware design firms try to tough it out through recession business analysis
November 8, 2009
By Antonella Ciancio
A GIANT silver teapot shines in the pale sun outside the Alessi factory, its scale a measure of how in the 1980s and 1990s Italian kitchenware, from espresso makers to lemon squeezers, grew into objects of desire.
But the allure of great design and artisanal quality is failing to insulate this narrow valley and home of the Lagostina, Alessi and Bialetti houses from Italy's worst post-war recession
So modern that people often think they are new, the brands have grown through decades with the inhabitants of the valley in the Italian Alps, surviving war, poverty, landslides and avalanches. Now they are feeling the pinch.
"Are we immune to the crisis? The answer is no," says Alberto Alessi, 62, the design director and grandson of Giovanni Alessi, a lathe worker who founded the family firm in 1921.
Competition from low-cost Chinese or Romanian manufacturers, outsourcing and recession have shut down many family firms and dampened Italian manufacturing, which accounts for about a fifth of output from the euro zone's third-largest economy.
Houseware exports, the main source of income for an area reliant on manufacturing, fell 59 percent year on year to E62 million (R700m) in the first six months of 2009.
Omegna, a peaceful strip of land on Lake Orta in the Piedmont region, owes its niche in houseware to craftsmen who emigrated to Germany in the 18th century to work in pewter, then returned home to set up their own businesses.
The industry employs 1 130 people in a territory of 160 000, according to a July estimate by the chamber of commerce. That is 9 percent fewer than last year.
"In the boom years of the 1960s there were about 40 houseware firms in Omegna," recalls Alessi, whose creative drive helped transform his company into a top design brand.
That number has more than halved, although the resilience of the locals, forged by poverty in a rugged region, remains.
"This province is trying to overcome the current difficulties by focusing on those quality products that have made us famous," says Roberta Costi at the regional chamber of commerce.
The combination of style and practicality that inspired Bialetti's trademark Moka express and Lagostina's first stainless-steel saucepans - which are on display at New York's Museum of Modern Art along with Alessi's 9090 espresso coffee maker - are key factors to counter the competition.
Sixteen houseware firms have teamed up with the chamber of commerce to explore new markets, like Russia, and develop innovations, for example by using nanotechnology, whose uses could include making stainless-steel knives sharper.
Thirteen firms are due to showcase a new quality brand, Lago Maggiore Casalinghi (Lake Maggiore Houseware), by the end of this year.
"Sales in the US and Japan have suffered, while they have remained stable in Europe," Alessi says at the firm's offices in Crusinallo, near Omegna.
Exports account for 60 percent of Alessi's annual revenues and the company employs200 international designers and 500 staff crafting 60 new projects a year.
"Even top companies like Lagostina are facing the consequences of outsourcing production," says the chamber's Costi.
The stainless-steel cookware maker was founded by Carlo Lagostina and his son Emilio in 1901 and is now owned by the French small appliances group SEB. It is in talks with unions over possible redundancies among the 200 employees.
It has ruled out plant closures, saying "Made in Italy" branding retains strategic value - exports account for more than a third of its income.
"The group is firmly convinced about keeping research and development and high-end production in Omegna," SEB says.
Coffee-machine maker Bialetti Industrie was founded in 1919 by Alberto Alessi's maternal grandfather, Alfonso Bialetti, and majority-owned by chairman and chief executive Francesco Ranzoni. It reached an agreement in April with more than 90 percent of its creditors to keep credit lines open for another year.
Last June they approved a three-year business plan to boost revenues and reduce debts. The company's stock, listed in Milan, trades at around 51 euro cents, above a low of 16.4 euro cents reached in March. It launched in July 2007 at E2.50.
People say it helps that family ties are so deep-rooted in this little industrial district, where 79 percent of the 5 000 craftsmanship firms are individually run.
When Alberto Alessi's father, Carlo, died last August at 93, his wake was held at the factory. Only family members sit on the board. A reproduction of Carlo Alessi's Bombe tea and coffee service - still the firm's most successful design after more than 50 years - stands outside the factory.
"We are closely tied to this valley. Our family was born here," says Alessi.
"If you ask me if our factory will still be in Omegna in 20 years, I can't answer you," he adds. "But I can tell you we need our skilled workforce to turn our ideas into reality."
Economists say the outlook for Italy's E1.5 trillion economy, which entered recession in spring 2008, is for a timid return to growth in 2010, behind France and Germany.
Manufacturing activity in Italy in September shrank at its slowest rate since May 2008, beating expectations. But analysts warn the rebound may run out of steam at the start of next year.
In the nearby mountain village of Forno, whose name recalls the metalworking furnaces, 87-year-old Giuseppina Tonoli remembers when she went to work for Alfonso Bialetti as a housekeeper.
"I was 14," she says. "I was so beautiful and strong." - Reuters
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