VP Tajani visits Italy's Sicily region to jump-start the recovery of local SMEs
European Commission - MEMO/14/242 27/03/2014
Other available languages: IT
Brussels, 27 March 2014
VP Tajani visits Italy's Sicily region to jump-start the recovery of local SMEs
Like in many regions in the European Union, companies in Sicily have suffered a lot from the economic crisis over the last years. To help SMEs in Sicily emerge from the downturn and help them participate in the next economic growth cycle, the European Commission Vice President Antonio Tajani is travelling to Palermo today. They will be accompanied by representatives of about 600 European companies, who will participate in more than 1300 bilateral meetings with SMEs from Sicily to form new partnerships and discuss opportunities for collaboration in key sectors active in the region such as aerospace, agro food, biotechnology and fashion industries. This meeting follows on from a similar trip by Vice President Tajani in early March to Campania.
New markets mean greater business opportunities
The adoption of internationalization strategies is a crucial factor for companies successfully addressing the crisis in Sicily. Businesses entering into new markets, while still recording significant reductions in revenue and investment, have shown more favourable performance than the others: while 40% of Sicilian companies registered a decrease in production in the first months of 2013, this trend was less negative for exporting companies. It is important that SMEs receive advice on how to export, since it is not uncommon for first export experiences to be unprofitable.
A central focus of this visit is a therefore a business to business networking event on 28 March. Partnerships will be generated between both companies in Sicily and other EU regions and countries, and also between Sicilian companies and those from non-European countries. The event aims to promote partnerships in sectors identified as key contributors to achieving growth in the region, including:
Strategy for growth conference
An important part of this visit will be the Europe 2020 strategy for growth conference, which Vice President Tajani will open together with the president of the Sicilian region, Rosario Crocetta. Issues discussed will include EU financing for business as well as supporting SME competitiveness and innovation.
Structural and rural funds in Sicily
From 2007-2013, between EU and national funds, Sicily had access to €8.54 billion.
But the last report available (from mid- 2012) highlighted a serious delay in Sicily in the use of EU funds in particular. Payments were only made for just over 17 % of the available funds. The shortcomings identified in the management of funds included the excessive fragmentation of interventions, the dispersion of resources in small projects and lack of strategic importance given to the overall development of the island, deficiencies in the system of checks and the fragmentation of competences.
However in 2011 measures were taken at national level to accelerate the implementation of the funding programmes. These resulted in a concentration of assistance in the following areas: education, the digital agenda, employment and transport. In Sicily, €350 million are now invested in measures for education and €65 million for tax credits for employment. The latter amount represents more than 45 % of the total budget available for this aspect in the south of Italy.
During the next round of EU Structural Funds, the “Convergence” objective regions, which includes Sicily, will benefit from a European contribution of €20.33 billion. The Italian Government is currently deciding on the breakdown of this amount among the regions.
The Sicilian rural development plan includes a budget of approximately €2 billion, mainly for improving the competitiveness of the agricultural and forestry sectors (42 % of the total) and improving environmental and rural development (42 % of the total).
Use of EU Funds for businesses in Italy
In Italy the Commission, together with the European Investment Bank group, is already working with over 100 financial intermediaries to help Italian businesses access financing. From 2007-2012, EU resources helped to mobilise over €3.5 billion of guarantees and €1.4 billion of equity to businesses in Italy. This included loan guarantees for around 40 000 SMEs.
During today's Europe 2020 Strategy for Growth conference the Vice President will highlight the new €2.3 billion funding program created specifically for SMEs. COSME, in operation since the start of 2014, aims to address the main challenges they are currently facing, such as access to finance, access to foreign markets, improvement of the business environment and lack of support for entrepreneurs. Among other things, this program will help EU enterprises, including those in Sicily, better deal with the current credit crunch by improving access to bank financing and venture capital (IP/13/1135).
Innovation in Sicily
Sicily is - like most Italian regions – a moderate innovator with an innovation performance below EU average. Its innovation performance has improved in recent years, but it is consistently placed in the category of moderate innovators. Weaknesses include low business expenditures on research and development (R&D) - less than 40% of that of Piemonte; a low share of population with a higher education and a low number of patent applications. Sicily's relative strengths include marketing and organisational innovations in SMEs and the sales of innovations; in both categories Sicily's performance is around the EU average.
Against this background, the Vice President will also use this visit to point out funding opportunities which will come out of the new Horizon 2020 research and innovation programme. For example, a new "SME Instrument" (with the help of the Enterprise Europe Network) will support innovative SMEs, during an entire innovation cycle: from the conception of the innovative idea, to the final creation of the new product or service. Companies will then have the responsibility to commercialize their innovations using existing mechanisms of access to finance.
Potential of clusters in Sicily
Clusters represent the major centres of specialisation across Europe, and 38% of European employment. A few clusters are active in Sicily notably in the fields of information and communication technologies (e.g. il distretto technologico of the Etna Valley), ceramic, agro-food and fishing products but Sicily can better exploit the potential of clusters to support its economic growth and exports.
Clusters have the ability to create innovation-friendly ecosystems, facilitating a smooth collaboration between research centres, large enterprises and SMEs. Growth of companies in a cluster is statistically proven to be higher, particularly when there is sound management of the cluster. Clusters can also facilitate the integration of SMEs in trans-European and cross-sectoral value chains, helping them to find partners not only in their region of origin, but across Europe, in order to develop sophisticated products with a high added value and high export potential. By working together, clusters can also multiply individual company offers and therefore the potential of their trade missions in non-EU countries.
Using COSME and Horizon 2020 the Commission has put in place various measures to encourage the development of potential cluster organisations and facilitate the bringing together of SMEs who wish to integrate in world-class clusters. To encourage export collaboration, COSME will be used to encourage clusters to participate in cross-sectoral “European Strategic Cluster partnerships”. From 2015 Horizon 2020 will also finance “cluster-facilitated projects for new industrial value chains”.
While clusters are a fundamental element of the economic ecosystem of EU regions, they do not represent the entire ecosystem. They need support and integration in the political and strategic development of the regions, and especially in the trans-regional cooperation, in order to be able to fully contribute to the reindustrialisation of Europe.
Growth and employment issues in Sicily
In 2012 GDP in the Sicilian region decreased by 4.3%, compared to an average of 2.4% for Italy as a whole. Estimates for first 9 months of 2013 also show a worrying picture for employment: -4.7% of employment in all sectors, and a decrease of 65 000 jobs. The worst scenario is for young people, as 55.5% of young Sicilians do not have work.
Trade is the most important sector of the economy, with 33% of the total from firms followed by agriculture (23%) and construction (12%). Tourism represents only 5% of farms (?) but it is a growing sector.
The number of registered businesses in Sicily in 2012 remained broadly stable at around 464 000. The first nine months of 2013 showed a decrease in the turnover of the industrial enterprises: around 40 % of the Sicilian firms had decreased turnover in the first three quarters of 2013, compared to less than 20% reporting an increase. However exports increased by 14 %, a better than average dynamic in Italy as a whole (0.6%) and, in particular, in comparison with the Mezzogiorno (- 3.9%).
Italy’s current internationalisation policies are strongly export-oriented, comprising a wide range of conventional policy instruments (e.g. export credits, export guarantees, export insurances, grants and soft loans for market feasibility studies or promotional activities, etc.) and support organisations.
Overall, the negative economic trends registered in Sicily in 2012, continued into 2013. However, some positive signals appeared in the latest months of 2013 so it is possible that the situation will improve in 2014. The Commission is working hard, via the Missions for Growth and other initiatives, to encourage these faint positive signs and help Sicily's businesses overcome the crisis.
Missions for Growth
This mission is part of the series of "Missions for Growth" to help European enterprises, in particular small and medium sized enterprises, to better profit from fast growing international markets. The Mission’s overall objective is the enhancement of the growth and competitiveness of European industry by better exploiting growth potential in non-EU countries via the reinforcement of economic co-operation and reforms, helping EU companies to access the Chinese market, as well as deepening of bilateral policy co-operation in various policy fields.
More information and registration link: http://ec.europa.eu/enterprise/initiatives/mission-growth/missions-for-growth/antonio-tajani/europe/italy-sicily/index_en.htm