Italian election winner awaits business turmoil

Italian election winner awaits business turmoil
Italian election winner awaits business turmoil

According to the Milan-based economic think tank Cerved, about 24.5% of Terni’s 16,000 companies are at risk of bankruptcy in the near term, after Crotone in the ailing southern region of Calabria the highest percentage of all places in the country.

The 106,000 inhabitants of Terni, located about 100 kilometers north of Rome, have been closely linked for more than a century to its main employer, Acciai Speciali Terni, one of Italy’s largest steel mills.

Rising gas and electricity costs caused the factory to send 400 of its 2,278 workers home last week with reduced wages until better times come. The laid-off workers see little cause for hope.

“We already have our own energy problem at home with gas and electricity bills, so now we have a job crisis on top of a domestic crisis,” said Igor Moresi, who has been working at the plant for 22 years on machines that coil steel sheets.

Italy’s energy-hungry steel sector has seen its costs increase tenfold since a year ago, according to data from steelmaker lobby Federacciai.

As in most of Europe, it’s not just energy prices that hit Italian businesses and households. Total inflation, exacerbated by the war in Ukraine, stood at 9.1% in August, reaching the highest level since the introduction of the harmonized EU index in 1997.

INSTABILITY

As for most young Italians, job security is a mirage for Jacopo Calabresi, 31, another worker sent home from the Terni steel mill. He got temporary contracts for the first five years at the factory before finally getting a permanent job two months ago.

“After years of total uncertainty, I had a short period of rest. Now, of course, I’m very concerned again,” he said.

According to the statistical office ISTAT, the number of temporary contracts in July was the highest since registration started in 1977. This preponderance of temporary, low-paid work is driving thousands of young Italians to seek better prospects abroad.

The new energy and inflation crisis comes on top of chronic Italian problems such as weak growth, stagnant productivity, huge public debt, low employment, red tape and a slow-moving justice system.

If the polls are correct, after Sunday all these problems will fall into the lap of Giorgia Meloni, the leader of the nationalist Brothers of Italy party, who looks set to become Italy’s first female prime minister.

Guido Crosetto, a close associate of Meloni and co-founder of her party, warned this month that the full effect of energy costs on the economy will be felt later in the fall, potentially leading to widespread social unrest.

“It’s going to be like Gotham City,” he said, calling on opposition parties to help the new government but ruling out another coalition of national unity like that of outgoing Prime Minister Mario Draghi.

Meloni says she will push for Europe to cap gas imports from Russia – something Draghi has been trying to do unsuccessfully for months – and to break the link between domestic gas and electricity prices.

She promises sweeping tax cuts and pledges to be “careful” with public finances. The Brothers of Italy manifesto, like that of all major Italian parties, contains few details about the financing of its policies.

RED TAPE

In the current situation, even the most successful Terni companies are feeling the pinch.

Fratelli Canalicchio, which makes parts for luxury boats, has been expanding since its inception 30 years ago, but co-owner Giovanni Canalicchio says there are more and more difficulties to overcome.

The price of steel has doubled in the past year, narrowing profit margins, he said, while successive governments have failed to cut the bureaucracy that most Italian companies complain about.

“Other European countries have much less bureaucracy and this allows their companies to be faster and more responsive to change,” he said at his factory of about 60 employees, cutting and forming steel parts for yachts.

“How I see the economic situation of the country? Frankly, it is not very rosy.”

Meloni has focused much of her campaign on Italy’s small and medium-sized businesses, such as Canalicchio’s, and while he didn’t reveal who he would vote for on Sunday, the businessman said he could understand her popularity.

“She is the only one who has done what she said, which is to remain in opposition and not participate in Draghi’s unity government, so her party is the only one that stands out from the rest,” he said.

About 5 kilometers away, Copini, a family business with 23 employees, has been producing another Italian specialty, olive oil, since 1955.

CEO Micaela Coppini said the company was unable to plan ahead or make investments because of the risk that the glass and paper suppliers for the bottles would have to stop production due to increased energy costs.

Coppini’s own electricity costs rose 251% in the first quarter from a year earlier, she said, although the company mitigated the impact by installing solar panels before the current crisis hit.

“The next government will have to take action to cut energy bills or the country’s production system threatens to grind to a halt,” she said.

The article is in Dutch

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