After 2008, Italy found itself smack in the middle of the less-than-flattering acronym used to lump together Europe’s problem-child countries: PIIGS. With a sovereign-debt crisis and a government known for corruption and resistance to reform, the country found itself sliding down the list of preferred investment destinations.
That is starting to change, and the recovery of one of Europe’s largest economies provides investment opportunities for Georgia companies and prospects for recruiters looking to bring investment into the state, Italian business leaders said during an event held at Miller & Martin LLP’s offices in Atlanta.
As it has come out of recession, Italy’s reputation is on the mend, Giovanni Nardulli, an attorney with the Rome-based law firm Legance Avvocati Associati, said at the event.
The country moved to No. 12 on A.T. Kearney’s index of top 25 foreign-direct investment destinations this year, up from 20th last year.
Aside from its wine, food and cultural offerings, the country has built a reputation for craftsmanship and precision manufacturing. Many small, family-owned firms retain valuable intellectual property. Some are struggling with global competition while in the midst of generational ownership transfers.
In 2014, U.S. firms were involved in more than 40 mergers and acquisitions in Italy, up from just 13 two years before, showing restored confidence in the market, Mr. Nardulli said. Investment is also flowing in from companies in continental Europe and China eager to gain access to Italian knowhow.
“I think the perception has changed,” he told Global Atlanta. “Until a few years ago, Italy was perceived as an issue, and now actually Italy is part of the solution, which is a big difference.”
That’s largely thanks to the government of Prime Minister Matteo Renzi, which has restored both respectability and predictability to Italy’s economy after rocky years under Silvio Berlusconi, Mr. Nardulli said.
The new government has introduced a raft of some 50 new laws designed to smooth the way for investors. Foreign firms can lock in tax rates for 10 years, and special courts have been set up to deal with foreign-investment related disputes. A new jobs law has fixed its restrictive labor policies, which made firing employees next to impossible and had a chilling effect on outside investment, he added.
“Until a few years ago, Italy was perceived as an issue, and now actually Italy is part of the solution, which is a big difference,” he said.
Building on success in the 1990s, it has also embarked on a second wave of privatization that could unleash a new troupe of globalized companies like the Enel Group, a former state-owned utility now with a diverse portfolio spanning Europe and the Americas and making early moves into Africa and Asia.
Enel entered the U.S. by buying hydropower firm CIS, expanding from there into wind and geothermal energy. That was an easier route than setting up an operation from scratch in what many Italian firms find to be a tough and expensive market at the outset, said David Post, head of Enel’s renewables group in the U.S.
“I think the U.S. offers a lot of stability. It’s probably not the highest-return environment, but for sure it’s an environment where when you build the project, the projects normally get built on budget and on time,” Mr. Post said.
John Woodward, director of foreign investment for the Metro Atlanta Chamber, said that “economic development 101” dictates going after the big, headline-grabbing projects like major new factories employing hundreds of workers, but that that mindset is changing.
“Interestingly, there’s been a shift in economic development applying to Italy and others. Most FDI is not greenfield. According to Brookings Institution, 87 percent is through mergers and acquisitions, and yet most economic development efforts are on recruiting,” he said.
He conceded that helping firms from Italy and elsewhere find acquisition targets might be a new tack to help them gradually grow their presence here.
“That’s an initiative that we are exploring. I think any (economic-development organization) worth its salt that is serious about FDI is going to be looking into this,” Mr. Woodward said.
Georgia is already home to more than 60 Italian subsidiaries, many in sectors including food packaging and production, industrial products, textiles and automotive — two companies that make gears for vehicles were present at the Miller & Martin event.
But the majority of Italian companies — mostly clustered in the north around the northern business hub of Milano — are small and export-oriented.
To get them out of their comfort zones and into the U.S., they need help boosting sales here first, said Marco Manzini, a metro Atlanta-based consultant that has worked with Italian firms in food processing, packaging, machinery and other sectors.
“What they’re looking for is some commercial base,” he said.
Aquafil USA is an example of the promise this track holds. The nylon fiber manufacturer started with a sale of three shipping containers of yarn to Northwest Hospitality Carpets Inc. It now sells $150 million in made-in-Georgia fibers per year, a quarter of the company’s global revenues.
Multiplying these success stories would allow Delta Air Lines Inc. to offer even more connectivity between Atlanta and Italy by reducing reliance on seasonal leisure traffic, said Roberto Ioriatti, Delta’s vice president for pricing and revenue management, who was ribbed good-naturedly for lack of consistent direct service from Atlanta to Milan.
While Delta does operate seasonal service to Milan, its joint venture with Alitalia makes heavy use of the airline’s hub in Rome, he said, providing wider connecting options for travelers.
For a full list of event speakers, click here.
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