July 9 2021 marked a watershed moment for Tuscany’s industrial sector. That morning, GKN Automotive, a tier-1 automotive supplier then owned by British turnaround specialist Melrose, fired all 422 workers at its facility in Campi Bisenzio, in the outskirts of Florence, and shut down the facility. 

A few hours after receiving the communication via email, the former employees stormed the factory, taking control of its precinct and assets. In the two-and-a-half years since then, they have refused to leave until a reindustrialisation plan is agreed. Their struggle made headlines, with public opinion on the matter split.

The sentiment among former workers is that of a regional community striving to hold onto its industrial base, in a bid to chase sustainable reindustrialisation. 

“That has been a lesson for us,” says Paolo Tedeschi, head of regional competitiveness at the Tuscany regional government. 

In the wake of the GKN crisis, the regional government has put together a combination of measures to better support the industrial firms active across the region, and their workers. 

It also strengthened its approach to investment retention and expansion through its regional investment promotion agency (IPA), Invest in Tuscany. Investment aftercare — the combination of services and support provided to existing foreign investors to encourage growth and reinvestment from within — now features alongside investment attraction as a pillar of the region’s strategy to spur economic development. 

Industrial heritage

Tuscany’s manufacturing sector employed more than 312,000 people in 2021, according to Eurostat data, standing out as the fifth largest region by industrial occupation in Italy and 16th in the whole of the EU. 

In line with national and European trends, its contribution to regional gross domestic product decreased from 23.6% in 2000 to 19.2% in 2021, according to a review by consultancy The European House — Ambrosetti (TEHA). 

The Covid-19 pandemic, which accelerated the evolution of core European industries such as automotive production, combined with the energy crisis triggered by the war in Ukraine, hampered ongoing efforts to shore up manufacturing, bringing along crises such as GKN and calling for a response by the regional government. 

“We put together several instruments to address industrial crises,” Valerio Fabiani, an advisor to Tuscany’s president Eugenio Giani on work and corporate crises, tells fDi. “They all trace back to the overarching strategy of turning a crisis into an opportunity for a firm that is committed to investing.”

Several initiatives stand out and have generated results already. 

Stakeholder engagement and tailored public incentives led to the reskilling and reemployment of dozens of workers laid off by steel wire transformation firm Bekaert in Figline Valdarno, Florence, and dairy products firm Alival in Ponte Buggianese, Pistoia. 

In another case, the regional government coordinated with local universities to produce a feasibility study for the regeneration of a cement plant in Greve in Chianti, Florence, which was decommissioned in 2021 by Italian group Buzzi. The study is now meant to inform a new business plan by a financial advisor that will act as a draw for possible investors. 

Local researchers from the University of Pisa also worked at a regeneration plan for the former GKN facility in Campi Bisenzio — in that case, the study was commissioned by the factory’s worker committee itself. 

“Our research is built on two pillars,” says Francesca Gabbriellini, a researcher at the University of Bologna who participated in the study. “First, it’s paramount that industrial regeneration embraces innovative, sustainable technology. But it’s equally important that workers, their skills and know-how remain at the heart of these schemes. There is no sustainable transition without the workers.” 

Overall, the regional government has fully or partially dealt with 30 cases of industrial crisis involving a total of 3990 workers, official figures show; for another 12 cases (930 workers) a possible solution is shaping up; in another nine cases (3745 workers) negotiations are underway. 

Aftercare drive 

These initiatives unfold hand in hand with the efforts by Invest in Tuscany, the IPA working within the regional government to attract and retain investment. While promotion efforts have always been at the forefront of the IPA’s activity, retention and aftercare have become increasingly important. In 2021, the region was home to 3400 local units of foreign multinationals that employ around 85,000 people, according to figures from national statistics institute Istat. 

“We try to nurture and grow those investors that are already active across our territory,” says Mr Tedeschi. “Investment retention and aftercare are of utmost importance. We go door to door to understand the concerns investors may be facing and address them.” 

The IPA now has an aftercare unit and will host dedicated activities with its peers from all around Europe and beyond, sincluding at the second Aftercare Forum scheduled in Florence on May 29–30. 

As part of its effort to strengthen the engagement with active businesses, Invest in Tuscany also launched an advisory board made up of foreign investors to discuss and address their needs. 

“We are convinced that by working side by side, the region will be able to accelerate new industrial projects and that it will be possible to draw a Tuscan roadmap to innovation not only for big corporations, but also and most importantly for the small and medium-sized enterprises that are connected by consolidated supply chains,” said Paolo Ruggeri, vice-president of Baker Hughes’s Nuovo Pignone subsidiary, and a member of the newly established advisory board, in a statement. 

Global foreign direct investment (FDI) trends further strengthen the case for stronger aftercare activities by national and subnational IPAs. In the current landscape, greenfield FDI projects are becoming bigger in capital value, but scarcer in number, according to figures from greenfield investment monitor fDi Markets. Inevitably, new investment wins are rarer, pushing investment agencies to spend more efforts on reinvestment strategies — reinvestment has accounted for only 22% of greenfield FDI projects in western Europe since 2003. 

The region has brought home a couple of notable wins already. Fashion powerhouse Louis Vuitton is consolidating its local leather manufacturing operations into a new facility in the Florence area that will almost double its overall number of local employees. 

However, engagement will not be enough for Tuscan authorities to unlock reinvestment. fDi Markets figures show that foreign investors into western European countries attach more weight to talent availability in reinvestment plans than first time investment decisions. 

Upgrading and fine-tuning the offer of local talent with the current demands of the job market is a strategic need for Tuscany, highlights Pio Parma, a consultant at TEHA and author of a review of the regional economy. He highlighted two others: chasing the opportunities engendered by the sustainable transition, and the upgrade of physical and digital infrastructure. 

The region can only do so much to fulfil its ambitions of industrial regeneration. 

“The growth of the regional economy should be anchored to industrial policies at national level that have gone missing for a long time,” Ms Gabbriellini argues. 

Thousands of blue collar workers around Europe face the same prospects of their peers at the former GKN site in Campi Bisenzio as the transition towards more sustainable, but also more automated and asset-light technologies, is accelerating the restructuring of European manufacturing. Better stakeholder engagement, incentives and aftercare by local authorities are steps in the direction of turning crises into opportunities.

Assertive national and regional industrial policies could also contribute, but business investment is ultimately motivated by the prospect of returns. Reindustrialisation has to make economic sense, or else it is a road to nowhere. 

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This article first appeared in the December 2023/January 2024 print edition of fDi Intelligence