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Virginia Mayo/AP
Italian Minister of Economic Development
Claudio Scajola

Italian Government Offers Boost to Fashion Industry

March 04, 2009 11:15 AM
by Anne Szustek
Italian Minister of Economic Development Claudio Scajola has vowed to put “interventions” in place by mid-March to boost the country’s iconic but flagging fashion industry.

Promised Economic Bailouts Hoped to Address Fashion Emergency

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The Italian fashion industry employs 80,000 workers and 30,000 distributors. The home of such renowned labels as Armani, Dolce & Gabbana, Fendi, and Versace, Italy clearly depends heavily upon fashion to burnish its economy and international status.

So when the Italian fashion industry posts a four percent contraction in revenue for 2008 and is expected to drop five percent this year, it is not just an indicator of the global recession but also an affront to national pride.

Last month, the Italian car and home appliance industries received $2.54 billion in stimulus funding from the Italian government. Italian clothing designers received nothing but a sense of grievance. New York magazine’s The Cut blog quotes Italian Chamber of Fashion Head Mario Boselli: “I can understand helping the automotive industry but wouldn’t fashion deserve the same, if not more, consideration than the furniture industry?”

But fear not; the Italian government will take steps to prevent the fashion sector from falling completely to tatters. Claudio Scajola, Italy’s minister of economic development, announced that the “first interventions” to help resuscitate the fashion sector will be in place by the middle of March. In addition, IT Holding, the parent company of Italian label Gianfranco Ferré, has asked for special administration for one of its distribution units, which has been since approved by government officials.

Lagging sales in the wake of the worldwide economic crisis have cut into Italian fashion sales figures, already by affected by the expiration of the Multi Fiber Agreement on Jan. 1, 2005, which eliminated quotas on textile exports from developing countries.

As was the case at New York’s Fall 2009 Fashion Week late last month, some Italian labels are saving money by declining to participate in Milan Fashion Week; instead, they are holding presentations. In one possible uptick for the Italian fashion sector, “Milan has 10 more collections than before the crisis,” Boselli told Reuters. “People do not have the negative sentiment they had before Christmas which affected January’s menswear shows.”

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Related Topic: Chrysler-Fiat auto bailout, European carmakers’ reaction

In a move to improve the chances of weathering its credit crisis, automaker Chrysler entered a nonbinding agreement with Italy's Fiat on Jan. 20 to trade technology and foreign sales networks in exchange for a 35 percent stake in the Detroit Big Three company. No cash is involved in the deal, although the deal is contingent on Chrysler receiving more auto bailout funds.

One requirement set forth by the U.S. government for supplying car manufacturers with more funding is for potential recipients to revamp their operations with a view to cost effectiveness.

Representatives from Fiat are headed to Washington, D.C., this week to extol the benefits of a potential Chrysler-Fiat alliance to U.S. government officials. However, joint Fiat-Chrysler products are not likely to be rolled out until 2012, a significant delay in these uncertain economic times.

European car manufacturers have been watching Big Three-automaker bailout negotiations to see how bailouts will affect their home car brands—and whether it will give rise to a trade dispute. 

At issue is the possibility that European manufacturers will have to compete in the global marketplace against American companies that are being subsidized.

As of November, the European Union was considering filing a legal complaint against any such U.S.-backed bailout. But General Motors, Ford and Chrysler have long contended that European government policies—such as state-run health care and pension systems for employees—offer an unfair edge to their European competitors.

Reference: Milan, fashion guide, Italy travel guide

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