Clusters, territory and Covid-19: The effects of the pandemic outbreak on the Livenza Furniture Cluster and the S3’s new development trajectories for a possible economic revival of Friuli Venezia Giulia’s wood and furniture industry.

Abstract

In a period of revival after the last 2008 and 2012 crisis, the Covid-19 outbreak has burnt to the ground every effort produced by the world economy to restore itself. Almost every world’s country has been forced to a more or less tight lockdown, shutting down temporarily most of the productive activities, whether considered as “not essential”. In this framework, Italy has been one of the hardest hit countries, not only form the sanitary point of view, but especially form the economical one. In particular, 48% of the firms have been necessarily forced to stop their activity in order to contain the development of the outbreak, but the results have been awful. In the first quarter, Banca d’Italia has registered a contraction of the GDP of 4,7 percentage points, forecasted to be -9,2% in 2020. The causes have to be reconducted mainly to a reduction in internal consumption levels, but also to a strong fall in of exportations, affected by the delay with which the outbreak have hit Italy’s main foreign markets. Among all the Italians, wood and furniture industries have been hit hardly, mostly due to their interdependence with other complementary sectors, as constructions. The closure of all construction sites, in fact, has drawn the demand for new furniture. In addition to this, the delay with which showrooms have reopened after the lockdown has exacerbated the situation, postponing the potential new demand. Another component that has led the furniture industry performance in the last years is tourism, probably the most affected sector by the outbreak. Along with building renovations and contract projects, in fact, it represented a key complementary industry for wood and furniture. According to the analysis produced by Intesa San Paolo, in the April the furniture industry has lost 83,6% of retail sales. The main cause has to be attributed to the fall in foreign demand, which has faced a 9% contraction in the first quarter. Exportations represent almost nearly half of the total sales for the wood and furniture industry. The delay with which other European States (Germany, France and UK) have proceeded with closures has caused a double loss: at the beginning of the pandemic, with a partial cancellation of orders, and when the safety measures have been eased, because foreign markets were not ready for a reopening. However, as every crisis, after the initial shock, new potential opportunities may grow, especially considering the upheaval of our daily routine. Work from home, social distancing, the need for more clean surfaces are only three of the whole set of market’s new requirements. The aim of this thesis is twofold: on first instance it wants to provide a global overview of Covid-19 effects in Friuli Venezia Giulia’s wood and furniture industries, but most importantly wants to reason about the potential paths of innovation that may lead a revival of the Region’s sectors. In order to do so, Smart Specialization Strategy will be used as a tool. The structure will be organized as follows: the first chapter will analyze the concept of Cluster (Porter, 1998) and the role of territory as company’s intangible; the second chapter will study the Livenza Furniture Cluster located between Veneto and Friuli Venezia Giulia; the third chapter will analyze the effects of Covid-19 in Friuli Venezia Giulia’s furniture industry; the fourth chapter will provide food for thought on the potential development trajectories that may be outlined by S3 in the new programming 2021-2027.