LUMEZZANE,
Its specialty is
brass valves, and in the last decade, the family-owned factories here have
watched helplessly as their business has spiraled away, valve by valve, to
lower-cost manufacturers in
"We don't
even know exactly how much of the market we are losing," said Aldo Bonomi, the general manager of a 105-year-old valve maker
founded by his grandfather. "But I am very worried. If I were smart, I'd
sell the company before we fall into losses."
Stories like Mr. Bonomi's are familiar in any country that has battled the tide
of global competition. What is different in
As a result,
Making a fresh
start to catch up with the rest of
Italian voters
ousted Prime Minister Silvio Berlusconi last month to
a large degree because he did not fix the economy. But then they elected a new
center-left government with a parliamentary majority so slim that it may be
hobbled before it even takes power.
"I'm not
very positive," said Alessandro Profumo, the
chief executive of
It is clear why
economic fears dominated Italy's recent election, and the epithet "sick
man of Europe," conjuring images of the tottering Ottoman Empire, has
become shorthand here.
A miracle of
romantic pluck decades ago, the Italian economy has stagnated in three of the
six years since the euro existed. Its competitive position has eroded, both globally and in
The biggest
problem, however, is structural:
"Look at
these valves," Mr. Bonomi said, plunking down a
matched set. "This one is mine; this one was made in
The Chinese one
costs half as much.
Economists offer
plenty of remedies for this situation:
The trouble is, the incoming government, led by Romano Prodi,
does not have the leverage to push for radical change, especially in the
Italian Senate, where his coalition holds only a two-seat majority.
"The most
likely outcome is that he will water down any reform proposals well in advance
to ensure that he faces minimum disruption in Parliament," said Erik
Jones, professor of European studies at Johns Hopkins School of Advanced
International Studies in
Nor is
"These guys
really don't want to go," said Roger Abravanel,
a senior director at McKinsey & Company in
Far from
conquering the world,
With the adoption
of the euro in 1999,
No other European
country has had as fraught a transition to the euro as
"Of course
we have problems staying with the euro, and that is precisely why we should
stay with the euro," said Domenico Siniscalco, a
former
Last year,
however,
Economists speak
approvingly of Mr. Prodi's likely appointment of
Tommaso Padoa Schioppa, a
technocrat and former board member of the European Central Bank, as
Any assessment of
Mr. Prodi's ability to make other major changes
revolves around two poles. The first is his success in pushing through tough
changes the last time he was prime minister from 1996 to 1998. The second —
the less encouraging side — is his coalition, which critics say is not
only dangerously fragile but weighted too heavily toward the far left.
In his first
term, Mr. Prodi had the job of preparing
In 1998 a crucial
partner, Fausto Bertinotti
of the Refounded Communists, withdrew his support and
the government fell. Now, Mr. Bertinotti is again in
the coalition, this time as president of the Parliament's lower house. Critics
say the past could repeat itself, if not with Mr. Bertinotti,
then with any of the government's eight other coalition partners.
Allies of Mr.
Berlusconi never tire of painting Mr. Prodi's
government as a hostage to the left. Mr. Bertinotti
and Franco Marini, the president of the Senate, were
both trade union leaders. Giorgio Napolitano is the first former Communist to
be elected president of
Critics note that
the government plans to repeal part of an innovative labor law, known as the Biagi law, which makes it easier for companies to hire
workers on a temporary basis. Advisers to the government insist that any
changes will not hinder
Not everyone is
pessimistic about
Back home, where
he keeps a design studio, Mr. Bertoli, 38, said he
was inspired by the sun-dappled landscape east of Milan — a region known
as button valley for its many local button makers. "You are surrounded by
beauty in this country," he said. "It permeates you."
Capturing this
beauty, he said, and selling it to the rest of the world — whether in the
form of Ferragamo shoes or Fiat cars — is how
"Men and
women in the year 3000 will be buying clothes and furniture," said Pier
Luigi Bersani, a top economic adviser to Mr. Prodi, arguing that