Things are looking up in Italy. Its membership of the Euro, the relative caution of its banking system compared to its neighbours and a general sense of déjà vu amongst the business community are helping the economy recover faster than most, writes Chris Fitzsimmons.
”The word ‘crisis’ is a very common term over here,” said Ennio Prase, owner of Prase Engineering about midway through our conversation. Strange as it may seem to start in the middle, it’s central to Prase’s case for why Italy’s economy, and therefore its AV integration industry, are already well on the way to recovery.
We should however return to the beginning to put this remark in context. Italy’s economy felt a somewhat delayed impact compared to others. “Since April in particular, all business channels connected with the construction market started to suffer quite heavily.”
If you compare that to elsewhere, such as the UK, it’s a good three to six months later than the autumn collapse.
“If we’re talking specifically about AV, we saw part of the conference business going completely. It was lost, but most of the projects were put on stand by. I would say this was mainly corporate projects – that sector absolutely suffered more than government ones.
“Right at the start of the year, there was some kind of tail left over from the end of 2008 that generated some business in the first quarter of 2009. However from April, when we’d normally expect the bigger projects to come in, we saw nothing, or at least not very much.
“A lot of clients just said: We need to stand back a bit and just see what’s going to happen.”
“Thank God, that situation is not longer still going on. Since the beginning of September a good part of the projects that were put on hold are coming back on stream.”
In terms of the impact on the wider economy Prase is bullish.
“We’re used to this kind of situation,” referring to his earlier remark about the commonality of crises in the Italian economy. “We are all geared up for it.” In truth, the Italian economy has been on some kind of roller-coaster for the last decade or two, the Lira was a notoriously weak currency, and although entry to the Euro helped that front, the transition was fiscally very painful.
This had however already conditioned its banking system to be very robust. “Even before the big events, the banks weren’t giving away money for free. Even five years ago, if you needed a loan or a mortgage for a hundred thousand Euro, they’d want to know who was underwriting it. If you wanted 100k, they wanted a guarantee for 200k. We didn’t do what they did in the USA – give everyone everything and then found ourselves in big trouble.”
Prase believes that this is the chief reason why the Italian banking system wasn’t compromised in the same way that the German or British ones were, but that’s not to say it hasn’t been tough.
“We had some tricky moments, there were some bad debts and companies that went under, but I also think much of the crisis came from the media. Even the strongest performers were convinced that there was a crisis, in addition to the real one!
“If I compare Italy with other countries, we didn’t suffer that much, and I can see things already getting really promising.”
I asked Prase for his best guess of the recovery time.
“I believe that in order to get back to where we were before, we’ll have to wait until mid-2010. Another eight months or so.”
And where does he expect the impetus for that recovery to come from? “Well, we have some hotel projects on the way that are looking very interesting – business hotels with conference centres in. The transport area is doing quite well.
“I also think that the arrival of EN 54 will be very good for us. It will certainly provide us with new business and we will benefit doubly as the product complying with the new norm will be of higher value. There’ll be refit work and new builds.”
In anyone’s book, to recover from what is meant to have been the worst financial crisis in 50-years in just 15 months is good going. But as we’ve also noted, economic crises are two-a-penny in Italy. According to Prase, it’s now just a matter of application.
“It’s time to roll up your sleeves and get on with the hard work.”