Components "made in Italy", committed to quality
Mondo Macchina spoke to Pier Giorgio Salvarani, the new president of Comacomp. "The agricultural machinery industry has its historic structure in Europe and the United States, areas where the most prestigious brands are located and where technological innovation is at the forefront. Then there is an emerging structure in countries such as India, China, Turkey and Brazil, where machinery demand is growing and where a local industry is rapidly developing."
The international exhibition of Agritechnica devotes an important exhibition space to the component industry, in which many Italian industries are present. Component manufacturing is one of the foremost sectors of Italian mechanics, an industry that contributes with the constant innovation of products and materials to the overall technological improvement of machines and agricultural equipment produced in many parts of the world. Regarding the characteristics and outlook of the sector, Mondo Macchina spoke to Pier Giorgio Salvarani, the newly elected president of Comacomp, the association within FederUnacoma/Confindustria that represents the companies specialized in the production of components and spare parts.
Italian industry boasts a particular tradition in the field of components for agricultural machinery. What are the main product types and what are the features that distinguish this sector’s components from those produced for industrial machinery or the automotive sector?
The component industry manufactures products and technologies for different sectors, and the needs of companies producing farm equipment are specific and particular. However, the experimentation and know-how that are the basis of many components can be applied to many sectors, and this allows the investments in research to be optimized. As far as product types are concerned, Italian industry is very aggressive and active in every product segment. The components and parts of towing machines displayed at exhibitions such as Agritechnica in Hanover or EIMA in Bologna would allow, if they were all combined, to build an entire tractor from scratch and put it into operation or any agricultural machine.
How is the Italian production fabric in terms of company size and territorial dissemination?
The size of many component companies is small to medium, and this tells us a lot about the energy and innovative capacity of these industrial entities, which can still be competitive even when they are small. The geographic dissemination of this sector’s industries somewhat follows the agricultural character of many Italian areas, since mechanical firms were born in certain regions to meet the needs of local agricultural production. Many districts of agricultural machinery, for example those of Reggio Emilia, Modena, Cuneo, Vicenza or Padua, coincide precisely with areas of great tradition in agricultural production.
How important are Italian components for agricultural equipment and machinery? How much of the turnover relates to the production of components for the manufacture of machines, and therefore for the “B2B” market, and how much can be attributed to spare parts and accessories?
Our Association (Comacomp, member of FederUnacoma) brings together about 90 agricultural machinery companies, and is the only institutional representative for the industry within Confindustria. The turnover of the associated companies does not represent the whole production, since other industrial entities are not part of our organization. However, we try to monitor the overall trend of the market and develop estimates based on which the economic weight of the industry should be valued at around 2,7 billion euros a year. Of these, approximately 65% is attributable to direct supplies to industries that manufacture finished products, and the remaining 35% is for spare parts and after-market.
How much Italian production is placed on the domestic market and how much on foreign markets? What are the countries where our production is mainly directed?
We estimate that around 75% of Italian production is directed towards foreign markets, and this confirms the competitiveness of our products, which are also considered by foreign industries as elements that can “make the difference”. The agricultural machinery industry has its historic structure in Europe and the United States, areas where the most prestigious brands are located and where technological innovation is at the forefront. Then there is an emerging structure in countries such as India, China, Turkey, Brazil and Russia, where machinery demand is growing and where a local industry is rapidly developing. Of course, this scenario expands the business opportunities for our industries, which aim to consolidate their presence on traditional markets and look for ever greater space in new ones. In short, Italian companies look to the global market, and their numerous participation at specialized exhibitions of high international value such as EIMA in Bologna or Agritechnica in Hanover is a clear proof.
How do you assess the current market trends? The market recovery we see in Italy and in the main foreign countries this year, has it been reflected in the component industry?
The recovery of the agricultural machinery market, which can be seen in Europe, China, India, the United States and many other countries, including Italy where tractor registrations have risen (about 9%) after nearly ten years of crisis, increases demand for components, and therefore also drives our industry. Many of our businesses are experiencing increases between 10 and 20% in 2017, and the forecasts for the first months of 2018 are also positive. The economic results of our industries can be affected by the variable of the raw materials, which are experiencing a consistent growth in prices, especially for iron, cast iron and plastic, an element that increases production costs and inevitably weighs on the business profits. For the second half of 2018, we expect a certain slowdown in demand, although it should remain positive and ensure a positive year-end.
It is estimated that in Italy, for every new registered tractor there are at least two that are sold on the used market, and we know that the fleet is largely obsolete. Could one say that this has driven the spare and accessories market over the years, to repair old equipment and update it somehow?
In an industrial logic, machines must work for a given period of time and then be replaced to make room for more up-to-date and more efficient means. This is not completely the case for agriculture, where operators consider buying a machine as an investment to be amortized over a very long time, and thus tend to keep the machine well beyond its period of peak efficiency. In this context, it is clear that the spare parts and accessories market remains lively, because the farmer’s orientation is to repair and upgrade the machine as much as possible. That is why it would be important for spare parts and accessories to always be guaranteed and high quality, otherwise the overall standard of the machinery will drop considerably, with risks also in terms of safety.
Component manufacturing is considered to be one of the main drivers of innovation for agricultural machinery. How much do the sector companies invest in research and development, and what are the key technological challenges for the industry?
It is commonly thought that it is especially the larger companies that invest in research, but in a technological sector like ours, less structured companies also need to develop innovative solutions and possibly stay on the cutting edge, especially compared to foreign competition. In recent years, emerging countries have enacted very aggressive policies on the markets, and our companies know that their only competitive leverage can be quality and innovation, and the ability to produce high added value products. Beyond the percentage of turnover allocated to research, we must consider that some technologies require more substantial investments and others less costly investments. In some cases, the effort for the company is very high, but the result is a leap in quality that repays the investment. There is technological evolution in industrial production, which consists in the improvement of an existing product, and a proper “technological innovation”, which often involves the creation of a new technology and which obviously entails higher costs.
Production districts, foreign markets, technological innovation and research are important challenges for this sector’s Italian industries. What are the initiatives promoted by Comacomp to support member companies in industrial and market policies?
As an association, we have always aimed to support the internationalization of our businesses, because the agricultural machinery market is growing in many parts of the world and there are spaces to be conquered. Our calendar features participations with Italian collectives at trade fairs in all parts of the world, and exploratory and promotional missions, especially in Latin America and Asia, where we record the highest rates of growth for the industry. Beyond these promotional and commercial initiatives, as president of the Association, I am very keen on the training activities and the opportunities for companies to meet, because I really believe that in a “frontline” sector like ours, unity and cooperation are winning factors. However, one of our priorities is the development of EIMA, an exhibition in which the Component Show is a strong point and a very prestigious element, in which our businesses find a formidable platform for conquering new and fruitful markets.
by the editorial staff