Facing uncertainty

2 August 2012




This month LCNi’s regular country spotlight series turns to Italy. The country’s severe economic troubles are well documented. Currently it is in the grip of recession, its fourth since 2001, and prospects for improvement do not seem good in the short term.

Though some of its problems are specific to the country and its political situation, many reflect those of the crisis that has affected the whole Eurozone. As this month’s LCNi went to press, Mario Monti had been hosting meetings to try and achieve some kind of pointers to achieving a breakthrough.

This was just before the EU summit to discuss the Eurozone debt crisis and the future of the Euro. Predicting what will happen is difficult but from media reports hopes of real progress at the summit seemed to be fading somewhat.

In LCNi’s article, author Kathleen Armstrong looks at Italy and its economy from a particular viewpoint – that of the laundry and drycleaning industry and in particular its suppliers. Like other sectors, these industries are suffering and the list of problems is a familiar one – higher taxes that affect the ability of a business to compete effectively, delays in payment for those supplying public services, which can be over a year in some cases, and difficulties in obtaining finance for investment.

Smaller companies in particular feel the effect and it is such companies that form the basis of the market. However, there may be some change here as consolidation increases.

There are some positives. Larger laundries that focus on the private sector are faring better. The OPL market is seeing a little growth and as Italy is Europe’s main coin-op market, equipment sales to this sector are faring reasonably well.

The drycleaning sector still suffers from the large number of small businesses, even though many have closed and some consolidation is taking place. Demand for services is falling as consumer income reduces but ironically interest in opening new drycleaning businesses is coming from the younger generation, who cannot find jobs and the middle-aged who have lost theirs.

Returning the broader picture, the country still faces troubling times. The government may be losing some support as it is forced into unpopular moves – even Berlusconi has been reported as trying to make a comeback.

As I finish this month’s Comment, I note increased speculation that elections may be brought forward.

Uncertainty certainly seems to sum up Italy’s economic and political situation.




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