Annex: Italy

Italy is the second largest steel producer in the EU after Germany and the 10^th largest steel producer worldwide. Italy is also one of the main consumers and importers of steel, due to its well-developed ecosystem of steel-intensive industries, such as automotive, mechanical engineering, construction and tube production. The production of domestic crude steel is estimated at 24.5 million tonnes in 2018, which marks an increase of 1.9% compared to the previous year. Specifically, Italy produced 16.9 million tonnes of carbon steels and 7.1 million tonnes of specialty steels, including 1.5 million tonnes of stainless steels. Italy has not yet recovered its production levels from before the financial crisis and the national economy has experienced a notable slowdown.

The analysis of hot production for 2018 highlights diverging trends between long and flat products: while the long products output, with a total of 12.4 million tonnes produced, marked a new improvement compared to 2017 (+ 4.1%), the flat products output dropped to 11.2 million tonnes, a decrease of 1.6%. The commercial balance experienced a decrease of 2.2 million tonnes in produced volume, while registering an increase in value of EUR 2.3 billion. Revenues generated by steel production amounted to EUR 40 billion (+17% compared to 2017). Steelmaking’s direct contribution to the Italian GPD was 0.3%, while the indirect contribution reached 10%.

With reference to the activity of steel downstream industries, 2018 was marked by a significant slowdown in the automotive sector, where production fell by 3.4% compared to the previous year. Overall, the activity of steel downstream industries remained positive.

In line with the general macroeconomic trend, steel-intensive industries in Italy experienced a significant downturn⁴⁰⁶.

In 2018, direct employment in the primary steel industry accounted for 33,500 positions, i.e. 1% less compared to the previous year. More generally, employment in the Italian steel industry (ATECO codes 24.1, 24.2 and 24.3⁴⁰⁷) is estimated at 33,356 jobs. The employment trend⁴⁰⁸ in the Italian steel industry suffered an abrupt downward change in the aftermath of the economic and financial crises, which marked the beginning of a steady reduction in employment, which has not yet ended (half way through 2019).

These findings are largely a result of:

• the substantial decrease in steel production

• the closure of plants

• plants producing below capacity (particularly the Taranto plant)

• the introduction of control and management systems and high levels of automation of production processes in the framework of Industry 4.0 The historical perspective

At the end of the Second World War, new projects were needed to relaunch production.

The main drivers of this new phase were:

• Reconstruction and new projects

406 Source Federacciai : all data and figures concerning the year 2018 have been provided to the study team by Federacciai. These data will be included in the 2019 Yearly Assembly Report.

407 https://www.codiceateco.it/divisione?q=24, Last visited on 15.05.2019

ATECO is an automatic coding system created by the Italian National Institute of Statistics (ISTAT) to classify economic activities.

408Source Federacciai : all data and figures concerning the year 2018 have been provided to the study team by Federacciai. These data will be included in the 2019 Yearly Assembly Report.

European vision on steel-related skills of today and tomorrow July 2019

• The Sinigaglia Plan⁴⁰⁹

• Italy’s accession to the ECSC and the restructuring of the 1950s

• The economic boom of the 1960s

Immediately after the war, the control of Italian steel production was equally divided between the public sector (Finsider) and the private sector. Under the Sinigaglia plan, the Italian steel industry was relaunched by driving State investments in large coastal integrated steel plants such as Cornigliano, Piombino and Bagnoli. Additionally, the plan called for the construction at Cornigliano of a new continuous hot strip mill for wide flat products (coils), a new technology developed and implemented in the US, to support the growing demand of the Italian automotive industry.

Italy's membership to the ECSC favoured the strengthening and competitiveness of the Italian steel industry. Adhering to the ECSC brought Italy great advantages in terms of low raw materials costs, as well as investment aid, and corporate restructuring funds. In 1962, for the first time ever, the prices of steel products in Italy were lower than the corresponding German prices.

In the period from 1956 to 1973, the three main Italian State-owned integrated steel plants (Genoa Cornigliano, Bagnoli and later Taranto) were incorporated in a new company, formed in 1961, called Italsider. At the same time, private steel producers such as Falck and Readelli experienced a gradual but steady decline. Fiat left steel production activities, passing its facilities to Finsider. In the meanwhile, the market of mini-mills started emerging, with the first mini-mills installed in the surroundings of Brescia, producing rods and rebars with EAFs and continuous casting⁴¹⁰.

The 20-year great expansion established Italy as one of the most prominent steel producing countries. The adhesion to the ECSC, together with the intense activity of the State-owned steel industry (led by Finsider), played a crucial role in modernising the country’s industrial infrastructure and in lowering steel prices. The 1970s energy crisis, however, marked the beginning of Italsider’s decline.

With the 1974 oil crisis, which marked the end of the great economic boom in the West, steel industries in Japan, Western Europe, and North America entered a protracted period of decline⁴¹¹. In spite of the crisis, the Italian steel market held up well compared to the rest of Europe, and the mid-1970s recession in Italy was by far less severe than in other European countries. In line with this trend, Finsider’s steel output grew steadily until 1974 and did not significantly fall thereafter, at least until the 1980s.⁴¹² It should be noted that, by the early 1970s, Italy's public sector had already carried out major technological modernisations. Taranto, in particular, stood out as one of the most important centres of technological excellence in the country⁴¹³. However, Finsider was increasingly affected by low capacity utilisation, and spiralling production costs. Finsider’s labour productivity, for

409 Sinigaglia Plan” is the name given to the ambitious restructuring program of the Italian steel industry which takes its name from Oscar Sinigaglia, who developed it in 1933 as president of the Ilva steelworks. Approved by the Italian government in 1948, the plan was based on the expectation that post-war reconstruction would require large quantities of iron and steel and that it was therefore necessary to provide the country a competitive heavy. The core of the project was the plant of Genoa-Cornigliano (later named after Sinigaglia), in which the integrated production-cycle was adopted (as in the factories of Piombino and Bagnoli). Thanks to the Sinigaglia plan, the national steel industry was revitalised, with production capacity rising from 3 to 9.2 million tonnes between 1938 and 1962.

410 Balconi M., La siderugia italiana (1945-1990) - Tra controllo pubblico e incentivi del mercato, Fondazione Assi, Il Mulino, Bologna, 1991

411 Vanderseypen G., “La politique de restructuration sidérurgique : Un bilan nuance”, Revue du Marché commun et de l’Union européenne, n. 386, March 1995, p. 164

412 Meny, Y. & Wright, V., The Politics of Steel: Western Europe and the Steel Industry in the Crisis Years (1974- 1984), Walter De Gruyte, Berlin, 1987.

413 Balconi M, La siderugia italiana (1945-1990) - Tra controllo pubblico e incentivi del mercato, Fondazione Assi, Bologna, Il Mulino 1991

European vision on steel-related skills of today and tomorrow July 2019 example, failed to show any progress between 1968 and 1980, despite a considerable amount of new investments.

Between 1980 and 1987, the EC industry’s hot rolling capacity fell by 32 million tonnes (from 172 to 140 million tonnes). During those years, the Italian steel industry underwent a significant restructuring: production capacity dropped by 7.2 million tonnes, and approximately 69,000 workers were laid off. The crisis of Finsider marked the end of Italy’s State-driven steel industry. The private sector managed to adapt to the consequences of the steel crisis by concentrating production on fewer companies (e.g. Lucchini, Riva, Pasini, etc.) focusing on higher value-added products. While the mini-mill sector still dominated the long products market, production sites decreased by 44 units between 1976 and 1996 (going from 72 to 28)⁴¹⁴.

All over Europe, the steel industry underwent a progressive process of privatisation.

Between 1986 and 1995, the share of privately-owned steelworks skyrocketed from 46%

to 92%. Italy followed the same trend. Despite a final attempt to re-establish itself with the restructuring of the “New Italsider” into ILVA in 1989, publicly-owned steelmaking experienced a massive sell-off in 1993. By 1996, all State-owned steel companies were completely privatised⁴¹⁵.

• Ilva Laminati Piani (ILP), including plants at Taranto and Novi, was bought by the Riva Group

• Acciai Speciali Terni (AST), with plants in Terni and Turin, became part of thyssenkrupp

• The tube producer Dalmine was acquired by the Techint group, owned by the Rocca family (now part of Tenaris)

• The Lucchini group acquired Piombino, Servola and other companies, establishing itself as a major stakeholder in the long product market. In 2005, Lucchini sold its majority stake to the Russian group Severstal. After Severstal’s bankruptcy and the closure of the blast furnace, the site was taken over by CEVITAL, and in 2018, passed to the JSW group

The image of careers in the steel sector

The image of steel in Italy has deteriorated over the last decade, mainly due to the events in the ILVA steelwork in Taranto, where the environmental impact of production activities was heavily portrayed in the national media. The situation appears to be returning to normal, but the negative impact on national public opinion persists. Local trade union representatives interviewed in this study confirmed that, even now, the bad environmental reputation of the steelwork industry affects the availability of workers at all skill levels. In particular, among young workers and jobseekers, reluctance towards the plant remains high⁴¹⁶. In addition, the 1,400 temporary layoffs announced by ArcelorMittal in June 2019 sparked new protests among workers and national unions.

In other steel producing areas, the situation is more positive, and steel companies have more collaborative relationships with local stakeholders. On average, steel companies find more favourable market conditions in Southern Italy than in the northern regions, where due to a more developed labour market, they face harsher competition, which makes it harder to employ and retain young and qualified talents. This has been identified as a key challenge for the Italian steel industry by many stakeholders from industry and academia,

414 Balconi M, La siderugia italiana (1945-1990) - Tra controllo pubblico e incentivi del mercato, Fondazione Assi, Bologna, Il Mulino 1991

415 Jan Jörmark, Coal and Steel in Western Europe 1945-1993. Innovative Change and Institutional Adaptation, Göteborg University Press, Göteborg, 1993

416 Interview notes - Workers’ Organisations, Senior representative at FIOM CGIL Taranto

European vision on steel-related skills of today and tomorrow July 2019 with several claiming that the industry needs a stronger supply of young personnel, especially in qualified R&D positions⁴¹⁷.

The positive aspects of a career in the steel industry differ depending on the professional level of workers and on the type of work they perform in the companies. For blue-collar workers, positive aspects are the greater solidity of the employment relationship compared to other sectors of the economy, a generally higher and more reliable salary level than in other industrial workplaces, and a stronger union representation, which allows for an increased awareness of workers' rights and a greater attention to the work environment and work organisation. As for more specialised profiles, especially those technical and administrative roles that are not affected by shift work, the attractiveness of working in the iron and steel industry is linked to the complexity of production processes, the continuous development of new products, the increasingly high levels of process automation, the continuous increase in production quality, and rather solid contractual conditions.

The crisis that hit the manufacturing sector in the 1970s had a particularly strong impact on the steel industry, which experienced an extended period of mass layoffs and career stagnation during the 1980s. As a result, the image of the industry worsened dramatically.

Before the crisis, the Italian steelmaking industry was considered a reliable source of stable jobs, which would sustain entire families for generations. After the 1980s, even those local communities traditionally tied to the iron and steel plants active in their regions started to gradually lose confidence in the reliability of steel companies as employers. Nevertheless, the industry remains a key employer in the areas where the main steelworks are based (e.g. Taranto, Terni and Piombino, Lombardy and Veneto)⁴¹⁸.

Jobs in steelmaking are still affected by many prejudices and misperceptions, especially those blue-collar positions that are associated with harsh working conditions and poor work-life balance. These factors play an important role in discouraging jobseekers, especially young people and women.

In the latest instalment of its sustainability report, the Italian steel producers’ association Federacciai highlights the best practices in the area of social responsibility that were undertaken by its member organisations⁴¹⁹. These include initiatives and projects aimed towards promoting social, cultural and educational development in the area where companies are operating. The overall goal was to improve the image of the steel sector and recreate ties with local communities. Several initiatives have been carried out to involve young people from high schools and universities, and showcase the many career opportunities available in steelmaking. The most relevant initiatives include:

• Fondazione Dalmine: The foundation was created by Dalmine SpA to promote industrial culture in the Dalmine and Bergamo areas. The foundation organises multiple cultural activities, including workshops, visits, projects for pre-school, primary school and high school students (see, for instance, the project “3-19”, mentioned in Table 8)

• Trainings and real-life projects: Taking advantage of the school-work alternation programme introduced in 2015 by the Italian Government, several companies in Northern Italy have launched activities with local high schools to bring students closer to steelmaking. Specific examples are the Feralpi Bootcamp project organised by the Feralpi Group and the Delta Junior project, launched by the Lucchini Group in 2016 (for more information, see Table 8)

417 Interview notes - Education Providers, Senior researcher in the ICT and industrial research centre at Sant’Anna University

418 Interview notes - Education Providers, Director of a steel-related training programme and former ECSC official

419 Federacciai, Rapporto di sostenibilità 2017, 2017, pp. 101 - 117

European vision on steel-related skills of today and tomorrow July 2019

• Field visits: Another common practice among Italian steelmakers is to organise field visits with local schools and universities to expose students to the day-to-day reality of working in a steel plant. The Marcegaglia and Arvedi groups entertain regular partnerships with local schools, while AST Terni has recently concluded a partnership with the University of Perugia to jointly organise a three-month programme in Metallurgical and Steel Technologies⁴²⁰

Skills needs

According to Cedefop, “construction, manufacturing and primary sector and utilities are expected to continue to stagnate or even decline over entire forecast period, after the sharp decrease of 2011-16”⁴²¹. Cedefop also highlights that the importance of high-skilled jobs related to software design and implementation and/or machine programming is growing both in the services and manufacturing sectors⁴²². ICT professionals⁴²³ in the services sector show one of the highest expected employment growth rates in the medium term (2% per year between 2015 and 2020)⁴²⁴.

The most appealing skills involve three main categories. These appear as a consequence of the market evolution resulting in changed demand for professional profiles.

Firstly, the need of strengthening automation in production steps calls for an accordingly increasing number of engineers with expertise in electro-technology. The demand is currently high: e.g. more than 40% of companies have difficulties in recruiting such professional profiles to fill job vacancies⁴²⁵.

Secondly, the strong impulse towards Big Data analysis (e.g. strong growth in the amount of in-firm data warehouses) lead to significant requests of professional profiles with solid skill in mathematics and analytics (such as statisticians and actuaries). Finally, the development of ICT systems kept on calling for software and application developers as well as analysts, where the large number of vacancies remain a challenge (again, in almost 40% of companies⁴²⁶). The significant lack of such profiles is ascribed to the relatively low number of graduates in Statistics (only small number of universities offer such degrees and the number of students involved is limited). This problem is expected to become greater in the current Industry 4.0 scenario with the increasing demand from the companies involved in technological changes in manufacturing and services. Finally, the shortage of ICT professionals has been increasing in Italy during the last 20 years. Despite being a well-known problem in Italy, no comprehensive strategy has been designed to tackle this shortage so far.

In general, the Italian labour market shows poor prospects for students wishing to follow STEM-related education programmes and universities, as a consequence of a lack of funds and specific skills. There are generally difficulties in developing collaborations with the industry to facilitate the transition from education to the labour market.

Further aspects contributing to this arethe heterogeneous quality level of educational programmes across different universities and the poor short- and medium-term prospects

420 Siderweb, “Terni, AST e università insieme per la crescita”, 27.02.2019, See:

https://www.siderweb.com/articoli/industry/702203-terni-ast-e-universita-insieme-per-la-crescita, Last visited on 14.06.2019

421 Cedefop, 2018 skills forecast - Italy, 2018

422 Cedefop, Skills Panorama, Italy: mismatch priority occupations, 2016,

https://skillspanorama.cedefop.europa.eu/en/analytical_highlights/italy-mismatch-priority-occupations, Last visited 15.05.2019

423 Mathematicians, actuaries and statisticians (ISCO code 212), Software and applications developers and analysts (ISCO code 251), electrotechnology engineers in development of the so-called Industry 4.0) (ISCO code 215)

424 Sistema Informativo Excelsior, Occupation forecasts 2015-2020, See: https://excelsior.unioncamere.net/, Last visited on 05.06.2019

425 Ibidem

426 Ibidem

European vision on steel-related skills of today and tomorrow July 2019 for engineering professionals. For instance, the average salary of an employed engineering graduate in Italy is estimated to be only 5% higher than economics graduates⁴²⁷.

To compensate for the unattractive labour market for STEM-related professions, efforts have been made to align the Italian educational system to higher standards of training in technical professions and increase cooperation with the industry⁴²⁸. In 2010, high specialisation technological schools (ITS) have been introduced in the Italian educational system. An ITS aims to provide students with concrete technical and technological competences, which are specifically tailored to match the industrial requirements of the region where it is located. Overall, there are 86 ITS offering different programmes mainly within the STEM area; the level of education provided corresponds to level 5 of the European Qualification Framework. An analysis of the first waves of graduates reveals that these schools are very effective in providing the skills and competences required by the market and therefore offer good labour market prospects⁴²⁹.

Thirdly, there is a gender gap in scientific activities (about 80% males) as well as among university graduates⁴³⁰. To change this negative trend and stimulate the recruitment of talented professionals, the Italian Government has undertaken a series of measures:

• first, to encourage investment in R&D, tax deduction has been granted to all companies since 2015

• second, in regard to skills acquisition, a tax deduction has also been granted for companies hiring new graduates with specific contracts focused on research activities with universities, which result in finalised degrees or postgraduate degrees (such as PhD’s)

These measures are expected to raise private R&D investment, even though job creation is not immediate. At a glance, the employment level in STEM occupations⁴³¹ is expected to grow faster than the Italian average in the medium term (3% increase against an average, which is below 1% in the period 2014-2018)⁴³².

As far as steelmaking is concerned, the need for a high level of competitiveness in the Italian steel industry calls for people with a solid knowledge of metallurgical processes, with strong expertise to meet the increased product quality requirements made by the market. Green skills are also in demand, due to environmental standards imposed by regulations and due to the increasing social sensitivities around the environment and sustainability.

Finally, digital technologies have allowed for the implementation of new control systems through integrated production cycle monitoring and planning. As a result, skills related to mechanical and electric/electronic maintenance have gained importance.

The increased speed of development and innovation in technologies has brought about the need for new training strategies aimed at providing workers with transversal competencies to adequately face the frequent changes in various activities. This occurs in conjunction with a new model where the industry’s production areas are more and more “remote”, interacting with modelling and information available through software⁴³³.

427 Almalaurea, “Indagine sulle condizioni lavorative dei laureati”, See: https://www.almalaurea.it/, Last visited on 05.06.2019. See also the recent study by CEPS “How returns from tertiary education differ by field of study”, WP 4, 11, July 2015.

428 Sistema Informativo Excelsior, https://excelsior.unioncamere.net/, Last visited on 05.06.2019

429 Almalaurea, “2015, op. cit.

430 Ibidem

431 Engineering professionals (excluding electrotechnology (ISCO 214); Physical and earth science professionals (ISCO 211).

432 ISFOL (Now INAPP), See: http://professionioccupazione.isfol.it, Last visited on 05.06.2019

433 European Commission, Directorate-General for Research and Innovation, Effect of the Near Net Shape Casting Technologies on Work Organisation, Employment Levels and Continuous Training, ECSC Technical Steel