Lessons from Italy

Last month, TIME Magazine did a great story on what lessons Cleveland can learn from Torino, Italy. Check out the piece below: 

What Tornio Can Teach Cleveland 

By Stephan Faris 

The closure of Torino's Lingotto assembly plant in 1982 was a body blow for the Italian car capital. The Fiat automobile factory, inaugurated in 1923, was once the largest in Europe. Assembly lines carried cars up five levels and delivered them fully formed onto the roof, where they'd whip around an oval test track before spiraling down the building's ramps and heading to showrooms. The shutdown marked the end of an era. That decade, Torino would lose more than 100,000 jobs, a trend that would continue through the rest of the century as the city's industrial dominance slowly bled away. (See TIME's photo-essay "Torino's Lingotto: Symbol of an Aging Auto City Reborn.")

Today the Lingotto plant stands once again as the symbol of the city. Only now the old factory serves as a testimonial that there can be life after the auto industry. Redesigned in the 1990s by Italian architect Renzo Piano, it forms the hub of a revitalized commercial district. The assembly floors, far from silenced, host a shopping mall, a multiplex, two hotels and an art gallery, and on the roof are a rooftop meeting room, a panoramic restaurant and a helicopter landing pad. The test track remains, now at the disposal of hotel guests looking for a jog high above the city streets.

Torino — once known as the Detroit of Italy — has become a model of how a city can transform itself after an industrial collapse. It's the latest chapter in how this city, which dates to ancient Roman times, has remade itself as its political and economic fortunes have shifted. Once Italy's capital, Torino turned to industry at the end of the 19th century after power moved to Rome.

This time, when its home industry waned, Torino turned outward. An aggressive urban plan, expansion into international markets, investments in innovation and the buildup of new sectors like food and tourism have made the city one of the most dynamic in Italy. Roughly 60% of Torino's abandoned industrial land has been repurposed. Its per capita GDP is more than 10% higher than the national average. Delegations from hard-hit cities like Cleveland and Detroit come to learn how their metropolis might become the Torino of America. "Turin is a city that had a plan to come back," said Detroit Mayor Dave Bing while touring the city in November. "It's good to see we're not in this by ourselves." (See pictures of how cities are powered.)

Torino was a company town whose company nearly went down. When Fiat sneezed, Torino didn't just catch a cold; everybody competed to supply the handkerchief. So when the car company started to slump, much like GM, the city was suddenly faced with the possible loss of its only customer. Torino's leaders knew they had to diversify, not just technologically but also geographically. The city would concentrate on its core competences — automobiles, aerospace, industrial design — but market them elsewhere.

A series of public agencies began marketing Torino as a package. Rather than having a host of small companies feeding into a single big one, the businesses in the region would promote themselves as a single brand, offering one-stop shopping to clients all over the world. "It's strength through numbers," says Silvia Sabato, a manager at the Piemonte Agency for Investments, Export and Tourism, which markets the area's firms internationally. "We don't represent just one company but an ensemble of companies." (See why Bangkok is the capital of gridlock.)

As an example, Sabato points to companies like the 2A die-casting foundry, located in a suburb about 20 minutes outside town. There, in the red glow of molten aluminum, the city's manufacturing tradition is still very much alive. Indeed, thanks to contracts developed through the agency that pull in more than a quarter of the company's $67 million annual turnover, the company logged its best year ever. "We will soon be expanding," says Vincenzo Ilotte, 2A's director. Exports account for 85% of the firm's business; Fiat, just 8%. "Fiat is one of our customers," says Ilotte. "It's not our only customer."

Torino's experience suggests that development can't necessarily be left to its own devices, especially in the face of historic forces like deindustrialization. Industry can be guided, even given a boost. Public agencies and philanthropies can provide small and medium companies with some of the services that would be handled by the back office at a company like Fiat or General Motors: funding R&D, promoting products, attracting talent and financing start-ups. In addition to hosting the 2006 Winter Olympics, Torino has revamped its public transportation, redeveloped industrial sites and invested heavily in culture and tourism. "The private sector is not going to invest only because there's open space," says Sergio Chiamparino, Torino's mayor. "Our principal lever is the things our territory has to offer."

One of those things is Torino's university, the Politecnico di Torino, which the city has leveraged into industrial advantage. An extension of the campus hosts the I3P incubator, where start-ups can get a three-year jump start and contacts with consultants and funders, which could lead to no-collateral loans from local banks. Nearby, workers are finishing a $33 million facility where General Motors designs and tests diesel engines. GM established the branch in 2005 after breaking off a joint venture with Fiat, electing to remain in Torino in no small part for the skills of the Politecnico's graduates, who make up more than half the project's 420 engineers. "They're almost plug and play," says Romualdo Ruotolo, a manager at GM. "They have a lot of knowledge when it comes to diesel engines." (See pictures of London preparing for the 2012 Olympic Games.)

The city's example has encouraged the likes of Cleveland, where a group of philanthropists has teamed up with local politicians to boost the region's economy. Once a powerhouse of heavy industry — steel, rubber, automobiles — Cleveland has struggled for decades to find its footing. Recently, however, the city and the surrounding area have established agencies like those in Torino to help young companies get off the ground, assist midsize businesses with finding new markets and guide the city's old manufacturing base into faster-growing sectors such as medical supplies, flexible electronics, clean energy and next-generation polymers. "The question is, What do you do if Bill Gates doesn't settle down in your town?" says Brad Whitehead, president of the Fund for Our Economic Future, a partnership of more than 100 regional philanthropies. "We're trying to put ourselves in the way of luck."

Cleveland and its region are now home to 19 venture-capital firms — up from two in 2000 — and are focused on working to help existing firms find their places in the new economy. GrafTech, a company that once provided carbon and graphite products exclusively for the steel industry, now makes heat sinks for electronics. And Lumitex, a maker of backlighting systems for LCDs and dashboards, has expanded its customer base from car companies to hospitals, providing lighting for surgery. "We need to build on our region's existing strength in old-line manufacturing and connect them to these high-growth sectors," says Daniel Berry, president of MAGNET, a government-funded organization that advises the region's manufacturers. "It would take northeast Ohio a very long time to build a new economy using only entrepreneurial start-ups." (See pictures of Beijing cleaning up.)

If Cleveland has one advantage, it's that its belt has already been tightened. Since April 2009, Cleveland's unemployment rate lagged the national average. In the first half of this year, it was a leader in private-sector job growth — signs, say the city's leaders, that by following in the footsteps of Torino, the metropolis might have finally found the way out of its slump. "We have to do this," says Whitehead. "We have to achieve a transformation. You see and hear a story like Turin's, and you say, 'Well, maybe it's a tall mountain, but it's a mountain that can be scaled.'"