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					THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY

                           ITALY
                           Fact Pack




                 Swedish Trade Council in Italy
                             2006



                               1
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

             Italian Construction Equipment Industry

             Recommendations

             References




                            2
                THE ITALIAN MANUFACTURING INDUSTRY PRODUCES FOR A
                VALUE OF SEK 7 600 BILLION
                                                                                           The total turnover of the Italian manufacturing industry
                              5 largest manufacturing industries in Italy
                                                                                            is SEK 7 615 billion
      Machinery                                                                                 the Swedish manufacturing industry’s turnover is
     construction                                                                                  SEK 1 357 billion
          The food                                                                         The most important sectors within the manufacturing
          industry                                                                          industry are construction of machinery and food related
                                                                                            production
      Automotive                                                                           There are approximately 540 000 companies active
                                                                                            within the manufacturing industry in Italy
       Chemicals                                                                                4.9 million employees
                                                                                                The Italian industrial structure is dominated by
            Metal                                                                                  small companies. 83 % of the manufacturing
          products                                                                                 companies employs less than 9 employees.
                                                                                           The average labour cost for an industry worker in Italy
                          0          200         400         600           800
                                                                      Billion SEK           is SEK 198 per hour


           Machinery construction and food production stand for 20% of the total Italian manufacturing industry
                                                                                    3
Source: ISTAT, Eurostat
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Italian Construction Equipment Industry

             Recommendations

             References



                               4
                 THE ITALIAN PRODUCTION OF CARS AND COMMERCIAL VEHICLES
                 TOTALS SEK 407 BILLION
                 - the latest statistics indicates an upswing in value of production
                billion SEK            Production of cars and commercial vehicles industry in Italy
                 500

                                                                                                        Trailers and containers
                 400                                                                                         SEK 14 billion


                 300
                                                                                                        Vehicles
                                                                                     Components and and engines
                 200                                                                   accessories    SEK 132 billion
                                                                                      SEK 260 billion

                 100


                   0
                              2001          2002             2003
                                     Domestic   Export

                                Growth mainly due to increasing exports of Italian automotive suppliers
                                                                          5
Source: ISTAT
                MORE THAN 1 MILLION VEHICLES ARE PRODUCED IN ITALY
                - Italy stands for about 5 % of the worldwide vehicle production


                                                                    VEHICLE MANUFACTURERS

                                                        COMMERCIAL VEHICLES
                                                           (314 000 vehicles)


                        LIGHT TRUCKS                        HEAVY TRUCKS                              BUSSES                          PASSENGER CARS
                       (270 000 vehicles)                   (40 000 vehicles)                     (4 000 vehicles)                     (723 000 vehicles)
                      3 manufacturers                     1 manufacturer                       3 manufacturers                     4 manufacturers
                               Iveco                            Iveco (part of Fiat                 Irisbus (part of Iveco):             Fiat Group (Fiat, Lancia,
                                (part of Fiat Group):             Group)                               3 200                                 Alfa Romeo, Maserati
                                183 000                                                                Carozzeria Barbi                      and Ferarri): 700 000
                                                           Trailer manufacturers                  
                               Sevel (Joint Venture                                                   (Volvo): 400                         Volkswagen Group
                                                                 Rolfo
                                between Fiat Auto and                                                                                        (Lamborghini): 1 500
                                                                 Merker (Margaritelli)               Breda Menarini Bus: 400
                                PSA): 81 000                                                                                                Pininfarina (Mitsubishi,
                               Piaggio: 6 000                   Acerbi – Viberti                                                           Alfa Romeo and Ford):
                                                                 Officine Cardi                                                             14 000
                                                                 Menci & C.                                                                Bertone (Opel): 7 500
                                                                 Pezzaioli Carozzeria


Source: Automobile Produktion                                                             6
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Italian Construction Equipment Industry

             Recommendations

             References



                               7
                 THE ITALIAN PRODUCTION OF PASSENGER CARS HAS
                 PERFORMED POORLY BUT IS SHOWING SIGNS OF RECOVERY
                   Passenger Car Production in Italy                                          Development the last 5 years

           Vehicles                                                      The Italian quote of the worldwide vehicle production has
     1 500 000                                                            decreased from 8,2 % in 1999 to 4,7 % in 2004.
                                                                                In terms of volume this means a decrease of about 40 %. Compared
                                                                                 with 2004 the production in 2005 decreased with about 13 %.
     1 250 000                                                           The problems can in part be explained by Investment in lower-cost
                                                                          production abroad.
     1 000 000                                                           Another reason for the decrease is the sluggish development and
                                                                          problems of Fiat Auto which have four major explanations:
       750 000                                                                  Product range: Limited and underdeveloped. Insufficient investments in
                                                                                 R&D and product development
                                                                                International presence: Significant presence on to few foreign markets.
       500 000                                                                   Inability to take advantage of motorization in developing countries.
                                                                                Sales and After Sales network: Underdeveloped in terms of service
                                                                                 quality and customer satisfaction.
       250 000
                                                                                C-segment: Wrong market positioning of the Fiat Stilo has jeopardized
                                                                                 the presence in a segment with very high volumes.
                 0                                                       Fiat is now however showing signs of a strong recovery and future
                         2001         2002       2003   2004   2005       prospects looks brighter.

                                                                             8
Source: STC, interviews, ANFIA, Il Sole 24 Ore
                FIAT’S PURCHASE DECISIONS FOR THE ITALIAN PRODUCTION IS
                CENTRALISED TO HEADQUARTER IN TURIN

                                 Manufacturer    Employees Business                Purchase decisions

                                 Fiat Auto          180.000   Passenger cars       HQ, Turin, Italy (For all Italian production. Also has local
                                                              Transporters         HQs in Brazil and Turkey with authority to make purchase
                                                                                   decisions)
                Passenger Cars




                                 Pininfarina          2.090   Passenger cars       The respective OEM for which Pininfarina produces mainly
                                                                                   makes purchase decision at HQ. They also have
                                                                                   representatives at the plant for day to day decisions.

                                 Bertone              1.796   Passenger cars       GM-Opel, HQ Europe, Rüsselsheim, Germany.



                                 Volkswagen            350    Passenger cars       HQ of Lamborghini, S. Agata Bolognese (Bologna), Italy
                                 Group
                                 (Lamborghini)




                                                                               9
Source: Kompass, interviews
                THERE ARE A TOTAL OF 13 CAR MANUFACTURING PLANTS IN ITALY
                - Most of them are operated by Fiat Auto
                         Fiat Group                                                Manufacturer            Plants               Models and focus              Production
     Pininfarina           Chivasso                                                                                                                             volume
 Bairo Canavese                                          Fiat Group
                                                         (Ferrari)                 Fiat Group         Cassino                                        Fiat:      700 000
                                                         Maranello                 Fiat               Chivasso               (Croma, Stilo, Punto, Idea,
     Pininfarina                                                                   Lancia             Maranello (Ferrari)                        Multipla)
     San Giorgio                                                                   Alfa Romeo         Melfi                                       Lancia:
                                                         Fiat Group                Maserati           Mirafiori                 (Y, Lybra, Musa, Thesis)
      Canavese
                                                         (Maserati)                Ferrari            Modena (Maserati)                     Alfa Romeo:
      Pininfarina                                                                                     Pomigliano               (166, 147, 148, 156, 159,
                                                         Modena                                       Termini Imerese                169, Brera, C-Cross
       Grugliasco                                        Wolkswagen Group                                                                Over,GT Coupe)
                              Fiat Group                                                                                                           Ferrari:
                                                         (Lamborghini)
         Bertone               Mirafiori                                                                                           (355/456GT/550/FXX)
                                                         Sant’ Agata Bolognese                                                                  Maserati:
       Grugliasco
                                                                                                                                     (Quattroporte,Coupè
                                                                                                                             Cambiocorsa; ITCA body-in-
                                            Fiat Group                Fiat Group                                                                   whites)
                                               Cassino                Melfi
                                                                                   Volkswagen         Sant’ Agata                          Lamborghini :          1 500
                                            Fiat Group                             Group               Bolognese                               (Gallardo,
                                                                                   Lamborghini                                               Murcielago)
                                            Pomigliano
                                                                                   Pininfarina        Bairo Canavese                         Mitsubishi:         14 000
                                                                                   No own brands      Crugliasco                    (Colt, Pinin Pajero)
                                                                                                      San Giorgio                          Alfa Romeo:
                                                                                                       Canavese                (8C Competizione, Spider)
                                                                                                                                                   Ford :
                                                                                                                                      (Focus, StreetKa)
                                        Fiat Group                                 Bertone            Crugliasco                                   Opel :         7 500
                                    Termini Imerese                                No own brands                                                   (Astra)



                                                                              10
Source: Automobile Produktion, interviews
                FIAT IS SHOWING SIGNS OF AN IMPRESSING TURN AROUND
                AFTER YEARS OF POOR PERFORMANCE
                                            Trends within the Italian passenger car industry

                                       After many years of losing market shares and reporting huge losses, Fiat’s car
                  Fiat is picking       business is showing signs of an impressing turn around. After the divorce with GM
                    up speed            in 2005, and after showing losses of EUR 2 bln in 2004, Fiat Auto is now reporting a
                                        70 % fall in losses compared with a year earlier.

                                       Increased competition and continuous price reductions is moving Fiat’s production
                   Globalization        abroad and switching its loyalty with its Italian suppliers towards a higher dependence
                                        on suppliers from countries with lower costs.

                                       Fiat’s new chief executive Sergio Marchionne has ended the company’s traditional
                                        strategy of pinning its hope to the next new car. Fiat will now try to compete in more
                  Fragmentation         market segments by creating a larger range of models.
                    of market          This fragmentation of market leads to the need of using common platforms for various
                                        models in order to create flexibility. Suppliers will thus have to be able to deliver whole
                                        modules to car factories.


                                                                      11
Source: STC, Interviews
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Italian Construction Equipment Industry

             Recommendations

             References



                           12
               ITALIAN PRODUCTION OF COMMERCIAL VEHICLES WHICH IS
               HEAVILY DOMINATED BY LIGHT TRUCKS IS INCREASING
                         Commercial Vehicle Production in Italy                                      Development the last 5 years

                     Vehicles                                                             After an exceptional, and statistically distorting,
                                                                                           beginning of the 21st century because of fiscal
                350 000
                                                                                           stimulations the Italian production of commercial
                300 000                                                                    vehicles has since the slight downturn in 2003 been
                                                                                           steadily increasing for more natural reasons
                250 000                                                                        Overall the increase in production from 2003 reached
                                                                                                6 % (CAGR 2 %).
                200 000                                                                        The increase is driven by strong performance of light
                                                                                                trucks whose production boomed in 2004 growing with
                150 000                                                                         4,6 %.

                100 000
                                                                                          The increase is in part explained by the strong
                                                                                           performance of Fiat and Iveco depending on successful
                  50 000                                                                   releases of new models (especially by penetrating more
                                                                                           segments of the LCV market) and a very aggressive
                         0                                                                 marketing policy.
                                2001    2002           2003     2004       2005           The increase has also been driven by domestic
                                        Light Trucks    Heavy Trucks   Buses
                                                                                           demand because of Italian companies need to renew
                                                                                           obsolete car fleets.

                                                                                  13
Source: STC, Interviews, ANFIA, UNRAE
                THE ITALIAN PRODUCERS FIAT AND IVECO BOTH MAKES
                PURCHASE DECISIONS AT HEADQUARTERS IN TURIN
                                          Manufacturer           Employees    Business           Purchasing decisions
                                          IVECO                      31.511   Light Commercial   HQ, Turin, Italy
                                          (Fiat Group)                        Vehicles, Heavy
                                                                              Trucks, Busses
                                          Sevel                       5.200   Light Commercial   Plant is managed by Fiat , in agreement
                    Commercial vehicles




                                          (Joint venture                      Vehicles           with PSA dedicated people. Therefore
                                          between Fiat Auto                                      purchase decisions are mainly taken at
                                          and PSA )                                              Fiat Auto HQ in Turin.
                                          Piaggio                     3.500   Light Commercial   HQ, Pontedera, Italy
                                                                              Vehicles
                                          Irisbus                     1.393   Busses             HQ, Turin, Italy (Fiat Group)
                                          (Fiat Group)                                           HQ, Lyon, France (Irisbus)

                                          BredaMenarini Bus            310    Busses             HQ, Bologna, Italy

                                          Carrozzeria Barbi             82    Busses             HQ, Mirandola, Italy
                                          (produces trucks for                                   HQ of Volvo, Torslanda, Sweden
                                          Volvo)


                                                                                       14
Source: Anfia,Kompass,interviews
                THE ITALIAN COMMERCIAL VEHICLE INDUSTRY IS DOMINATED BY
                FIAT AND FIAT CONTROLLED IVECO
                                                                                            Manufacturer           Plants          Models and focus            Production
                                                                                                                                                                 volume
                                                                                          Sevel                  Val di Sangro                    Citroen:       183 000
                                                                                          (Joint venture                                          (Jumper)
                                                          Iveco                           between Fiat Auto                                            Fiat:
      Iveco                                               Suzzara                         and PSA)                                       (Ducato) Peugeot:
     Brescia                                                                                                                                        (Boxer)
                                                          Carrozzeria Barbi               IVECO                  Suzzara                            Iveco:        81 000
                                                          San Giacomo Roncole                                    Brescia         (Daily,Eurocargo, Stralis)
                                                                                                                 Bolzano
                     Piaggio                              Breda Menarini Bus
                                                                                          Piaggio                Pontedera                        Piaggio:         6 000
                   Pontedera                              San Donato                      (Produces own                                            (Porter)
                                                                                          brand and for                                           Daihatsu:
                                                                                          Daihatsu)                                                  (Hijet)
                                                                    Sevel
                                                                    (Fiat Auto and PSA)   Irisbus                Valle Ufita                      Irisbus:         3 200
                                                                                          (Controlled by                                (Cityclass, Citelis,
                                              Irisbus               Val di Sangro         IVECO and part of                         Midway, Midys, Arway,
                                            Valle Ufita                                   Fiat Group)                                             Evadys)
                                                                                          Carrozzeria Barbi      San Giacomo                       Volvo:            400
                                                                                          (produces for           Roncole                        (Genesis)
                                                                                          Volvo)

                                                                                          Breda Menarini         San Donato         Breda Menarini Bus:              400
                                                                                          Bus                                            (M231C, M231M,
                                                                                                                                          M240N, M240L,
                                                                                                                                  Avancity, M340, M240LI,
                                                                                                                                      M200E, M231CNG,
                                                                                                                                     M240CNG, M240EI)


                                                                                   15
Source: Automobile Produktion, interviews
                THE POSITIVE TREND WITH A RISING PRODUCTION OF
                COMMERCIAL VEHICLES SHOWS NO SIGNS OF STAGNATING

                                       Trends within the Italian commercial vehicle industry

                                     The Italian producers of commercial vehicles are performing strongly
                    Increasing
                    production             The production and sales of Italian commercial vehicles has been functioning as a role
                     volumes                model for the production of passenger cars. The production has been rising thanks to
                                            intelligent product releases and the positive trend shows no signs of bringing to a halt.

                                     In order to achieve economies of scale and to share fixed costs the industry has been
                  Consolidation       consolidating
                    of market              The most significant example is that Irisbus, formerly a joint venture between Iveco and
                                            Renault, is now a wholly owned subsidiary of Iveco (Fiat Group).


                                     Today not only the large companies are looking for flexible, individualized solutions;
                    Customized
                     services         even medium sized businesses are increasingly looking for customized financing
                                      deals, particularly when it comes to leasing solutions.



                                                                     16
Source: STC, Interviews
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

                  Passenger Cars

                  Commercial Vehicles

                  Suppliers

             Italian Construction Equipment Industry

             Recommendations

             References



                           17
                THERE ARE ABOUT 1 700 AUTOMOTIVE SUPPLIERS IN ITALY
                - But the medium size of companies is rather small
                                   Italian automotive suppliers                                  Geographical concentration of
                                                                                                    automotive suppliers
                       Totally there are about 1 700 suppliers to the
                        automotive industry active on the Italian market.
                       The suppliers are located in the northern parts of
                        Italy, close to the HQ of Fiat Auto and the most
                        important car plants:
                                Close to a third of all suppliers are based in the
                                 region of Piedmont where Turin and the HQ of
                                 Fiat is located.
                       The Italian suppliers are generally small or
                        medium sized companies:
                                The average number of employees for an Italian
                                 supplier is about 70
                       The largest Italian suppliers to the automotive
                        industry are Pirelli, Sogefi, Brembo and Magnetti
                        Marelli.
                       Traditionally Italian suppliers are especially
                        strong in engineering and design.                                  Low     High


Source: STC, interviews, ANFIA                                                        18
                 EVEN DUE TO A CONSOLIDATION OF MARKET THE NUMBER OF
                 ITALIAN AUTOMOTIVE SUPPLIERS IS STILL HIGH

                                                            T1 SUPPLIERS
                                                      (examples of the largest ones)


             Electrical systems     Interior equipment           Propulsion                  Body                Running gear

          Cables, bus systems,     Cockpit, seats, dash-   Power train, exhaust    Body, roof, glass, doors, Suspension, brakes,
          embedded systems         board, air conditioning systems, engines        lighting etc.             axles, steering, tires
             Magneti Marelli         Lear Corporation         Magneti Marelli       Automotive Lighting      Magneti Marelli Sistemi
               Sistemi Elettronici    Delphi Italia             Powertrain               Rear Lamps Italia       Sospensioni
             Delphi Italia             Automotive Systems  Delphi Italia                (Magneti Marelli)      Sogefi
               Automotive Systems  Valeo                        Automotive Systems  Lear Corporation           Pirelli Tyre
             Valeo                   Intier                   Dayco Europe          Valeo                    Carraro
                                      T.R.W Automotive         Fiamm Automotive                                Brembo
                                        Italia S.p.A             Batteries                                       Delphi Italia Automotive
                                      Johnson Controls Italia                                                    Systems
                                                                                                                 T.R.W Automotive Italia
                                                                                                                 Bosch -Tecnologie Diesel e
                                                                                                                  Sistemi Frenanti

Source: Anfia,interviews                                                 19
                     TIER ONE SUPPLIERS: DETAILED INFORMATION (1/2)


                     Manufacturer              Employees    Business                                   Italian headquarter
                     Pirelli Tyre                  21.500   Tyres                                      Milan


                     Magneti Marelli               20.000   Powertrain, suspension,                    Turin
                     Holding S.p.A                          lighting, electrical systems
                     Sogefi                         6,171   Engine and cabin filtration. Suspensions   Mantova
                                                            components.
      T1 Suppliers




                     Lear Corporation               3.000   Seat systems, electronic products and      Grugliasco
                                                            air-conditioning,
                     T.R.W Automotive Italia        2.260   Brakes, suspension                         Moncalieri (Turin)


                     Brembo                         2.000   Brakes                                     Curno
                     Bosch- Tecnologie              1.942   Diesel engine injection pumps. Brakes      Modungo (Bari)
                     Diesel e Sistemi                       components.
                     Frenanti Italia




                                                                                20
Source: Kompass, interviews
                     TIER ONE SUPPLIERS: DETAILED INFORMATION (2/2)


                     Manufacturer              Employees    Business                                Italian headquarter
                     Dayco Europe                   1.164   Power transmission, air-intake and      Airasca (Turin)
                                                            engine cooling
      T1 Suppliers




                     Valeo                          1.130   Lighting, electrical systems, motors,   Santena (Turin)
                                                            engine cooling etc
                     Delphi Italia                   885    Chassi, steering systems, powertrain,   Collegno (Turin)
                     Automotive Systems                     safety systems
                     Johnson Controls Italia         200    Electronic components for air           Milan
                                                            conditioners.




                                                                               21
Source: Kompass, interviews
               FOR STRATEGIC REASONS THE T1 SUPPLIERS ARE MOSTLY
               FOUND NEAR THE HQs AND PLANTS OF THE OEMs
                                                         Tolmezzo
                                         Curno           Automotive Lighting Rear Lamps Italia
                                        Brembo           (Magneti Marelli)

                                          Milan          Montecchio Maggiore
              Magneti Marelli Sistemi Elettronici        Fiamm Automotive Batteries
                                     Pirelli Tyre
                       Johnson Controls Italia           Bologna
                                                         Magneti Marelli Powertrain
                                                         Mantova
                                        Turin            Sogefi
            Delphi Italia Automotive Systems
                                        Valeo
                        Lear Corporation Italia
                      T.R.W Automotive Italia
                                Dayco Europe                            Bari
          Magneti Marelli Sistemi Sospensioni                           Bosch - Tecnologie Diesel e
                                                                        Sistemi Frenanti




                                                    22
Source: STC
                 MANY T2 SUPPLIERS ARE SMALL, LOW VALUE ADDING FIRMS
                 THAT FACE HARD COMPETITION FROM LOW-COST COUNTRIES

                                                                  T2 SUPPLIERS
                                                             (examples of the largest ones)




                    Electrical systems     Interior equipment           Propulsion                Body                   Running gear

                 Cables, bus systems,     Cockpit, seats, dash-   Power train, exhaust   Body, roof, glass, doors, Suspension, brakes,
                 embedded systems         board, air conditioning systems, engines       lighting etc.               axles, steering, tires
                    ITT Industries          Gammastamp             Fonderie Mario         Automotive                 Gruppo Sogefi
                      Friction Products      Conceria Pasubio         Mazzucconi               Lightning Italia Rear  Metelli
                    ASK Industries                                  SKF Industrie             Lamps (Magneti           Federal Mogul
                                                                     Metelli
                                                                                                Marelli)                  Operations Italy
                                                                                             Olsa
                                                                     Ufi Filters                                        Sila Holding
                                                                                             Federal Mogul               Industriale
                                                                                                Operations Italy




                                                                           23
Source: Anfia, Automobil Cluster
                         TIER TWO SUPPLIERS: DETAILED INFORMATION (1/2)


                          Manufacturer        Employees    Business                       Italian headquarter
                          Sogefi                   6.171   Filters, suspension and        Mantova
                                                           precision springs

                          ITT Industries           1.000   Electronic components          Barge
                          Friction Products
          T2 Suppliers




                          SKF Industrie             944    Bearings                       Villarperosa (Turin)

                          Automotive                800    Lighting                       Tolmezzo
                          Lighting Italia
                          Rear Lamps
                          Gammastamp                730    Components for safety belts,   Bianzé
                                                           doors etc

                          Metelli                   420    Brake parts, engine parts,     Cologno Monzese (Monza)
                                                           transmission




                                                                                24
Source: Anfia, Automobil Cluster, Kompass
                         TIER TWO SUPPLIERS: DETAILED INFORMATION (2/2)


                          Manufacturer       Employees   Business                         Italian headquarter
                          Fonderie Mario           388   Components for engines,          Bergamo
                          Mazzucconi                     transmission and brakes etc
                          ASK Industries           300   Car audio e antenna systems,     Reggio Emilia
                                                         amplifiers, cables etc
          T2 Suppliers




                          Conceria Pasubio         250   Leather for carseats             Arzignano, Padua

                          Ufi Filters              230   Filters                          Nogarole Rocca (Verona)

                          Federal Mogul            135   Components for lighting,         Turin
                          Operations Italy               friction and power cylinder
                                                         systems
                          Olsa                      51   Interior and exterior lighting   Turin
                                                         components




                                                                                25
Source: Anfia, Automobil Cluster
                ITALIAN SUPPLIERS HAVE DIVERSIFIED THEIR CUSTOMER BASE,
                AND SPECIALISED THEIR PRODUCT PORTFOLIOS
                                       Trends within the Italian automotive supplier industry

                                      Many Italian automotive suppliers have traditionally had Fiat Group as their single
                                       client. There is now a clear tendency for suppliers to diversify their customer portfolio
              Customer portfolio
                diversification        with non-Italian customers.
                                             Italian suppliers are now performing very well because of increasing exports and less
                                              dependence on Fiat Group.


                                      Italian automotive suppliers are slowly becoming more specialized (i.e. creating
               Product portfolio       product portfolios with focus on core products, technologies and competences).
                specialization               With these more specialized product portfolios suppliers are at the same entering similar
                                              non-automotive industrial sectors.


                                      Delocalization of Italian automotive suppliers:
                                             Production facilities established in low-cost countries (mainly for labor intensive
                 Strategic cost               operations)
               reduction actions
                                      Increase of sourcing volumes from low-cost countries
                                      Production capacity and workforce down-sizing

                                                                      26
Source: STC, interviews
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

             Italian Construction Equipment Industry

                  Manufacturers

                  Suppliers


             Recommendations

             References




                           27
                THE ITALIAN PRODUCTION OF CONSTRUCTION EQUIPMENT
                TOTALS ABOUT SEK 43 BILLION
                - the industry grew with more than 8% in 2005
                  billion SEK                           Production machine and construction vehicles in Italy
                                                                                                           Road Equipment SEK 3 billion
                40                                                                                                          Concrete Equipment
                                                                                                                                SEK 6 billion
                30
                                                                                                                                   Tower Cranes SEK 3 billion

                20
                                                                                                   Earthmoving Equipment            Crushing, Washing, Sizing
                                                                                                                                    Equipment SEK 2 billion
                10                                                                                     SEK 29 billion


                 0
                           2002               2003             2004        2005
                                            Domestic        Export

                                               Growth mainly a result of increases in exported volumes
                                                                                      28
Source: Committee for European Construction Equipment
              TOTALLY THERE ARE ABOUT 300 COMPANIES ACTIVE WITHIN THE
              CONSTRUCTION EQUIPMENT INDUSTRY IN ITALY
              - But many companies are small and only active locally

                                                              CONSTRUCTION EQUIPMENT
                                                      (examples of the largest companies in the industry)




                          EARTH MOVING                         MINING                           LIFTING                         ROAD

               Excavators, wheel loaders, backhoe        Wheel loaders, drills,            Mobile cranes, forklifts   Graders, asphalt pavers,
               loaders, Skid steer loaders, haulers      haulers                                                      asphalt mixers
                         Komatsu Italia SpA                Solimec                      Marchetti Autogru             Bitelli (Catepillar Italia)
                         CNH (Fiat Group)                  Casagrande                   Raimondi                      Antec
                         Astra Veicoli Industriali                                       Merlo                         Marini
                          (Owned by IVECO and                                             Terexlift                     CNH (Fiat Group)
                          part of Fiat Group)                                             Amoc Veba Srl                 Fiori SpA
                         Merlo
                         SCAI SpA (Hitachi)
                         Fiori SpA
                         Macmoter SpA
                         Euromach Srl

                                                                                  29
Source: UCoMESA , Anima
              CONSTRUCTION EQIPMENT OEMs: DETAILED INFORMATION (1/2)

           Manufacturer            Business                           Turnover       Employees Plant           Purchasing decisions
                                                                      (EUR m)
           CNH (Fiat Group)        Escavators, skid steer loaders,    € 9 796 m      2.704     Modena          HQ, Modena, Italy
                                   backhoe loaders

           Astra Veicoli           Dump-trucks, tractors              € 211 m        480       Piacenza        HQ, Piacenza, Italy
           Industriali
           Merlo                   Telescopic handlers                € 195 m        500       Cervasca        HQ, Cervasca, Italy

           Marini                  Asphalt pavers, paver finishers,   € 85 m         370       Alfonsine       HQ, Alfonsine, Italy
                                   cold milling planers etc
           Bitelli (Caterpillar    Asphalt pavers and cold planers    € 75 m         265       Minerbio        HQ, Minerbio, Italy
           Italia)
           Terexlift               Lifting platforms                  € 50 m         130       Umbertide       HQ, Umbertide, Italy

           Casagrande              Hydraulic Crawler Drills, piling   € 39 m         250       Fontanafredda   HQ, Fontanafredda, Italy
                                   equipment, crawler cranes

           Raimondi                Cranes                             € 32 m         42        Legnano         HQ, Legnano, Italy

           Amoc Veba Srl           Truck cranes                       € 13 m         100       Poviglio        HQ, Reggio Emilia, Italy

Source: Kompass, UCoMESA, Anima,                                                30
              CONSTRUCTION EQIPMENT OEMs: DETAILED INFORMATION (2/2)

           Manufacturer            Business                           Turnover        Employees Plant            Purchasing decisions
                                                                      (EUR m)
           Marchetti Autogru       Cranes                             € 12 m          70        Piacenza         HQ, Piacenza, Italy


           Fiori                   Excavators, loaders, mixers,       € 16.2 m        49        Finale Emilia    HQ, Finale Emilia
                                   dumpers, backhoe loaders                                     (Modena)         (Modena), Italy.
           Euromach                Excavators                         € 3.5 m         24        Montichiari      HQ, Brescia, Italy
                                                                                                (Brescia)
           Macmoter                Excavators, skid track loaders,    €3m             53        Modigliana       HQ, Modigliana (Forlì),
                                   dozers, prime movers                                         (Forlì Cesena)   Italy
           Komatsu                 Wheel loaders, escavators, skid    n/a             n/a       Vicenza          HQ, Vicenza, Italy
                                   steer loaders
           Antec                   Steer skid loaders, cold planers   n/a             n/a       Peschiera        HQ, Peschiera Borromeo,
                                                                                                Borromeo         (Milan), Italy
           Soilmec                 Rotary rigs, drilling equipment    n/a             n/a       Cesena           HQ, Cesena, Italy




Source: Kompass, UCoMESA, Anima,                                                 31
THE ITALIAN CONSTRUCTION EQUIPMENT INDUSTRY IS
CONCENTRATED TO THE REGION EMILIA ROMAGNA
                                             Vicenza        Fontanafredda
                                   Brescia   Komatsu         Casagrande
                          Milan   Euromach
                          Antec
                       Raimondi

                                                                        Alfonsine
                                                                        Marini
                 Cervasca                                               Minerbio
                    Merlo                                               Bitelli
                  Piacenza                                              Cesena
         Marchetti Autogru                                              Soilmec
    Astra Veicoli Industriali          Modigliana
                   Poviglio            Macmoter
               Amoc Veba                             Umbertide
                   Modena                             Terexlift
                     CNH
                      Fiori




                                                    32
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

             Italian Construction Equipment Industry

                  Manufacturers

                  Suppliers


             Recommendations

             References




                           33
               MOST OF THE ITALIAN SUPPLIERS TO THE CONSTRUCTION
               EQUIPMENT OEMs ARE SMALL AND MEDIUM SIZED COMPANIES

                                                                     SUPPLIERS
                                                             (examples of the largest ones)



                                            Propulsion and
               Electrical systems                                  Steel construction            Hydraulics              Accessories
                                             running gear
            Cables, sensors, semi       Power train, engines,    Undercarriage and body    All kind of hydraulic   All kind of accessories
            conductors, control units   exhaust systems, axles                             cylinders
              Siemens Vdo Trading       SKF Italia              Italscania SpA           Bosch Rexroth          Berco SpA
             Robert Bosch               Cararro SpA             Perlini International    C.A.M.I                Cobo
                                         Bosch Rexroth                                     Hydrocontrol           Case del Sedile
                                         SAIM Europe Srl                                  Homberger               Isringhausen
                                                                                            Safim SpA              Webasto product Italy




                                                                             34
Source:STC, interviews
                                      CONSTRUCTION EQUIPMENT SUPPLIERS:
                                      DETAILED INFORMATION (1/2)

                                              Manufacturer            Employees Business                      Purchasing decisions
                                              SKF Italia              3649      Propulsion and running gear   HQ, Turin, Italy
           Construction equipment suppliers




                                              Berco                   3000      Accessories                   HQ, Ferrara, Italy

                                              Carraro                 913       Propulsion and running gear   HQ, Padua, Italy

                                              Robert Bosch            476       Electrical systems            HQ, Milan, Italy

                                              Isringhausen            400       Accessories                   HQ, Novara, Italy

                                              C.O.B.O.                300       Accessories                   HQ, Brescia, Italy

                                              Perlini International   300       Steel construction            HQ, Verona, Italy

                                              Hydrocontrol            175       Hydraulics                    HQ, Bologna, Italy




                                                                                              35
Source: STC, Kompass, interviews
                                      CONSTRUCTION EQUIPMENT SUPPLIERS:
                                      DETAILED INFORMATION (2/2)

                                              Manufacturer            Employees Business                       Purchasing decisions
                                              Italscania              79        Steel construction             HQ, Trento, Italy
           Construction equipment suppliers




                                              Homberger               52        Hydraulics                     HQ, Genoa, Italy

                                              SAFIM                   52        Hydraulics                     HQ, Modena, Italy

                                              CAMI                    35        Hydraulics                     HQ, Padua, Italy
                                              Siemens VDO Trading     30        Electrical systems             HQ, Milan, Italy
                                              Webasto product Italy   25        Acessories                     HQ, Milan, Italy
                                              Case del Sedile         18        Acessories                     HQ, Modena, Italy
                                              SAIM Europe             n/a       Propulsion and running gear    HQ, Milan, Italy

                                              Bosch Rexroth           n/a       Propulsion, running gear and   HQ, Milan, Italy
                                                                                Hydraulics




                                                                                             36
Source: STC, Kompass, interviews
                THE SUPPLIERS TO THE CONSTRUCTION EQUIPMENT OEMs ARE
                CONCENTRATED AROUND MILAN IN THE REGION OF LOMBARDY
                                                         Varese    Brescia   Trento
                                                   Isringhausen    Cobo      Italscania
                                        Milan                                Padova
                          Siemens Vdo Trading                                C.A.M.I.
                                 Robert Bosch                                Carraro
                          Webasto Product Italy
                               Bosch Rexroth                                 Verona
                                         Saim                                Perlini International
                                                                             Ferrara
                                         Turin                               Berco
                                     SKF Itallia
                                                                             Modena
                                       Genua                                 Casa del sedile
                                    Homberger                                Safim
                                     Bologna
                                  Hydrocontrol




                                                                  37
Source: STC, interviews
                THE GROWTH OF THE ITALIAN PRODUCTION OF CONSTRUCTION
                EQUIPMENT IS EXPECTED TO CONTINUE
                - In large parts based on increasing foreign demand
                                      Trends within the Italian Construction Equipment industry

                                         In 2005 the Italian production of construction machinery increased with
             Continuous growth in         more than 7.5 %. In the coming years a further growth is foreseen, relying
              produced volumes            on a steady demand both from the Italian market (thanks to the realization
                                          of large construction projects) and from foreign markets.

                                         Italian companies have been losing market shares to Asian producers, who are
            Increasing competition        pushing down general price levels.
            from far east countries
                                         In order to meet the competition Italian companies are working on differentiating
                                          their product offering and increasing the quality of the after sales service.

                                         Italian production of construction equipment is heavily dependent on sales to
              Weight of exports as        foreign markets.
               part of total sales
                   increases             Today close to 70 % of production is sold abroad and the weight of exports
                                          continues to grow since exports increases more than domestic demand.

                                                                 38
Source: STC, interviews
CONTENT



             Overview Italian Manufacturing Industry

             Italian Automotive Industry

             Italian Construction Equipment Industry

             Recommendations

             References




                           39
                WHEN DOING BUSINESS IN ITALY LOCAL PRESENCE CAN MANY
                TIMES PROVE TO BE A GREAT ADVANTAGE
                 Country specific recommendations for doing business in Italy

                                    Local presence is often a great advantage. Italian companies are used to working
            Local presence
              important
                                     closely with their counterpart and local presence with an Italian speaking representative
                                     is often an important success factor.

                                    The value chain in Italy is often fragmented. Many actors are involved in the
              Fragmented
              value chains
                                     distribution network and the use of local agents can often be an effective way to reach
                                     the end customer.

                                    Forming a company in Italy is a very bureaucratic process and assistance in
             Differing rules         this process is highly recommended.
            and regulations         Deals with agents and distributors should be overseen by legal adviser since
                                     regulations differ a lot from Swedish practise.

                                    Be prepared that time of payment is among the longest in Europe. Italian
             Late payments           customers will be resistant to accepting a time of payment under 60 days; this
                                     should be considered when negotiating with the Italian counterpart.

                                                                     40
Source: STC, interviews
                THE ITALIAN AUTOMOTIVE INDUSTRY IS LOOKING FOR SUPPLIERS
                COMPETITIVE IN BOTH PRICE AND TERMS OF DELIVERY
                 Industry specific recommendations for doing business with the Italian automotive industry

                                    Lead time and frequency of delivery are important selection criteria. Supply-mix
                  Delivery           flexibility and sequenced-in-line supply capabilities are also key success factors
                                     when competing for doing business with Italian automotive companies.

                                    Price competitiveness is very important and it is generally viewed as
                    Price            an advantage if the prospective supplier has its own manufacturing
                                     facility in a low cost country.

                                    Local presence with manufacturing-, logistics- (e.g. warehouse) or
              Closeness to           commercial premises as close as possible to the customer’s manufacturing
               customer
                                     plants or purchase decision centres can be a key selection criterion when the
                                     Italian automotive company chooses supplier.




                                                                      41
Source: STC, interviews
CONTENT



             Overview Italian industry

             Italian Automotive industry

             Recommendations

             References




                           42
              STC IN ITALY CAN SUPPORT SWEDISH COMPANIES IN ALL
              ACTIVITIES FROM MARKET ANALYSIS TO BUSINESS START-UP
                                  Evaluation of market characteristics and market potential.
                 Market           Identification and evaluation of business opportunities, customers and sales channels.
                analysis          Analysis of, and benchmark with, established competitors.
                                  Identification of possible trade laws and regulations affecting the specific product or service.


                                  Identification and evaluation of potential distributors, agents and suppliers.
                 Partner          Initiate and conduct discussions with potential partners.
                 search
                                  Arrangement and realization of business meetings.



                                  Local sale- and Key Account support.
                Business
              support office
                                  Back-office support: Economic administration, customer service,
                                   administration of personnel.


                                  Formation of Italian subsidiary.
                Business          Recruitment / head hunting
                 start-up         Property search
                                  Assistance in merger & acquisition

                                                                          43
Source: STC
              STC IN ITALY HAS A VAST EXPERIENCE OF HELPING SWEDISH
              FIRMS DOING BUSINESS WITH THE ITALIAN AUTOMOTIVE INDUSTRY
                        Examples of Swedish companies STC in Italy have worked with on the Italian market


                                       COMPANY                               PROFILE


                                                                  Manufacturer of vehicle racking
                                                                    systems for service vans.


                                                                      Producer of aftermarket
                                                                           body panels.


                                                                  Manufacturer of car covers that
                                                                      protects the varnish.

                                                                 Developer of electronic systems
                                                                  and software for automobiles,
                                                                       trucks and buses.



                                                                44
Source: STC

				
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