4.4 Industrial districts and flexible organisation
Clearly the response to globalisation, and to greater competition generally, in the
footwear sector, has not been uniform across EU countries. In some countries, such as
Germany, investment abroad has played a very important role and domestic
employment has declined sharply. Elsewhere, in Italy, for example, domestic output and
employment have been maintained. An important aspect of the apparent success of the
footwear industry in Italy is the way that the industry has become organised and in
particular the adoption of flexible production methods and the emergence of locational
concentration of firms in industrial districts. It is to this issue that we finally turn.
Storper and Scott (1990) define flexible production as the ‘variety of ways in which
producers shift promptly from one process and/or product to another, or adjust their
output upward and downward in the short run without strongly deleterious effects on
productivity’. This flexibility can be achieved within the firm and between firms. The
former can be derived from the use of general-purpose equipment and machinery and
through the more effective adjustment of labour inputs. Flexibility between firms is
achieved from the fragmentation of the production process into many units in different
firms. This provides for rapid change in the combinations of vertical and horizontal
linkages between the various units and allows for quick adjustment of output levels and
of product specifications. It is clear that the footwear industry in Italy has benefited
from a high degree of specialisation based upon the division of the production cycle
with several firms specialised in different phases of production (Rabellotti (1995)).
Crucial in this structure is a well-developed network of backward-linked firms
producing components and raw materials. This organisation of the sector has led to a
high degree of flexibility and ability to adjust to changing market conditions.
Flexibility in production is often closely linked with labour flexibility. Storper and Scott
(1990) identify three main areas where employers seek flexibility from the labour input:
(1) to make wage rates adjustable downwards and to determine wages on a worker-by-
worker basis rather than with occupational groups (2) redeployment of the workforce
(internal flexibility) across the shop-floor and (3) develop strategies that allow for rapid
adjustments in the quantity of labour input (external flexibility). The latter can typically
be achieved through labour turnover, including temporary lay-off and recall, through the
use of more temporary workers, more part-time workers and via subcontracting. Internal
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