highly standardised products and huge volume of production to meet market demand.
As the European market demanded an increasing quantity of low cost shoes,
international buyers required their suppliers to provide huge quantities of standardised
goods. As a consequence, each firm mhad to meet the same quantity and quality
standards, and its profitability depended on the production capacity of the whole
district. In this respect, network externalities (Katz and Shapiro, 1986) were very strong
as the incentive for firms to invest in new production capacity depended on the other
firms doing the same. Although there was no explicit cooperation among firms in the
district, each firm’s performance depended on the ability to reach high levels of
production at the district level. This model of production allowed Barletta to be the
leader in this market segment until the end of the 1980s. However, during the 1990s
consumers’ preferences and market demand have undergone radical changes, and the
Barletta model of production entered a severe crisis.
During the 1990s, Barletta started to face increasing international competititon in its
segment of the market. The major change in international competition was due to the
insertion of Southeast Asian countries and China in traditional manufacturing sectors.
The huge differential in wage costs between Italian and Chinese producers forceed the
former to find ways to cope with increasing competitive pressures. In 1994-95 and in
1999 Barletta producers succeed in lobbying for a greater market protection from
‘unfair’ imports from asian countries: the European Commission introduced quotas on
imports from China in march 1994, and minimum price levels of imported goods of 5.7
ECU together with tariffs between 2 and 20.3% on imports from China, Indonesia and
Thailand in march 1998.
Notwithstanding the protection of the domestic market, the Barletta model started
showing severe vulnerabilities with respect to international competitors. Barletta faced a
structural problem of progressive loss of competitiveness which should have been
solved with radical re-organisation of production, including investment in different
segments of the markets. Unfortunately, the district did not succeed in introducing any
relevant changes and therefore started to reduce production and employment.
An opposite evolution occured in the major sporting footwear district in Italy,
Montebelluna (Treviso). The district moved to very high quality goods and established
linkages with leader firms in the sport system, such as Diadora, Lotto, Tecnica.
Montebelluna started to delocalise some segments of the production process abroad and
28