Italian Manufacturing Faces Headwinds: Transition 5.0 Delays and the Rise of Non-EU Competition
The Italian manufacturing sector, particularly the machinery industry, is navigating a period of uncertainty. Delays in the implementation of the Transition 5.0 incentive program, coupled with increasing competition from non-EU manufacturers, are creating a challenging environment for businesses. Bruno Bettelli, president of Federmacchine, has voiced concerns about the impact of these factors on investment and growth.
The Stop-and-Move of Transition 5.0
Transition 5.0, initially announced in late 2023, aimed to encourage digital and energy transition within Italian industry. However, its rollout has been plagued by delays. The platform for accessing the incentives only became operational in August-September 2024, and subsequent adjustments through the Law of Budget further complicated matters. This has led to a situation where companies, having already planned investments based on clear rules, find themselves in a state of limbo.
“The authorities had assured us that the incentive would be available from the beginning of 2026. Unfortunately, we are once again seeing delays that risk demotivating the market, just as has happened in the past,” Bettelli explained. The lack of regulatory stability is causing customers to postpone orders, awaiting clarity on the final terms of the incentives.
The Threat from Non-EU Manufacturers
A key concern for Italian manufacturers is the potential for increased competition from companies based outside the European Union. The elimination of the EU origin requirement for eligible goods, whereas welcomed by importers, has raised fears that domestic producers will be disadvantaged. Currently, imports of machinery and equipment account for 37% of the Italian market, totaling 10 billion euros against a domestic demand of 27 billion euros. Italian manufacturers are keen to prevent this share from increasing significantly.
While EU competitors, particularly those from Germany, operate under similar conditions, the rise of Asian manufacturers – offering lower prices – is a growing concern across various product categories.
Export Slowdown and Domestic Demand
The geopolitical instability is already impacting Italian exports. In the first nine months of 2025, sales of machine tools declined at a double-digit rate, and foreign orders for the October-December period also decreased. The entire Federmacchine sector experienced a 2% decline in 2025, driven by a 5.4% reduction in exports.
This slowdown in exports is shifting the focus towards domestic demand. However, the uncertainty surrounding Transition 5.0 is hindering investment, creating a paradoxical situation where an incentive program designed to stimulate the market is, in fact, acting as a brake.
The Importance of Regulatory Certainty
Bettelli emphasizes the demand for stable regulations, clear procedures, and predictable timelines to support the competitiveness of the Italian manufacturing system. “Without clear rules, demand remains stagnant, awaiting details of this hyper-amortization scheme that should encourage Italian investment. Instead, under these conditions, it paradoxically acts as a brake, further complicating an already challenging situation weighed down by international geopolitical instability.”
Did you know? The Italian machinery industry is a key driver of innovation and efficiency improvements for businesses across the country.
FAQ
Q: What is Transition 5.0?
A: Transition 5.0 is an Italian government program designed to encourage businesses to invest in digital and energy transition technologies.
Q: Why are there delays with Transition 5.0?
A: The program has faced delays due to issues with platform implementation and subsequent legislative adjustments.
Q: What is the concern regarding non-EU manufacturers?
A: The removal of the EU origin requirement for incentives raises concerns that domestic manufacturers will face increased competition from lower-priced products from outside the EU.
Q: What is Federmacchine’s role in this situation?
A: Federmacchine is advocating for stable regulations and rapid solutions to ensure that companies that have already invested based on Transition 5.0 are not left unsupported.
Pro Tip: Italian manufacturers should proactively explore opportunities to differentiate themselves through innovation, quality, and specialized services to maintain a competitive edge.
Stay informed about the latest developments in the Italian manufacturing sector. Visit the Federmacchine website for more information and updates.
