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VENICE, Italy (Reuters) - Murano glass has long been prized for its rich colors, beauty and sophistication, but the global financial crisis is pushing the 700-year-old craft close to extinction.
Many orders are on hold, layoffs are rising and some furnaces are cold in a downturn symptomatic of the woes of manufacturers both small and large in Italy, Europe's fourth biggest economy.
Even before the crisis bit last year, the Venetian island was slammed by a strong euro that chased away free-spending Americans and others and by competition from Chinese and other producers.
In the last five years, sales at some companies have dropped by half, and the workforce has shrunk to 1,000 from about 5,000.
The current downturn "threatens the existence of Murano, even though two or three companies could remain," said Davide Camuccio, head of the Filcem-CGIL glass and chemical workers' union in Venice.
"This could be a mortal blow."
Artisans have been making glass on Murano, an island close to Venice in its tranquil lagoon, since the 13th century. Long a key center of European glassmaking, its prized products ranged from chandeliers through jewelry to tableware.
Perhaps the island's most famous technique is the "retortoli," where opaque or white threads form a spiral, especially valued on Venetian goblets.
Murano craftsmen are used to adapting their skills to the taste of each new generation, but solutions to the current crisis cannot be molded in a 2,300-degree C (4,200 F) furnace.
"The situation is really, really disastrous right now. In all the years I've been working, I've never seen anything like this," said Gianfranco Albertini, president of Promovetro, an association grouping about 60 small companies, half the number of 40 years ago.
The days of Americans lining up to buy glass pieces that can cost thousands of euros are long gone. Sales have fallen as much as 15 percent in recent years, and exports were about 250 million to 300 million euros in 2007, he said.
"As of the middle of 2008, it would be much, much lower," he said.
Murano is having to shift to higher-margin, one-of-a-kind items and venture into new markets in Asia, Russia and the Middle East where the brand is less known.
Next to roaring furnaces, sparks flew as master glassmaker Simone Cenedese used a board to shape a fiery orange globe into a custom-made sculpture last week. He and two assistants were the only ones working at the row of furnaces.
"The future of Murano is definitely that of excellence, of special pieces, not mass production," he said.
Murano's woes typify the larger crisis that is dragging down hundreds of thousands of small businesses, the backbone of the Italian economy.
This year, the Bank of Italy is forecasting a 2 percent drop in gross domestic product, in line with the whole 16-nation euro zone. The impact is more severe for Italy and its manufacturers as growth has been stagnant for a decade.
Industrial output fell 2.3 percent in November from October, the third straight steep drop for a manufacturing sector mired in recession.
"This is a crisis for small artisan companies in all sectors," said Camuccio, the union leader.
In the last few months, larger glass companies have laid off or sent home on reduced pay 300 of their 700 workers, he said.
The talent pool available to learn the classic Murano techniques is shrinking as workers who might have stayed on to become masters are laid off or abandon the business.
The hot, sweaty labor is also less appealing to young people who prefer a higher-tech future, even though the pay is relatively high compared with other Italian industrial jobs.
"Today it's computers, computers. Manual labor is kind of looked down on," said Giovanni Cenedese, Simone's father and president of his family-run company.
The loss of jobs and sales is a challenge facing Venice as a whole, its streets and squares flooded by a high tide in December and its population shrinking as young people desert the city of palaces and gondolas.
Mayor Massimo Caciarri said Venice was putting up to 300,000 euros into a branding campaign for Murano glass and called it "fundamental for the city."
Murano "is one of our problems, one of 10,000," he said.
Reporting by Ian Simpson, editing by Tim Pearce