| |
Death of an industrial king: The looming
crisis
By Francesco Sisci
One
could tell it as family story, an Italian
Buddenbrooks perhaps. It could wrench souls and
inspire tears. But it is not just a tragedy of human
spirit, the tragic and complicated life of Giovanni
Agnelli, known as Gianni or l'Avvocato (the lawyer). It
is a story of power and of an industrial crisis that may
lead to a major industrial reshuffling in Europe.
The death on January 24 of the president of
Fiat, Gianni Agnelli, at 81 leaves a vacuum of power
that is difficult to fill. It could signal the real end
of the political transition in Italy started with the
anti-corruption drive of the "Clean Hands" in the early
1990s.
The influence of Gianni Agnelli went well
beyond the personal fortune of his family and of his
industrial group, Fiat. The family and the group had
stakes, directly or indirectly, in some 25 percent of
the Italian stock exchange, an amazing level of
influence. But this power and influence hinged on the
personality of Gianni, a master of modern times who
could win the trust of banks, investors and common
people, as the procession of 100,000 men and women to
his casket has proved. Straight, compassionate, discreet
but also not bound by many scruples, Agnelli embodied
some of the best of Italian culture, and was one of the
driving forces of Italian growth in the past decades.
Over three decades he took control of all the local car
makers, Lancia, Alfa Romeo, Ferrari, Maserati, but also
had his fingers on all four major Italian newspapers. In
sum, he was the closest thing to a king that Italians
had. Now, without him, his legacy could be shattered and
the Fiat group could be broken apart.
Yet his demise was not sudden. The first blow arguably
came with the death in 2000 of his longtime ally and
mentor Enrico Cuccia, president of Mediobanca. Cuccia
had engineered the rescue of Italian industry, shielding it
from foreign competition. Over the years the protection
of Italian industry came to coincide more and more with
the protection of the Agnelli family, who stood out as
the owners of the only surviving large private
Italian industrial group. Cuccia's demise, and with him the
end of a complex web of relations stretching all
over Europe and to the other side of the Atlantic, weakened
Gianni Agnelli.
He had already been hit by a previous tragedy
that affected his family and his business: the
death from cancer of his nephew Giovannino Agnelli, the
anointed heir of the family. Without an heir ready
to take the reins of the group, the family suffered a
crisis deepened only by the demise of Cuccia. The depth
of the Agnellis' crisis could be seen in 2001 when, for
the first time, the powerful head of the association of
Italian industrialists (Confindustria) was a
man elected against Agnelli's wishes - Antonio D'Amato. D'Amato
expressed the new ambitions of the aggressive small
and medium enterprises (SMEs) willing to support
current Prime Minister Silvio Berlusconi's "Forza Italia", a
party despised by Gianni Agnelli.
Gianni Agnelli
had turned down Berlusconi's request for support earlier
in his political career. However one may judge the man
who is now the prime minister of Italy, behind him there
was and is real force - the SMEs grew out of the centers
of influence of Fiat, although in the beginning many did
work one way or another for Fiat.
Now these
companies account for some 90 percent of the Italian
gross domestic product (GDP). Most of them are not
listed, sometimes because they are too small, sometimes
because they are very healthy and do not need to raise
extra capital. They grew out of a silent pact with the
politicians of the 1980s. The state tolerated SMEs' tax
evasion by considering it a form of financing. This was
the flip side of the fact that the banking system was
largely geared on the large companies, like Fiat, but
also like the state-controlled IRI, which in the
meantime has been divided up in smaller entities and
sold off.
The Agnellis' demise coincides with
the great cash earner of the group, the automotive
interests, suffering billions of dollars of losses every
year. A plan to relaunch the automotive industry would
come at an enormous cost. The family can't raise this
kind of money without selling other parts of the group,
which are doing better and even in the future may prove
more profitable than the car sector. The likely options
could well be the slicing up of the group and the sale
of the automotive interests to some larger group. This
would entail the collapse of the Agnellis' family
leverage over the Italian economy, and thus politics. It
is difficult to imagine how this void will be filled.
The person who stands to gain the most from this
is Berlusconi. The new president of Fiat, Gianni's
brother Umberto Agnelli, is a longtime supporter of
Berlusconi, and the breaking up of Fiat would force any
buyer to go to the prime minister and discuss the deal.
This would carry with it the grand prize, control of
Corriere della Sera, the largest-circulation paper in
Italy.
But Berlusconi, also owner of the largest
TV group in the country, will not be the only winner.
This breaking up could be the first stage of the
emergence of a generation of new industrialists in
Italy. At first they could be financial people, keen on
getting their hands on the spoils of the Fiat group, but
then could come real industry people who know how to
handle production. Fiat owns the largest tractor
industry in the world, one of the largest van makers
(Iveco), as well as Ferrari, Alfa Romeo and Maserati,
automotive brands so famous they need no advertisement.
But perhaps the real news in the story is the rise
of the SMEs, which should grow rapidly. If this doesn't
happen, the whole of Europe will suffer. Italian SMEs
are a model and an inspiration for Europe and help the
growth of other SMEs throughout European countries; just
as the growth of the Italian commercial city states in
the 13th and 14th centuries helped the growth of city-states
of the Hanseatic League and of the Netherlands.
The growth of European SMEs into larger companies
could be at least part of the answer to the
present European doldrums, when the economy is
sputtering and the US crisis only adds to problems on
the European side of the Atlantic.
The
resilience and tenacity of the Italian SMEs would make
one think that this growth is possible. If it doesn't
happen, if both Fiat doesn't find a solution for its
problems and the SMEs do not grow in size and influence,
it could be the beginning of a major decline of Italian
industry and its economy, dragging along, because of its
size, a large part of Europe.
(©2003 Asia Times
Online Co, Ltd. All rights reserved. Please contact content@atimes.com
for information on our sales and syndication policies.)
|
| |
|
|
 |
|
