Abstract
In early 1979, Nicola Tufarelli’s successor as head of Fiat Auto was nominated. The person chosen, Vittorio Ghidella, was known to the Agnellis because he ran RIV, a factory producing ball bearings in Villar Perosa that had been the property of the family before it was sold off to the Swedish concern SKF. Three years previously, when Tufarelli had voluntarily handed in his resignation, Gianni Agnelli had already mentioned Ghidella as a possible replacement, and De Benedetti had told me about this, but neither he nor I knew who he was and the suggestion was dropped.
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Notes
- 1.
The spectre of those failures came dramatically to mind years later, when (in 1990) I negotiated the acquisition of Ford New Holland: over and over again I compared the terms of the initiative I had got underway with the ghosts of the past, to convince myself that my case was based on the right conditions.
- 2.
Romiti’s account in his book (Romiti-Pansa, op. cit.,) is different; perhaps Ghidella was invited to join Fiat by the Agnellis without Romiti’s having taken part in the decision.
- 3.
Paolo Scolari, who came from the Earthmoving Equipment sector (Fiat Allis), was put in charge of R&D. Just like that: they took a person who was working on heavy machinery and sent him to design cars. Among Fiat’s thousands of engineers no one was considered up to the task! It was necessary to turn to the agricultural sector even to find someone to design cars: the nomination to head the Sales Department went to Paolo Bernardelli, who also came from Fiat Tractors. Ghidella felt it was very important to boost the Logistical function in order to improve the scheduling and distribution process of the car sector. He put Gianfranco Castagna in charge, the only person he had brought with him from RIV (a fact that proves that his team was not a “concert party”) and Castagna was very careful to make savings on distribution costs, while he was less interested in customer satisfaction. As for Employee Relations, Ghidella entrusted the responsibility to Carlo Callieri (about whom I shall talk with regard to the March of the Forty Thousand and about my arrival in the direzione generale (COO’s office)), while Administration went to the Frenchman Stéphane Doblin and the Purchasing Department to Giorgio Rigazzi. The only ones left from the previous Committee were Bracco in charge of Production and Giuseppe Perlo in Product Planning. Ruggero Ferrero, the most authoritative industrial director of the past epoch, was elbowed out. Cesare Romiti made him head of the Teksid Sector and then made him direttore centrale, but he couldn’t stand him and never took any account of his opinions.
- 4.
I recall the names of the seven Groupings, whose description is given in greater detail in Document 1 of Chap. 14, and the principal data of 1982 (incidentally, they represent turnover in billions of lire and the number of employees with the Italian companies). Aspera (t. 218, e. 3,262), Comind (t. 440, e. 6.147), Gilardini (t. 332, e. 5,026), Magneti Marelli (t. 480, e. 9,475), Weber (t. 207, e. 4,918), Fiat Lubrificanti (t. 208, e. 608), together with IVI (t. 162, e. 1,387). Finally there was Sepa (t. 24, e. 522). The top echelon of the Sector had only 49 employees, secretaries included. The total for Italy came to 2,254 billion lire of turnover and 35,956 employees. The turnover of the foreign companies was 314 billion and employees 6,166. Another 1,369 employees were in cassa d’integrazione straordinaria (temporary lay-off).
- 5.
Translator’s note: in Italy, salaries were constantly adjusted to inflation but, after Agnelli’s concession, the amount added to workers’ pay for every percent of the index increase (punto) was not a percentage of their previous salary but a fixed sum, the same for everyone all over the country. Gradually, over time, this led to salaries being nearly equal for everybody, irrespective of the starting point.
- 6.
Five years later, when in 1984 I took on the management of Iveco, my purchasing office, run by Alessio Lucca, obliged suppliers to respect a long period of zero inflation, in other words a moratorium on price rises, and ten years later, in 1991, from Fiat’s direzione generale I supported Ghidella’s successor in Fiat Auto, Paolo Cantarella, who went as far as to ask suppliers for reductions in the prices paid for components.
- 7.
Translator’s note: a miner who helped construct a maze of underground tunnels during the war of Spanish Succession. When the French threatened to conquer Turin and entered the network he blew himself up inside a tunnel to block their advance.
- 8.
I won’t have further occasion to talk about Giovanni Germano, who did not work for me any more after Marelli. He did not stay long with Fiat Spare Parts: Cesare Romiti handed him the task of bringing Fiat Allis back to health. He was the third to attempt this, after Jacques Vandamme and Ferdinando Palazzo (or the fourth, if we also count Vittorio Ghidella’s farsighted refusal). Germano lived up to his reputation as an absolute cost cutter but he did not succeed in his impossible intent. He resigned and became self-employed, as perhaps he had always wished to do.
- 9.
Not even Francesco Torri was left to help me: the fame he had won in past years as direttore generale with Germano had aroused the interest of Umberto Agnelli and I did not feel I should oppose the career of a person who was asked to become the direttore generale of Piaggio.
- 10.
Translator’s note: a 1970 law whereby workers were granted substantial protection.
- 11.
I received a hand in getting through the “chicken coop crisis” from a young socialist member of the regional council with responsibility for labour matters, a serious and upright person who I remember with great esteem: Sergio Moroni. I was deeply grieved when I learned, ten years later, that he had committed suicide in prison during the darkest period of the “Clean Hands” legal inquiries.
- 12.
Translator’s note: this was a form of compensation, paid for with funds from the National Pensions Institute, which in turn drew funding from the taxation of companies and workers. The beneficiaries, usually laid off temporarily because of a shortage of work, received about 80 % of their salary. This system gradually developed into a very long-term institution where people never went back to work, even if still officially employed, and were paid for years. This is not to be confused with unemployment benefits, which also exist, but usually involve far smaller payments.
- 13.
The pro tempore Minister for Industry, Bersani, on the occasion of Olivetti’s 90th anniversary, celebrated in Rome’s palazzo Colonna in November 1998, attributed the Olivetti of Adriano’s day with the “overcoming of the Tayloristic model”. The remark corresponds to posthumous adulation, encouraged by Olivetti propaganda of the Fifties. In fact, Olivetti had created crèches and other important social benefits, but the organization of work had been extremely traditional. The power of stereotypes!
- 14.
In 1964, I was certainly not a part of Olivetti top management but everyone in the Company knew how things had gone. Years later, I told Carlo De Benedetti, then presidente (CEO) of Olivetti, about the episode and he included it in the text of his parliamentary hearing in 1996. He received an indignant letter of protest from Mediobanca supremo Enrico Cuccia. At the ceremony for Olivetti’s 90th anniversary, Carlo De Benedetti climbed down and said that the gruppo di intervento (a “white knight” intervention group of industrial and financial institutions) had been “necessary and useful”. The power of Mediobanca!.
- 15.
The Audit was a mechanically programmable accounting machine that was extraordinarily widespread in company accounts departments and on which swarms of women of the Fifties and Sixties spent their youth. In the early Sixties it was improved by an electronic device, the Unità Moltiplicatrice Elettronica (the Electronic Multiplying Unit), entirely transistorized, which was one of the first gadgets of its kind in the world, if not the very first.
- 16.
They were led by an engineer called Ingignoli. This small group started from the presupposition that the problem lay in the electronic module: the rest of the system, and the injectors in particular, would have easily been found on the market; in case of necessity they had decided to join forces with the American company Bendix, which promised to make major investments. I believed they were wrong. Petrol injectors were among the most sophisticated ironware of any to be found among all the products of mechanical engineering, given that they had to be machined to micron precision and cost less than ten dollars apiece. Bendix did not have much of a chance because the big three American car builders had decided to produce these essential parts by themselves.
- 17.
This firm saw things in a way that was diametrically opposite to Marelli. According to them, the tricky parts were the mechanical ones, especially the injector and the pump. They maintained “they would have the electronics done” by some small company in the Bologna area and, in any case, they had contacts with the American firm Motorola. I visited Motorola and all they could show me on the subject was a radio factory in Texas. The mistake was just as serious as that of Marelli, as was to become clear in the years that followed.
- 18.
Weber had some good reasons in support of its idea of the immortality of the carburettor. Its new “twin barrel” model had been a success all over the world thanks to the advantages it offered in terms of fuel consumption and atmospheric pollution. Ford adopted it in the USA and asked for it to be produced near them. I accepted the idea of Livio Montefameglio, Weber’s CEO, to acquire an existing company and together we visited the Carter factory in Saint Louis. Down there we understood the success of the Italian concern: for thirty years the Americans had been producing the same old four-barrel carburettor model, a gas guzzler offering something like the technology and savings of a fire hydrant; moreover, the social degradation around the production plant was incredible. Having discarded that factory, which was shut down soon after, we turned to a smaller factory recently constructed in South Carolina, and we bought it for a low price. My goal was to use the local presence and our contacts with Ford to attempt to introduce one day the future Weber/Marelli injection system to the United States market as well. And even if the idea had not worked it would not have been a tragedy, because the initial costs were covered by the income from the carburettors. I do not believe that that initiative went completely as I had wished but it certainly contributed to the internationalization of Weber and Marelli at a time when the word globalization was yet to become fashionable.
- 19.
Translator’s note: a small town close to Turin, where Fiat had located facilities for meetings and training, in a beautifully restored ancient villa (see Chap. 8).
- 20.
Among those who tried but failed to keep up with the development of electronic injection I recall: Siemens in Germany, Lucas in the United Kingdom, Sagem and Valeo in France, and Bendix in the USA.
- 21.
By contract, the role of amministratore delegato (CEO) of Borletti SpA was the preserve of a Fiat nominee and this was an impenetrable position, given the circumstances and a CEO of that kind. I engineered the idea of sending Marco Bono, who had been hapless enough to present the Magneti Marelli budget shortly before. I was unable to judge his degree of responsibility for Magneti Marelli’s recent troubles or to what extent he had been forced to stay afloat amid a local situation that was unserviceable for him and a policy marked by industrial disinterest and negligence on the part of Fiat as a shareholder.
- 22.
See, for example, “la Repubblica”, March 3, 1991.
- 23.
I maintained (provocatively) that financial burdens ought to be entered among fixed costs because interest increased even when production was at a standstill for lack of buyers and the workers were in cassa integrazione. The normal schemata of the income statement and the entire methodology of industrial accounting were insufficient to describe the phenomenon, having been conceived in very different conditions of inflation.
- 24.
In Gilardini in 1974 I stipulated that every operative division should measure its own net invested capital as the sum of net fixed assets (machinery, plant, etc., after deduction of depreciation) and working capital (inventories, customer receivables and supplier payables, etc.). Net invested capital was considered to be financed by an internal debt on which the Central Bodies pocketed a virtual “interest” (the divisions were not independent companies). The pay incentive about which I talked in Chap. 2 was accorded to dirigenti only on the part of company profits that exceeded the “service” of the debt on the net invested capital. This was an extremely advanced criterion, which Carlo De Benedetti had accepted in full, but I could not export what I had managed to do in a small family company to big industry, where this task did not concern me and where any proposal regarding this was in odour of heresy as far as the function of finanza centrale (the Central Finance Office) was concerned. At the time when I joined Fiat a curious misunderstanding occurred. For simplicity’s sake I had used the term capitale di dotazione (allotted equity) to describe the amount of virtual net invested capital on which Gilardini divisions had to pay their virtual interest to the central “provider of funds”. In Italian public industry the term I had used had a completely different meaning, the opposite of mine, and a decidedly negative connotation: it meant the funds that the state effectively paid into the equities of the companies it owned, equities that were in any case lost in the operations, paving the way for further requests. When Gilardini was bought by Fiat, Carlo De Benedetti boasted to Cesare Romiti about the system in use in his former company: the latter, interpreting the term capitale in dotazione from his point of view as an ex public manager and without verifying what it was about, indignantly labelled it as statism-oriented. My terminological imprudence had caused another source of friction among the many others that poisoned the atmosphere between the two men.
- 25.
The condition did not apply to raw materials and the most powerful foreign suppliers could also reject it; but this did not have much effect on the general average.
- 26.
Romiti-Pansa, op. cit.
- 27.
Romiti-Pansa, op. cit.
- 28.
Translator’s note: A Labour Minister from the left wing of the Christian Democrat party, particularly lenient in dealing with union turmoil.
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Garuzzo, G. (2014). The Perilous World of Automobile Components (1979–1982). In: Fiat. Springer, Cham. https://doi.org/10.1007/978-3-319-04783-6_3
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