Abstract
“You’re in luck” Giorgio Manina said to me in aggrieved tones when he dropped into say hello on 2 May 1984, my first day as CEO of Iveco, “this month’s accounts will break even”.
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Notes
- 1.
Iveco was incorporated as a Company subject to Dutch law, holding all the controlled companies throughout the world. To solve the problem of the Babel of languages in the international organization charts and being unable to use Dutch words for obvious reasons of pronunciation, I adopted American terminology for all the positions involving the entire Group, wherever the respective officers were based. Below the Chairman of the Board (Cesare Romiti until 1990 and then Giorgio Garuzzo until 1996) and the Chief Executive Officer (Garuzzo and then Giancarlo Boschetti), the main Heads of the operative functions were called Vice Presidents (in some cases with the additional title Senior or Group); all these were members by right of the Steering Committee, as well as the national representatives of France, Germany and, later, the UK and Spain; in this book I use this terminology extensively.
- 2.
Translator’s note: founded in 1924 as the “newspaper of workers and peasants”, this was the official newspaper of the Italian Communist Party.
- 3.
The figures are as follows:
Evolution of Iveco’s results between March 1984 and 1985
In the month of:
March 1984
March 1985
In percentage (%)
Vehicles sold
8,318
8,216
+1.3
Turnover (in billions of lire)
387.7
395.4
+2.0
Cost of product (in billions of lire)
324.9
302.4
−6.9
Gross margin (in %)
16.2 %
23.5 %
Net profit (in billions of lire)
−30.6
+4.0
- 4.
Others were less suspicious: “Garuzzo steers Iveco to recovery” was the headline in the Financial Times on 1 May 1985, exactly one year after my arrival, “The new chief introduces radical changes, Ken Gooding reports”. Romiti chose the recovery of Iveco as a strong argument for the Fiat Press Office releases on the progress made in the first semester of 1985. As a consequence, the papers of 24 and 25 September 1985 were very explicit. “La Tribune”: “After losses in recent years—Now Iveco is part of Fiat’s dynamism”; “Il Sole 24 Ore”: “Iveco is part of the Fiat boom”; “Frankfurter Allgemeine”:”Iveco has got over the lean years”; the “Corriere della Sera”: “Fiat eliminates the last great critical area, that of industrial vehicles…”; “The Wall Street Journal” noted “a recovery of the run-down truck sector, Iveco B.V. Iveco’s losses in recent years had remained the strongest exception to Fiat’s recovery”. “il manifesto” was more dramatic: “At full speed without ‘dead weight’. Fiat turns over 13,000 billion and rids itself of 13,000 workers. This is how Agnelli presents himself to Ford”; in his text Loris Campetti permits himself a touch of lyricism: “Romiti, Ghidella and Annibaldi, not to mention the brothers Giovanni and Umberto Agnelli, present themselves to Ford Europe with their papers in order to clinch the deal… of the end of the century. Fiat’s balance continues to run on overdrive, the useless dead weight, read the surplus, and that’s to say the workers, continue to fall like dead branches and yellow leaves in the autumn wind. The auto sector is in profit, but also industrial vehicles”. As usual, the most attentive was Ken Gooding of the “Financial Times”, who returned to the topic several times; on 25 September, under the headline “Iveco set for a tenth birthday celebration”, he wrote: “Iveco, Europe’s number two lorry group, seems certain to celebrate its tenth anniversary this year by returning to profit for the first year since 1982. […] The extent of the profit will depend on the intensity of the lorry price war over the last quarter, which has flared up again in France, one of Iveco’s key markets. […] For three years, Mr Giorgio Manina has been trying to get Iveco back on the right track with a search for growth, by pushing the company’s market share. […] When it appeared clear that this strategy was doomed to failure, Mr Garuzzo was called in to cut costs in every area and to lower production level to a point where Iveco could break even”.
- 5.
See Document 2 in Chap. 14.
- 6.
I left Hahn, with the title of deputy, as internal consultant to the technical area, where he was useful in helping me understand the specific aspects of lorry engineering. I assigned the line functions as follows: R&D to Federico Filippi; Production to Antonio Benzi; Purchasing to Alessio Lucca; Sales to Giancarlo Boschetti; Diversified business (“Divisions”) to Riccardo Ruggeri. For staff functions I nominated: Giovanni Millo to Product Development; Umberto Quadrino to Administration and Finance; Francesco Zen to Legal Affairs; Cesare Palenzona to External Relations; Gianfranco Castagna to Logistic and Informatics Services; Giovanni Morello to Employee Relations; Felice Cantarocco to Advanced Planning. The national companies were headed by François Marc (Iveco Unic, France) and by Wolfgang Keller (Iveco Magirus, Germany). Later, the UK and Spain were added. I had not brought any co-worker with me from outside, except for my secretary, Gianna D’Anna, who had made her contribution to the efficiency of office work right from my first days with Fiat, but the managers I surrounded myself with came from an extremely wide range of backgrounds. Three of them had trained with me in the Components Sector (Boschetti, Lucca, and Ruggeri), another came from the Politecnico university (Filippi), two from the Automobile Sector (Millo and Palenzona), and one from the Foundry Sector (Morello). Castagna was a follower of Ghidella who had gained experience with RIV, owned by the Swedish SKF concern. Until then Quadrino only had experience with the Holding Company, including working as direttore addetto to Cesare Romiti. Marc had been with Mercedes, Hahn in the German firm KHD and Keller in some American multinationals. Benzi was the only one who had come from the world of lorries and represented, so to speak, the autochthonous substrate of the population.
- 7.
I would like to have copies of the minutes of those meetings, over three hundred in the years between 1984 and 1990, minutes that I personally reviewed every time and would provide a cross-section of company life in each of its functions. The head office copy was destroyed at the time of the judicial enquiries of 1993 and 1994 by a zealous functionary who thought it might contain dangerous information; the assumption was out of place but in times of emergency it is hard to conserve clear-headed reasoning everywhere. I hope that some other copy may have survived in the hands of one of the vice presidents of those days.
- 8.
As was to be seen many years later in the case of relations with Japan. I once had an experience that demonstrates the role of government in the defence of the country’s industrial interests, but also the reliability of the grands commis of the French state. One day I went to Paris to meet Dominique Strauss-Kahn, then Industry Minister, about the Magneti Marelli electronic injection system (years before, Marelli had bought Solex and Jaeger and supplied Peugeot-Citroën and Renault). I was accompanied by Fiat’s representative in France, Giorgio Frasca. The minister arrived late on account of an unexpected meeting regarding the crisis in Somalia. At the end of our conversation, during which Strauss-Kahn supported in an accurate, documented fashion his position in favour of the French case, his personal secretary returned to apologize: “The minister was in a bit of a hurry, but his father died last night and he had to dash off to see to his onerous task, but only after holding the extraordinary meeting and after having honoured his appointment with you”.
- 9.
Boschetti had done a good job at IVI, a paint factory in the Components Sector, where I had nominated him amministratore delegato (CEO) in 1979. Years later, Giorgio Manina asked me for him to head Iveco’s Purchasing function. I refused. According to me he was entirely unsuited for that position. Manina invited me to lunch to plead his cause, as was typical of his background as a marketing man: “I’ll let him go”, I said, “only if you make him marketing and sales director”. He accepted immediately: “I’ll use the pretext of purchasing to fit him in and after six months I’ll transfer him in place of Michelacci”. And so it was. But in Iveco’s sales department, Boschetti soon found himself in a sorry plight. His work was criticized and in the corridors of corso Marconi there was talk of taking him down a peg or two, an opinion that began to influence Romiti. I didn’t think he was all that guilty: Iveco’s Head Office was putting a lot of pressure on him to increase sales volumes and, in a declining market, the network reacted by relaxing on prices: gross margins had fallen to 16 %, ten points below the previous figure. When my time came in Iveco I immediately confirmed him as head of all the commercial operations in the lorry sector.
- 10.
Painstaking research was carried out on the fluid dynamics of the manifolds and combustion, new injector pumps were used and powerful new devices were introduced: the turbocharger (which is a pointless luxury for petrol engines but very useful for diesels), the intercooler, the waste gate, and so on, down to ceramic inserts, turbines, variable geometry, and other contraptions typical of modern engine technology.
- 11.
I organized the day in an unusual manner. I personally took on the role of conductor, following a constant thread of what was said, a kind of solo voice. Among the many topics in a long list, I would take one, and introduce and conceptualize it. Then a solo instrument would break in, the vice president of the Function most closely concerned, to show the tables with the figures that justified my assertions and to give detailed instructions about what was to be done. Then I would move on to the next point; and so on, for eight or nine hours. Preparation had been meticulous, without leaving any room for improvisation. There was little human warmth: Giorgio Manina had distributed that in abundance, real or sham as it may have been; it was necessary to make a sharp change of direction towards no-nonsense professionalism. (I have always advised young people to beware of company meetings where human warmth is exhibited and dished out open-handedly; good collective feelings are not always justified or utilized for good ends, better to leave them to genuine and spontaneous occasions and devote business meetings substantially to business). There had been some grumbling on the part of some vice presidents who felt like puppets thrust onstage by the bouncer. But I stuck to my guns. I wanted the audience to perceive the feeling of a Steering Committee conspicuously united and compact with its own head. Then, albeit without saying so directly, I wanted each vice president to get involved in the objectives outlined and to put his own soul before that of his function; they were all true professionals and I knew that by presenting a topic in public they would have felt deeply involved as far as the future was concerned.
- 12.
Many structural interventions are shown in Document 3 of Chap. 14, just as they were presented in Marentino.
- 13.
As soon as the books were balanced, I began to insist with Romiti that an increase in equity capital was needed to reduce passive interest and to finance the new range of products, a request I formalized in a letter on 26 April 1985. They granted me 1.69 billion Dutch florins, which eventually arrived on 15 October 1987. Of this sum, 1.03 billion florins replaced a previous interest-free loan (effectively equivalent to our own equity); that left a net 0.65 billion florins, or roughly 400 billion lire, which I ordered to be withdrawn from Iveco and paid into a wholly owned holding company, FinIveco, which used the cash in the years that followed to back up all the associated companies in their investments in fixed assets and in working capital. FinIveco was originally called TrutCo, but I had this name changed because, frankly, it was ugly and gave the idea of a clandestine entity. FinIveco was based in the Dutch Antilles for reasons of tax relief and flexibility, like many sister companies owned by multinationals in every country, but was legitimate from every point of view.
- 14.
It was a vehicle whose conception and genesis were international: designed in Ulm and assembled in Turin, it had a 13.8 L engine that pumped out 330 HP, or a 17.2 L version good for 420 HP, produced respectively at Bourbon Lancy in Burgundy and in Turin, also the base of the engine design department. About 150 engine designers, with great experience in fluid dynamics, worked in Arbon, Switzerland; this was a centre that Manina had wisely bought from Steyr not long before; I arrived in Iveco just in time to prevent its closure under the pressure of the emergency.
- 15.
Iveco kept up good relations with Libya as a consequence of the entry of Libyan capital in Fiat in 1976 and had a 25 % stake in the Libyan Truck and Bus Corporation (LTBC), an assembly company that put together European components in the factory at Tajura, near Tripoli. But LTBC produced normal road vehicles or those for building sites; military trucks are very different heavy vehicles, suited for very demanding working conditions and constructed using wholly particular materials and specifications and with very high costs (and prices).
- 16.
Jallud was Libya’s only general: nobody could attain a rank higher than that of Gheddafi, who was a colonel, after his seizure of power.
- 17.
An entity avowedly financed and managed from Italy. The vice president of Personnel, Giovanni Morello, suggested to me the following criteria for participation in the convention: all the Torinese quadri, many from the rest of Italy, some representatives from outside Italy. At that time this was the Group’s concept of internationality! He was lucky I didn’t toss him out the window. The criteria had to the complete opposite: all the foreign quadri, many from the rest of Italy, some representatives from Turin. Certainly not out of hatred for the city: those based far away were the ones most in need of news and reassurance. I had even forbidden the use of the term “foreign”, how you could you consider “foreign” a person with Iveco Magirus or Iveco Unic? Iveco was a pan-European company.
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Garuzzo, G. (2014). The Rescue of Iveco (1984–1985). In: Fiat. Springer, Cham. https://doi.org/10.1007/978-3-319-04783-6_5
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