Abstract
I did not discuss the nature of my new responsibilities with Cesare Romiti, far less did I negotiate with a view to obtaining any assurances regarding my future. Fifteen years of working with him sufficed for me to trust him and to know that written stuff would have served no purpose. All that remained was to get down to work. The news of my nomination was given to the press on 12 December 1990, in a minor key, so that Italian and international newspapers reported only a few sober comments. This beginning, certainly planned by Cesare Romiti, who carefully reviewed all press releases destined for the world outside the Group, was fine by me because it wasn’t celebrity I was looking for. A few weeks afterwards there was the presentation in the temple that was Mediobanca.
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Notes
- 1.
Translator’s note: the headquarters of the Bank are located on the side of Teatro La Scala in Milan, hence the old street name; now the address has been modified to piazzetta Enrico Cuccia, 1.
- 2.
Translator’s note: Raul Gardini, a tycoon well known for his dealings with Montedison, Fondiaria and Enimont.
- 3.
Translator’s note: both close aides to Cuccia, the second one being the eldest son of Fiat’s CEO, Cesare Romiti.
- 4.
For the definition of “Intermediate Sectors” see Chap. 4: in that period they were Magneti Marelli, Gilardini, Teksid, and Comau.
- 5.
Translator’s note: RIV was a manufacturer of ball bearings, owned by the Agnelli family for a long time, and sold to the Swedish SKF concern in the ’60s.
- 6.
Translator’s note: IFI was an Agnelli family holding, in charge of its Fiat shares.
- 7.
These were the quarterly results:
Fiat Auto’s market share in Italy (1989–1992, in %)
1989
1990, by quarter
1991, by quater
1992
full year
I
II
III
IV
I
II
III
IV
I
57.7
55.4
53.1
52.0
49.4
47.7
47.4
45.1
46.1
43.7
of which the Fiat segment B (Fiat Uno)
43.3
41.0
41.0
38.8
35.1
34.5
34.2
31.2
32.5
29.9
and Fiat’s segment C (Fiat Tipo)
45.9
42.0
38.8
37.6
37.5
30.1
27.9
29.9
31.5
25.6
- 8.
Apart from Fiat Auto (including Alfa Romeo and Lancia), also Renault, PSA (Peugeot and Citroën), Volkswagen-Audi (including Seat), and American Ford (including Jaguar) and General Motors (with the Opel and Vauxhall brands, including Saab).
- 9.
In France, for example, Lancia was considered a poor linked brand of Fiat. Later, Paolo Cantarella had to withdraw the marque from the UK. The problem became enormous when Fiat launched the Bravo and the Brava without either Alfa or Lancia having equally worthy models. The Volkswagen boss, Ferdinand Piech, told me one day about the enormous efforts he demanded of his designers in order to ensure that the perception of Audi models was always greater than that of the corresponding mass market models by VW, for example by using aluminium or magnesium even when they could have done without them, thus pursuing a strategy that was the opposite of the one Fiat was obliged to follow with Lancia and Alfa Romeo.
- 10.
Two examples: to establish the price of road tax they invented the cavallo-fiscale (taxable horsepower), a measurement that was not physical but bureaucratic, linked to cylinder capacity; while a huge VAT supertax was slapped on engines of more than 2.5 L, because Fiat did not have a suitable engine.
- 11.
Patrizio Bianchi, in charge of a study centre run by Nomisma, saw things correctly: The decision to invest 1,000 billion to produce a super-compact car in Poland […] tells us that Fiat intends to maintain a position in the lowest segment of the market with a poor product […]; this is a sign that it is struggling: there’s still a long way to go before Fiat returns to competitiveness” (“The Independent”, 11 December 1991).
- 12.
Years later I fought against the idea of investing 1,500 billion on an entirely new vehicle to renew the Fiat 500, cash that would never have returned, until in 1995 Paolo Cantarella finally ceased to propose the initiative. We also gave up on producing the Smart, which Nicolas Hayek (the creator of Swatch) came to offer us insistently: we left Mercedes to get into that mess, with the enormous losses that were to be derived from it.
- 13.
In 1984, on the occasion of Umberto Agnelli’s fiftieth birthday, Romiti, Ghidella, and I were invited to a family get together in the villa at Villar Perosa. Gianni Agnelli, in the course of a little speech, thanked us for the work we were doing in favour of the incomes of those present (“take the dividends” he said “and leave the managers to work in peace”), then, on noticing the respective wives among the onlookers, he couldn’t resist a quip and prophesized for us three too a similar return to more domestic values as we grew older.
- 14.
One little example: Fiat Auto measured the saturation of the factories with a highly sophisticated computerized system, but it set the use of 220 days a year as equal to 100; those in charge were stunned when I asked for the bar to be raised to 365 days (366 on leap years).
- 15.
It’s easy to understand why. Suppose, for example, that you invest 5,000 billion lire in new factories with a view to remaining or becoming competitive (as Iveco did with SPR); the consequence of this is a gigantic cost in terms of depreciation and interest, something like 1,500 or 2,000 billion per annum. If the factories work only 80 hours a week (16 h per 5 days) instead of 144 per week (24 h per 6 days) the quota of financial cost that every unit of product must take on itself increases by 80 %, a gap that cannot be recovered in another way: it makes the difference. On analysing the accounts in detail, you could see that Fiat Auto could try to obtain from a better exploitation of the factories a value roughly equal to half of the margin that it lacked owing to the inadequacy of the C and D models I have described above.
- 16.
Translator’s note: Giovanni was Gianni’s grandfather, who ran Fiat from its foundation up to the end of the war. He had been made Senator by Mussolini.
- 17.
This was more evident for Fiat than for Alfa Romeo and Lancia, whose dealers had not been quite so decimated by the reforms, while most of them still belonged to the historical nucleus. Iveco’s trading policy had been different. We had been aware of the problem, so that in the seven years of my management only a few good dealers had been lost and relations had remained good in general. From our standpoint we could see what was happening in Fiat Auto; the vice president for sales, Giancarlo Boschetti, who was often out and about to test the mood of the dealers would, on his return, tell me his criticisms of Fiat Auto gathered from those dealers authorized to sell both lorries and cars.
- 18.
For example, in the early Eighties, Fiat’s advertising campaign had aroused the indignation of the British: the UK had been plastered with posters that informed its citizens that the engine of the Austin, the only manufacturer that was still British, was “medieval” in comparison with Fiat engines. This copy, which revealed a poor understanding of British psychology, aroused the slumbering nationalism in what was Europe’s most open market, and it also aroused civic conscience with regard to an attack deemed unfair, a most serious blunder, as the Argentinean general Gualtieri was to discover not long after in the Falklands war. Little old ladies rose up in rebellion and the newspapers were bombarded by letters from offended citizens. Years later, a TV advert showed the British a duchess as she made a present of the Fiat Uno to her butler who had served her so faithfully. And I could go on with other examples of this counterproductive style.
- 19.
The ceremonial included a general meeting for all dirigenti during which the consolidated annual report and the situation of the Group in the country were illustrated, which was followed by the discussion of topics of common interest. Then I visited the factories, met the national authorities and invited the local top management to a select dinner. There was nothing extraordinary about any of this, it had been customary practice for any multinational for a long time, but for the Fiat Group this was an unheard of innovation. It worked well for the four years of my tenure. I also got first-hand experience of one of the oddest paradoxes in the organizational structure of the Fiat Group, which I discussed in Chap. 4. In every European country they had transplanted the same schema as in Italy, with a tripartition of presences. There were the operatives who reported to the Italian heads within each Sector, there was a representative of the Holding Company who reported to the Fiat Holding staff in corso Marconi, and there was an office of the function of central Administration and Finance, whose direct longa manus reached everywhere. The three currents communicated so little among themselves that often the dirigenti of the Group present in the same country met in person for the first time on the occasion of my pilgrimage to their country.
- 20.
On 1 March 1993 Umberto Agnelli invited Renato Ruggiero and me to dinner with the evident intention of getting us to agree. “You will be” he said “my two principal collaborators, one with an internal role and the other outside the organization”. I wrote in a note: “[Umberto Agnelli] is really naive in his attempt to do good and I’d like to gratify him, but Ruggiero stubbornly insists on considering “international”, hence subject to his “role of coordination and direction”, everything outside Italy. I cannot manage to make him discern the complexity of the Group around the world, and delimit but deepen the sphere of his activities”.
- 21.
“Corriere della Sera” of 11 November 1991.
- 22.
The phenomenon of self-denigration was deeply rooted in Italy. The “National Geographic” of December 1992 published the following statement by Silvio Berlusconi: “The great Italian businesses, both public and private, have found themselves in difficult situations substantially because of bad management and a lack of ideas”. Broadly speaking, this was true and could be agreed with, but why go and say it there of all places? I pointed this out to the Steering Committee of Fiat’s Communications Project: “considering the circulation (eight million copies), the readership (twenty million) and the authoritative magazine’s capacity to create mass stereotypes in America, it seems to me that the interview stands out for its extraordinary content of [self-deprecation]”.
- 23.
Translator’s note: in Italian, la volontà di continuare. The “will” in question, of course, referred to the political turmoil and the Red Brigade attacks in Italy in those times.
- 24.
Among the many, I find the following in my notes: 22 January 1992 Paolo Cirino Pomicino, the Budget Minister, on 13 February Claudio Rinaldi, the editor of “L’Espresso” (a magazine that in those days published very harsh criticism of Fiat), on 9 March Rainer Masera, the COO of IMI, on 30 March Vincenzo Scotti, the Home Secretary, on 1 April Giovanna Cattaneo Incisa, the mayor of Turin, on 2 April Redento Mori, editor of the weekly “Il Mondo”, on 15 April Patrizio Bianchi of Nomisma (a think tank founded by Romano Prodi, then Chairman of IRI), on 13 April Andrea Monti, the editor of “Panorama”, on 23 April Guido Venturoni, the Chief of the Navy General Staff, on 11 May 1992 Roberto Mazzotta, the Chairman of the Casse di Risparmio delle Province Lombarde, on 18 May Luigi Abete, the new head of Confindustria (he had just replaced Sergio Pininfarina), on 22 June Carlo Ripa di Meana, EEC commissioner, on 26 June Gianni Locatelli, editor of “Il Sole 24 Ore”, on 13 July Ennio Presutti, the Chairman of Assolombarda, on 28 September Claudio Vitalone, Minister for Foreign Trade, on 12 October Raffaele Costa, minister for Community Policy, on 16 November Paolo Liguori, editor of “Il Giorno”, on 1 February 1993 Mino Martinazzoli, the leader of the Christian Democratic Party, on 12 February 1993 Mario Pendinelli, editor of “Il Messaggero”. Luciano Benetton came accompanied by the photographer Oliviero Toscani, who, in the presence of Agnelli, said without mincing his words what he thought of the Group’s image.
- 25.
On 21 March 1992; he did not stay for lunch.
- 26.
Also through the so-called EEC “free practice”. In 1990 57,000 Japanese vehicles entered Italy, equal to 2.3 % of the market, included in the figure are off-road and other special vehicles that were not subject to quotas and made up over half the total. There was also the phenomenon of “parallel imports” from other EEC states, partly constituted by fake second-hand vehicles.
- 27.
A market analysis commissioned by Fiat Auto showed that in Germany, among all the potential purchasers of cars, at least one person out of two did not so much as consider imported products. This quota diminished to one out of three in France but slid to one out of five in the UK, by then devoid of its own car industry. In Italy the possession of a foreign car sometimes worked in the opposite way and was seen as a status symbol, a reversion that had been facilitated by Fiat’s mediocre offer and by the aura of scarcely innovative economy cars that surrounded it.
- 28.
It was the same Lambsdorff, who I had invited to become chairman of Iveco Magirus, who informed me of the agreement.
- 29.
The newspaper’s opinion was expressed clearly on many occasions; see for example 23 September 1991: “The problem of European industry is that of too many obsolete and costly factories that have survived solely thanks to subsidies and protection. If European car producers try to elude the Japanese challenge, they will not only damage the European market and its economic welfare, but will also sign their own death warrant”. The sermons came from a reliable pulpit: a country that had once possessed a world famous automotive industry that no longer existed.
- 30.
Three Americans (General Motors, Ford, and Chrysler), five Europeans (Fiat, Volkswagen/Audi, Peugeot/Citroën, BMW, and Mercedes Benz, without considering Rover, which was then connected with Honda), five Japanese (Toyota, Nissan, Honda, Mitsubishi, and Mazda, apart from other smaller entities) and three Koreans (Hyundai, Kia, and Daewoo, apart from the intention to start up on the part of Samsung).
- 31.
For example, on 11 June 1992, during the most heated period of the attacks that followed the announcement of the closure of the Chivasso factory, all the Italian newspapers duly prompted by the Fiat press office published my radical statement: “The term alliance in company economics means nothing: either you buy something or you get bought. Neither one operation or the other is underway in Fiat Auto […] if what I have heard said is true, that there are trade unionists who would like to see Fiat Auto in foreign hands, I must disappoint them. […] Luckily, Fiat Auto has two million customers who every year believe in the company; it is very serious if some unionists do not believe this”. At the institutional meeting at the Lingotto of 4 December 1992 I thundered: “One of the most harmful [attacks on our reputation] concerns the rumour about the so-called “strategic alliance” we are allegedly negotiating. […] This rumour is pernicious, because it attacks in a subtle but powerful way the basis of the appeal of our Car Sector. (1) We would be unable to carry on alone, admitting in this way that our situation is worse than that of all the others; (2) the Japanese would be better carmakers; (3) we would therefore have an internal management incapable of running the company without external chaperones […]; (4) the explicit consequence of this would be a desire on the part of Fiat shareholders to detach themselves from Fiat Auto. It is obvious that, at this point, a potential customer may be induced to purchase an original Japanese car right away, while waiting for this to be produced by Fiat Auto”: I hoped that a veiled accusation of commercial defeatism would put a brake on Gianni Agnelli and the unions and their incautious statements.
- 32.
The Italian newspapers of the period had some information about the conclusion of the talks. “Fiat ‘loses’ the agreement of the century. The Chrysler deal is off’, ran the headline in “la Repubblica” of 4 November 1990; the paper in question was always ready to show Fiat affairs in a negative light.
- 33.
One day in 1990, on bumping into me by chance in a corridor on the eighth floor of corso Marconi, Cesare Romiti mentioned the existence of the Chrysler contact and asked me what I thought about it. I told him that it struck me as a highly risky initiative, and that was all I could say about the operation. On 21 May 1998, in an article by Paolo Madron (“And the Avvocato said: soon because it’s late”) “Panorama” magazine stated that Fiat did not acquire Chrysler because of opposition, or rather a “refusal”, on the part of Luigi Arnaudo and me. This was a canard because, at the time of the talks I was busy with Iveco and New Holland and could not have, as in fact I did not have, any contact or information or role or influence in the matter. I wrote a formal denial that the newspaper published two weeks later. According to the writer of the article I allegedly described Chrysler as a “dead man walking”. I do not recall whether I used that image during the only fortuitous conversation I had with Romiti on the subject; it’s possible, because the opinion I had of Chrysler in those days was of that kind.
- 34.
Translator’s note: IFIL was a public listed company within the Agnelli galaxy, controlled by IFI, but independently managed. In 2009 the two were merged into Exor.
- 35.
Conversely, IFI, which was headed by Gabetti on Gianni Agnelli’s account, maintained a neutrality steeped in disquiet during the war.
- 36.
The text of the letter is given in Document 9 of Chap. 14.
- 37.
A very long one was published by the satirical magazine “Cuore” in January 1992. Another one arrived directly on Gianni Agnelli’s desk. The tone of the letters was violent towards Cesare Romiti and Paolo Cantarella, blander against Giancarlo Boschetti; I was always spared but presented as being prevented from acting.
- 38.
I shall be discussing this in chapter 12. Pino Nicotri, the author of FIAT. Fabbrica Italiana Automobili e Tangenti (1997) states that at the time of the Clean Hands inquiry the document was found during a search of the home of Luigi Arnaudo, who had nothing to do with it and worked for Umberto Agnelli, and which the investigators studied to see if there might be some connection between the unusual contract and the bribe system. But, at the time the document was dated, no one had the slightest suspicion of what was to happen later, and the justification Cesare Romiti gave to the judges—according to the minutes recorded in the same book (op. cit., p. 209)—was wholly correct. Besides, it sufficed to read the clauses that required an indemnity (which was to decrease over time) in the event of a possible dismissal. I knew nothing about the investigation and learned about this only when I read Nicotri’s book, from which I also learned that the benefit had been extended to Cantarella and Boschetti, who were my co-workers, too: Romiti’s customary dissimulation.
- 39.
As I have explained previously, the production of compact cars in Poland was unable to contribute in any way. Only Brazil was very profitable, even though it was hard to know how long things would last, given the volatile nature of that country’s economy.
- 40.
See Document 6 in Chap. 14.
- 41.
It should be said that Romiti and Agnelli never had any consideration for the Chairmen of Confindustria that Fiat itself contributed to electing. Moreover, Romiti was always sparing with positive appreciation of industrialists while he was always very deferential towards top state bureaucrats, as was the case with Guido Carli and Carlo Azeglio Ciampi, even when there was perhaps something to object about with regard to their work.
- 42.
Obviously, I was alluding to the decision he had made to change the original family surname, Farina, by adding to it the name of his father, the famous coachbuilder nicknamed Pinin.
- 43.
Translator’s note: with reference to the fable by Aesop “the ant and the cricket”.
- 44.
Translator’s note: Paolo Cirino Pomicino was then Minister of Economy.
- 45.
One year later, the reasons were also accepted by public opinion; see for example the article by Giuseppe Turani in the “Corriere della Sera” of 31 May 1992, “Scala Mobile congedata”.
- 46.
At the time of the Clean Hands inquiries the transaction was thoroughly examined by the investigators, who examined my bank accounts in detail. The operation was entirely legal and regular, but it aroused a sensation and was the subject of gossip: my bodyguards told me that there was talk about it among the former carabinieri who served as escorts to personalities in the city; poor management on the part of state powers easily causes unpleasant consequences for private citizens who are trying to get by under difficult circumstances.
- 47.
The text is given with a few comments in Document 7 in Chap. 14.
- 48.
Translator’s note: an insurance company belonging to the Agnelli group via IFIL (now part of Assicurazioni Generali).
- 49.
Two extraordinary measures to reduce overheads and fixed costs were implemented before the substantial step taken at the end of 1993. One, highly unpopular, was decided by me on 19 March 1992, when I informed the Sector Heads that all salary increases to the Group’s dirigenti, quadri, and clerical staff in Italy were to be suspended. Any company would have blocked white collar salaries long before reaching Fiat’s condition at that time. Yet the move aroused strong resistance from the Sector Heads, especially Paolo Cantarella. He dragged along Giancarlo Boschetti, who was under his influence and who was worried about not being considered independent enough of the Holding Company, unlike his more important colleague. Cantarella feared an impact on people’s motivation, but this was down to inexperience; I had gone through a sufficient number of company crises (the first at my own expense as a young engineer with Olivetti) to know that people understand and accept financial sacrifices when the going gets tough. Then in May 1992 Fiat decided to close the factory in Chivasso, once the pride of Lancia. This involved the dismissal of 3,600 workers, laid off in cassa integrazione at zero hours, and 2,000 white collar staff, these last without any promise of reintegration. In July Cantarella invented the transformation of the huge shed into a centre for components companies entrusted to the ownership of external suppliers, with an approach typical of his imagination, extremely skilful as he was at getting out of any blind alleys in which he might find himself. On 2 July an agreement was signed with the unions: about 1,700 people would be re-employed at Mirafiori and Rivalta, while another 1,250 would be re-utilized at Chivasso.
- 50.
The topic of the section is extended to 1992 in Document 8 of Chap. 14.
- 51.
“Fiat / L’uomo del future: date a me quel che è di Cesare” (Fiat/The man of the future: give unto me that which is Caesar’s), was the headline of a long article by Tullio Fazzolari that “l’Espresso” devoted to me on 29 November 1992 and which I consider one of the most generous pieces ever written about me, and also the one that presented me in a way that was nearest to what I really was or, at least, how I would have liked to be. “Innocuous truths or the beginning of a cult? Vade retro”, I noted in the margin of the press cutting. The mark was decidedly overstepped by the full-page spread devoted to me by “La Stampa” on 17 December 1992, accompanied by a 32-centimetre photograph, within which were set two passport-sized photos of Gianni Agnelli and Cesare Romiti. Transient glory, given that three years later the paper was to completely forget that I existed (see Chap. 12).
- 52.
Romiti also handed me the running of the Human Resources function, which was headed by Enrico Auteri. The substance of things did not change because my relations with Auteri had been excellent for fifteen years and he was still completely devoted to supporting the entire top management, Romiti first of all, but in this case too the formal significance of the change was unequivocal.
- 53.
Translator’s note: a well-known social scientist and political commentator.
- 54.
It was a committee set up by Romiti months before to have a chance to obtain contacts with external personalities in the world of social studies.
- 55.
The notes continue the next day: “There’s little reason to be happy in Geneva today at ACEA [The European Vehicle Manufacturers’ Association]. The markets are collapsing [and] I’d like to cry this out to public opinion, together with the staff cuts [coming our way] in future years. But, indiscriminately, everyone, Germans, French, and British is in opposition: their fear is that people, alarmed, may buy even less. And the recession spirals down, for lack of confidence. But for the first time at Geneva the Japanese are not so aggressive with new models: it seems as if they wish to pass unnoticed, in obedience to the MITI directives. They say that only Toyota’s imperialist characteristics have remained evident. By now I’m the oldest nominee in ACEA, but today events in Italy have diminished my authoritativeness, won over these years. The country’s label today is no longer of much quality”.
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Garuzzo, G. (2014). The Direzione Generale During the Fiat Auto Crisis (1991–1993). In: Fiat. Springer, Cham. https://doi.org/10.1007/978-3-319-04783-6_8
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