I was enjoying an extremely dry gin martini with a cousin-in-law, a moderately successful businessman, on a terrace in Italy a fortnight ago, when he looked out over the Ligurian landscape and remarked, extremely drily: “We’re too young to do business like grown-ups.”
At least, I think that’s what he said. We were competing against the sound of cicadas and he was speaking in Italian, very softly. But then the view that he was expressing is spoken only softly in Italy, for it is a barely tolerable truth. It is that Italy, little more than a century-old as a unified nation, has little international trading experience and no internal industrial culture to give it an identity or common purpose. In economic terms, it is the child of Europe.
Two subsequent events remind me of the comment on the terrace. The first is the industrial demise of Carlo De Benedetti. The second is last weekend’s neo-fascist demonstrations in Milan against the Northern League’s demands for secession. I don’t for a minute suggest that there is a causal link between these events (the fall of the house of De Benedetti hardly ranks with that of the Romanovs) but, nevertheless, both events are symptomatic of a dangerously young Italy – too young to do business like grown-ups.
To trot out De Benedetti’s difficulties with the marketing of Olivetti’s products is to tell only part of the story. How he first stepped into the limelight in 1978 to buy a stake in Olivetti through his family’s financial vehicle, CIR; how he transformed the typewriter company into a leader, alongside IBM, in personal computers and how it became Europe’s largest supplier of automated office equipment. However, Olivetti – and De Benedetti – were left behind by an influx of software products, chiefly from Microsoft, and as the PC business became a commodity market insensitive to strong brand names, Olivetti became overstocked and underfinanced.
But, as I say, that is only part of the story. De Benedetti is an entrepreneur whose destiny has been prescribed as much by foreigners as by the Italian industries in which he has operated. In 1988, encouraged by developing cross-border trade in general and European financial services in particular, he launched a hostile takeover bid for the Belgian commercial edifice, SociÃ©tÃ© GÃ©nÃ©rale de Belgique. National interests in the shape of Belgian and French shareholders repulsed him.
Now, once again, De Benedetti’s fortunes have been decided in a foreign boardroom. This time it was the turn of London, rather than Brussels, to host a meeting that plotted the repulsion of the Italian. Baring Asset Management hosted an August (and august) meeting of Olivetti shareholders, who accounted for some 25 per cent of the equity. Much of these shareholdings had been acquired in a rights issue last December and Olivetti’s shares were now trading at well below the purchase price. It seems that the name of Baring was once again attached to a market whose price was plummeting.
But nothing is ever a shareholder’s fault and word of the heated meeting, at which De Benedetti’s head was demanded, reached the Italian press. In other words, London-based shareholders leaked it to the Italian press. De Benedetti was finally doomed and offered his resignation in favour of chief executive Francesco Caio (note the position of that “i” – it does not quite translate as Frank Hello-and-Goodbye, as some of my crueller Italian relations have suggested).
At the time of writing, Olivetti is in as much of a mess as an Italian parliament on a hot Friday. London, having stuck the hatchet in De Benedetti, now wants answers pretty sharpish to questions about the extent of the company’s exposure to the banks, the real value of its unsold computers and the prospective restructuring costs as Olivetti tries, under Caio, to dig itself out of its hole. Presentations to analysts and investors in London, promised for the start of this week, have been postponed until an interim statement at the end of the month.
None of which is very grown-up. For his part, De Benedetti may care to reflect that, while his future and that of his company have all too often been decided abroad, he has had precious little support from his own country
(I hesitate to say “government” because it changes so often). In any other European Union state, an industrialist of De Benedetti’s stature would have enjoyed some degree of support abroad.
But the truth is that there is nothing to provide Italian industry with support abroad. Attempts at industrial policy have to be conducted by industrialists such as Silvio Berlusconi, now toppled from political power, against a background of political and commercial corruption that did for the likes of prime minister Aldo Moro (murdered) and industrialist Raul Gardini (“suicide”). De Benedetti himself still faces a jail sentence for his alleged role in the collapse of Banco Ambrosiano.
Now we have the spectacle of the Lilliputian Northern League, led by Umberto Bossi, (who should be played by Peter Sellers in the movie), demanding independence for “Padania”, while neo-fascists march in resistance. This is not grown-up.
I have only two questions: Just what might De Benedetti and Olivetti have achieved in a mature country? And what equivalent dangers are there for the UK, firstly in letting a north/south divide deepen and, secondly, in isolating itself from the EU?
Italy, for all its farce, provides a cautionary tale.