The markets react well to the Fiat CEO's decision to separate the core auto business from farm and truck sectors, a vote of confidence for Marchionne's vision that could have reverberations for all of Italian industry
By Giuseppe Berta
IL SOLE 24 ORE/Worldcrunch
The split of Fiat's core auto business from its farm machinery and truck units marks a fundamental transformation destined to have an impact across the entire landscape of Italian industry.
By splitting the two operations, Fiat has abandoned for good its 20th century structure, a model that was marked by aggregating non-homogenous businesses. This model had characterized Fiat's development and expansion, turning it into the formidable force that merged economic capability, political power and social influence that generations of Italians have come to know well.
That model was also linked to a family-based ownership, that of the Agnellis. For all of the past century, to say Fiat meant to evoke not just a car company, but a more complex entity with a strong presence across Italian society, one that was capable of exercising a persuasive and adaptable public role.
This extraordinary story, which marked the history of 20th century Italy, has come to an end with the separate listings on the Milan stock exchange that began with Monday's trading, as noted by the architect of the split, Sergio Marchionne, Fiat's CEO.
(Fiat auto and Fiat Industrial, which includes Iveco trucks and CNH Global farm equipment, each performed well as they began trading separately Monday in Milan, an initial approval of the strategy of Marchionne, the Italian-Canadian CEO who has been revamping Fiat. The Turin-based company already owns 20 percent of Chrysler and the split is seen as clearing the way for Fiat to increase its stake in the U.S. automaker. Marchionne attended Monday's session at the Milan Stock Exchange, underscoring the event's significance. He said it was "possible" that Fiat increase its stake in Chrysler to more than 50 percent if the American automaker is listed this year.)
The new chapter has yet to be written
By no coincidence, the man behind the split is also the one who, since taking over the company at a time of deep crisis in 2004, has taken advantage of a governance no longer overshadowed by the charismatic presence of Giovanni Agnelli. The late patriarch's strong personality had blurred the lines between ownership and management. But Marchionne acted in a period when these lines were more clear, and the separation between ownership and the management entrusted by it was again established.
Since then, Marchionne has followed a clear path and acted with autonomy. It's the same level of freedom also enjoyed by Alan Mulally, the manager who has revamped Ford's fortunes, making it the only Detroit-based car company to regain significant market share without state aid.
The spin-off was part of Marchionne's strategy. If the goal is to maximize performance of each specific unit amid global competition, then it makes sense to provide each unit with the freedom of movement necessary to develop individually. Fiat Auto has paved the way with its alliance with Chrysler. Now the other sectors must follow suit and show they can move with the same degree of autonomy in order to grow on a global scale.
This strategy inevitably projects Fiat onto the whole world. It is worth noting that the last thing Marchionne did in 2010 was to open a new car-production plant in Brazil.
From now on, the scene where both Fiat units need to act is a global one. It is a grave error to keep separating what happens within Italian borders from what happens outside of them, as many still do in this country. It is now necessary to see things from another perspective, for example assessing the European and American car markets together, because they are bound to interact with and affect one another.
Marchionne is also doing away with an anomaly that had always made Fiat exceptional: the fact that it was not just an economic subject but very much a political one, too. His bet will be won or lost in the global marketplace, no longer dependant on negotiations with domestic political powers and labor confederations.
Those who today are lamenting the difficulties that this country will be forced to face as a result of this strategy forget that, in the long term, Italy can only benefit from a clear distinction between politics and business.
Read the original article in Italian