1973 – 1986 The energy crisis and the first internationalisation
The history trail
The crisis of 1973
The energy crisis exploded in 1973, triggering a process of recession and inflation which would influence the entire global economy for many years. The increase in the price of money and the market crisis which hit its main sectors forced Finmeccanica to make a deep change to the industrial policy it had employed until that point. With the 1976 strategic plan, Finmeccanica set out the main objectives of a new strategy: reorganisation, internationalisation, and competitiveness. Fulfilling these objectives entailed choices which were not always painless, but involved the whole Group in a number of changes which shaped the current industrial situation. Finmeccanica’s activity had until then also included the relaunch of many activities which were not part of its industrial project; however, the aim of creating companies which could measure up on an international level in sectors which were vital in the Italian economic development, also meant giving up undertakings in areas which were not useful for this strategic choice. With this view, between 1974 and 1987, Finmeccanica sold a number of companies, predominantly to private buyers, focussing from then on the electro-mechanical sector and aerospace.
The sale of Alfa Romeo
The first sector to be affected by the crisis was the automotive one, when passenger car sales recorded a dramatic decline because of soaring fuel prices. In the Fifties and Sixties, Alfa Romeo had great commercial successes. In particular, the success of the Berlina 1900 in 1950, and especially the Giulietta in 1955 permitted a gradual increase in production capacity which in 1973 was more than 300,000 cars a year in the two large plants in Arese and Pomigliano d'Arco. The models launched in the late Seventies and early Eighties did not meet with great commercial success, and a joint venture with Japan's Nissan for the production of the new model Arna did not achieve the desired success. The design capabilities of Alfa Romeo were still beyond doubt, but the competitive framework had changed profoundly. Alfa Romeo had to face increasing competition from foreign brands that had benefited from the internationalization of markets occurred during the energy crisis. A global situation was taking shape in which only very large companies or nimble "niche" producers could survive. The future of Alfa Romeo could only be found in a comprehensive agreement with a stronger carmaker. In 1986, the production activities of Alfa Romeo went to Fiat. A few months later the Alfa 164 came on the market, designed by Pininfarina, the last prestigious car designed and built in the Finmeccanica Group
The relaunch of Ansaldo
The crisis also drastically changed the prospects of Ansaldo: the Italian nuclear programme was suspended and the company’s accounts showed a considerable downturn in results. Ansaldo moved towards a more consistent presence on the international market, managing to offset the lack of orders on the home market and overcome the difficult financial situation. It was clear, however, that the Energy sector – which accounted for over 80% of its revenue – could no longer sustain its role as growth driver. Finmeccanica then turned to improving its other business activities, such as railways – with the incorporation in 1980 of Ansaldo Trasporti – and industrial plant design – with the incorporation of Ansaldo Sistemi Industriali. Ansaldo Trasporti would be listed on the Milan Stock Exchange in 1986. In that period Ansaldo realized that branching off into biomedical electronics would be an opportunity with attractive prospects for industrial development. In 1982, they set up a special Ansaldo Elettronica Biomedicale division to initiate a biomedical equipment research and development plan. It was the beginning of a process that five years later would lead to the establishment of Esaote Biomedica, which was to become a centre of excellence and one of the world's leading manufacturers of medical equipment. Renamed Esaote, the company would eventually leave the Finmeccanica Group in 1994.
The expansion of Aeritalia
The aerospace sector was also hit by the after-shocks from the 1973 crisis which disrupted the growth prospects and investment programmes of global airlines. In a context dominated by uncertainty, 1976 saw the release of FIAT – which had a 50% shareholding in Aeritalia – and Finmeccanica had to face the problem of ensuring the future of this young company. Aeritalia’s autonomous industrial capacities enabled it to move from the role of subcontractor to the role of partner in qualifying programmes, sharing the designing and financial risk. Its international focus increased with involvement in important programmes both in the area of aeronautics, for civil and military aircraft, and in the area of space, in collaboration with the world’s largest manufacturers. To cite just a few examples, agreements dating back to these years include involvement in the MRCA Tornado, AMX, Boeing 767, Airbus A330, ATR, and Eurofighter programmes. In the first half of the Eighties, the company conducted an extensive programme of acquisitions, necessary to increase production capacity and expertise. Companies operating in different areas of the aeronautical business came within the scope of Aeritalia, including Partenavia (1981), a Neapolitan business specialising in tourist aircraft, Officine Aeronavali Venezia (1981), operating in the aircraft maintenance and overhaul sector, Meteor (1985), leader in targets and guided systems, based in Ronchi dei Legionari (Gorizia). It also acquired some minority holdings, including 25% in Aeronautica Macchi (1982), with which it was already a production associate for the AMX.
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In the Seventies and throughout the Eighties, Aeritalia laid the foundations for a series of international collaborations in major international aeronautical programmes which would be significantly developed in the following years, remaining key features of the international markets to the present day. To cite just a few examples, Aeritalia has been involved since 1976 in the programme for the MRCA Tornado, the multi-purpose fighter produced in collaboration with German and English firms. In 1978, Aeritalia, in the role of prime contractor in collaboration with Aermacchi, started designing the AMX tactical support aircraft. Three years later it concluded an agreement with the Brazilian company Embraer to jointly develop the aircraft. Also dating back to the end of the decade (1978) is the agreement with the US company Boeing for an Italian involvement in the 767 programme in which Aeritalia took on the position of risk sharing partner. It was the first time that Aeritalia had taken part in a programme as partner, and no longer as a constructor and supplier of parts, of the largest company in the world. The collaboration with Boeing gave Aeritalia the opportunity to develop innovative carbon fibre manufacturing technology for the production of the composite materials used to build aircraft as part of the programme. A sector in which it would soon take up an undisputed leadership position, which would guarantee its role at the forefront of future collaborations with Boeing. In 1981 Aeritalia signed the first agreements with Airbus for the supply of aircraft for the A330 and A310 family. Lastly, also in 1981, in collaboration with the French company Aérospatiale, Aeritalia set up the ATR group for the production of turboprop regional aircraft. On 16 August 1984, the prototype of the ATR 42 took its first flight, paving the way for one of the Finmeccanica Group’s greatest successes in the aeronautical sector. Thanks to this new aircraft, Italy went on to become part of a close circle of nations with the capacity to build civil aircraft at the highest level. Amongst the most significant agreements made in those years was the Eurofighter consortium for the design of the new European Fighter Aircraft - Typhoon, established in 1986 by the United Kingdom, Germany, Italy and Spain. Finmeccanica, with Aeritalia, secured a 19.5% share in the programme, corresponding to the share of aircraft ordered by Italy.
Aeritalia rapidly gained a prestigious role in the space industry. In this sector it had inherited business activities from Cespre, a company established by Finmeccanica and FIAT in the early Fifties to produce jet propelled machinery. The first significant opportunity on a national level came when CNR - Consiglio Nazionale delle Ricerche (Italian National Research Council) and NASA signed the agreement for the launch of SIRIO, the first telecommunications satellite fully designed and produced in Italy. Aeritalia participated in the project alongside other companies operating in the space industry, including Selenia and Telespazio. SIRIO 1 was launched on 25 August 1977 to conduct experiments in communication and transmission of high frequency radio waves. Designed for an operational lifetime of two years, it worked until 1985. From that point Aeritalia, alongside Selenia, was at the forefront of the Italian space industry, focussing on the scientific satellite sector and large space infrastructures, and taking on the role of prime contractor for the production of Italian designs in this sector. The decisive push came from involvement in the Spacelab project, the space laboratory on which design work began in 1974, when Aeritalia was commissioned to design and produce the whole service module and the thermal control system. The shuttle was launched on 28 November 1983 on board of the space shuttle Columbia, first of a long series of missions which would run until the end of the Nineties. The Spacelab project was a turning point for the Italian space industry, which became a key player on a European level thanks to the expertise and technology developed in the sector by Aeritalia. This project was followed by others, both Italian and European, such as Iris, Italsat, Ariane, Columbus, and Eutelsat, which made Aeritalia the most important space company in Italy and one of the best in Europe.
|Year||Company sold||Acquired by|
|1982||San Giorgio Prà||Sofin|
|1982||San Giorgio Elettrodomestici||Sofin|
|1982||N. Fonderia Montorso||Private buyers|
|1983||Cbf/Umbria Cuscinetti||Private buyers|
|1985||Ansaldo Motori||Gie Marelli|
|1986||Alfa Romeo Auto||Fiat|
Esaote Biomedica was a start-up founded through an entrepreneurial insight of the Genoa Ansaldo Group: exploring the possible development of the biomedical electronics sector, as other big companies (Siemens, Philips and General Electric) were also doing. This insight was the start to a great business success story, at a time when non-invasive medical diagnostic equipment was practically non-existent in Italy, which eventually led to the corporate group becoming one of the world's largest for the sector. In 1982, Ansaldo created the internal Electromedical Division, which initiated important collaborations with university and CNR laboratories and obtained immediately important successes in the market, producing ultrasound and magnetic resonance tomography equipment. In 1984, Ansaldo's Electromedical Division was spun off and merged into ESAcontrol, a new company formed in Genoa (part of the Selenia-Elsag grouping, a STET subsidiary at the time). ESAcontrol brought together all the electromedical activities of Elsag, Selenia and Ansaldo (hence the acronym ESA). The new group continued making significant investments in research and development, setting for itself the ambitious goal of becoming an international player and attaining remarkable achievements in the field of diagnostic imaging. In 1986, it was joined by a new entry. STET acquired OTE Biomedica of Florence from the Farmitalia/CarloErba Group, headed by Montedison, as Farmitalia/CarloErba was reorganizing to focus on the pharmaceutical sector. Out of the merger of the Florentine OTE Biomedica with the Genoese ESAcontrol came the new ESAOte Biomedica, which in 1989 would return to the Finmeccanica fold, following Finmeccanica’s acquisition of the whole Selenia/Elsag group from STET. The company grew by leaps and bounds within a few years, producing proprietary technology equipment. In the early nineties, it expanded abroad, acquiring Biosound USA and creating ESAOte France and Germany. In 1994, with an innovative management buy-out, Esaote Biomedica left the Finmeccanica Group, under the new name of ESAOte SpA. 22 executives of the company became shareholders, with an initial share capital of 10%. Italian and international financial investors also acquired an interest; Bracco acquired 15%, going up to 51% in 1998. Meanwhile, in 1996 Esaote was listed on the Stock Exchange, but got out of it in 2003 as a result of a takeover bid on 100% of the capital launched by Bracco, which was already the majority shareholder. In 2005, Bracco decided to sell Esaote, which in the meantime had become a world leader in the field of biomedical diagnostic equipment, in order to deal with high debt burdens and focus on its core business. In January 2006, there was a second management buy-out, with about 100 executives and managers becoming shareholders along with Intesa San Paolo, MPS Venture, Carige and Equinox. The final shareholder structure came about in December 2009, after a third management buyout, with 40% of the shares going to ARES Lifescience (a Swiss holding company specializing in biomedical science), 54% to institutional investors (Intesa San Paolo, MPS Venture, Carige and Equinox) and 6% to management. Today, Esaote is among the top ten diagnostic imaging companies in the world, having reached levels of excellence in health research and technological innovation in addition to being an example of how an average sized company can compete in high-tech sectors, in non-niche markets, with the largest technological corporations in the world as its competitors.
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