1994 – 1997 Globalisation and the national defence pole

The history trail

The arrival of the Defence companies

Between 1994 and 1996 – after over a year of leased management – Finmeccanica acquired the Defence companies which reported to the public holding EFIM (Ente Participazioni e Finanziamento Industria Manufatturiera) which was placed in liquidation. This meant that over 70% of the national industrial capacity for aerospace and defence was concentrated in the Group. The transaction was supported by a further capital increase which provided the cash flow required to settle the credit owed to the banks against the former EFIM companies. As a result of this transaction, the IRI share in Finmeccanica fell to 59% while the rest was placed on the market. The Government’s choice of Finmeccanica as the Group best suited to representing the national “pole” for the sector was clearly due to its advanced technological know-how, its already significant presence in the sector and its track record in managing agreements with international partners. The companies which became part of the Group had rich histories and traditions and included names such as Agusta (helicopters), Breda Meccanica Bresciana (land and naval artillery), Breda Costruzioni Ferroviarie (railway construction), Officine Galileo (electro-optical systems), OTO Melara (land and naval weapons), SMA (land and naval radar).

A new reorganisation

WASS (Whitehead Alenia Sistemi Subacquei) was founded in 1995 from the merger of Whitehead S.p.A.’s underwater businesses, acquired from FIAT, with the business branch of the Finmeccanica company Alenia Elsag Sistemi Navali (which had inherited the business of the Selenia Elsag Sistemi Navali consortium), relating to the production of torpedoes, torpedo launchers and countermeasures for ships. The acquisition of the former EFIM companies generated the need for another rationalisation within the section. In 1996 the operational units were organised in macro divisions, with a leader: Alenia Aerospazio (with two subdivisions for aeronautical and space business), Agusta Elicotteri (with all Agusta’s helicopter business), Alenia Difesa, composed of businesses grouped, in turn, in three divisions (OTOBreda, which was the result of the fusion of Breda Meccanica Bresciana and OTO Melara, avionics systems and equipment, international naval systems), Ansaldo (energy, industrial systems, transport), Elsag Bailey (industrial automation). In the same year Ansaldo Trasporti set up the Dutch holding company Ansaldo Signal NV, in which it concentrated all its signalling assets. Soon afterwards Ansaldo Signal was listed on the Nasdaq in New York.

1997: The relaunch plan

The international structural crisis which affected the sector in the Nineties forced the Finmeccanica Group into a serious rethink regarding its structure and its strategies for staying competitive on a global level. Heightened international competition and falling prices made it a priority to search for ever higher levels of economic efficiency and technological excellence, and to establish strategic alliances. A few years earlier the international aerospace industry had already started a concentration process at the end of which only a few large operators would remain on the global scene. Very soon the trend also manifested itself in Europe where the industries in the sector launched alliances and joint ventures to face up to competition from overseas.These were the years during which the “big four”, Lockheed Martin, Northrop Grumman, Raytheon and Boeing emerged in the USA, while two leaders were establishing themselves in Europe: the British BAE Systems (1999) and the Franco-German EADS (2000). In this context Finmeccanica, despite having cutting-edge technology, could not count on a market share which was sufficiently representative compared to other international players, as its asset portfolio was too diversified. It therefore ran the risk of being absorbed by larger competitors, with no say on strategic direction, and disappearing from the international scene. This situation had negative repercussions on the Company’s accounts which were still also weighed down by heavy debts. In 1997, Finmeccanica prepared a reorganisation and relaunch plan according to some key guidelines: decisive action for economic and financial recovery, capital increase of around 2,000 billion lira (following which the public share in Finmeccanica came to 60%), focus on core business, spin-off of main activities, creation of joint ventures in the defence and helicopters sector, and disposal of non-strategic activities, in order to secure an eminent competitive position in industrially significant sectors. The activities which moved out of Finmeccanica’s scope included, amongst others, Elsag Bailey Process Automation, the Elsag Bailey subsidiary which grouped together all the activities – in Italy and abroad – in process automation and other Ansaldo activities linked to industrial automation, transformers and nuclear components. Elsag Bailey’s activities in the field of service automation remained in Italy, primarily intended for the civil market.

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Agusta Helicopters
Agusta Omi Avionics systems
Agusta Sistemi Training systems and Avionics
Breda Meccanica Bresciana Naval and land artillery
Breda Costruzioni Ferroviarie Railway construction
BredaMenarinibus Buses
Officine Galileo Electro-optical systems
Oto Melara Naval and land weapons
SMA Naval and land radar

Agusta’s business dated back to the very beginnings of the history of aviation. Its founder, Giovanni Agusta, designed his first aircraft in 1907. It was an AG-1, a biplane glider which made its first flight on 14 February 1910 on the parade ground in Capua and which would continue to be developed until 1911. After the First World War, Giovanni Agusta founded, in 1927 in Cascina Costa (Varese) where the company still has its head offices, Cantieri Aeronautici Agusta where activities began on servicing and repairing Caproni three-engined planes, and continued with the construction of aircraft under licence and alteration to existing models. After the Second World War, the Agusta family, although resuming its aeronautical business, decided to diversify into motorbikes, founding the company Meccanica Verghera (MV) which produced motorbikes until 1980, winning 76 world titles. In 1952, following an agreement with the US company Bell Aircraft Corporation, Agusta started to build helicopters under licence for the European market. On 25 May 1954 the first version of the AB47G flew to Cascina Costa. In 1958 it started producing civil and military helicopters from its own designs. It subsequently began a series of acquisitions, including Siai Marchetti (in 1969) and Caproni Vizzola (in 1982). After joining EFIM, Agusta continued to grow, although with notable gaps on an organisational level and growing debts which, in 1992, meant it had to begin a hard-hitting restructuring plan, focussing its activity on the core business of helicopters and reorganising production into six plants. Each plant became a centre of excellence focussed on a specific technology which contributed to the creation of the “helicopter system.” When it joined Finmeccanica, Agusta was on the road to recovery and had its own successful products, like the A109 and the A119 in the commercial sector and the A129 Mangusta, the first combat helicopter designed and built entirely in Europe. It also brought with it two important international collaboration programmes: the EH101 multi-purpose helicopter which Agusta had been developing since 1979 with the British company Westland Helicopters, part of the GKN group, and the EH90 multi-purpose helicopter, a programme which involved the French, German and Dutch helicopter industries.

Officine Galileo started in 1909 in the field of optical instruments and precision machinery, especially for the military market and, at the time of its establishment, one of the two vice-presidents was the scientist Guglielmo Marconi. The company was heir to an even older laboratory tradition dating back to 1830, when the Grand Duke of Tuscany had called upon scientist Giovanni Battista Amici from Modena to direct the Florence Specola Observatory. With the help of craftsmen, Amici began the production of mirrors and lenses for telescopes and other precision instruments. Over the years, production grew to encompass surveyors, telescopes, compasses, precision scales, and especially the famous "Amici telemeter", the ancestor of the modern radar. In 1863-64, a company was formed in Florence that built physics and optical equipment. Astronomer Giovanni Battista Donati, instrument maker Giuseppe Poggiali, physicist Tommaso Del Beccaro and engineer/entrepreneur Angelo Vegni were among the founders. In the late 1860s, the name "Officina Galileo" appeared for the first time (later changed to "Officine Galileo"). They mainly produced physics and optical instruments (microscopes and spectroscopes), telegraph equipment and electric clocks. However, the company was put into liquidation in 1906 due to technical and economic problems. In that same year, the brand new Officine Galileo was started, thanks to the economic support and prestige of personalities such as industrialist Giuseppe Volpi and scientist Guglielmo Marconi. In 1909, the company moved into its new Rifredi facility. During World War I, they produced periscopes for submarines, rangefinders, tappet devices and above all arc lamp projectors and large satellite dishes for ships. In the end, they ushered in the construction of excellent electrical measuring instruments. World War II had left the factories almost completely destroyed, but the company managed to recover by producing electricity meters, detection equipment, scientific and electrical instruments, vacuum technology equipment and cameras. During the time they were part of EFIM, Officine Galileo had become a complex and diversified company, manufacturing infrared sensors, weapons control systems, optical instrumentation, thermal sensors and most especially optronic equipment.

They both descended from a common ancestor: "Ing. Ernesto Breda e C", founded in 1886 in Milan by engineer Ernesto Breda from Padua, who had taken over Elvetica, a small engineering and railway company in Milan. Since its establishment, Breda began to expand its operations in two directions: the war production of bullets and field guns requested by the State, and the specialisation in the production of locomotives, almost entirely absent in Italian industry at the time, but which had great prospects for expansion because of domestic and European market conditions. In 1891, they won their first bid for the supply of 22 locomotives to Romania, thus becoming part of the European community of manufacturers, hitherto dominated by the German and English industries, the only valid competitors of the American locomotive industry. In 1899, thanks to major foreign orders, and with the financial support of Banca Commerciale Italiana, it was transformed into a public limited company under the name of Società Italiana Ernesto Breda per Costruzioni Meccaniche (SIEB). The most important activity was the production of locomotives, which benefited from public procurement for the development of the national rail network. However, they were also involved in many other mechanical productions, such as forging metal pieces and manufacturing boilers, machine tools and agricultural machinery. With the outbreak of World War I, Breda geared its production towards war material; after the war, in 1925, in order to overcome the difficulties of industrial restructuring, they focused on the production of small arms, in the Brescia factory, and airplanes. In 1936, Breda introduced the Electric Train FS ETR 200, at the time, a source of national pride and among the most beautiful trains in circulation in Europe. They built eighteen units that would remain in service for the Italian State Railways until 1993. The history of the ETR includes a speed record set on July 20, 1939 from Florence to Milan, with a top speed of 203 km/h. It was proven for the first time that 200 km per hour could be exceeded, at a time when most of the trains were still running on steam. In 1936, Breda acquired Officine Ferroviarie Meridionali, an aviation and railway company located in the Naples area (which was renamed IMAM - Industrie Meccaniche e Aeronautiche Meridionali), increasing its production capacity in the field of aeronautics. On the eve of the Second World War, Breda was a large integrated group active in different sectors: shipbuilding, aeronautics, weapons, steel, electromechanics, railways and locomotives. The end of World War II left the company's plants in very critical conditions and with the need to reconvert the war production again. The Italian State provided aid through the FIM (Fund for the Mechanical Industry) program, but Breda was in a particularly serious crisis and was not able to repay the loans made by FIM, which became its owner at that point. FIM proceeded to reorganize the Breda Group, selling the aeronautics sector to Aerfer, and setting up independent companies for each production unit still vital, all belonging to the holding company FinBreda. Among the various companies managed by FinBreda as part of FIM were Breda Ferroviaria, which produced trains and locomotives in the Milan factory, and Breda Meccanica Bresciana, which manufactured small arms in the Brescia factory. Meanwhile, in 1962, the State created EFIM, a new independent body for the management of FIM investments in the mechanical industry, whose main account was FinBreda. In 1968, EFIM acquired the ownership of Officine Meccaniche Ferroviarie Pistoiesi from Finmeccanica. This was an industrial site that in 1906, as a branch of San Giorgio of Genoa, had started the production of wagons and locomotives in the Tuscan city of Pistoia, and had joined Finmeccanica upon its incorporation. The merger of the Pistoia factory with Breda Ferroviaria started Ferroviaria Breda Pistoiesi, which as a result of further restructuring inside EFIM, became Breda Costruzioni Ferroviarie in 1972. Between the nineteen seventies and eighties, the company obtained important international successes, with the construction of rolling material for several US cities. Finally, with the liquidation of EFIM, both companies (Breda Meccanica Bresciana and Breda Costruzioni Ferroviarie) were acquired by Finmeccanica in 1996.

Its origins date back to 1919, when Carrozzeria Menarini was founded in Bologna, initially for the repair of vehicle bodies and later expanded to building bodies for cars and taxis. Production soon expanded and, the construction of passenger cars having been abandoned, construction of industrial vehicles was stepped up, later evolving into the more complex and demanding production of buses. After overcoming the difficulties involved in rebuilding the production facilities in the wake of World War II, they produced exclusively buses starting in 1952, and grew again in the sixties. By designing their own chassis for city and intercity buses, Menarini went from a simple body shop to becoming a full-fledged manufacturer of complete buses. In 1989, Menarini was purchased by Breda Costruzioni Ferroviarie, as part of an industrial aggregation process that included the bus sector, as had been the case for cars and industrial vehicles. Thus was started BredaMenarinibus, and from that moment on, the little red horse, Breda's historic emblem, would appear on all the buses coming out of the Menarini plants.

OTO Melara was the heir to a long industrial tradition that began in La Spezia in 1905 with the establishment of the Vickers-Terni “Società italiana per artiglierie e armamenti”, which settled in the Melara district of La Spezia. They mainly manufactured weapons for the Italian Army and Navy. During the First World War, out of its factories came guns for naval and land artillery, including the 305/46 cannons that armed the Doria and Cavour battleships, machine guns and training aircraft. After the war, converting to civilian use meant producing steam and diesel engines, turbines, ship boilers and propellers and railway equipment. In 1922, Vickers left the joint venture and  “Acciaierie di Terni” became the sole owner until 1929, when it merged with Cantieri Navali Orlando of Livorno and Cantieri Navali Odero of Genoa shipyards. That is what gave rise to the acronym OTO (Odero, Terni, Orlando), by which name the company was known in the subsequent years. In 1933, OTO came under the control of IRI and continued the production of armaments for the Italian Armed Forces during World War II. After the war, it was merged into Finmeccanica at the time of its foundation, got back to civilian production again, and in 1953 changed its name to OTO Melara, after the name of the neighbourhood - the Melara in La Spezia - where the factories were. After Italy joined NATO, the company gave a new impulse to military production, providing the Army with turrets, medium calibre naval guns, ammunition, armoured vehicles, and specializing also in electronic and ballistic systems. The production of the 76/62 naval gun, one of OTO Melara's biggest international commercial successes, dates back to the mid-fifties. In 1973, following a Finmeccanica Group reorganization, OTO Melara was sold to EFIM, and when the latter was liquidated, it went back to the Finmeccanica galaxy.

Whitehead was a historic company whose origins harked back to British engineer Robert Whitehead who, in 1858, had started the first studies that would lead to the invention of the torpedo in the Technical Plant of Fiume, then part of the Austro-Hungarian Empire. And when he finally managed to develop his first successful fish torpedo, he could not have imagined that he had started a new era in the field of naval strategy and tactics. In 1875, the Torpedo Fabrik von Robert Whitehead began the production of torpedoes for the most important Navies in Europe and the world. In 1924, the Whitehead torpedo factory was taken over by engineer Giuseppe Orlando from Livorno. In 1934, the Fiume company acquired Moto Fides, originally a motorcycle factory in Livorno, which gradually became a torpedo manufacturer, based on the growing demands of Italy's Royal Navy. At the end of World War II, Fiume was annexed to Yugoslavia, and what was left of the factories' production was transferred to Livorno and merged with the Moto Fides torpedo plant, which marked the start of the Whitehead Motofides Stabilimenti Meccanici Riuniti. Meanwhile, back in Fiume, now Rijeka, the former Whitehead factory became the seat of a mechanical company named "Torpedo". The Whitehead-Motofides of Livorno became part of the Fiat group in 1945, resuming its activities with several productions, such as chassis, compressors, automotive components and outboard engines, in addition to military production for the Italian Navy; starting in the sixties, they made a number of high-tech products, such as anti-submarine, electric propulsion, water-jet, passive or active and wire guidance torpedoes, as well as electronic components for defensive countermeasures. In 1985, Whitehead-Motofides was split into Motofides, for civil and military production for the army, and Whitehead, for the production of naval defence systems. In 1995, when the sector exited the Fiat Group, Whitehead went over to Finmeccanica and merged with the Alenia naval systems to create the new WASS.

SMA - Segnalamento Marittimo e Aereo, founded in Florence in 1943, was operating in the civil and military signalling sector, building naval and land radars, signalling lighting equipment, environmental and meteorological monitoring systems and biomedical equipment. After the biomedical sector was spun off, the company became part of the Defence, Avionics Systems and Equipment subdivision of Alenia, and later merged into the new Galileo Avionica.