Land of Autocratic, Energetic Business Giants

ITALY'S BOOMING NORTH

EACH opening night during the opera season, Milan's Via Manzoni is transformed from a bustling commercial street to a river of wealth and elegance. Bumper to bumper, a seemingly endless line of Mercedes, Alfa Romeos, Lancias and Maseratis inches toward the Piazza della Scala, their high-powered engines being raced by traffic-frustrated drivers. Pulling up before La Scala's neoclassic facade, the cars discharge their cargoes--usually an Italian businessman, resplendent in white tie, and his bejeweled wife, dressed in a Fontana, Capucci or Dior.

Milan's opulence is no sudden sparkle or passing phenomenon. The city is the dynamic fountainhead of the biggest, most sustained comeback that any European nation has made from World War II ashes. Germany has had its economic miracle, and France its postwar resurgence; both are still prospering but at a slightly slower pace. North Italy has sustained its boom. In Milan the Gothic finials of the renowned duomo now have to fight for recognition against a skyline of striking new skyscrapers. From the Piazza del Duomo rises the bedlam that only Italian traffic can generate. In front of the cathedral's stately bronze doors Milan is digging an entrance for its new subway. Everywhere Milanese businessmen move at dogtrot pace in a furious pursuit of profits, and lavish restaurants, such as Giannino, have geared their cuisine and prices to help them spend it.

Not only the businessmen prosper, Milan's workers are the industrial elite of Italy. Per capita earnings have leaped 56% since 1952 to $1,000 a year, which in actual purchasing power amounts to much more. Milan's 1,500,000 people pay 26% of the taxes--and grumble as if it were 100%. And all over North Italy--the flaring top quarter of the boot that lies above Florence--workers can now own the refrigerators and television sets they produce. Last year so many of them traded their motor scooters for autos that car registrations in Italy soared some 30%.

Italian industrial production, still largely concentrated in the "iron triangle" of Milan, Turin and Genoa, has doubled in the past eight years. So avidly does the rest of the world gobble up Italian products that the nation's balance-of-payments surplus is the envy of the U.S. Treasury. Buoyed by these achievements, North Italian businessmen, who once argued that they could hold their home markets only with the help of protectionism, today swagger forth on a Common Market invasion of the rest of Europe with all the self-assurance of the Caesars of old.

Promised Land. As always. North Italy is outpacing the rest of the country. The arid South, despite all the Italian government and U.S. aid money poured in, is still primarily a land of hunger and hopelessness. In startling contrast gleams the prosperity of North Italy, which has replaced the U.S. as the near and visible promised land in the dreams of impoverished Sicilians and Calabrians. "California begins at Milan," runs the current folklore of South Italy and each day hundreds of southerners board northbound trains to seek the living wage they cannot find at home. Last year some 70,000 of them settled in Milan alone.

At the end of World War II, most of North Italy's industry lay in ruins, and even to regain the modest prosperity of prewar years seemed a task of decades. The resurgence came much quicker, and for three reasons:

sb U.S. Marshall Plan aid of $3.5 billion to Italy--a substantial part of which went to rebuild the North, where there was much more industry that was worth rebuilding.

sb The tough fiscal policy of the late President Luigi Einaudi, which prevented runaway inflation.

sb Discovery of methane in the Po Valley, which has given Italian industry a cheap domestic fuel source to stoke its industrial boom.

The Autocrats. These strokes of good fortune were converted into "the Italian miracle" by the energy and imagination of North Italian businessmen and the industry of their employees. Unlike the committee-minded U.S. businessman, the Italian chief executive is a freewheeling autocrat who bases his decision far more on intuition than on the promptings of scientific management.

Probably no Italian industrialist shouldered his way to U.S. attention with more of a jolt than the late Adriano Olivetti. An intense idealist with a left-trending political philosophy. Olivetti was looked askance at by many other Italian businessmen who argued that what really kept the Olivetti Co. going was the sober, steadying hand of Financial Wizard Giuseppe Pero, 68, now the company's chief executive. Yet, for all his quirks, Olivetti was a marketing genius, who by introducing the sophisticated "Italian look" in office machines, built a family business into an international concern and just before his death 22 months ago startled the business world by acquiring Connecticut's faltering Underwood Corp. in the first major takeover of a U.S. firm by foreigners since World War II.

Courtly Killers. In Italy, Olivetti's influence never approached that of tiny (5 ft. 1 in.) Vittorio Valletta, 78, managing director of the Fiat automobile empire, which now builds 80% of the 600,000 cars produced in Italy each year and is a major producer of steel, locomotives, marine diesel engines and aircraft. A courtly ex-accountant who rebuilt Fiat from World War II rubble. Valletta led the company to its present near monopoly in Italy partly by taking advantage of a prohibitive tariff on foreign cars. Now that the Common Market is about to change all that, Valletta has moved to keep his hold on the home market with long overdue price cuts, simultaneously has launched an expansion program designed to double Fiat's production and flood Europe with Fiat's smallest cars, the two-cylinder 500 and four-cylinder 600, which undercut Volkswagen in both size and price.

Second in power only to Valletta in Italian private industry is coldly handsome Count Carlo Faina, chairman of the giant Montecatini chemical complex. Despite an aristocratic heritage--he holds a longstanding title granted by Pope Pius IX and confirmed by the Italian royal family--Faina joined Montecatini 35 years ago as one of 360 applicants answering a want ad. Assigned to rebuild the chemical complex after the war, he defied stockholder opposition by multiplying the outstanding shares in order to obtain new capital. Now, with sales of $600 million a year, Montecatini slugs it out internationally with the likes of Du Pont and Britain's Imperial Chemical Industries, and in the Italian market has a reputation for slashing prices until a rival is forced to give up the fight.

No less deadly a competitor is massive, baldheaded Franco Marinotti, 70, boss of Snia Viscosa, Italy's biggest producer of synthetic textile fibers. Marinotti, who preaches a cold-blooded business philosophy ("Gratitude is a sentiment possessed mainly by dogs"), did his postwar rebuilding without a cent of U.S. aid. Despite this self-imposed handicap, he pushed Snia into the front rank of industry by automating to cut costs and by instituting a research program so successful in turning up new fibers that, as he boasts, even the U.S.'s Allied Chemical Corp. has signed up to produce Snia's caprolactam, raw material for nylon. As head of one of the world's largest exporting companies, Marinotti brushes aside talk of Common Market challenges. Says he with a grin: "I've always been in the Common Market."

The Da Vinci Complex. Like Marinotti--who paints passable landscapes under the name "Francesco Torri"--many a North Italian businessman takes as his personal hero that versatile Renaissance genius, Leonardo da Vinci, and like Da Vinci is not deterred from any enterprise by lack of experience. A prime example is Count Gaetano Marzotto, 67, whose family-owned Marzotto Textile is Italy's biggest wool spinner and producer of readymade clothes. Several years ago, enraged by an all-night bout with bedbugs in a Sicilian hotel, Marzotto set out to build his own hotels in Italy's remote places. Clean, simple and inexpensive, the improbably named "Jolly Hotels" were such a success that the Marzottos now have 51 of them, the biggest privately owned hotel chain in Italy.

Ferdinando Innocenti, 71, is another who combines restless curiosity with shrewd economic sense. One day before World War II, Innocenti, then a small-time maker of steel pipe in Milan, bumped his head on a wooden scaffolding. This, in Da Vinci style, led him to develop the lightweight steel scaffolds now standard the world over. After the war, he bent his tubes into a motor scooter frame and, with his Lambretta, rode the crest of Italy's pent-up demand for cheap transportation. Next, spotting Italian industry's growing need for tools, he began producing heavy machinery and giant electric steelmaking furnaces. Recently, to keep up with the middle-class Italian's desire to graduate from two-wheeled transportation to four. Ferdinando, with his son, Luigi, took Innocenti Co. into assembling British Motor Corporation's Italian-styled Austin A-4O.

Reds & Taxes. Such versatility and drive has enabled North Italy's businessmen to resist, and sometimes overcome, the Italian government's forage into political and economic fantasy. Saddled with a near-medieval tax system that makes an honest declaration of income an invitation to bankruptcy, and perennially endangered by the temptation of Italy's ruling Christian Democratic Party to make a deal with the powerful Nenni Socialist Party at the expense of free enterprise. Italian businessmen live under a constant state of siege. In the postwar years they fought the threats of Communist unions to take over their companies by handing out paternalistic fringe benefits with a lavishness no U.S. firm would dream of. (After touring the sports grounds, libraries, kindergartens, social center and free medical facilities that Olivetti provides at its Ivrea headquarters, an English visitor dryly remarked: "I assume that the fact that you also produce office machines is pure coincidence.") The results have been mixed: North Italian workers no longer support Communist political strikes, but they go right on electing Communist union leaders as the best economic goads to management.

Even without Communist unions, the North Italian executive must operate in a wondrously mixed economy where there is already more government ownership of industry than in any other country outside the Communist bloc. Born under Mussolini's Fascism during the Depression, the government-run Institute for Industrial Reconstruction (I.R.I.) owns 30% of all outstanding stock in Italy, controls 350 companies ranging from the nation's largest banks to the Alitalia air service. The busy port of Genoa, whose shipments have tripled to 44 million tons since 1953, is dominated by I.R.I.'s Ansaldo shipyards, which built the I.R.I.-operated luxury liners Cristoforo Colombo and Leonardo da Vinci.

The Head Buccaneer. Biggest anomaly of North Italy's boom is that its closest approximation to the buccaneering giants of 19th century capitalism is Enrico Mattel, 55, head of E.N.I., the state-owned oil and gas monopoly. When Enrico Mattei, a handsome, hawk-faced fellow, discovered the Po Valley's methane deposits 15 years ago, he became one of the key wonder workers of the Italian miracle. Since then, using state funds to emulate his private enterprise rivals, he has built a diversified industrial fief that includes everything from motels to Italy's largest fertilizer factory. He also boasts one of Italy's paternalistic company towns--Metanopoli.

Mattei delights Italy's nationalists with his swashbuckling sorties into the international oil market. Ordinary Italians love to see him outrage the major oil companies by flooding their European markets with his AGIP gas (much of which is made from Russian crude) and outbidding them for drilling rights in oil-rich African and Middle Eastern nations. But Italian businessmen, though appreciative of E.N.I.'s methane, argue that Mattei has kept its price higher than need be to finance his international ventures and his political and economic battles.

The Revolutionaries. But even where the government is strongest, North Italy's private industry manages to flourish. Though the state produces 55% of Italy's steel, Milan's Falck Steel succeeds by specializing in high-grade alloys. Periodic talk of nationalization of the electric power industry fails to faze ramrod-backed Giorgio Valeric, 57, managing director of Italy's largest utility, the Edison Group. Snaps Valerio: "We've doubled output in ten years, and we're still going ahead. Politicians are conservatives. We industrialists, we are the revolutionaries."

Most Italian businessmen seem to share Valerie's disdain for "those bureaucrats in Rome." After Olivetti's Underwood takeover, one industrialist exulted: "Americans used to come here as if they were visiting Black Africa, but they've learned a thing or two." To a man. North Italian businessmen dislike the "Italian miracle" phrase that the Italian press began to use some years ago. Says Leopoldo Pirelli, 36, third generation of his family to run the huge (1961 sales: $220 million) Pirelli rubber company: "There's more perspiration than is normally involved in a miracle." The secret lies far closer to hand, in industrial imagination, high skills, hard work, aggressive ambition. Perhaps the finest result of the North Italy boom is the fact that, after the long years of Fascism and the humiliation of military defeat. Italy's national self-respect has been restored and is increasing by the works of its own people.

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