Fincantieri, a great disappointment

02/03/16

Dear Director, I recently read some articles dedicated to the sector of our shipbuilding and more specifically dedicated to the latest events involving one of the companies that can be considered, rightly, one of the last Italian companies among the most important at national level and European. I refer to Fincantieri.

After having read with joy, also in his newspaper, a renewed attention to the maritime sector and shipbuilding, which has manifested itself and materialized in this last year, just ended, with the allocation by the Government of funds destined to the renewal of the fleet of the Italian Navy for an amount equal to 5,4 billions of euros, I note with not a little annoyance a behavior from Fincantieri that depresses the hopes in the national public opinion. I am referring to the dismissals that Giuseppe Bono has imposed as a cure for the financial instability that the company seems to be going through.

In the newspapers in the past few days I read that Senator Vito Vattuone met the company's representatives and, immediately after, the trade unions. Thus the senator explained the current situation: "The company has confirmed to me that there is a job vacuum, a transitory problem. The naval law will open a new phase in workloads, but the start-up has slowed down a little. " Expectations regarding the start-up of new constructions to renew the navy fleet were different and instead of the redundancy fund opened by 7 in March at the end of June - rather, new recruits were expected.

In this regard, Vattuone, who contributed to the government's allocation of 5,4 billion euros for the supply of new units, remarked that the difficulties would be short-lived: “It happens in the initial stages. The company has reduced the number of employees involved as much as possible and the void had to be solved in a different way, avoiding layoffs with the agreement for the disposal of holidays ". On this point, most of the trade unions agree: the decline in employees replaced by external firms continues. However, politics have been asked - beyond the transitional phases - to take care of another aspect: that which concerns the significant decline in employees, and to a greater extent workers, replaced by external firms working on contract. At the Riva Trigoso shipyard, in 2008 there were 952 employees, of which 602 workers and 350 clerks (28 women overall). In 2012 the total number drops to 786 employees, of which 471 workers and 315 employees (26 total women). In 2015 the numbers become these: 672 employees, of which 366 workers and 306 employees (the number of women unchanged). This would result in an incidence of external procurement in the hull and outfitting areas of 55 percent.

"Fincantieri is changing nature" as stated by Sergio Ghio, responsible for industrial policies for the CGIL, presenting the case of Pergolo, a company with over half a century of history and 40 employees in layoffs. "He employs local labor, local people," said Ghio. He deals with electrical systems and has a very high professionalism. His destiny is black since he lost the contract on the seventh and eighth Fremm: Fincantieri gave it to his Romanian subsidiary Vard ».

Whoever saw the Navy fighting for a certain political confluence so that important funds were allocated to the national shipbuilding industry to renew the military naval fleet, he would have imagined, I do not say greater employment, but at least the safeguarding of current jobs and savings deriving from non-use of the redundancy fund. After all they are always public money and to think that they are spent to ensure work and to restart the national economy is a thought that reassures citizens also in a spirit of solidarity with the workers of the sector.

But no!

With a sudden decision, the managing director of Fincantieri, Giuseppe Bono, announced that he had assumed interim responsibility for the group's merchant ship management. The merchant ship management is historically the most important business unit of Fincantieri, and reports to the factories in Monfalcone (Gorizia), Marghera (Venice), Genoa Sestri Ponente, Ancona, Castellammare di Stabia (Naples) and Palermo. These are the sites dedicated to the construction of cruise ships and ferries, a sector in which Fincantieri excels worldwide. Gabriele Cocco, the manager who until yesterday had direct responsibility, was assigned to another position. At the same time, Bono appointed two deputy general managers: Alberto Maestrini (director of military ships) and Pier Francesco Ragni (director of business development). Angelo Fusco, on the other hand, has taken on the role of deputy manager of military ships. Bono's decision came at a particularly delicate moment for Fincantieri. After the resignation of the general manager Andrea Mangoni and the rumors of the need for a capital increase, investors are waiting to know the business plan of the company, which will be announced in conjunction with the financial statements on 31 March.

Presenting the data relating to the first few months of the 2015 (closed with a loss of 96 million), Bono explained that «the performance of the management reflects the strong increase in production and design activity. This increase is a consequence of the significant growth in the order portfolio. However, the weight of prototype ship orders, acquired at low margins in the most acute phase of the crisis to support production activity, penalized the group's profitability. To this was added the effects of the crisis in the Gas sector, caused by the unpredictable drop in the price of oil, and the continuing difficulties of Vard in Brazil, also linked to the country's economic and political situation ". To speed up Bono's decision, according to the reconstruction, the delays accumulated in the construction of the Carnival Vista cruise ship, in the Monfalcone shipyard. It is no coincidence that in the last few days in the North East production sites the company has recalled some former construction site managers, whose experience is evidently considered to be very valuable at this stage. Fincantieri, in addition to having consolidated its relationship with the American Carnival group, has signed a historic agreement with the MSC of the Aponte family and has been chosen by Virgin Cruises for the realization of its first cruise ships: two bets on which Bono has focused a lot .

But then why lay off?

Fincantieri is today faced with major difficulties in terms of finance, production, organization, and management, and with some problems even on the judicial side.

Despite the overall growth in orders that Fincantieri can boast, its stock, listed at the start (July 2014) 0.78 cents, is now worth 0.31. The splash is due to several factors.

First of all, the crisis of Vard, the division of the group with the highest profitability, which builds specialized vessels in underwater oil and gas research. With oil prices falling sharply worldwide, the investments of oil multinationals in this area are also drastically declining. The result was the reduction in activity of all European shipyards and a situation almost collapsing at the Vard shipyard in Brazil, which suffered from the fall of the Brazilian economy, the paralysis of the Rousseff government and the storm that hit Petrobas, with the delay in the beginning of the exploitation of marine deposits. The profit warning (or the announcement of falling profits) of last October has formalized this critical condition. When Fincantieri bought the 55% of Vard (January 2013) a Vard share was worth 1.3 euro, now it is listed on 0.16. The second difficulty factor is the reduction of profits in the group's core business, the construction of cruise ships; a reduction due to the fact that Fincantieri - in the most acute years of the crisis - had secured many orders by selling its ships at bargain prices to the great shipowners (no less powerful and multinationals than Fincantieri, starting from the US Carnival). The third is the growing uncertainty that weighs heavily on the Chinese economy, while Fincantieri relies heavily on joint ventures to be implemented with Carnival on the Chinese market.
Moreover in Europe, between the 2008 and the 2011, the heavy crisis of overproduction of the sector has led to the closure of about thirty construction sites, with the destruction of 50.000 jobs. And - as in other productive sectors - the recovery of activity has been stunted both in Europe and elsewhere. Just to say: Hyunday closes the first nine months of the 2015 with an operating loss of 1 billion dollars, Daewoo with a loss of 2,8 billion, while Mitsubishi has accumulated over a billion losses on the cruise ship order for Aida Cruise. Other problems for the other companies operating in the oil and gas research sector, such as Technip or Saipem, also at a loss.

In short: (In Italian only) the contradictions and convulsions of the world economy have dismantled the optimism of the leaders of Fincantieri who have always demonstrated. As a result of all this, Fincantieri is now in the need, formally denied but real, to proceed with a substantial capital increase (there is talk of 500 million on 800 million of total capitalization), with the unknowns of the case, given that Fincantieri's entry into the stock market was a half flop. And immediately there were those who, sniffing the bad weather coming, took it up in a hurry. This is the general manager of Fincantieri, Andrea Mangoni, who resigned at night with a modest severance pay of 3 million euros "for eight months of work" ... On the day of farewell his picture appeared in the newspapers in which he laughed out loud. And I believe you!

Now let's see how this change in the situation affects the master-worker relationship. Bono and his team have progressively adopted the Marchionne line in Fincantieri, presenting a set of extremist claims: 104 extra work hours per year (approximately 30 minutes totally free of additional work per day), generalization of the 6 × 6 without any limit to the 'flexibility' of the timetable, radical modification of the criteria of the production bonus and of the relative quantities, remote controls on workers, further expansion of the use of contract work and temporary agencies, drastic limitation of trade union activity on construction sites, just to say the greatest.

Certainly all this situation is strongly detached from that idea of ​​Italy that starts again, which the President of the Council Renzi strives to publicize on every occasion and I close my letter by asking a question, which however seems to me to be legitimate, we are sure that this situation it is not attributable to bad management, to a guide that is perhaps outdated and out of date that has had its day and that uses questionable methods and ways, after all it is only from the 2002 that the current ad is at the helm of the company.

The time has perhaps not come to change, to stop with the impossible emoluments, to think a little more about the workers and their families and maybe even get back the paid gold liquidations, characteristics of a use and malpractice belonging to an era economic geology that many hoped would be overcome?

Giovanni Di Vittorio

(photo: Fincantieri / Vard)