Fincantieri: The French Connection and the Italian Job

(To Damiano Trieste)
11/09/17

The agreement is now done. The Fincantieri titles have in fact been on the rise for a few days and the mantra celebrating the birth of the Franco-Italian pole of military shipbuilding has started again. The task is to convince the Italians that what promises to be a resounding defeat will actually be a bright victory of our state capitalism. The details are not yet known. But we venture into a hypothesis (hoping to be mistaken), based on the pessimism that the recent history of our country and its centers of power imposes. Our crystal sphere says that the solution adopted, after the indignant proclamations of our rulers as a reaction to the questioning by Macron of the agreements already signed, will privilege France at the expense of Italy, in the sense, to be concrete, of our GDP, employment levels, etc.

Here then is the move of the horse with which Macron will checkmate Italy (perhaps with the hand of some "fraternal" Italian friend): to give life to a European pole of shipbuilding, divided into two branches. In Fincantieri the management, although under the protection of the French government (which does not sell the majority of the property), of the new industrial group Saint Nazaire-Fincantieri for the merchant ship; to the French Naval Groups the control of the military branch of Fincantieri (the profitable one).

The company that made us so proud, aimed at the conquest of a dangerous French competitor, is turning into the rescue, with public funds, to the shipyards of Saint Nazaire in order not to make them fail and in the sale to the French group Naval Groups of the control of our Industry Military naval mechanics, with heavy consequences also for Leonardo. A nice twist, no doubt about it.

Given the balance of power between Naval Groups and Military Fincantieri, the first capacity to be anemised (as has always happened in the previous cases of mergers between Italian companies and French groups) will be the design capacity, to reduce us to the role of simple sub-suppliers. Then there will be the disposal of some Italian shipyards destined to build military ships, considered exuberant compared to those of the new Franco-Italian group. The first to fall will be the historic shipyard of Castellammare di Stabia, on which Fincantieri has not invested for some time, the others will follow. With all due respect to the unions and the Italian industrial industry, Fincantieri will not only continue to transfer workloads from Riva Trigoso and Muggiano to the Vaard shipyards in Romania, but will also use French shipyards, to the detriment of the Italian ones, to honor the commitments made to maintain the employment levels of Saint Nazaire. Then prepare Monfalcone, Ancona and then Palermo (which has the largest masonry basin in the Mediterranean able to accommodate ships from 350.000 tons - photo).

On the military front, in addition to the negative consequences for employment in shipbuilding and related industries, among the collateral damage there will also be the employment levels of Leonardo's companies. Since Thales, its main competitor owns the 15% of Naval Groups, it is clear that as a result of the French leadership on the military branch, the weapons and command and control systems of Thales will be privileged on the new ships, compared to those of Leonardo. Considering that almost the 50% of the economic value of a military ship is represented by its equipment, the damage in terms of GDP and employment for Italy is evident. Even worse could be the scenario if the Government had also offered Finmeccanica in the gift package to the French. In this case also Leonardo would be progressively reduced to the role of sub-supplier of the French industry.

The Italian government increasingly reducing the defense budget has demolished not only the operational potential of the Armed Forces, but with them has impoverished the capacity for innovation and more generally the strength of the high-tech defense industry, making it increasingly vulnerable and less competitive on foreign markets. Exactly the opposite of what France has done, which is now preparing to absorb our latest autonomous capabilities in the defense sector.

It is also appropriate to clarify that despite the proclamations for the creation of a new one Airbus Naval, able to accelerate the integration of the European Defense, Macron will not put Europe as a system to all its sites, but only those in difficulty of Saint Nazaire, keeping for France the shipyards with the highest technological content, that is those capable of build the most sophisticated military units including submarines, exactly as it happened with theAirbus Aeronautical. Also in that case France kept separated from Airbus, in exclusively French hands, the establishments of Dassault, from which the excellent multi-role fighters come Gust (photo), with which France has often successfully competed with the European consortium Euro Fighter.

Once again, France will shorten an annoying European competitor under its leadership, while still keeping the family jewels in its hands. So Europe yes, but with French guidance.

For the mercantile sector, the lack of the majority of the property will not allow Fincantieri, probably to his great relief, to adopt aggressive industrial plans to relaunch Saint Nazaire, being able to download on his major shareholder (the Italian State) the debts of the French yard, which they must be really powerful, considering the paltry price of 80 million euros they were bought for. A fantastic price for a very convenient deal. Strange that the auction was presented, unique among all the major shipbuilding groups in the world, including the German giant ThyssenKrupp, only Fincantieri. Is it possible that Bono was the only one to sniff the deal?

The less naive the whole operation appeared from the beginning as the rescue of Saint Nazaire and not an acquisition to eliminate a dangerous competitor in the segment of large passenger ships, as it was told to the Italian public. It would have been much more advantageous for Fincantieri to let the shipyards of Saint Nazaire fail, without even taking this burden on our public finances. Even the justification given regarding the lack of space to build passenger ships from 200.000 tons makes no sense, given that Fincantieri has in Palermo (photo) a masonry basin capable of containing ships of very large tonnage (300.000 tons.) Much higher than the one required for the new large passenger ships. It would have been enough to invest resources in the Sicilian construction site instead of abroad, to have a plant able to withstand the competition on large passenger ships, increasingly requested by international shipowners.

Moreover, the proposal made by the French economy minister La Maire to give life to a Airbus in the naval sector, to win the resistance of the Italian government, it is flour from the Bono sack (easy verification on the web), so far not taken off due to the negative consequences on all the Italian Defense companies. Why then is France proposing it and not our Government, if the idea was of the managing director of the Italian group? One thing is certain, after La Maire guaranteed that the managing director and president of the new Franco Italian group in the passenger sector would be an expression of Fincantieri, even without the majority of the ownership, Fincantieri's attitude has returned to be extremely cooperative. After this announcement, France and Fincantieri joined forces to push for the French proposal to be accepted and, on the other, Minister Calenda and Padoan who tried to resist to obtain more protection for the Italian interest. But was Fincantieri not owned by Cassa Depositi e Prestiti, that is the Italian State?

That the consequences of the agreement could be harmful for the interest of Italian citizens, should it be configured as anticipated by us (in the hope of having made a mistake), the precedents of industrial mergers with the French, in space and in missiles, prove this. Selenia Spazio, for example, was a world excellence in the construction of satellites. Since Thales came into play as his majority partner, the Italian company has disappeared from the radar.

In the end, for Italian politics the choice will be to fight the France / Fincantieri block or to fold, avoiding conflict with powerful opponents, trying to save face with the story of theAirbus Naval. It is basically a matter of arriving at the April elections. The fable of the Italian victory can however be told, because we would have obtained from the French (although on a French proposal, but this is a subtlety) to give life to the European industrial pole for common defense. We will also say that it is not the boss who counts, but the European spirit that we aim to strengthen. And better to have Fincantieri as a friend in times of elections than as an enemy. On the other hand, the Italians will suffer the damage, but not immediately, in some time, in past elections. Another strategic productive sector therefore seems destined to fall into foreign hands, with the complicit indifference of the opposition and the unions.

If it were to end like this, Macron would have won big. He would have succeeded in not giving the Italians ownership of Saint Nazaire and taking control through Naval Groups of the Italian industrial sector dedicated to the construction of military ships. If this were not enough, through Thales it could absorb Leonardo's companies in a mortal embrace. In short, the entire Italian defense industry sector would be under French leadership. Macron would have done his duty to the people who elected him, to defend French national interests. But we Italians also have a winner: Dr. Giuseppe Bono. Instead of retiring, after 12 years of reign over Fincantieri, to which he had arrived after a period at Finmeccanica and before that in Efim, at 73 years he will conquer another prestigious chair that will allow him to stay in the saddle, with all the annexes and connected of the case, at least until 77 years. Vassal of the King of France and no longer the absolute monarch of Fincantieri, it is true, but at 73 years, when the majority of his peers have been retired for some time, they can certainly be satisfied.

And to the national interest? Someone else will take care of it.

Or not.

(photo: Présidence de la République française / Fincantieri / US Air Force)