Italy's business dynasties under pressure as bridge collapse stirs anger

The Benetton family, which recently found itself in the cross hairs after the fatal Genoa bridge disaster, is among those facing a crisis of confidence

The Morandi bridge in Genoa collapse has turned spotlight on Italy's business families. EPA

The names of Italy’s richest families – who represent 5 per cent of the population and hold over 40 per cent of the country’s wealth – are world famous.

From Nutella matriarch Maria Franca Fissolo, the widow of Michele Ferrero, to media tycoon and former prime minister Silvio Berlusconi and the Fiat car manufacturer’s long-time leader Gianni Agnelli, the history of Italian capitalism is peppered with business titans. But external competition and twists of fate may now be sapping some of the vital energy from these eminent clans.

Following the collapse of a bridge in the coastal city of Genoa on August 14 that killed 43 people, another prominent Italian family, that of fashion entrepreneur Luciano Benetton, has come under fire due to Benetton Group's majority 30.3 per cent stake in the company managing Italy’s motorway system, Atlantia. Gilberto Benetton is a director of the firm, which is publicly traded on the Milan Stock Exchange.

From a six-month high of €28.28 on May 15, shares in Atlantia plummeted from just under €25 on August 13, the day before the bridge collapse, to €18.30 on August 16 and have fallen further since.

Atlantia shares took a huge hit

They slid to as low as €18.18 on Thursday.

Luciano Benetton, former chairman and founder of Benetton Group, right, hugs his son, Alessandro Benetton, chairman of the group. Bloomberg

After the disaster, Italy witnessed a harsh rebuffal of the state’s family-centred approach. According to Andrea Billi, economics professor at Rome’s La Sapienza university, “Benetton surely obtained a preferential treatment by the state”. The concession awarded to the family is now under scrutiny for being skewed in their favour. Some social media users took to the web to announce their intention to boycott the family’s fashion businesses. Altlantia's shares

Partially collapsed Morandi highway bridge, in Genoa. AP

For the country's €790 billion (Dh3.37 trillion) worth of family-run businesses - according to figures by the Observatory on Italian Family Business - the importance of reputation and lineage as key non-economic assets cannot be underestimated.

This was well understood by the Italian car manufacturer Fiat, founded by Giovanni Agnelli in 1899 and managed by his grandson, Giovanni (better known as Gianni) from 1966 until his death in 2003.

Fiat, Alfa Romeo and Jeep are controlled by the Agnelli family. AFP

“I think Gianni Agnelli was a symbol of Turin, and his disappearance is mourned by all of us,” one of those who attended Mr Agnelli’s funeral told state TV at the time.

After the Tunin-based Savoy crown was dethroned during the Second World War, the Agnelli family – which reigned over a newly-born empire made of machinery and conveyor belts – took its place in the consciousness of the people.

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But, as Luiss University economics professor Fabiano Schivardi put it, Fiat is “an exception” in the Italian family-led business landscape in that it employs CEOs who are external to the family.

Its best-known outsider, Sergio Marchionne, appeared on the scene in 2004 when Turin was no longer the heart of Italy’s industrial renaissance and Fiat was a shadow of its former self.

Sergio Marchionne. AFP

When the global car industry was hit by the financial crisis in 2008, Fiat made a deal with the American company Chrysler. "For many years, Fiat has been one of the main private employers in Italy," Prof Schivardi tells The National. "There had always been a bargain between employment and state funds, but this model was no longer sustainable in the face of expanding markets and foreign competition."

Fiat had received state funds, which kept production from relocating to countries with cheaper workforce. But as public debt rose, the state found itself no longer “in a position to issue state funds for big businesses anymore”, Prof Schivardi says.

The Italian weekly Espresso pointed to Fiat's foreign investments as an indicator of the fact that long-time Italian businesses, "the backbone of Italy's economy", were moving far from home turf.

In July 2018, the unexpected death of Mr Marchionne – whose name had become synonymous with the company’s success –  caused shares to plunge by 15 per cent and the company to lose a total of €6 million. The appointment of the new British CEO, Mike Manley, has also prompted concerns that the company will drift further away from Italy.

If the Agnelli dynasty rose to become the symbol of Turin, another family –  one headed by former prime minister Mr Berlusconi –  made its mark on Italy’s fashion capital, Milan.

Silvio Berlusconi. AFP

Back in the 1970s, the would-be-real-estate mogul launched a satellite city, Milano 2, marketed as a “Milan without the smog and the traffic”. Now 79, Mr Berlusconi is one of Italy’s richest men, his fortune listed as $7.48bn on the Bloomberg Billionaires Index. His company Fininvest owns TV company Mediaset and Italy’s largest publishing house, Mondadori.

Alongside being one of the richest, Mr Berlusconi is one of the most controversial. During his political tenure, he kept control of his media empire, laying himself open to accusations of conflict of interest. He was found guilty of tax fraud in 2013, but attempted a comeback at the national elections in March 2018. For the first time since his entrance in the political arena, Mr Berlusconi’s party ranked third in the centre-right coalition. The four-time Italian prime minister, who led his party to hold the majority of seats for over nine years, is the longest-serving politician to occupy this post.

In 2016, the family holding suffered its biggest annual loss of €120m due to foreign competition, which it defined as “great damage”. That led the company to sell the Serie A football team AC Milan, helping to reverse its fate and end 2017 with a profit of over €600.

Succession is also a thorny issue affecting Mr Berlusconi’s legacy, as his offspring from his first marriage - Pier Silvio and Marina - are at odds with the offspring from his second marriage - Barbara and Luigi.

According to Prof Billi, “all these families face the great problem of passing on their business to the next generation”.

Prof Schivardi also points out that, “while Italy has been a closed-off capitalistic system since [the Second World War], the commingling of family and state is slowly coming to an end”.

While the Benetton family defended its empire after the bridge collapse, some Italian dynasties previously confronted with the prospect of their own downfall have embraced that possibility.

When asked about the destiny of his banking empire, Enrico Cuccia, a significant figure in Italian capitalism who founded investment bank Mediobanca and who died in 2000, gave a pragmatic answer: “The Roman empire ended, Mediobanca will end, too.”