The tough cop takes the wheel; profile; Cesare Romiti

Fiat's new boss has taken 20 years to emerge from the giant shadow of Gianni Agnelli. Wolfgang Achtner traces the rise of a company man
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The Independent Online
CESARE ROMITI is not a man to mince his words. He once described suggestions that Fiat's vast market power be curbed with monopolies legislation as "anti-capitalist vomit" from the "Marxist left and Catholic right".

Bettino Craxi, the former Socialist leader, labelled him a "thug" after a particularly acrimonious labour dispute in 1979.

Romiti, 72, a Fiat man for 20 years, was last week named as successor to Gianni Agnelli, the 74-year-old chairman of Fiat. Thick-shouldered and square-jawed, Romiti is much less well known than his boss, but reckons he is every inch as tough.

"The difference between Agnelli and myself," he once told an interviewer , "is that I'm meaner, really much meaner, than he is."

Agnelli's resignation signalled the end of a 30-year reign by Italy's "uncrowned king" at its largest private sector corporation.

Romiti, who has stood in his shadow, was born in Rome in 1923. He studied economics, and in 1947 went to work for the Bombrini Parodi Delfino munitions group. When BPD merged with Snia Viscosa in 1968, Romiti became the latter's chief financial director. For a while, he worked in Italy's vast public sector. In 1970, he became general manager and chief executive at Alitalia, the state- owned airline, and three years later, chief executive officer at Italstat, the group that built the country's highways.

Romiti joined Fiat in 1974 , arriving at the company's Turin headquarters as the general manager of its financial, planning and control division. It has been widely reported in Italy that he was imposed upon the Agnelli family by Enrico Cuccia, the head of the secretive and powerful Milan merchant bank, Mediobanca. Romiti himself says Gianni Agnelli had been trying to convince him to join the company for a long time.

In April 1976, he was appointed general manager along with Agnelli's younger brother Umberto and Carlo de Benedetti. After only 150 days, De Benedetti was forced to leave the company. According to De Benedetti, his departure was the result of a disagreement with Agnelli, who opposed the idea of a huge investment in new car models and wanted to diversify away from the auto sector. As some observers have noted, it was ironic that three years later De Benedetti's ideas were put into practice by Romiti.

The 1970s were a torrid time for Fiat. It was piling up huge losses, its factories were hit by rampant absenteeism, and several executives had been injured in Red Brigades attacks. In 1979, on advice from Romiti, the company announced a plan to lay off 23,000 workers, and 61 others were fired outright.

The move triggered a struggle with the unions that left Fiat paralysed by a 35-day strike, leading many experts to worry that the company might not survive. Disgruntled mid-level company executives organised a pro- test march of 40,000 workers calling for a return to work, and the unions were forced to give way, in what was later seen as a watershed in Italian industrial relations and a turning-point in Fiat's fortunes.

In an interview earlier this year, Romiti explained why he had decided to sack those 61 workers. Some of them, he said, were involved in terrorist activities, others had organised a prostitution ring inside the factory, where bosses had lost their authority and the situation was out of control. "People did anything in here, except work," Romiti said. "When we fired the 61, I said whatever happens, those people won't be allowed back in here." The unions took Fiat to court, where it was confirmed that two- thirds of the men who had been sacked had been involved in terrorist activities.

Romiti confessed that at the time he had feared that he could lose the struggle, and he knew that his defeat could have led to Fiat's demise. "It was a difficult choice. But it also was a necessary decision ... Without that step, I don't know what Fiat would be today. Indeed, I don't know if Fiat would even exist today."

In the summer of 1980, Enrico Cuccia convinced Agnelli that he and Umberto should leave the day-to-day running of Fiat to professionals like Romiti. Romiti thus became Fiat's sole chief executive and de facto boss. The move had another effect: Gianni Agnelli, now chairman, by seemingly playing second fiddle, could, in difficult times, play the nice cop, leaving the role of tough copto Romiti.

Romiti has been described by the Italian press as a dedicated company man for whom the average workday lasts 16 hours. Little is known of his private life, other than that he enjoys the occasional evening out with his wife Gina, and that one of his two sons is an executive at Mediobanca. In his free time, he enjoys sailing, and has been spotted on numerous occasions at the Turin stadium when Juventus FC , the football team owned by Fiat, plays at home.

Under the leadership of Cesare Romiti and Vittorio Ghidella, head of the car division, Fiat was able to get back on the right track. In the early 1980s, it became Europe's biggest car maker and the star performer of Italy's "second economic miracle". Thanks to a heavy investment in factory automation, Ghidella managed to lower the car division's break- even point. He was the creator of the extremely successful Uno model, which accounted for nearly 40 per cent of sales in 1987. At that time, the Fiat group - which also included Lancia, Alfa Romeo, Autobianchi and Ferrari - dominated the Italian market, accounting for 60 per cent of domestic sales.

Meanwhile, under Romiti's guidance, Fiat diversified its interests, which included the arms business, textiles, insurance, banking, media and publishing, construction, engi- ineering and food.

The Romiti philosophy is simple. "My model of a company is one that tries to reach its primary objective: to produce wealth and thus increase profits. I'm disappointed by politicians who have hesitations about this indisputable concept."

Romiti also makes it clear that he does not believe in power-sharing. As he told one interviewer: "Here at Fiat, we have one boss at a time."

As a result, the news of Ghidella's resignation in November 1988 hardly came as a surprise to many observers. Officially, his departure was motivated by a difference of opinion with Gianni Agnelli. However, rumours of a vicious power struggle between Ghidella and Romiti had been circulating for months. It was no secret that relations between them had become increasingly strained ever since they had clashed back in 1985, when Ghidella had been in favour of a merger between Fiat Auto and Ford of Europe. Romiti insisted he had not opposed the merger: the deal only collapsed, he maintained, when it became clear that the Americans wanted to take control.

In October 1993, Fiat, caught up in Europe's worst post-war recession, was back in a slump. The company's market share had been shrinking steadily since 1988 in Italy and in Europe, and car and truck sales had dropped nearly 20 per cent on the previous year. When some key shareholders agreed to provide Fiat with a badly needed injection of new capital only if Gianni Agnelli agreed to stay on as chairman, Agnelli, who was 72 at the time, was forced to postpone his retirement.

Various experts were quick to point out that Agnelli's announcement was a show of support for Romiti, who only a week earlier had been indicted by Turin magistrates on charges of allegedly being party to illegal financing of political parties and tax fraud. Romiti has already been involved in various investigations on similar charges brought by magistrates in Rome and Milan. He has claimed he became aware of payments made by several companies belonging to the group only after corruption scandals erupted in 1992. Some critics have argued that this statement is hard to believe, since Romiti was known to be a man who believed in hands-on management and the motto "know- ledge is power".

Announcing his retirement last Monday, Agnelli told a group of Fiat managers that Romiti would "take over responsibility for the company for the next few years" in order to prepare for a "generational passage".

Some analysts pointed out that Agnelli had indicated that Romiti's role would be similar to that of Vittorio Valletta, the elderly manager who ran Fiat during the early stages of Agnelli's career. Last summer, Agnelli had designated his 31-year-old nephew, Giovanni Alberto Agnelli, currently chair- man of the Piaggio motorcycle company, as his eventual heir.

Of Romiti, Agnelli said: "He's younger than me, but not by much", underlining the point in Piedmontese dialect: "L'e pi' nen 'na musna' " - "he's not a child."