The recent sale of Magneti Marelli at the Japanese Calsonic Kanzei, announced from London on 22 October last, brings the question of size and family ownership of our industry back into the limelight. This is a transfer made by FCA, a large group expatriated from Italy to Holland in 2015, still family-controlled today; sale to a Japanese company of very similar size owned by the American fund of private equity kkr extension.
FCA is very indebted: as of last June it had 16,6 billion euros of financial debt against a negative tangible equity of around 3 billion. Out of total assets of 99,5 billion euros, the assets (goodwill and other charges to be amortized) totaled 25,6 billion, i.e. slightly less than the value of tangible fixed assets (28 billion), i.e. those assets that make management possible. Against the 16,6 billion of debts, 14 billion of short-term financial assets were registered among funds in hand, with banks and equivalents whose presence has always raised some questions.
The value of the sale, the details of which are not yet known, is declared at 6,2 billion euros and constitutes a potential improvement of FCA's financial structure. The official press release insists on the future growth of Magneti Marelli, but it is clear that, in addition to the debt relief of the seller, the operation will above all increase the buyer: in fact, CK will increase from 7,7 to 15,2 billion euros in turnover, it will enhance supply and be able to exploit a larger and more diversified market.
In my opinion it is amissed opportunity for the Italian industry which instead of a trivial sale could generate a "new" large national company with a global reach. Instead, the by now historical trend of our capitalism is confirmed, which sees the consolidation of large foreign groups faced by a few large Italian companies under state control and, above all, by swarms of small and medium-sized enterprises.
Alas, that "mantra" that leads many (often uninformed) scholars to complain about the excess of small businesses, their presumed obstacle to the development of productivity, their low propensity for internationalism, their refusal to use managers outside the family will be strengthened parent company, their vulnerability to generational change and their inadequacy for the application of new technologies. It was precisely these last aspects (or fears) that constituted a reason for in-depth analysis for members of the Master in established by the Catholic University of Milan. Are all these “minor” businesses good or bad? To such a question, a leading professor of the Cattolica, Raffaele Mattioli who taught banking techniques there between 1939 and 1944, would have answered that they are "a fact"! And you have to deal with the facts by studying them thoroughly.
Every year, according to the results of the AUB Observatory on family businesses, it can be calculated that in Italy one generational changeover takes place for every 61 businesses. If we consider that there are 4.400.000 active businesses surveyed by Istat, these passages should be counted in the order of tens of thousands. And since family businesses tend to show a certain resilience (at least in number) we should deduce that most of the time they end with some success. But to understand this success we need to reflect on the historical evolution of our industry.
It is the opinion of the top management of Bankitalia that "entrepreneurs sometimes do not want to increase the size of their company too much" (so Salvatore Rossi in Venice on October 5th); an opinion that has a large following in the academy and in publicists, which is based primarily on the axiom that a large company is more efficient than a small one. Well we must realize that this axiom could have been valid in Henry Ford's time, but was then swept away by industrial history that has seen flexibility and quality prevail over large-scale production.
The transformation of the demand for goods in developed countries and the advent of information technology (starting from the 80s of the last century) condemned Fordist capitalism, favoring what Giacomo Becattini called "capitalism with a human face". The basis is no longer a financial capital invested to draw profits and capital gains of a purely speculative nature, but a company founded and managed by people who develop their life projects aiming not only and not so much at "earnings" per se, but at joy of living and social position. And this the "social engine" of the districts and to condemn these entrepreneurs because they do not want to increase their financial size, for example by going public, is equivalent to reproaching two parallel straight lines because they never meet.
This district evolution, which dates back to the years of the economic miracle and was consolidated in the 70s and 80s of the last century, was then combined with the emergence of medium-sized enterprises (Fourth Capitalism), two thirds of which have district origins . But the real Italian problem is not the excessive number (over 4 million according to Istat) of small businesses that do not want to grow, but rather the small number of large ones who are determined to regress. According to census data, manufacturing companies with 1.000 or more employees increased from 339 in 1971 to 176 in 2011 and each of them decreased the average size from 3.877 to 2.438 employees. So the big companies have decreased in number and reduced in size: instead of condemning the lack of growth of the small pygmies, shouldn't we try to remedy the decline of the big vatussi? That is, shouldn't we ensure that the part of the economy supported by the pygmies is expanded by adding one supported by the Vatussi?
As for the axiom of productivity, we should reflect on the fact that the positive balance of our trade balance with foreign countries is totally attributable to smaller companies: in 2017 the goods that districts and medium-sized enterprises exported exceeded their respective imports by an amount equal to 103 billion euros, making Italy the second net exporter of the EU after Germany; the typical goods of large companies (chemicals, automotive, iron and steel, etc.) on the contrary recorded a negative balance of 6 billion euro. You win on foreign markets if you are productive and the data just presented show that the most popular axioms need to be reviewed; as well as the productivity calculation methodologies (Ptf) that are currently used by the academy whose results are refuted by the facts.
The lesson on generational change in the cited Master della Cattolica saw the testimony of a so-called "minor" entrepreneur (about 150 employees). He works in one of those sectors that the "mantra" considers wrong (textiles). He is not a presumably rough craftsman with calloused hands: in addition to possessing a degree from Cattolica, he has profound management skills earned working in industrial companies in Italy and abroad. At the age of 40 he took over from his father in the family business where he developed his presence in the controlled capillarity filters sector; a highly specialized production which, with two billion pieces a year, insists on a niche of the world market of which it controls 50%. Heavily automated production, including quality controls and zero factory emissions. From a financial point of view, its credit rating with banks is comparable to the triple A level. In fact, one of the hallmarks of the Fourth Capitalism is the role of self-financing: the national aggregates of these companies annually confirm a structure in which equity fully covers the requirement for fixed assets, leaving only a portion of working capital commitments to bank credit.
When it comes to family businesses, the mention of the Buddenbrook effect is frequent, according to which, following the plot of the homonymous novel by Thomas Mann, the first generation creates, the second preserves and the third destroys. There is no doubt that this happens in some cases, but this cannot be the norm, bearing in mind the permanent number of family businesses and, with regard to the Fourth Capitalism, their governance. In the best models it provides for a family pact which provides for a selection of the successor based on the competence acquired both on studies (including a master) both in the field; and a changeover date that sees the new leader at an age of around 35-40: not too few to guarantee experience and not too many to guarantee initiative.
