Fiat into Spain

Turin, Italy's fourth largest city, is the capital of Italian industry. It is also the biggest company town in the world, dominated by a single colossus world-famed for its name: Fiat (Fabbrica Italiana Automobili Torino). Almost two-thirds of Turin's 735,000 people owe their livelihood to Fiat; off the assembly lines of its 15 plants roll 90% of Italy's cars. But automaking is only the core of Fiat's industrial empire. A visitor to Turin rides to a Fiat-owned hotel in a Fiat taxi, reads a Fiat newspaper, drinks Fiat's Cinzano vermouth, shops at a Fiat drugstore, leaves for Milan over the Fiat-controlled autostrada (toll road).

Last week, Fiat grew a bit more. In Barcelona, a Fiat-controlled, Spanish-financed company named Seat began making Fiat cars in the hope of turning out 200 a month to sell at 150,000 pesetas ($3,750). The only sizable automaker in Spain, Fiat will have the Spanish car market virtually sewed up, since no other automaker can afford Spain's 40% excise taxes, from which Seat will eventually be exempt. Fiat also landed a $22.5 million U.S. Air Force contract to assemble F-86 Sabre jets under 10-year license from North American Aviation Inc., the first such order placed on the Continent.

"Will and Creation." Fiat, whose name Soldier-Poet Gabriele D'Annunzio once defined as the "word of will and creation," is a vertical trust which, through a holding company named I.F.I, (for Istituto Finanziario Italiano), controls a good cross section of Italy's economy. Among its holdings are insurance, busses, airlines, hotels, and cement, paint and steel plants. Abroad, in six countries from Sweden to India, Fiat plants turn out goods sold in 80 countries.

Fiat was created by the iron will of a flinty, ex-cavalry officer named Giovanni Agnelli, who helped found the company in 1899. Agnelli made Fiat's red racing cars famous at international meets, sometimes driving them himself. Born with a genius for command and a passion for work, Agnelli early saw the advantages of mass production and integration and began acquiring suppliers and outlets for his cars. So shrewdly did he choose that by 1927, when I.F.I, was formed to hold Fiat's investments (and solidify his control), he owned a diversified slice of the Italian economy. For such -accomplishments and for Agnelli's financial help in the March on Rome, an admiring Mussolini made him a lifetime Senator. He also cooperated by placing staggering duties on imported cars.

With such help, Agnelli continued to expand Fiat in the '30s, entered World War II with the huge, new Fiat-Mirafiori auto plant. As one of Italy's biggest armament makers, Fiat was soon turning out everything from trucks to airplanes to machine guns.

Red & Black. Fiat plants were bombed repeatedly, with losses running to an estimated $40 million. When Agnelli died in 1945, it looked as if Fiat might never recover. But it was able to rebuild with the help of $46 million in U.S. loans. Then the Fiat union, a member of Communist-controlled C.G.I.L. ( Confederazione Generale Italiana di Lavoro), formed "councils of management" to run the plants, virtually took over. The councils soon found the job too tough to handle, and gradually they were forced to let brilliant, little (5 ft. i in.) Professor Vittorio Valletta, who had succeeded Agnelli, take charge.

Valletta, a self-made man whose constant traveling and shrewd bargaining make him Fiat's best salesman, quickly got things humming again. By last week, Fiat was turning out 500 cars a day, twice its prewar peak, and its huge iron & steel works, including the biggest cold-rolling mill on the Continent, had doubled its prewar capacity. Last year Fiat reported a $4,000,000 net on $320 million sales.

Communists are still powerful, but membership in C.G.I.L. has dropped from 82% to 65% since 1949. Though this still large membership in the Communist union worries U.S. military men, it does not worry Valletta. The big C.G.I.L. membership, he points out, does not mean that all are Communists, but merely that workers have chosen the largest, oldest and strongest union in Italy. Says Valletta: "If I were a worker, it's the one I would belong to myself."

Mice & Monopoly. As an automaker, Fiat specializes in small, low-horsepower models that can negotiate Europe's twisting roads and give good mileage on its expensive gasoline. Most Italians, however, find them too high-priced, complain that Fiat could afford to cut prices. They cite the fact that in Paris, where there is competition, the new Fiat "1100" sells for $235 less than in Italy. Even the Italians who can afford Fiat's two bestselling cars, the Topolino (Little Mouse) at $1,146, and the "1100" at $1,608, must be prepared to put down a $320 deposit and wait eight months for delivery.

Grip of Iron. So important is Fiat to the Italian economy that the government would hardly make a major economic decision without considering its effects on Fiat. In addition to the 117,000 cars, trucks and buses it turned out last year, Fiat made two-thirds of Italy's tractors, three-quarters of its refrigerators, and much of its diesel and railroad equipment. It has helped reconstruct Italy in other ways. After the war, Fiat kept more men on its payrolls than were needed, and only recently has had work for them all. Explains Valletta: "If we had discharged all the people we didn't need, the result might have been revolution."

Such immense power has bothered more than one monopoly-hating American charged with helping rebuild Italy's economy for NATO defense. But most of them have come to accept Fiat's position. As one of Italy's economists has pointed out, no Italian government, however strong, would ever be able "to withstand the collapse of Fiat. Said he: "No matter how badly things were to go with Fiat, the government would be obliged ... to keep [it] going, even if this meant making refrigerators as Christmas presents to the Eskimos."

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