Europe's Businessmen Bureaucrats

SOME of Europe's biggest business executives are on government payrolls.

The companies they run are, variously, monuments of socialist tradition, nationalist pride or the turbulence of the Depression and World War II. In France, state ownership of industry is estimated to be 20% or more. One lingering result of Mussolini's corporate state is that modern Italian businessmen must operate in an economy where more than one-third of business is controlled by the government. In Germany, Hitler's Third Reich started Volkswagen to produce his "people's car," but it made war vehicles instead and is still 40% state-owned. Governments control every major European airline--because every government pridefully feels it must have one, and no one else is willing to lose such money.

Many of these state-controlled companies are now run by boldly unique businessmen bureaucrats, whose management skills are widely and publicly admired by their free-enterprising competitors. Some leaders:

Italy's Manuelli

Italy's biggest steelmaker is a civil servant, but hardly servile. Says bullish-looking Ernesto Manuelli, 56, president of the state-controlled Finsider steel complex: "I have more freedom of action than a man in my position in private business. Presidents of Fiat or Pirelli often have to get their boards' permission before initiating changes. I don't." Several years ago, he rebuffed a government demand that Finsider build a plant in job-starved southern Italy, instead vastly expanded its plants in Genoa before moving down the Boot. Manuelli also publicly opposed the nationalization of Italy's electric power industry this year, arguing that it would only upset the stock market (it did) and "double the public debt." Socialists angrily demanded his scalp, but Manuelli held his job simply because he has done so well in it.

Manuelli is accustomed to political pressures. Rising through various state-run companies, he was picked by the first postwar Italian government in 1945 to head the Ansaldo shipyards, immediately became a target for Communist gunmen who had secreted an arsenal there in preparation for a general uprising. Manuelli cleaned out Ansaldo, but had to go around with a revolver in his pocket and with two "escorts" carrying tommy guns. Since he took charge of Finsider in 1958, its sales have risen 45% to last year's $761 million, and production has gone up 55% to 5,100,000 tons--a remarkable amount for a country that in 1945 produced only 400,000 tons. Rapidly expanding, Manuelli plans to double output by 1966, produce 10.5 million tons out of an expected national total of 15.5 million tons.

But Manuelli is not a buccaneering empire builder in the manner of the late Oilman Enrico Mattei. "I welcome competition," he says. "After all, the more steel we have, the better for Italy."

Finland's Halle

Another lifelong bureaucrat who is his own boss is 54-year-old Pentti Halle (pronounced Hol-leh), head of Finland's third biggest company, the Enso-Gutzeit paper and forest products complex. "In sales and purchasing we operate just like a private firm," says Halle, who started as an Enso-Gutzeit engineer 28 years ago. Picked last April to head the company, he refused to yield to politicians' requests that he build a pulp mill in underemployed eastern Finland, instead chose a site in a more economic area where the company owns timberland.

Enso-Gutzeit, originally a Norwegian company, was taken over in 1918 by the Finnish government, which wanted to get its vast timber holdings out of foreign hands. The Soviet annexation of some Finnish lands in 1940 cost Enso-Gutzeit 40% of its paper and pulp capacity and all of its hydroelectric stations. Coming back steadily since the war, it now has sales of $130 million and accounts for 10% of Finland's exports.

France's Dreyfus

Nationalized largely out of necessity, France's automaking Renault was taken over after Founder Louis Renault was accused of being a wartime Nazi collaborator. Says the government careerist who runs it today, quiet-spoken Pierre Dreyfus, 55: "We operate like an absolute monarchy, and I make all the decisions." The government can question his judgment only by firing him, but that is most unlikely. Under Dreyfus since 1955, Renault's sales have increased 47% to last year's $604 million, and its gnatty Dau-phines and rakish Caravelles have driven into export markets around the world.

In a country where well-educated civil servants command huge prestige and powers (and can readily get to top jobs in private industry), Dreyfus is a government servant to the hilt, with a driving sense of patriotic mission. He is paid only the relatively low salary of a civil employee (the amount is secret), but he pays talented aides more than that to keep them at Renault. He set up a plant in Algeria amidst all its chaos in 1959 because the government wanted Moslems and Europeans to try working together. It may take a while for that venture to become profitable, but Dreyfus considers it worthwhile nevertheless and prides himself on the fact that Renault brings in $440 a minute in foreign exchange for France.

West Germany's Enae

There are obvious disadvantages to state control, as can be testified by duel-scarred Konrad Ende, 67, general director of the biggest wholly state-owned industrial company in the free world, Germany's Salzgitter AG, which had sales of $789 million last year from ore, coal, steel, oil and heavy machinery. Strapped for capital, as are many German firms (TIME, Nov. 23), Salzgitter is prohibited by the government from selling stock and, burdened by an already unwieldy long-term debt, is reluctant to borrow further from high-interest bankers. The Bonn government is miserly with its grants, while requiring Ende to serve some political ends. His Salzgitter AG has had to take over two uneconomic producers of electrical machinery and railroad equipment in West Berlin to help lift the city's economy.

Ende, a mining engineer who served as an archconservative Deputy in the Reichstag in the last days of the Weimar Republic, joined Salzgitter in 1941, when it was still known as Reichswerke Hermann Goring. He ran its mining operations in Germany and in Nazi-occupied lands. In 1950 he was picked by Bonn to revitalize what the war had left to Salzgitter: a ragged collection of steelmaking plants, largely dismantled, built around some low-grade ore mines in northern Germany. Despite the many problems, Ende opened new mines, modernized the ore processing, put up steel mills, branched into oil drilling. Since Ende took over, Salzgitter's annual sales have increased by an astonishing 475%. though they are leveling off this year. ''You have to compliment Ende for his drive," says a competitor. "Look at what he has been able to accomplish with that lousy ore."

Norway's Owe

Hunting for executive talent, state-run companies often raid private industry. When Norway after the war determined to expand an aluminum plant that the German occupiers had built, the government sought the services of slender Aage Owe (pronounced Oh-veh), the chief of a privately owned margarine monopoly. Engineer Owe accepted the presidency of the firm--which became known simply as The Aluminum Co.--only after he won the right to hire his own staff ("I wanted to have the same advantages as my privately owned competitors. I didn't want state bureaucrats").

Plowing all the profits into modernization instead of paying dividends as some politicians wish, Owe, who is now 68, has increased yearly sales to $53 million and production to 160,000 tons. That is twice the combined output of Norway's four private aluminum companies--and almost all of it is exported to bring in much-needed foreign exchange.

Britain's Beecning

Before taking the thankless job of running Britain's rattling railways, genial but tough Richard Beeching raised a public storm last year by insisting that the government match the salary that he got as technical director of Imperial Chemical Industries: $67,000. That was 2 1/2 times what his predecessor got and much higher than the Prime Minister's pay ($28,000), but Beeching's principles opposed a comedown. Beeching, now 49, may be worth much more than that to the railways, which ran a crashing $252 million in the red last year.

A trained physicist indifferent to expensive traditions, he coldly reduces problems to charts and graphs, is described by an aide as "the sort of battle commander who can make a careful assessment of the casualties needed to win and then go off to a peaceful lunch." He has already raised fares on heavily traveled commuter runs and proposed to scuttle lightly traveled ones. He wants to close 24 obsolescent repair shops (which would eliminate 18,000 jobs), also intends to speed up freight schedules and give major companies their own freight cars in what he calls "the livery of their own choice."

Some Britons who tend to demand new station houses and an end to deficits in the same breath sniff at "Dr. Beeching's bitter pills." Totally unruffled by criticism, Beeching says his goal is to convert the railways from "a political shuttlecock" into a lean, efficient business. Should he do it, Beeching would achieve distinction as a bureaucrat who disobeyed Parkinson's Law and actually managed to diminish a bureaucracy.

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