ITT's Bigger Push in Europe

IN the dog days of last summer, International Telephone & Telegraph Corp., America's biggest conglomerate, surprised investors by agreeing to sell a clutch of household names that it had acquired in recent years. Among them were home builders Levitt & Sons, Avis Inc. and Hamilton Life Insurance. To ITT insiders, however, the decision was no surprise. Chairman Harold Geneen chose to sell because the alternative was a costly antitrust battle with the Justice Department that would have tied up his company in courts for years, and might still have ended in divestiture.

As part of the price for peace, ITT also agreed to make no more major acquisitions in the U.S., an apparently crippling moratorium for a company that has relied heavily on mergers for its remarkable record of increased earnings for 49 consecutive quarters. But Geneen, a wily, English born accountant, had calculated the odds. In return for the U.S. companies that are on the block, ITT will get some $600 million. It will pump much of this into Europe. Thus, by restricting ITT in the U.S., the trustbusters helped to provide the company with both the funds and the incentive to expand explosively--and create jobs--abroad.

Up from the Ranches. ITT has been growing fast in Europe, having acquired 16 firms in varied fields there this year. Telecommunications equipment accounts for about half of its European sales, and the company has expanded into automotive components, heating and ventilation equipment, and myriad other product areas. Last week the company named a new president for ITT-Eu-rope, which will have sales this year of about $2.7 billion, some 36% of the firm's global total.- He is Michel C. Bergerac, 39, who is almost as multinational as ITT itself. French-born "Mike" Bergerac is a naturalized U.S. citizen and has a home in Brussels. A Fulbright scholarship took Bergerac to the U.S., where he earned a master's degree in business administration at U.C.L.A. and traveled around working as a hired hand on Western ranches before entering the corporate world as a production manager for U.S. Divers Corp., a manufacturer of deep-sea diving equipment.

Bergerac takes over ITT's European operation at a time when the monetary crisis has added to the uncertainty about the future of most Continental economies. Even so, Bergerac says: "Europe remains our choice for growth. It has the potential, the kind of well managed companies we like to acquire. Some of our rivals are hesitating about expansion, but that is ITT's opportunity."

That opportunity will be greatly enhanced by ITT's vaunted system of monthly European meetings. At these sessions, about 150 top managers from Europe and the U.S. review in detail the operations of each European company and product group. The European meetings cost ITT about $4,000,000 a year in travel, hotel, telecommunications, data processing and other expenses. Are they worth it? ITT men point to the record: since the meetings started in 1961, European profits have climbed 530%.

Constantly Monitoring. Because ITT makes and markets so many products in so many countries, its managers get early warnings of economic trends, which they share with one another at the meetings. This year, for example, many electronics manufacturers found themselves with rising inventories as demand fell. ITT boasts that, by constantly monitoring national economies and the trend of sales, it was able to react so quickly to the slowdown that its inventories hardly rose at all.

TIME'S European Economic Correspondent Roger Beardwood recently attended a monthly meeting in Brussels. He reports:

"The meeting is a cross between a self-criticism session in a Soviet factory and question time in the British House of Commons. It is no place for the thin-skinned or the nervous. Smoking is forbidden and only mineral water is on hand to revive the fainthearted. Those attending sit round a horseshoe-shaped table. The windows are curtained to banish time. Most members of the Manhattan contingent, who fly over by chartered Pan American 707 jet, keep their watches on Eastern Standard Time. Monthly and year-to-date financial results are flashed on a big screen. They show whether the company or group is doing better or worse than its forecast, and if there is any significant variation, a sharp discussion follows.

"The meetings cope with matters both pressing and routine. Last month's emergency was a fire that burned out a plant near Paris. Plans were made to have prefabricated buildings put up in the destroyed plant's parking lot, and rush in telephone exchange equipment components from other ITT factories so that the assembling work could continue. As a result, deliveries would be delayed by no more than two weeks.

"On routine problems if things are going very wrong, ITT senior managers will suggest corrective action. If that does not work--and work fast--the company will be invaded by a team of ITT experts. 'We run the world's largest management consultancy,' says one top executive. The difference is that our clients have to do what we tell them --or leave. "

Rewards and Penalties. Some do leave. But for those who stay--and most do--there are lavish rewards, including high salaries and the sense of belonging to a management elite. Standing at the head of that elite, Bergerac has great decision-making powers. Last week he was reviewing reports on the German economy. His assessment: "We expect some growth next year, but not much. If things get really bad, we shall cut back on automotive products, but may actually pick up in telecommunications." The fact that so much of ITT's volume is in telecommunications equipment should be a continuing help. Demand remains strong in both good times and bad, as Europeans clamor for telephones and state-owned operating companies rush to increase the supply. In France next year, Bergerac expects a 36% rise in sales of telecommunications products.

Thus the U.S. Justice Department's action in barring ITT's moves at home and forcing it to expand abroad could prove to be a golden boon for the corporation. But there is a nagging irony. Partly because of the trustbusters, ITT now has lively plans for increasing its growth in Europe just when the U.S. is struggling to expand its economy and cut its burdensome jobless rate.

*If ITT-Europe were ranked separately, it would be about the 17th biggest industrial company outside the U.S.

This file is automatically generated by a robot program, so reader's discretion is required.