The State's Tycoons

For generations, Italy's economy was dominated by flamboyant autocrats who pioneered the country's industrialization and ran their businesses like private principalities. There was Alberto Pirelli, who showed off his tires by sponsoring an auto trip from Peking to Paris, and Textile Mogul Giannino Marzotto, who gave his workers vacations in Russia to disillusion them about Communism. Today most of this individualistic breed is gone, pushed aside by modern management techniques, fractious unions and a long, relentless drive by the state to control, modernize and expand the country's industry.

As state ownership of enterprise has spread, a new kind of tycoon has risen to head Italy's major corporations --outstanding economists or financiers who have spent all or most of their careers in government employ. Under these men, the state-run firms operate with little of the bureaucratic bumbling and political waffling that afflicts nationalized industry in other countries. In Italy, state managers combine the prudence of the civil servant and the dash of the entrepreneur with chilling effectiveness. Usually indifferent to the trappings of authority and the dazzle of the spotlight, they nonetheless wield enormous power--often greater than that of many Cabinet ministers.

Ghost and Hammer. Archetypical of the new manager is Eugenio Cefis, 50, president of Montecatini Edison, Italy's largest industrial firm. Except for a brief postwar fling at private enterprise, Cefis, who was trained as an economist, has spent most of his career working for ENI, the state-owned petroleum syndicate. Known as "The Ghost" because of his aversion to publicity, Cefis became the shadowy, indispensable Mr. Fixit at ENI. After he became ENI's president in 1967, he built a sound management team by breaking with ancient Italian tradition and wisely delegating authority.

When Cefis came to Montedison nine months ago, the jerry-built conglomerate was teetering on the edge of disaster. The state, through big minority holdings, has maintained effective control of the firm since 1968, though a succession of private managers has been allowed to run it. Because of internal squabbling, they had failed. Since taking over as the government's man, Cefis has been selling off the firm's deadwood, including Sisma, a steel fabricator, and AB Tudor, a battery maker. At the same time, with the strong financial backing of the state, which he refers to as "my principal shareholder," Cefis is following an aggressive expansion program; he has gained control of Carlo Erba, Italy's second-largest drug company; Rhodiatoce, a synthetic-fiber maker; and Bastogi, a major financial holding company. Cefis' main aim: to knit Montedison into a chemical combine strong enough to compete with giant foreign firms.

The present chief of ENI, which controls more than 35% of Italy's petroleum industry, is Raffaele Girotti, 53, a Cefis protege. Trained as an engineer, Girotti has worked for ENI since 1949. He has earned the nickname "The Hammer" because of his ruthless management skills. In an effort to reorganize one sprawling firm, he interviewed every man in its management ranks, sometimes as many as 30 a day, and then decided which ones to keep and which to discard.

Another member of the new breed, Giuseppe Petrilli, 58, is president of IRI, the state-owned holding company that controls up to 25% of all Italian industry, including shipping, automobiles, supermarkets, cement and electronics. A onetime economics professor and a good gray administrator, Petrilli came up through the ranks of state welfare agencies and brings a distant chief-of-staff attitude to supervising IRI's far-flung activities.

Whispering Clout. Much of the new managers' clout comes from their close association with Italy's banking community, which is also heavily state-controlled. The country's four biggest commercial banks are state-dominated, and three of them in turn control Mediobanca, Italy's biggest investment bank. Mediobanca provides much of the capital for state acquisitions of private industry. Heading Mediobanca is another manager who has spent almost all his working life in state-controlled organizations: Enrico Cuccia. Even more than Cefis, Cuccia shuns the limelight. He rarely agrees to interviews and has a habit of speaking in whispers when talking to a visitor in his Milan office.

The rise of these state industrialists is squeezing the fun out of Italian business. But it also is demonstrating that, contrary to free-enterprise mythology, government managers can be highly efficient businessmen.

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