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Know your Billionaires!

The Agnelli Family, a Turin Dynasty

It’s a nice idea that many entrepreneurs work their way up from nothing to become highly successful, but this doesn’t usually bear much relation to the facts. Fiat’s founder is a case in point. Giovanni Agnelli, was born in 1866 to a wealthy family of landowners in the Piedmontese region of Villar Perosa, 80 km south-west of Turin. A military career was set out for him and he was trained as an officer at the Military Academy of Modena before becoming a calvary lieutenant. However, in 1899, enthralled by the big innovation of the late nineteenth century – the car – he founded, with several partners, the Fabbrica Italiana di Automobili Torino, which was then called Fiat. He was passionate about racing and won several awards. But it was war that really enabled Agnelli’s business to take off, first that against Libya in 1911 and then World War I between 1914 and 1918. Agnelli was to provide support by supplying as much equipment as possible. This included trucks, machine guns, aircraft engines and ambulances.

The company grew from just 50 employees in its initial years to over 10,000 in 1915. A brand new factory was required to manufacture impressive amounts of military equipment for the Italian army. This was to be the Lingotto factory, which opened in 1922 in Turin’s southern suburbs. From the outset, the new company imitated Henry Ford’s production model with mechanisation, assembly line production and division of labour. The company expanded even more with the Mirafiori factory, located on the outskirts of Turin. The larger factory was designed in 1936 and completed in 1939, on the eve of World War II.

Giovanni Agnelli gradually took over his partners’ shares and became Fiat’s official chairman in 1920. But this role didn’t prevent him from spreading fake rumours so as to influence stock prices or from fudging the true value of shares so as to swindle small investors. In 1908, Fiat’s entire board had to resign due to falsification of accounts. The prosecuting attorney was, however, unable to provide adequate evidence and Agnelli was acquitted.

In 1914, Agnelli met Benito Mussolini and decided that his car company would finance his political party. When companies like Fiat came under heavy attack for the excessive profits reaped during the War, Mussolini was to show his gratitude by wiping the slate clean.

A holding company, a football club, a newspaper

The 1920s were an opportunity for Agnelli to branch out, and he acquired a significant stake in La Stampa, one of Italy’s main newspapers published in Turin. Six years later, he was to become the sole shareholder. He also invested in tractors, railways, ships and planes, and gained ownership of the Juventus football club in 1923. He created his own bank, enabling people to purchase his cars on credit. In order to manage this empire, he founded IFI in 1927, a holding company he controlled, now known as Exor.

But his most lucrative venture remained military equipment. In 1923, he was named senator for life and joined Mussolini’s fascist party in 1932. This meant that the majority of government and military procurement came his way. Then, when Italy formed an alliance with Nazi Germany, he provided military equipment to the Germans. Although he expressed support for the Americans as soon as it became clear that Mussolini was on his way down, in 1945 Giovanni Agnelli’s possessions were taken from him. He died on December 16th 1945 at the age of 79.

He left his empire in the hands of his grandsons, Giovanni or “Avvocato” (nicknamed such because he had a degree in law although he never practised as a lawyer) and Umberto. As they were both too young to manage such an enterprise, Vittorio Valletta, Fiat’s managing director, was named president. Giovanni, the eldest, was just 24 and embarked upon a society life of mischief and shenanigans, closely followed by People magazine until 1966 when he took over as Fiat’s chairman, following Valletta’s retirement. His annual income at the time was estimated to be one million dollars, a sum that would allow him to party hard enough to keep his place on the front page of the tabloids.

The Valletta era was particularly tough for the company’s employees. Valletta had no qualms in firing workers accused of being communist sympathisers. Fiat also played a key role in keeping the Italian Communist Party out of government as well as in the rise of the Christian democratic party, with the support of the Americans, thanks notably to the Marshall Plan. Valletta was also one of the founding members of the Bilderberg Group (1954), the semi-secret organisation that brought together powerful leaders in Europe and North America.

The Agnelli family took part in major international conferences that brought together select committees of the world’s economic and political elite. These included the Bilderberg meetings and the Trilateral Commission which, in 1973, included Japan, and later Asia, as well as the Italian branch of the Aspen Institute.

Giovanni Agnelli or “Avvocato” was gradually introduced into Fiat’s circles of power. He was elected mayor of Villar Perosa in 1946, and in 1959 was named chairman of IFI. Four years later, he became the director of Fiat, a position he held for three years until he became the company’s president. In 1957, he attended a Bilderberg meeting for the first time. Six years later, he was a member of its steering committee.

A group that accounted for approximately 3% of Italy’s GDP in the 1980s

In the years following the war, the Agnelli family expanded its grip over the Italian economy and industrial sector through its main company, Fiat. This was achieved by an approach that included hiving off activities, thus creating a vast network of vertical integration, from the separate pieces to the finished product so that the entire car was produced by Fiat. The new subsidiaries included Iveco, created in 1975 and which produced heavy goods vehicles. And Teksid, established in 1978, which manufactured steel for Fiat. In 1973, COMAU, a company specialising in robotics and automated systems, was added to the list.

Fiat also took over other enterprises, mostly car companies. It took over Autobianchi in two stages, first in 1955 with a shareholder’s pact between Pirelli, Fiat and the Bianchi family, and then in 1968, acquiring full ownership. Lancia was the next to join the consortium in 1969. Fiat gained a 50% stake in Ferrari in 1969, fully acquiring it in 1989. Similarly, Magneti Marelli, established in 1919, in partnership with Ercole Marelli, a manufacturer of electric equipment, was sold in its entirety to Fiat in 1967. It is estimated that the Fiat Group accounted for approximately 3% of Italy’s GDP in the 1980s.

At the same time, the Agnellis teamed up with Enrico Cuccia, the president of Mediobanca, a semi-public bank and significant figure in the history of capitalism in Italy. Cuccia became the family’s advisor. But the relationship was not one-sided. When Ford sought to acquire Alfa Romeo in 1986, Cuccia did everything in his power to prevent the deal from going through, and Fiat was able to buy out its competitor for a price lower than that offered by Ford.

Italy thus became a country governed by a handful of tight clans, with the Agnelli family among the most powerful.

As the economy became increasingly globalised, it was no longer enough for the Agnelli family to reign over Italy alone. In the late seventies, Giovanni and Umberto Agnelli handed over Fiat’s operational management to experts in this domain. The “Avvocato” decided to go into politics with the “Per le Autonomie” political group. He was named senator for life in 1991. His brother was involved with the Christian democrats.

In 1983, Umberto co-founded the European Roundtable of Industrialists (ERT), bringing together some 45 leaders of European multinational corporations whose task was to undertake high-level lobbying activities within European institutions. A Fiat representative regularly takes part in the Roundtable.

In 2003, Giovanni died, followed by his brother 16 months later. The Avvocato’s grandson, John Elkann, then took over the reins. He appointed Sergio Marchionne as president of Fiat, who embarked upon a huge overhaul of the group. He saw Chrysler’s troubles as an opportunity to buy out the company, which he did progressively from 2009, eventually integrating it into a new structure called FCA (Fiat Chrysler Automobiles).

Agnelli’s holding company increased its stake in a reinsurance company based in Bermuda

In 2014, the group split its operations into two, separating its car-making subsidiaries – FCA, COMAU, Teksid and Magneti Marelli – and its industrial division, which manufactures trucks, tractors and other construction equipment, now called CNH Industrial. Both are owned by the holding company Exor, with the Agnelli family a majority shareholder (29% stake in Fiat and 27% stake in CNH Industrial).

At the same time, the family began investing in more profitable sectors than the traditional industrial sector, which had previously been its focus. Fiat Ferroviaria was sold to Alstom in 2001 ; and Magnetti Marelli to the Japanese to the Japanese company Calsonic Kansei in 2018. Both Avio and Fiat Engineering were also sold. Ferrari was put back on the stock market but Exor still owns 23.7% of the company’s shares.

In addition, Agnelli’s holding company increased its stake in Partner Re in 2015, a reinsurance company based in Bermuda. A merger project with Axis Capital, which did not come off (Partner Re opted out of the deal) resulted in the family taking full control of the company, even though its previous stake was just 9.9%. That same year, the British company Pearson sold its shares in the magazine The Economist, thereby enabling Exor to increase its 4.7% stake to 43.4%.

The family has, therefore, remained active, not only in Italy but all over the world, as illustrated by the failed attempt to merge with Renault. John Elkann’s self-proclaimed goal is to make FCA a major player in the global automotive industry, by producing some 8.7 million cars annually, a figure, which jumps to 15 million if we add Nissan and Mitsubishi Motors to the mix.

John Elkann’s net worth was 760 million euros (850 million USD) in 2016. The Agnelli family’s rose to 12 billion euros (13.5 billion USD) in 2014.

Henri Houben, Gresea

Agnelli Family
Net worth : John Elkann made over 760 million euros (850 million dollars) in 2016 (Forbes)
= more than 22 245 years of the average salary in Italy. The Agnelli family made over 12 billion euros (13.5 billion dollars) in 2014.
Country : Italy
Sectors : Automobile, Investments
Companies : Fiat, Exor
Football club : Juventus (Turin)
By Gresea

Photo credit : John Elkann in 2009 in St. Gallen (CC International Students’ Committee via Wikimedia Commons).

Translation : Susanna Gendall

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