Commentary
Alitalia, Ilva and the new Italian government
One thing that is clear about the politicians who are now trying to govern us is that their abilities when it comes to businesses are rather lacking.
Time truly flies: before you know it, Alitalia and the steel company Ilva are in just as much of a mess, but the mess is a few years older. And it’s not because those involved are proudly proclaiming, like Livy’s Roman centurion, “Hic manebimus optime” (“We’ll stay here just fine!”). But at least there is some evidence now that we might be close to a turning point—at least for one of the two.
One thing that is clear about the politicians who are now trying to govern us is that their abilities when it comes to businesses are rather lacking. Of course, the 5 Stars are touting Olivetti as their model, the company where their late chief ideologue, Gianroberto Casaleggio, used to work. But he came on the scene when the vision of Adriano Olivetti and his revolutionary socially conscious business model had already long since vanished, and Roberto Colaninno, who would end up in a disastrous role as “Captain” of Alitalia, was eyeing the top spot. In any case, the 5 Star Movement claiming some connection with the model of Olivetti and his Ivrea-based company is rather specious. As for the Lega, their only possible connection with the company from Ivrea is the fact that their Milan headquarters is located on the same street where the company’s offices used to be, perhaps even (lucky them!) in the very same building. If that’s true, the owners must be very happy with the change in tenants.
We will just note that, when it comes to businesses, the official statements by those currently in government on how to resolve these two long-standing crises tend to be rather surprising.
Let’s start with the Alitalia affair. Both the ruling parties have spoken, albeit half-heartedly, about the need to safeguard the Italian character of the company. More worrisome are Salvini’s unambiguous statements that the current government will not accept breaking up the company, while the reality of the situation is that it simply has to.
And it is not the case that the company is worth very much at the moment, nor that it has any particularly attractive selling points. Among other things, it has long since lost its position of market leader in Italy to Ryanair, and its current second place is now being threatened by the growth of EasyJet: according to figures provided by the Corriere della Sera, Alitalia carried 25 million passengers in 2011 and only 21.8 million in 2017, while the global market grew by almost 50 percent in the meantime. At the European level, its market share in 2017 was only 2.0 percent, and 1.2 percent at the transatlantic level.
Meanwhile, the industry is transforming at a dizzying rate and is showing an increasingly tough level of competitiveness. In this context, there seems to be only one possible solution: break up the whole group and sell it quickly: the flight division to Lufthansa and Easyjet (or WizzAir), and the ground handling services to another company, all the while trying to get something more than what has been negotiated so far in terms of employment levels.
This is the situation, unless someone pulls a rabbit out of the hat at the last minute. Some are hinting again at the usual rumors of a Chinese buyer, but no such buyer has yet materialized, and so far there is little encouraging information on the prospects of a sale.
As regards Ilva, Di Maio has been the one most committed to the issue up to now. At first, he started off by saying it was necessary to close the plant and launch new business initiatives in its place, while the Lega’s position on it is less clear-cut.
This initial proposal by the 5 Stars leader has for a long time been shared also by a good part of the population of Taranto, exasperated by the long delays in the implementation of the Calenda anti-pollution plan and by the fact that they keep getting ill, while the solutions proposed by the Calenda plan appear to be insufficient, to say the least.
However, to imagine that, in the current sorry state of public administration and finances, it would be possible to find new jobs, as part of “new initiatives,” for at least 20,000 workers seems patently absurd, even if we adopt the sanguine outlook of Voltaire’s Candide.
And besides, it is also clear that closing a plant that has such an importance, both for Italy and for the southern economy, seems like an irresponsible idea.
Only slightly less drastic is the proposal by the president of the Puglia region, which calls for the plant to be made carbon-free. This might end up being the plant’s saving grace, but the project is very difficult at the level of feasibility, except perhaps in the very long term.
At this point, while some from M5S still insist on shutting Ilva down, it appears that Di Maio is actually working constructively and in good faith towards a solution (as he appears inclined, not only in this case but also more generally, to listen to others and to learn from them, which is a rare virtue), by improving the Calenda plan with a more forceful effort both in terms of pollution clean-up and in terms of the level of employment.
It is certain that a solution must be found as soon as possible, because soon the budget of the commissioners will run out. So let’s give it a day or two, hoping that the can won’t be kicked down the road again. To err is human, but to persist would be downright diabolical.
Originally published at https://ilmanifesto.it/lalitalia-lilva-e-i-nuovi-governanti/ on 2018-07-08