Julian Moxon/MILAN
The man responsible for reviving Italian helicopter-manufacturer Agusta says: "Someone told me this was an impossible rescue. That's when I knew I was interested."
Amadeo Caporaletti had hardly settled into his office, following his appointment in September 1991 as president and chief executive of Agusta, when the enormity of the rescue task facing him sank in. "Debts were rising dramatically, we were saddled with inefficient businesses and there was no long-term strategy," he reflects.
The good times for Agusta during the 1980s had turned sour in the 1990s. The group was hemorrhaging money through numerous loss-making subsidiaries, the management unable to reverse the decline. Debts stood at L1,900 billion ($1.2 billion), while annual sales were just L600 billion. In 1993, vast state-owned high-technology enterprise Finmeccanica took Agusta over from its bankrupt owner, Efim, and began looking for the right person to bring the helicopter manufacturer out of crisis and put it on a stable footing.
CARTE BLANCHE
The vote to give Caporaletti the job was unanimous, which he says "...proved that this was not a political position, but a commercial one". His reputation as a no-nonsense solution finder had gone before him. This, after all, was the man who, as joint general manager of Aeritalia, had played a significant role in creating the marriage between the airframe manufacturer and Selenia in December 1990, which created today's Alenia. He also negotiated the risk-sharing contract, with Boeing to supply components for the 767 and, with Jean Pierson (now managing director of Airbus Industrie and "still a very good friend"), founded the ATR regional-aircraft consortium with Aerospatiale.
Caporaletti insisted on one thing if he was to undertake the Agusta job. "I had to have carte blanche to do what I thought needed doing". This was granted, and used. Firstly, the flow of money in the wrong direction had to be stopped. "I told everyone that not one single lira should go out of the company without my signature," he says. Then, much to their chagrin, he called a meeting of Agusta's top managers between Christmas and New Year. "It was unpopular, but I knew we had to start 1992 with a clean sheet of paper," Caporaletti says.
Several crucial decisions were taken. "I knew we had to return to the job we knew best - designing and building helicopters," says the Agusta president. The first decision was to hive off the group's electronics, space-environmental engineering and fixed-wing operations. "They were very inefficient, and did not have enough critical mass to make economic sense," he says.
The divestments meant inevitably that jobs had to be lost. In early 1992 Caporaletti began extensive negotiations with Agusta's unions. "We were perfectly honest with them. I said that either we had to adapt, or we would die," he says. A document explaining Agusta's global market position was shown to the unions, which left no doubt about the company's impossible situation. Six weeks after the talks began, the first of several agreements had been forged, and signed, ultimately leading to the loss of 4,000 jobs from the workforce of 9,200 - no small achievement in a country where unions dominate much of the industrial scene.
The business was now recentred on Agusta's headquarters at Cascina Costa, Milan. "We developed the concept of centres of excellence, which were responsible for their own profits," says Caporaletti. Benevento, for example, became responsible for provision of castings for Agusta and other customers, while the Brindisi plant was in charge of sheet-metal production. "Now, we have a network of centres," he adds. The components are fed into the final-assembly plant at Vergiate, about 20km from Cascina Costa.
SOLID FUTURE
The result cannot be disputed. Sales in 1995 stood at L1,012 billion, a rise of some 40% over the 1991 figure. Perhaps more importantly, Agusta has a solid future based on two major collaborative programmes - the NH90 and EH101 transport helicopters, plus three new projects of its own making - the A119 Koala and A109 Power, and the A129 International Mangusta attack helicopter. "We have stopped losing money, and now we have a complete product range," says Caporaletti.
Despite occasional reports of a move towards a marriage with Eurocopter, Caporaletti indicates that GKN Westland remains the favoured partner. The two are already linked closely through the EH101 development programme, having recently formed a common structure to market civil versions of the helicopter.
Caporaletti adds that, while both are European, the long-standing relationships each company has with the US helicopter industry means that they are also aligned culturally. The two parent companies also know each other well through a business relationship. "We're naturally on the way to a stronger partnership," says Caporaletti, "but when, if and how will be up to Finmeccanica."
Source: Flight International
