Italy: The Destiny of Dynasties

Two of Italy's greatest industrial dynasties began only 25 miles and nine years apart, and rose with parallel vigor to worldwide fame. In Turin in 1899 Giovanni Agnelli established Fiat, destined to become Italy's leading auto producer. Nine years later, in sleepy Ivrea, Camillo Olivetti founded the typewriter company that became equally famous for its office machines. But fortune has not smiled equally on the two in recent years, and last week one dynasty had to bail out the other. Organizing support from a syndicate of banks and businessmen, Agnelli's grand son rounded up $50 million to infuse the company run by the grandsons of Olivetti with desperately needed working capital.

Out of Argentina. Inflation is ham stringing all Italian industry; Milan's stockmarket last week dropped to a four-year low, and Fiat, stung by anti-inflation government taxes on car pur chases and gasoline, looks for a sizable production drop this year. But Olivetti, whose global sales reached $360 million last year, has been especially hard-hit.

Five years ago the company took a calculated risk, becoming the first European corporation since World War II to take over an American firm. It now holds 90% of the stock of foundering Underwood, onetime leader in the U.S. business-machines field, whose ragged research and inadequate product line had pushed it into hard times. But Olivetti had hardly nursed Underwood back from a 1959 sales low of $75 million to annual sales of $117 million — and a profit last month for the first time — when other problems appeared.

In Italy's important export market of Argentina, where Olivetti has long built typewriters and calculators, an attempt to ship in other machines was almost completely cut off last year by Argentine import restrictions. In neighboring Brazil, inflation far worse than Italy's ate up Olivetti's profits. Heavily dependent on South American sales, damaged by the Italian spiral and drained by its effort in the U.S., Olivetti had insufficient income to cover the costs of its vastly expanded plants, which turn out products noted for their quality and design.

Trouble & Optimism. Olivetti's condition was made more critical by the fact that the dynasty was collapsing. Since Camillo Olivetti's death in 1943, his three sons, three daughters and their children have never been able to agree on common moves. Olivetti limps along on a codirectorship of Grandsons Roberto and Camillo Olivetti, representing two different factions. About all that they have been able to codecide is that they need the Agnelli syndicate to come in and buy one-third of Olivetti. To run Fiat and some 110 other companies that range from cement to Cinzano vermouth, Giovanni Agnelli's twelve heirs have put their combined holdings into a smoothly functioning holding company called Istituto Finanziario Industriale.