From Fiat to Luxottica: how and why empires crumble

Gianni Agnelli harboured a regret that stayed with him throughout the second half of his life: “In the end, I’ll be remembered as the man who sold what my grandfather left me,” he confided to his very few close friends. Ever since he had taken the reins from Vittorio Valletta in 1966 – a handover marked by much gratitude (the ‘Professor’, as he was known, was heartbroken and died a year later) – he made several attempts to sell off Fiat. The first attempt was with Citroën, in full agreement with the Michelin family who controlled that very chic company; Charles de Gaulle, still reeling from May ’68, stood in the way. Then came Ford in 1985, when Fiat was at the height of its success, and General Motors in 2000 as collapse loomed. Finally, there was Peugeot, but by then ‘l’Avvocato’ was no longer with us; the fifth generation had taken the helm, led by a grandson who is not called Agnelli. The story comes to mind now that the Del Vecchio family is looking to sell, even though they are only the first generation. In reality, it was Leonardo himself who had established his Luxottica company across the Alps; however, at Essilux, a company incorporated under French law, the reins of control remain, for the time being, in Italian hands. If the dispute amongst the eight heirs were to end in a free-for-all, as it seems likely, it would be a sensational case of premature extinction.

The American historian David S. Landes wrote that one can only speak of a dynasty if a family survives beyond the third generation. Very few in Italy have managed this, according to the popular saying that ‘the first generation creates, the second maintains, the third destroys’. If we take a look at what has happened over the last three decades, we cannot help but be struck by it. All the major private companies have either collapsed or been sold off. Over the past thirty years, the leading players in the automotive, chemical, steel, textile, oil, cement, telecommunications, consumer electronics and household appliances sectors have vanished. Does the ‘small is beautiful’ mentality prevail in Italy? Do Italians simply not have what it takes to sustain large-scale industry, let alone a multinational? There is some truth in this cliché, yet in the last century this was not the case. By the mid-1980s, Fiat had overtaken Volkswagen. Olivetti invented the first personal computer, though it soon abandoned the venture. Montecatini introduced plastic into everyday use. Pirelli was among the absolute pioneers in the rubber industry. Ferruzzi influenced the global cereals market. Merloni introduced new washing machines.

Libraries are crammed with books on the rise and fall of great empires, but they are all political histories, from Edward Gibbon in the 18th century – who had it in for Christianity – to Daron Acemoglu today, who takes issue with institutions. Few, however, have analysed the fortunes of economic empires. Every story is different, partly because the heroes and anti-heroes are different, yet there are many points of similarity.

The first is ownership, which becomes uncertain when the business opens up to new capital and new managers entrusted with its running, but above all when it faces the transition to new generations. The second is hubris, which affects both the ‘ironmaster’ and the manager. Then there is politics, which in the Italian context always interferes; to keep it at bay, industrialists have bought newspapers, but it has never been enough. Last, but certainly not least, is technological development: when it gets out of hand, when it is too far ahead for the company’s ability to adapt, that is when the trouble begins.

In the downfall of the Italian automotive empire, the dynastic factor played a particularly dramatic role. Gianni had been chosen partly because Umberto was too young and the Salic Law prevailed in the family, just as it did in the Savoy monarchy: never a woman in charge. The Lawyer had a son who seemed like the last of the Buddenbrooks; his passions lay elsewhere, and with his parents absent, he lived practically with his maternal uncle Nicola Caracciolo di Castagneto, known as ‘the Green Prince’ for his environmentalism and his campaign against nuclear power. His brief, troubled life led him to take his own life in 2000 at the age of 46. His relationship with his daughter Margherita was even more strained, and remains so to this day. It seemed as though fortune favoured Giovanni Alberto – known as Giovannino – Umberto’s son, a strapping lad who had all the right qualities for the role, but he was struck down by cancer in 1997 at the age of just 33. In reality, another figure could have led the family: Susanna – known as Suni – but she was, after all, a woman.

The Lawyer died in 2003; a year later, his brother also passed away, and Fiat was in disarray. The loan granted by the banks – which would certainly have become shareholders with a 25 per cent stake – was due to expire; internally, top manager Giuseppe Morchio was eyeing the top job, whilst externally, Roberto Colaninno (who had moved from Telecom to Piaggio) was plotting a coup. John Jacob Elkann, known as Jaki, is certainly a tough character behind that boyish face, but he was still green. In that fateful year of 2005, it was Suni who pulled Luca di Montezemolo out of her hat, whilst her trusted adviser Gianluigi Gabetti had Sergio Marchionne up his sleeve. The rest is history—including legal history. The Avvocato’s will is being contested by Margherita, who has turned against her mother’s memory and against the children she had with Elkann in order to support those she had with the Russian nobleman Serge de Pahlen. A Greek tragedy set in the Canton of Ticino.

The Marzotto family managed to survive into the third generation, but even their wool empire crumbled when a dynasty that had grown too large lost its sense of belonging and purpose. And to think that Enrico Cuccia had already devised one of his convoluted strategies to transform the historic family – which had begun spinning wool in Valdagno in 1836 – into the Italian equivalent of LVMH. The idea was to merge Marzotto with the financial firm HPI, an operation also known as ‘Supergemina’ because it involved Gemina, the financial company headed by Cesare Romiti and his family. The shareholding would have been in the hands of the ‘usual suspects’: Fiat, the Marzotto families (note the plural), Mediobanca, Pesenti, the ‘copper king’ Orlando, Pirelli, Lucchini and, of course, Generali. It lasted the space of a spring, from March to May 1997. Since then, everything has gone downhill. Five years later, HPI – which had become HDP – sold Valentino to Marzotto, which also controlled the German firm Hugo Boss; however, the numerous relatives turned against Pietro Marzotto, who was trying to keep them all together. Luigi, Gaetano senior, Vittorio Emanuele, Gaetano junior, Pietro and finally the handsome Matteo: two centuries, six generations, a dynasty that fell to pieces – “the stuff of operettas”, as the last “Sior Conte” had said before his death in 2018, embittered by the squabbles amongst seven brothers and a myriad of cousins. Today, some family members produce wine, others trade real estate, and still others operate in tourism (the Jolly Hotel chain was theirs); the parent company was acquired by Antonio Favrin, a former top manager of the group, while in Valdagno the memory of the working-class neighbourhood remains – the factory town, or perhaps the town-factory. The young Merloni dynasty has also dissolved, torn apart by feuds, particularly following Vittorio’s death in 2016, and the household appliance business has ended up in Turkish hands, having passed through American ownership.

The Pirelli family has not spanned three generations – not directly, at least. Giovanni Battista founded the rubber goods factory in 1872, made his fortune from submarine cables, then moved into tyres at the turn of the 20th century, where the company reigned supreme until 1990, when even Leopoldo, the ‘gentleman capitalist’, threw in the towel, defeated by the attempt to acquire the German firm Continental. His father, Alberto, was a leading figure – cultured and elegant – who had brought Benito Mussolini into the fold of the international elite. His eldest son, a writer and anti-fascist partisan, handed over the reins of the company to his brother Leopoldo, a moderniser who sought to reform Confindustria and turned the group into a true multinational (in the 1970s it merged with the British firm Dunlop). The German debacle prompted him to hand over the reins to his son-in-law Marco Tronchetti Provera, who had married Cecilia in his second marriage. And with him, everything changed. He sold the cable business to a consortium of managers backed by Goldman Sachs (today they are world leaders through Prysmian), acquired Telecom Italia in 2001 (which he left after four years of industrial and, even more so, political disputes), Pirelli focused on the premium segment, and in that same year, 2015, the majority stake passed to the Chinese firm Sinochem. Tronchetti retained control; a year ago, the Italian government imposed the ‘golden power’ clause, and the Beijing-based shareholders took a step back. Pirelli is still here, but now a far cry from giants such as Michelin, Bridgestone, Goodyear and the rapidly rising Chinese firms.

Olivetti’s decline began with the death in 1960 of Adriano, son of the founder Camillo. This was followed by almost twenty years of missed opportunities, with a shareholder base – built up by Cuccia – that was as diverse (Mediobanca, Fiat, Pirelli, Imi, La Centrale Finanziaria) as it was distracted, and certainly unwilling to invest the capital needed to support the digital revolution. In 1978, Carlo De Benedetti arrived. A single man at the helm seemed the best solution, thanks to the ‘virile presence of the entrepreneur’, as Bruno Visentini – who had chaired the company – would put it. Except that De Benedetti was not content with this, as we shall see. ‘Whenever he was offered deals that would have taken him to the pinnacle of power, his desire to cash in immediately prevailed,’ wrote the financier Francesco Micheli, who had been close to him.

The Pesenti family’s lineage in Bergamo dates back to the Middle Ages, but their journey from the first to the third wave of capitalism began in the early 20th century, when Italcementi was founded. Carlo (1907–1984) was a leading figure in the post-war period; he produced not only cement, but also cars through Lancia, insurance policies through Unipol and Ras, news through La Notte, and heavy machinery through Franco Tosi; he stood his ground against Michele Sindona and the Agnelli family, but not against the iron laws of the market. His son Giampiero, married to Franca Natta – daughter of the chemist Giulio Natta, who won the Nobel Prize in 1963 for his discoveries in polymer technology – entered the ‘inner circle’ of Mediobanca, where he played a significant role. That was until his heir, Carlo, sold the group to the German firm Heidelberg in 2016, marking a shift from manufacturing to finance.

The Morattis, princes of ‘black gold’ (with Eni always reigning supreme), made a bitter exit from the oil industry. Angelo (1909–1981) began selling lubricants at the age of just 16 and traded in mineral oils right up until the Second World War. In 1946, he realised that the post-war reconstruction effort required petrol and that Italy could become a giant refinery. In Sardinia, at Sarroch, near Cagliari, he opened the largest plant in the Mediterranean. He became a public and popular figure thanks to the successes of Inter Milan, managed by Helenio Herrera. Together with Agnelli, he bought the Corriere della Sera to help the Crespi family (historic Lombard cotton merchants), then sold it to Rizzoli in 1976. Of his six children, Bedy became an actress; Massimo became so passionate about Inter that he lost himself in the club; and only Gian Marco (who was also married to Letizia Brichetto) followed the path of the oil industry. By the time he died in 2018, the group was already faltering, and it was Massimo who sold the family business, Saras, in 2024 to the Dutch company Vitol for 650 million euros. The other oil barons, the Garrone family from Genoa, sold their Sicilian refinery in Priolo to the Russian firm Lukoil and switched to renewable energy. Attilio Monti, known as ‘Artiglio’, did not see his business survive beyond the first generation: in 1979, he sold Eridania to Ferruzzi and his oil assets to Eni; his sole heir, Maria Luisa, married Bruno Riffeser, and upon her death, her son Andrea took the reins of a group divided between financial activities and newspapers. *Il Resto del Carlino*, *La Nazione* and *Il Giorno* – after Eni sold them – are now part of Leonardo Maria Del Vecchio’s portfolio.

Alessandro Benetton cut his teeth in finance, but his ambition is to become the figurehead of a family that is at risk of falling apart as early as the second generation. Alessandro and Rocco are Luciano’s sons; Barbara and Sabrina are Gilberto’s daughters; Andrea, Christian and Leone are Carlo’s heirs, whilst Giuliana has Daniela, Franca, Paola and Carlo Junior, and they are considering whether to sell or reduce their shareholdings. In short, the empire of colourful jumpers is set to change once again. Thanks to Gilberto, who passed away in 2018 (the same year as his brother Carlo), the group has moved from manufacturing to infrastructure; it manages motorways in Spain, France and the Americas, as well as airports (Fiumicino being the most important), railway stations, Telepass, digital infrastructure and shareholdings (such as in Generali), It is now seeking to revitalise the textile sector, where it all began. The family holding company, Edizione, is in transition, not in decline.

Dramatic, however, is the end of Serafino Ferruzzi’s empire, with the tragic fate of Gardini and the sombre demise of Italy’s second-largest industrial group, Montedison. We shall discuss this. A merchant, farmer, industrialist and stockbroker, Serafino was a key figure in the economic miracle. His parents were smallholders who supplemented their income by selling hand-woven rush baskets. Their son began as a farm manager for the Marquises Cavalli, but when Montecatini was looking for a sales representative for fertilisers and chemicals, he seized the opportunity. The war also put a stop to his ambitions, and the turning point came in 1948 with the grain market. Success led to cement, farms in South America, sugar, newspapers in partnership with Monti, and finally finance. He died in a plane crash in 1979, by which time he had reached the pinnacle of Italian capitalism. All the assets were registered in the names of his four children: Idina, Franca, Arturo and Alessandra. The son was favoured with a 31 per cent share, whilst each of the daughters received 23 per cent. Meanwhile, however, Raul Gardini – the ambitious husband of the eldest daughter – had risen to the top, and the Ferruzzi heirs entrusted him with the reins. To what extent?

It is the mid-1980s, recalls Sergio Cusani, who worked alongside Gardini. Mediobanca was pressing for the Ferruzzi group to gain entry into the so-called ‘inner circle’, but ‘Il Contadino’ – as he was known at the time – bought up shares left, right and centre and took over Montedison. To finance the deal, he requested 2,000 billion lire from the Banca Nazionale del Lavoro, headed by Nerio Nesi, offering as collateral shares backed by the assets of Serafino Ferruzzi, who had left over 1,200 billion lire in Luxembourg. Thus was born Italy’s second-largest industrial conglomerate, with revenues of around 20,000 billion lire, 52,000 employees and more than 200 plants worldwide. At the same time, debt also grew, becoming a burden that would soon prove unbearable. There were dark omens for the Enimont deal. The plan was to merge Montedison with Eni’s chemicals operations through a joint venture (40 per cent each and 20 per cent held by the market). Basic chemicals were already seen as a sector to exit, and Gardini had envisaged focusing on biofuels and the processing of agricultural surpluses. Eni, for its part, wanted to concentrate on gas and oil. A marriage of convenience turned into a power struggle. In 1990, Montedison sold everything to Eni for 2,805 billion lire, a price deemed exorbitant which concealed a massive bribe of 150 billion. The scandal erupted, engulfing all the key figures involved in the deal. Gardini took his own life three days after the suicide of Gabriele Cagliari, chairman of Eni, because he could not bear the defeat of his dream of greatness and the stain on his honour.

The Ferruzzi collapse dragged the whole of Montedison down with it, including Il Messaggero, which was subsequently sold to Francesco Gaetano Caltagirone. Founded in 1966 under the guidance of Mediobanca through the merger of Montecatini and Edison following the nationalisation of the electricity sector, the history of the chemicals group is also intertwined with the hubris of managers brimming with vision and ambition, such as Eugenio Cefis, who, from the top of Eni – a position he had reached following the death of Enrico Mattei – climbed the ranks at Montedison using funds from the hydrocarbons agency; he is the very embodiment of the ‘ruling class’ described by Eugenio Scalfari and Giuseppe Turani. When he left in 1977 without explanation, Cuccia told him: ‘And I thought you were planning a coup d’état’. Mario Schimberni took his place; nicknamed ‘the little man in grey’, he would prove himself a worthy successor to the wolves of Wall Street. He sought to free himself from cumbersome and impoverished shareholders, challenged the ‘Agnelli system’, took control of the insurance company La Fondiaria, and developed the concept of the public company, but he never managed to break free from politics: in 1994, he confirmed that Montedison paid between 400,000 and 600,000 dollars a year to the PSI and the DC. Craxi wanted more – up to 1.2 million dollars.

Politics certainly played a part in the irresistible rise and equally dramatic fall of Carlo De Benedetti, who spent his life buying and selling without pause: Fiat in 1976, when he was chief executive for 100 days; Banco Ambrosiano in a veritable hit-and-run deal; Olivetti; Buitoni; Omnitel and La Repubblica; he sought to acquire Société Générale de Belgique, snatching it away from the Franco-Belgian financial establishment – and that is when the collapse began. ‘The Engineer’ was an industrialist – and a successful one at that – at Olivetti and in the mobile phone sector, as Paolo Bricco wrote in his thoroughly researched book; yet his vocation and instinct as a financier both guided and misled him, just as they did in politics. He presented himself as a hard-line, unadulterated capitalist, yet one open to the Communist Party. Neither the right-wing Christian Democrats nor Craxi’s PSI forgave him for this, whilst Agnelli could not forgive him for attempting to take over Fiat itself. It was almost inevitable that Berlusconi would become his number one enemy. The Democratic Party, of which (as he claimed) he held membership card number one, never managed to defend him (and many did not even want to).

Not even Enrico Cuccia, the ‘Lord Protector’ of the great families, shied away from politics; from the 1960s onwards, he had transformed Mediobanca into the most effective weapon for defending private capitalism against the expansion of the state. An anti-communist of yesteryear (even though he charmed Massimo D’Alema) and an anti-socialist (even though he sought help from Bettino Craxi against Prodi), his political point of reference had always been Ugo La Malfa, the influential but somewhat insignificant Republican leader. His main enemies were to be found within the Christian Democrats, even on opposing sides such as Amintore Fanfani (who was very close to Cefis) and Giulio Andreotti, whilst Nino Andreatta and Romano Prodi managed to oust him in 1985. Cuccia, having returned thanks to private shareholders, took the reins once more until the very end. Despite his aversion to newspapers, he retained a say over the Corriere della Sera. His protégés did not have enough money; a word from him was enough. For Fiat, he even secured the backing of Gaddafi and Cesare Romiti. He died in 2000 without the fortunes he had amassed for his ‘key debtors’, and Mediobanca faded away with him. Neither his protégé ‘Vincenzino’ Maranghi, who lasted at the helm for barely three years, nor Alberto Nagel, who remained at the helm until 2025, could be considered his true heirs – not least because, by then, the world of the brilliant banker no longer existed.

“The problem of a master (or rather, many masters) of Italian capitalism is becoming urgent,” wrote Romano Prodi in 1992. This was the rationale behind the privatisation of public enterprises, which were not sold merely to raise cash. The initiative failed. A new generation of business tycoons has emerged, but from the grassroots, while the large state-owned groups have ended up in the wrong hands. This occurred with Telecom Italia, with Finsider and with the motorways; telecommunications, steel, infrastructure – strategic sectors taken over by entrepreneurs who proved unequal to the task: some, like the Riva family in the case of Ilva, because they were ousted by a convergence of politics and the judiciary; others, like the Benettons, because they ultimately proved to be tight-fisted and turned a blind eye to safety, as the collapse of the Morandi Bridge revealed. Telecom has been returned to public ownership via the Post Office; Autostrade per l’Italia was bought back by paying 8 billion euros to the Benettons; and Ilva has effectively been nationalised for years. Even the ‘king of rebar’, Luigi Lucchini, former president of Confindustria, failed to run the Piombino steelworks. The exception is Dalmine, acquired by the Rocca family, who have weathered the ‘third-generation syndrome’ well. The Italian steel industry has not disappeared; on the contrary, it is the second largest in Europe, but it has changed radically.

Almost all of Italy’s industrial empires have faded away, partly due to their inability to keep pace with the wave that will lead to the new industrial revolution. This applies to Fiat and the motor industry, to basic chemicals, to blast-furnace steel – wherever technology interfaces with the environment and where the boundaries of industry are no longer national. Globalisation, from the 1990s onwards, has exposed the limitations and weaknesses of large-scale Italian industry, whilst offering new opportunities to small and medium-sized exporting businesses. But the story that best illustrates the failure to catch the high-tech bandwagon is that of Olivetti. De Benedetti had tried his hand at it by forming an alliance with AT&T, in the hope of being able to make use of all the wonders contained within the American giant’s laboratories. It did not turn out that way. Even today, "The Engineer" still reproaches himself for not having invested in Apple when Steve Jobs proposed it to him. Above all, he lacked the necessary patience; he wanted everything at once, whilst the technological wave is a long and costly process: it took a decade before computers boosted productivity and profits. CDB also faced what might be called a ‘dynastic’ problem. Rodolfo, the son who took the reins, had other ideas; it was he who pushed for the sale of the Espresso group (or rather Gedi, as it came to be known), refocusing CIR, the family holding company, on clinics and car components. It is a far cry from what it once was, but the dreams have been shattered for good.

Has the decline of the major industrial groups led to the deindustrialisation of Italy? No; ultimately, the model that we would today call ‘populist’ prevailed. Whilst the Constituent Assembly brought together Catholics, Socialists, Communists and a handful of Liberals, a number of key figures involved in what would become the post-war reconstruction were consulted. Two schools of thought immediately clashed: the first wanted to focus on small and medium-sized industry, because ‘Italy is a nation of artisans’; the second, by contrast, centred on big business, both old and new. It was Valletta who broke the deadlock: he set about building cars, high-speed trains, lorries and aeroplanes at full speed; he backed the ‘Autostrada del Sole’ motorway and then the nationalisation of the electricity sector alongside Fanfani and the Socialists. Italy remains Europe’s second-largest manufacturing nation, but without the impetus of large enterprises, it risks remaining a follower, a mere water-carrier.