ROME – Italy's Finmeccanica is to complete its transition to a unified company from a group containing an array of different units by Dec. 31, and will entrust its fortunes to a key team of 10 top managers, CEO Mauro Moretti has said.
Speaking on the sidelines of a conference on Aug. 23, Moretti gave a sense of the massive streamlining he has carried out since his appointment last year when he said, "I have got rid of 200 managers and chosen the 10 that I need."
Results at the group have improved since Moretti took over the helm thanks, he said, to a rationalization program that will culminate by year end in the creation of seven divisions within the firm.
The divisions will be less autonomous than current group companies like aerospace firm Alenia Aermacchi, helicopter builder AgustaWestland, electronics firm Selex, cannon maker Oto Melara and torpedo firm WASS.
The divisions will, however, roughly match the functions of the units they supercede. They are: Helicopters, Military Aircraft, Aerostructures, Airborne and Space Systems, Security and Information Systems, Defense Systems, and Land and Naval Defense Electronics.
In the process, Oto Melara will fold into WASS, suggesting that long-term talk at Finmeccanica of finding a European partner for Oto Melara may be on hold.
The new divisional structure will not include Finmeccanica's US electronics firm DRS, nor its stakes in missile house MBDA, its space joint ventures with Thales or its ATR prop aircraft joint venture with Airbus.
Addressing analysts on July 31, Moretti stressed that he would be keeping a close eye on the divisions. "The heads of the divisions will be meeting with me continuously… reporting directly to me," he said.
"All key personnel have been appointed and we are moving swiftly to the execution phase" to start on Jan. 1, he added.
Finmeccanica has yet to say who the divisional heads will be, or whether the current unit names will continue to be used in some form.
The line-up of unit heads now includes Daniele Romiti at AgustaWestland, Fabrizio Giuliani at Selex and Filippo Bagnato at Alenia. The latter is an experienced manager who has worked at Eurofighter and ATR and was brought in by Moretti to replace Giuseppe Giordo. As a Moretti appointment at Alenia, he is likely to feature in the CEO's group of 10 top managers.
Also likely to play a key role is Giuseppe Soccodato, Finmeccanica's strategy chief, who has been given visibility since Moretti arrived last year. Chief Financial Officer Gian Piero Cutillo, who accompanies Moretti at his quarterly meetings with analysts, has also become a visible point man in the new set up.
"The rationalization is a long-term process that was started by previous CEOs," said Gabriele Gambarova, an analyst who follows Finmeccanica at Banca Akros in Italy.
"Airbus has done it — it's sacrosanct. Before the units did what they wanted in terms of capital expenditure and research and development and it was very messy," he said.
"Another important change was the transfer of hundreds of aerostructure staff at Naples to maintenance firm Atitech," he added.
Moretti told analysts he wanted the group to focus on the Far East, the Middle East, Sub-Sahara and North Africa and the Pacific coast of South America.
But from now on, he said, Finmeccanica would have a common front office in overseas markets for all its products. Hitherto, he said, different units would market their wares without knowing that fellow units were targeting the same markets. Now, he said, "We will speak with one voice."
That would allow the reduction by one-third of the 30 different offices Finmeccanica currently operates around the world, he added.
After hinting he would sell off DRS last year, Moretti suggested healthier results from the firm and a strong dollar meant he would hold on to it, albeit after "some disposals."
"DRS is performing quite well and we are expecting more improvement in second half," he said. Moretti suggested he would look for synergies between DRS and Selex, an ambition held by previous Finmeccanica CEOs that was never realized.
As for Finmeccanica's stake in MBDA, he said, "Everything has the right price," and added that in six months he would "consider the different offers and decide."
More than just corporate paper shuffling, the creation of divisions marks a step in a long-term process at Finmeccanica to incorporate units that are imbued with tradition and ties to Italian regions dating back to their birth as private companies, before they were taken over by Finmeccanica.
Count Giovanni Agusta, the founder of the helicopter firm, flew his first plane in 1910. When the firm was banned from building aircraft after Italy was on the losing side of World War II, Agusta turned to building race-winning MV Agusta motorbikes, before returning to the helicopter market.
Oto Melara can trace its roots back to 1927 in Genoa while WASS dates back to Englishman John Whitehead, who developed the world's first effective self propelled torpedo in 1875 in Fiume, which was then part of the Austro Hungarian empire and is now in Croatia. ■
Email: tkington@defensenews.com
Tom Kington is the Italy correspondent for Defense News.
