Italy Inc. is selling some of its distinctive brands to foreign investors with just one condition from Prime Minister Matteo Renzi: that jobs are kept at home.
While the downside for Renzi’s strategy is the country losing the ownership of unique “Made in Italy” producers such as Pirelli, Loro Piana and Ducati, investments from better capitalized buyers could rekindle Italian manufacturing and prevent factories from closing.
“For me there’s no difference between an Italian and a foreign investor, what I care about is the industrial plan,” Renzi’s industry minister, Federica Guidi, said in an interview in Rome. “A fair market without barriers means the best guys can come in. I’m in favor of that.”
That approach has brought global investors to Italy’s door, with deals targeting companies in the country surging more than 300 percent this year to $30.9 billion, according to data compiled by Bloomberg. That’s more than any other country in the euro region and compares with a 9.2 percent gain in Europe as a whole. Foreign companies spent a record $17.1 billion in 2014 buying companies based in Italy, according to Bloomberg data.
“It’s a rational strategy and the only one left for Italy as the alternative is desertification of the manufacturing base,” said Giuseppe Berta, a professor of contemporary history at Bocconi University, author of “The North way: from economic miracle to stagnation.”
Renzi wants stable manufacturing jobs as he attempts to reduce an unemployment rate stuck above 12 percent. Employers have delayed hiring as Italy has been mired in a recession since the second half of 2011, the longest period on record.
Today, with Italy’s gross domestic product finally starting to show feeble signs of recovery, with two straight quarters of expansion, resources from abroad could help make a difference. Unlike some of his predecessors, Renzi -- far from blocking foreign takeovers -- is encouraging investments in the country’s factories.
Supercar maker Lamborghini, owned by Wolfsburg, Germany-based Volkswagen AG, announced last month it will build its new Sport Utility Vehicle in Italy, adding 500 jobs at its Sant’Agata Bolognese factory. It got 80 million euros in tax breaks and other benefits from the Renzi government.
The national carrier Alitalia, which was rescued by Abu Dhabi-based Etihad last year, will add 310 jobs in Italy as part of a 700 million-euro investment plan backed by the Gulf’s third-biggest airline.
“Alitalia can only thrive as an Italian company but, working next to a multinational company like Etihad, which is very disciplined and severe in its approach, will help us,” Alitalia Chief Executive Officer Silvano Cassano said in an interview in April. “Alitalia is now in safe hands financially and the faster we grow, the sooner I can start hiring people.”
Fiat, which moved its headquarters to London and its legal residence to The Netherlands after merging with its U.S. unit Chrysler, hired more than 1,000 workers at its southern Italian plant of Melfi, where it builds Jeep SUV for North America.
The carmaker, whose move made headlines last year, plans to add 1,100 more jobs this year in Italy. CEO Sergio Marchionne plans to build Alfa Romeo and Maserati sedans in Italy to be sold outside Europe.
An eventual sale of car designer Pininfarina to Mumbai-based Mahindra and Mahindra would strengthen the company and provide a stable future for its workers, Chairman Paolo Pininfarina said in April.
“I notice that we didn’t receive any interest in the company from Italian investors, just from foreign ones,” he said.
Pirelli Chairman Marco Tronchetti Provera made the company’s sale to Chem China contingent on the Chinese company maintaining the group’s headquarters and R&D center in Italy. A “super-majority” of 90 percent of the share capital will be needed to move the headquarters or transfer Pirelli’s intellectual property.
Granted, not all efforts to maintain jobs pan out. Whirlpool pledged to maintain jobs when it bought Indesit from the Merloni family last year. Industry Minister Guidi is now trying to prevent the reduction of more than 2,000 positions, or over 30 percent of the company’s workforce in Italy.
For Berta, that’s an indication that even the best intentions will not help keep low-end jobs in Italy.
“The main problem with the government strategy is that the country will end up being dependent on decisions taken in Beijing, Mumbai, Abu Dhabi or Wolfsburg for the survival of productions in Turin or Sant’Agata Bolognese,” he said.
Still, the overall strategy is good for Italy, Guidi said.
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“It’s hard to say whether foreign investors are always good, or always bad,” she said. “I think it is added value that Italy has become a platform” for business.