Agnellis’ global push risks perils of rootlessness
Holding company’s move from Italy could tempt Fiat owners towards short-termism, writes Andrew Hill
John Elkann told reporters at this weekend’s meeting of Exor shareholders that the majority vote to move the Agnelli family holding company’s headquarters from Italy to the Netherlands, was not a symbolic choice, but a natural one.
But the chairman of Exor, which controls the carmaker Fiat Chrysler, was making a false distinction. The decision is both natural and symbolic.
Natural, because, since Fiat’s merger with Chrysler, the Agnelli family has controlled, through Exor, a genuinely global group. Core elements of the group have already moved to different locations, for different reasons: Fiat Chrysler itself is legally incorporated in the Netherlands and has fiscal residence in the UK, for instance. Mr Elkann — grandson of Gianni Agnelli, a global industrialist who nevertheless kept Fiat firmly in Italy — was right in saying that Exor is a “container” that is merely following its contents.
Yet it is disingenuous of him to imply that Exor’s departure is not also a symbol. The T in Fiat stands for “Torino”, after all, and Turin once was home to 100,000 Fiat workers, against the 5,000 currently employed there.
Over the years, Italians have often lamented the fact that hardly any Italian companies grow to have global significance. Fiat was one of the few, but it still came close to failure in the early years of this century. Exor, which also controls Ferrari, the US reinsurer PartnerRe, as well as holding a significant stake in The Economist, is indubitably stronger for its international reach.
Global significance, however, encourages less attractive global habits, one of which is the adoption of a certain useful rootlessness, for reasons of fiscal or operational efficiency. Multinationals grow distant from the places where they grew up and, as those ties weaken, their bosses and investors often succumb to the temptations of short-termism and expediency.
When the regional president of Piedmont, of which Turin is the capital, commented on the proposed Exor move in July, he pointed out how the decision increased the pressure for Turin to use its automotive heritage and expertise to become a “car city” without being “a Fiat city”. Compared with that task, moving headquarters from one jurisdiction to another is simple.
The true test of Mr Elkann’s long-running project to globalise the family business will be whether he and those working for him continue to channel a proportion of the benefits of Exor’s global resurgence back to its native land. Italian politicians have a duty to make Italy an attractive place to invest — a duty they have, in the past 25 years, too often shirked — but the heirs of Gianni Agnelli have a lasting responsibility to their homeland, too.