Word: pirellis
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...greatest troubles afflict the ambitious transnational combinations of companies. Two years ago, Britain's Dunlop and Italy's Pirelli pooled interests to form a tire, cable and rubber giant, with sales of $2.3 billion. At the time, Leopoldo Pirelli, chairman of his family-run Italian company, said, "This is a marriage from which there is no turning back." Yet last week the partners had divorce in mind...
Those burdens are now being felt. On sales of $1.3 billion in this year's first half, profits were only $171,000. In its Italian operations, Pirelli had a deficit of $25.5 million as a result of rising costs, labor unrest and loss to rivals of some orders from automaker Fiat. Last spring the combine became the target of the first big international strike, when some Dunlop and Pirelli workers staged joint work stoppages in Britain and Italy to protest layoffs...
...unwieldy management structure has also hurt. Pirelli suffers from creaky accounting. Dunlop executives have been urging Pirelli men to provide more figures faster as a guide to cost cutting, but to little avail. Geddes is discussing with Dunlop's bankers possible changes in the union; the choices are few. The British could try to persuade Pirelli to pull its Italian operations out of the world-spanning combine; yet that would hardly appeal to Leopoldo Pirelli. Or Geddes and his executives could continue trying to help Pirelli, at the risk of having rising losses entirely submerge Dunlop profits...
...between Fiat and France's Citroën, which are supposed to exchange technology and share plants. Amid rumors of boardroom squabbles, Citroën plans to sell additional stock, but Fiat General Manager Umberto Agnelli says that Fiat will buy none of it. As in the Dunlop-Pirelli alliance, neither side can move without the other's consent. Says Agnelli: "Our objectives are very ambitious-to produce the automobile of the future for a worldwide market." Citroën, he adds, has "failed to follow these objectives...
...Dunlop-Pirelli and the Fiat-Citroën difficulties do not mean that transnational alliances are bad. But the troubles do cast serious doubt on the concept of what Dunlop's Geddes calls "a marriage of equals." If the Europeans are to create many vigorous multinational companies, they will have to swallow nationalistic pride, aim for complete mergers and accept unified managements-like those of their American rivals...