Leonardo and Invitalia deny the Democratic Party a lie on the Italian bus industry in Seri
The affair of the Italian bus industry represents an emblematic case of "distorted use of public property": this is what was highlighted by Business Minister, Adolfo Urso, responding to an urgent question from the Democratic Party in the Chamber after the sale of Leonardo's shareholding and of a Invitalia's share in Iia a Seri Industrial. And the Leonardo and Invitalia groups say that… All the details
In the Italian bus industry "we found a disaster", therefore "we restored the company" and now "we can accompany it in market growth".
This is what the Minister of Business, Adolfo Urso, underlined last week, responding to an urgent question from the Democratic Party in the Chamber, regarding the sale of Iia to Seri Industrial.
On 19 June Leonardo (30% owned by the MEF) announced the signing of an agreement for the definitive sale of its shareholding in Industria Italiana Autobus to Seri Industrial, a Civitello family company. The Piazza Monte Grappa company holds 29% of the capital of the company which has almost 600 employees, two production centers in Bologna and Flumeri.
The decision comes after the resolution of Leonardo and Invitalia, current main partners of the IIA team, who decided to accept the offer presented by Seri Industrial , a proposal which arrived at the end of a process started to identify an industrial partner to relaunch the agency. The move will therefore lead to Seri Industrial's entry into the capital of Industria Italiana Autobus with a controlling stake.
The reaction of the unions was immediate, expressing strong discontent, "against the disengagement of the public shareholder and worried about the future of a factory", reported Il Sole 24 Ore last week, and the criticisms of the Democratic Party, highlighted this week by the newspaper Repubblica : “ The Democratic Party defends state buses” .
In his speech in response to the Dem's question, Minister Urso retraced the history, starting from the two companies that gave rise to Iia, and which "from jewels had become state caravans in which to place screwed managers". According to the head of the Department of Enterprise, for Iia there was no alternative to Seri other than liquidation.
The minister then concluded, after reviewing the action carried out by the Executive since it took office: "We have put the company on the right path".
All the details.
THE GOVERNMENT DECISION
The operation – as indicated in Leonardo's note – involves Seri Industrial taking over 98% of the share capital while the remaining 2% will continue to be held by Invitalia, already a partner together with Leonardo in Industria Italiana Bus.
“I reiterate that this Government, from the beginning, has operated in the exclusive interest of the company and the workers of Industria Italiana Bus and that in the light of the facts, due to Invitalia's legal obligation to divest its majority shareholding and to Leonardo's autonomous entrepreneurial choice to focus its attention on its core business sectors, there are no alternative scenarios to privatisation, other than that of the liquidation of the company itself, nor do they exist at the moment, after a research process led by an international advisor lasted more than 2 years, offers from potential buyers that can be considered better for members, public taxpayers and the workers themselves than that authorized by the ministry".
The Iia affair, he added, represents an emblematic case of "distorted use of public property which has compromised the development of the national vehicle industry".
THE TREND OF THE COMPANY ILLUSTRATED BY THE MINISTER
As for the company's performance, "as of December 31, 2023, after the change of management – he reported – it produced 183 buses, two more than the objective set by the industrial plan for 2023, and 59% more compared to the previous year, turnover increased by 42% compared to 2022 and 300 new orders were acquired" and furthermore "the current order portfolio of electric buses ensures saturation of production capacity until the first half of 2025, and during In 2024, production is expected to more than double compared to 2023, of around 400 buses".
“NO ALTERNATIVE TO SERI EXCEPT LIQUIDATION”
Urso explained that Seri "is committed to an industrial plan based on synergies and innovation, such as to ensure the competitiveness of the company also abroad and is also committed to guaranteeing stable employment levels in the Flumeri and Bologna factories and to allowing in the interest of the company in the possible entry of another industrial partner".
THE GUARANTEE CONDITIONS POSTED BY THE GOVERNMENT
However, the government has also set two "guarantee" conditions.
Invitalia will in fact remain in the capital with a 2% share which, "by virtue of the five-year shareholder agreements", "allows the public shareholder to oppose any resolution contrary to the agreement, the corporate purpose or the corporate interest of Iia ”. Furthermore, there is a "dragging right" clause which allows the public shareholder to dispose of the shares of the majority shareholder "if the latter does not follow up on the industrial plan or does not guarantee business continuity". Urso then also spoke about another condition: that is, the obligation was established for the buyer to "sell the unbuilt part of the Flumeri factory if offers were received from parties interested in developing a growth plan in non-competitive sectors at that of buses, with a specific focus and, I don't mention it by chance, – said the minister – for the automotive sector, according to a congruity of objectively established values”.
“With these interventions – concluded the minister – we think we can mark a new page for the Italian bus industry, which will bring it out of 10 years of questionable choices, providing Italy with a solid operator in a strategic field such as local public transport sustainable".
THE NOTE FROM LEONARDO AND INVITALIA
Seri Industrial's was the only proposal compliant with the sale process of Industria Italiana Autobus, a stake that the public shareholder was required by law to sell. This is what the companies Leonardo and Invitalia put down in black and white last weekend in a joint note. “Regarding the sale of their shareholdings in Industria Italiana Autobus to Seri Industrial, communicated on 19 June 2024, Invitalia and Leonardo confirm that following a process, assisted by Kpmt and Studio Legance, which involved numerous potential bidders both Italian and foreign countries, Seri Industrial's offer was found to be the only one compliant with the provisions of the transfer process", is written in the note.
“During the meeting with the social partners – continues the press release – the Ministry of Business and Made in Italy had requested a supplementary analysis aimed at verifying the possibility of integrating Seri Industrial's industrial plan with that of another consortium of entrepreneurs. The latter sent a non-integrative and conditional replacement offer, not compliant with the transfer process, which also proved to be more economically expensive".
PD LIED
The note from the companies and Urso's response in Parliament are in fact an indirect response to the criticisms of the Democratic Party which essentially asked for the company to be kept in Italian and public hands. “The government is not authorizing a sale, but a fire sale of a public company.” Thus the secretary of the Democratic Party, Elly Schlein, spoke in recent days on the Italian Bus Industry issue. In a video published on social media he is next to the workers at the Flumeri site, in the province of Avellino. «Here we risk a sell-off of a strategic company, exactly what we need the Pnrr for: investing in mobility, in local public transport. We need Italian companies that make buses, in particular that make electric buses, otherwise we will continue to have to buy them from other countries."
+++
WE PUBLISH THE FULL RESPONSE OF MINISTER URSO TO THE URGENT INTERPELLATION ON THE ITALIAN BUS INDUSTRY
I intended to personally respond to this question from the entire group of the Democratic Party, which bears as its first signature that of the party secretary, leader of the opposition, on the first available occasion, that is, today, also – and I would say above all – out of respect to the workers of Industria Italiana Autobus and aware of the glorious history of the two companies from which Industria Italiana Autobus was born, companies that then marked the history of Made in Italy.
The affair concerning the Italian Bus Industry is emblematic of a distorted use of public property, which has compromised the development of the national vehicle industry in our country, in this case buses.
Very clearly in Parliament and in this Chamber, which I have attended from the opposition benches, I express, as always, with extreme clarity, what we found when we took office, then what we have done in these twenty months, finally what the growth prospects of the plant.
What did we find? A disaster. What we have done? We have restored the company. What we want to do? Now we can finally accompany it in its market growth.
The story is now about ten years old and originates, as I said in the introduction, from the divestment of the Irisbus companies (then part of the FIAT Iveco group) which preferred to relocate the production of buses from Flumeri abroad to the Czech Republic – and how many other episodes similar occurred in those ten years -, and by BredaMenarinibus, a historic company from Bologna, which was then in a phase of crisis and in which a minority percentage of the Finmeccanica group, now the Leonardo group, was present. In 2019, the Conte Government decided to bring Invitalia into the field with a 42.76 percent shareholding, joining Leonardo, Finmeccanica heir, in BredaMenarinibus and the Turkish company Karsan, which, first as a supplier of components and then as controlling partner of this Bus Industry, had used the Italian factories as a mere assembly of its production in Turkey. I repeat, assembly of production in Türkiye. It is from that moment, i.e. from 2019, this was the state, that we can consider the management of the company public.
After a short time, and despite co-financing from the Ministry of Economic Development (as the Ministry governed in those years first by Di Maio and then by Patuanelli was then called), in the form of development contracts, a profound crisis opened due to choices questionable managerial skills to say the least and insufficient financial support from the shareholders in a sector that is particularly capital intensive and with reduced profit margins, such as that of the production of buses for local public transport, extremely small margins. This has also put – yes – the public contracts of important Italian municipalities at serious risk with the risk – yes – of compromising the achievement of the objectives of the PNRR with whose resources those contracts had been financed.
It is at this moment that we reach the Government, when the disaster has already been realized and the orders have been compromised at that point.
What did we find at the end of 2022? We found an annual production that had collapsed to just 111 buses, losses of 48 million euros and total debts already accumulated of 172 million. Certainly, we understand, there was a crisis of financial means, caused by the difficulty of accessing the banking system, but this triggered a negative spiral which led to a further growth in indebtedness, leading to the complete, I repeat the complete interruption of the supplies – no one was supplying anymore – and therefore the non-acceptance of further orders by suppliers: paralysis.
It was a compromised situation, the result of choices prior to our mandate and of absolutely incorrect corporate strategies. In fact, the two companies, once the jewels of Italian buses, had become, together with the public sector, state caravans in which to place "fucked" managers. What we have done? We have started the production recovery. In the first quarter of 2023, we developed an ambitious industrial plan, with the aim of accelerating the green transition path while maintaining existing employment levels unchanged.
Furthermore, for the first time, already in the first half of 2023, this Government subordinated the provision of financial support to the achievement of intermediate objectives, functional to the implementation of the new industrial plan, set by the Ministry in relation to productivity, the state of progress of investments and management efficiency, with particular attention to cost containment.
We have set precise constraints, defined, significant and agreed objectives, also listening to the unions so that management skills emerge.
The failure to achieve the intermediate objectives mentioned above, despite the further injection of resources, led to the replacement of the management, in full agreement with the social partners, who continuously highlighted the managerial errors of the previous management, determined by the previous Governments, to end of June 2023, after we had concluded that the plans and intermediate objectives had not been achieved.
Following the installation of the new board of directors, the 2023-2026 Plan was prepared which envisages self-sufficiency by the second half of 2026 to allow the necessary recovery of the company in view of the absolutely necessary transition to the private buyer, and above all accelerate the transition to the production of electric vehicles, aiming for a national market share of 30-35 percent.
The Plan envisages, from a perspective that is not merely emergency, important investments in new products and a series of organizational and operational optimization measures which will allow the gradual increase in the productivity rate as well as a substantial improvement in the parameters of working capital, margins and level of the after-sales service.
This Plan has already allowed the reactivation of production through the efficiency of the production structure and the renegotiation, with positive results, of the delivery terms with the contracting authorities. There has been an increase in the pace of order disposal, also due to compliance with scheduled deliveries, including that of the first 4 12 m BEV buses.
As of December 31, 2023, after the change of management, the company produced 183 buses, 2 buses more than the objective set by the industrial plan for the year 2023, and 59 percent more than the previous year, to 2022.
The increased production of buses was reflected in the growth in turnover, equal to approximately 55 million euros, an increase of 42 percent compared to 2022. The order backlog was reduced from over 700 buses to approximately 500, thus avoiding burdensome penalties, and 300 new orders were acquired.
The current order backlog, also due to some tenders for electric buses that Italia Industria Autobus (IIA) was recently awarded, ensures the saturation of production capacity until the first half of 2025.
We have put the company on the right path. During 2024, the turnaround plan envisages: the production, more than doubled compared to 2023, of approximately 400 buses – that is, more than doubled compared to a year in which, finally, it had reached significant levels – and, to this end, at the Flumeri plant, the gradual increase in the workforce and the increase in the production rate, from the current 1 bus/day to 2 buses/day from September, therefore the doubling of production. Furthermore, the development of the electric production range is envisaged with pantograph models – direct and reverse – and 10 meter models and the design of 8 and 9 meter electric prototypes.
The planned actions also include the strengthening of after-sales activities and engineering, research and development functions at the Bologna plant.
To guarantee the production continuity of IIA, compliance with the production plan and the delivery of the buses to the contracting stations, during 2023, the public sector has injected resources of 83 million euros to cover the accumulated losses, restore the capital and satisfy the financial requirement necessary to ensure production. However, there was an absolute unwillingness to meet IIA's financial support needs on the part of the Turkish partner Karsan who, by not participating in the recapitalization operations, consequently saw his participation gradually reduced to zero.
Also in the first half of 2024, as per the forecast of the industrial plan, the public sector intervened twice, injecting new liquidity for approximately 32 million euros, in order to guarantee compliance with the production targets for the second half of 2024.
Having reconstructed this story in all its steps, both in what happened before 2019 and in what happened from 2019 to when we assumed the responsibility and burden of the Government, I come to the most recent choices.
As mentioned, when Invitalia intervened in 2019, a development contract was originally envisaged in the former Irisbus plant in Flumeri, in Avellino, Campania, relating to an industrial development program with total investments of approximately 48 million euros and with concessions granted amounting to approximately 18 million. However, the benefits granted according to the aforementioned legislation were accompanied – as mentioned – by the entry of Invitalia into the share capital, pursuant to article 8-bis of the ministerial decree of 9 December 2014, which provided that the aforementioned participation could not – I highlight this passage to my parliamentary colleagues and to those who listen to us – be detained for a period of more than 5 years. Consequently, Invitalia was required to dispose of this shareholding, considering that the authorization to enter the capital of Industria Italiana Autobus dates back to 24 January 2019, and 5 years have passed.
Added to this is the fact that Leonardo, a company listed on the stock exchange and – therefore – subject to different market rules and more oriented towards private logic, had already decided at the end of 2023 to divest its stake in IIA, to direct its business on sectors more relevant to its core business.
For the above reasons, the two partners, supported by an international advisor such as KPMG, have started a process of identifying an industrial partner to whom they can entrust the leadership of Industria Italiana Autobus, following the guidelines provided by the Ministry, aimed at strengthening the solidity assets and industrial capacity of the company.
It is, therefore, a due and necessary act, consequent to the determination taken, autonomously, by the members of Industria Italiana Autobus and, at the same time, directed by the Government to protect the public interest and employment levels.
At the end of the aforementioned process, 23 expressions of interest were presented, of which only one resulted in a truly binding offer and was not subject to conditions that did not qualify it as such. Only one, out of 23 expressions of interest. On this basis, on May 10th, the board of directors of Invitalia approved the proposed agreement for the sale of the stake held in the capital of Industria Italiana Autobus, in favor of Seri Industrial Spa, consequently requesting the required authorization from the Minister of Business and made in Italy. This, May 10th. As a result of the plenary table, which we convened on 22 May – immediately after this request – in acceptance, among other things, of the requests formulated by the social partners with whom we have discussed many times and by the regions – the two regions, Calabria and Emilia -Romagna – and to guarantee in any way the solidarity of the offer, we have started a shared path to study any additional proposals to that of Seri Industrial. That is, after the approval by the board of directors of Invitalia of the transfer agreement with the only company that had presented an expression of interest, transforming it into a real binding offer, we responsibly took action to convene the table with all the social partners, the trade unions and the two regions, to guarantee in any way the solidity of the offer and to start a shared path of in-depth analysis of possible supplementary proposals to those of Seri, albeit in a time frame characterized by very tight deadlines, including the deadline for the reconstitution of the share capital of Industria Italiana Autobus – eroded by losses of 63 million – and that relating to the validity of the binding offer presented by Seri Industrial.
Following this meeting, therefore, various technical tables were held, which saw the participation of representatives of the Campania region and the Emilia-Romagna region. In particular, following the meeting on 28 May with entrepreneurs who had shown interest – and who were also highlighted and mentioned by the questioning parliamentarians – on 4 June a non-supplemental offer was presented – as requested, given the deadline of the terms – but alternative and, unfortunately, worse than that of Seri Industrial, especially from an industrial point of view, as it is not accompanied by a development plan, nor provided with guarantees regarding employment levels, assets and business continuity. This proposal would also have entailed the risk of a considerable burden – further burden – on public finances, providing for Invitalia to release, exclusively with respect to private partners, financial guarantees until a hypothetical break even is reached. , without certain time and quantity limits. Without limits.
Pending this process of in-depth analysis of the proposals presented, I would like to point out that it has become necessary to promptly provide additional resources necessary for the continuation of production activities, for an amount equal to 12 million euros.
Subsequently, at the table on 4 June with the leaders of a Chinese group that had previously shown interest, together with representatives of the regions, we found a willingness to make investments in kind in the Industria Italiana Bus plants, with the contribution of innovative technologies, but , at least at this stage, not of financial contribution.
The discussions – still ongoing even at the highest institutional levels – are, at this stage, preliminary to a possible entry into the capital of Industria Italiana Autobus which we hope for and which can only take place in a more advanced phase of the recovery and relaunch process of the company.
The results of the dialogue with all economic operators potentially interested in the Italian Bus Industry were fully illustrated to the regions on 11 June.
Lastly, on 13 June I met with the national trade union organizations to offer a detailed representation of the company situation and the discussions reported above. However, the same trade union organizations decided not to take part in the subsequent meeting, also called on 13 June, during which the top management of Seri Industrial illustrated the industrial plan proposed for the relaunch of the company in attendance – because they were present – from the Campania and Emilia-Romagna regions.
At the end, therefore, of the long and in-depth privatization process of Industria Italiana Bus just described, having acknowledged that no offers have been received, either improving or supplementing the one presented by Seri Industrial, and waiting for the interest to materialize for the moment only reported by investors contacted by the Unit for attracting foreign investments of the Ministry, we authorized the public shareholder Invitalia to conclude the sale of the stake held in Industria Italiana Autobus in favor of Seri Industrial.
This industrial group, which produces batteries, i.e. the component that represents approximately one third of the production cost of electric vehicles, is committed to the creation of an industrial plan, focused on the creation of synergies and innovation, such as to ensure the competitiveness of the company also abroad. It also undertakes to guarantee the employment levels of the Flumeri and Bologna factories and to allow, in the company's interests, the possible entry of another industrial partner. We have not limited ourselves to this: we have set 2 conditions that we believe will be a guarantee to avoid possible production and employment impasses. The first condition: Invitalia will remain in the capital with a 2 percent stake, which, by virtue of the five-year shareholder agreements signed at the same time as the transfer agreement, allows the public shareholder to oppose any resolution contrary to the agreement, the corporate object or to the social interest of Industria Italiana Autobus. Furthermore, a "right of carry-over" clause has been envisaged, which allows the public shareholder to dispose of the majority shareholder's shares if the latter does not follow up on the industrial plan and does not guarantee business continuity.
The second condition that we asked for and obtained: a second clause provides for the obligation for the buyer to sell the unbuilt part of the Flumeri plant should offers arrive from parties interested in developing a growth plan in sectors that are not competitive with that of production of buses, with a specific focus – and I don't mention this by chance – for the automotive sector, according to an objectively established value congruity.
Then we would like to do more for that industrial area, we know that we can do more. With these interventions we believe we can mark a new page in the history of Industria Italiana Bus, which will bring it out of 10 years of questionable choices and poorly used resources, providing Italy with a solid operator in a strategic field such as sustainable local public transport .
In conclusion, I reiterate that this Government, from the beginning, has operated in the exclusive interest of the company and the workers of Industria Italiana Autobus and that, proven by the facts, due to Invitalia's legal obligation to divest its participation majority and the autonomous entrepreneurial choice of Leonardo Spa to focus its attention on its core business sectors, there are no alternative scenarios to the privatization of Industria Italiana Autobus, other than that of the liquidation of the company itself. Nor are there at the moment, after a research process led by an international advisor lasting more than two years, offers from potential buyers that can be considered better for the members, public taxpayers and workers themselves of Industria Italiana Autobus, than the one authorized by the Ministry.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/leonardo-invitalia-pd-industria-italiana-autobus-seri/ on Mon, 24 Jun 2024 08:04:09 +0000.