Pier Francesco Guarguaglini, Chairman and CEO, Finmeccanica
If it is true that a company assumes the characteristics of a strong executive leader, then the world had better watch out for Finmeccanica.
Chairman and CEO Pier Francesco Guarguaglini has won a reputation as a tough and shrewd negotiator in the European game of consolidation. He has taken no hostages in his drive to transform Finmeccanica from a government-owned holding company for Italy’s strategic defense and aerospace industries into a world-leading industrial powerhouse.
Now the Italian treasury owns just 32.4% of Finmeccanica, and the rest is quoted on the Italian stock exchange. This year the company expects its revenues to top 10 billion euros; it is the world leader in helicopters (AgustaWestland) and training aircraft (Aermacchi), ranks second in Europe’s defense electronics industry, ranks first as a provider of satellite services, owns 25% of MBDA (the world’s second largest missile company), and is a major player in aerostructures (Alenia) with a 26% share (with partner Vought Aircraft Industries) in the Boeing 787. Finmeccanica companies also account for 60% of the defense electronics in the Eurofighter program.
Company Strategy
“We must be the main player in our core business, or at least in parts of it,” says Guarguaglini. Our goal is to have very strong international companies with a main concentration in aerospace and defense, and very strong international businesses in specific sectors, such as helicopters, defense electronics, aerostructures and transport airplanes.”
Guarguaglini has pursued a dynamic strategy of growth, often driving consolidation in the European industries. And Finmeccanica has shown a shrewd use of leverage, first contributing assets to form joint ventures with other companies then winning them back again as it negotiates further control.
Leadership Style
Guarguaglini has no patience for inaction for stagnation. He has extricated Finmeccanica from some joint ventures where it cannot lead, pursuing a 67%-33% formula instead of the traditional 50-50.
“I prefer to be in charge than just a partner,” he told Show News. “There must be only one to decide. I hate internal memos where four people are cc’d, discussing how to decide. Look at EADS [with two joint CEOs] — it is not clear who is making the decisions, and sometimes this can be a problem.
“I prefer to talk about it, and then decide.”
Sensing the chance of victory in the competition for the U.S. Presidential helicopter with the EH101 helicopter, he became frustrated by a lack of similar vision at GKN, Finmeccanica’s partner in AgustaWestland.
“So I pushed a lot to buy 100% of AgustaWestland,” then lobbied strongly for a win with Italian prime minister Berlusconi, British Prime Minister Tony Blair, the White House and Capitol Hill, explaining that victory would involve not just AgustaWestland but the strengths and commitment of Finmeccanica.
To lead his industrial units Guarguaglini has picked CEOs with a track record in product innovation, execution and marketing, making it clear that strategy comes from the chairman’s office. “I don’t want them to interfere in corporate issues,” he says.
U.S. Strategy
With Lockheed Martin as prime contractor on the U.S. Presidential helicopter, Guargauglini believes Finmeccanica is building credibility with the U.S. government. To leverage this it has set up a North American company in Washington, D.C., to lead its marketing and industrial activities; footholds already include avionics, special laser radar and electronic warfare, and the Bell Agusta Aerospace joint venture with the AB139 and BA609 civil tiltrotor. A large engineering presence resides in Seattle, Fort Worth and Long Beach for the Boeing 787 and Joint Strike Fighter.
Last year AgustaWestland opened a helicopter assembly plant in Philadelphia, and Alenia Aeronautica will set up a Boeing 787 assembly plant with Vought in Charleston, South Carolina.
Specific opportunities include the USAF requirement for a deep-penetration crew extraction helicopter, and the U.S. Army’s planned purchase of a transport aircraft, for which Alenia is proposing the C-27J with L-3 Communications as U.S. prime contractor.
“Our purpose is to convince the government that Finmeccanica is a single company,” says Guarguaglini. “That means Finmeccanica will be very present as a flagship in the U.S. through helicopters, aerostructures, avionics and security.
“In the last five years we have more than doubled our sales while the Italian defense budget remained flat. Our intention is to strengthen activities abroad as future European defense budgets likely will remain that way.” — John Morris
Recent Highlights
• With Alcatel, Finmeccanica formed the Space Alliance, Europe’s biggest space company, through two joint ventures. Alcatel Alenia Space will lead satellite construction, and Finmeccanica’s Telespazio takes over all satellite and space services and management.
• Finmeccanica bought BAE’s UK-based defence electronics operations in the Eurosystems transaction and formed Selex Sensors and Airborne Systems to take control of the group’s avionics business. Owned 75% by Finmeccanica, this encompasses sensors, airborne radar, mission systems, electro-optics and electronic warfare systems and includes Galileo Avionica and the former BAE System’s Avionics.
• The systems integration business previously majority controlled by BAE Systems was split into two autonomous units in which Finmeccanica now owns all the activities of AMS SpA and the British air traffic control, including ASI Inc. and Gematronik. These now compose Selex Sistemi Integrati. BAE retained AMS Ltd. and its C4ISR Networked Systems and Solutions.
